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Murdoch's News Ltd. Rejects TV Piracy Claim in Australia

Rupert Murdoch’s embattled media empire found itself facing fresh controversy on Wednesday, after an Australian newspaper published an investigative report alleging that News Corporation had engaged a special unit in the mid-1990s to sabotage its competitors, leading the Australian government to call for a criminal investigation into the claims.

News Corp. Chairman Rupert Murdoch looks down as he leaves the One Aldwych Hotel surrounded by his personal security team to speak with reporters after meeting with the family of murdered school girl Milly Dowler on July 15, 2011 in London, England.
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News Corp. Chairman Rupert Murdoch looks down as he leaves the One Aldwych Hotel surrounded by his personal security team to speak with reporters after meeting with the family of murdered school girl Milly Dowler on July 15, 2011 in London, England.

But News Ltd., the company’s Australian media wing, dismissed the report as “laughable,” saying that it was filled with inaccuracies and baseless claims that had been dismissed by courts in other countries, including the United States.

The newspaper, The Australian Financial Review, which is owned by one of Mr. Murdoch’s main Australian rivals, Fairfax Media, published more than 14,000 internal e-mails from a former News Corporation subsidiary along with the results of what it said was a four-year investigation into whether that company, NDS Group, encouraged the mass pirating of rival satellite television networks.

“These are serious allegations, and any allegations of criminal activity should be referred to the Australian Federal Police (AFP) for investigation,” Suzie Brady, a spokeswoman for Communications Minister Stephen Conroy, said in an e-mail exchange.

A spokeswoman for the police said that the agency had not yet received a request from the authorities to investigate the allegations in the report, which centered largely on the battle for dominance over Australia’s burgeoning pay TV market in the late 1990s but also touched on the company’s operations in Europe and the United States. The report states that Australia had no effective laws against pay TV piracy at the time, so the actions inside the country would not have been illegal at the time.

The report came a day after a BBC documentary made similar allegations against NDS Group in Britain, saying that it had paid a consultant to “crack” and publish on a pirate Web site the smart-card codes of a pay service that was started by ITV, the country’s free broadcaster. News Corporation has denied the claims made in the BBC program, Panorama.

The new e-mails, which the newspaper said had come from the hard drive of Ray Adams, a former commander in the Metropolitan Police in London who served as head of operational security for NDS Group in Europe from 1996 to 2002, appeared to show that a secret unit within the company called “Operational Security” promoted a wave of high-tech piracy that damaged the News Corporation rivals Austar and Optus at a time when the company was positioning itself to be the dominant player in the Australian pay TV industry.

The e-mails also supported the claims made in the BBC program, the report said.

The report said that the e-mails provided evidence that the unit, which is headed by Reuven Hasak, a former deputy director of Israel’s domestic secret service, Shin Bet, encouraged and facilitated piracy by hackers of companies for whom NDS provided pay TV smart cards, which allow subscribers to receive encoded satellite transmissions.

The report said that the piracy cost the Australian companies as much as $52 million a year and helped to severely damage the television provider Austar, which Foxtel is now in the process of acquiring for nearly $2 billion in a deal that would cement the company’s hold over the country’s pay TV market. The Australian Competition and Consumer Commission is reviewing that deal.

News Corporation, which has been roiled by accusations of phone hacking at its British newspapers, including the now-defunct News of the World, hit back at the report in a statement by its Australian wing.

“The story is full of factual inaccuracies, flawed references, fanciful conclusions and baseless accusations which have been disproved in overseas courts,” News Ltd. said in a statement.