Satellite-TV Hacking Allegations Return for Murdoch


It’s been four years since Rupert Murdoch’s NDS subsidiary was largely cleared in a civil lawsuit charging that the company employed hackers to sabotage rival companies.

Now the allegations have surfaced again, this time with internal e-mails allegedly documenting a coordinated scheme to damage competitors to Murdoch’s media empire that was led by a former Israeli intelligence officer and former UK police officers working for the Murdoch firm. Their actions extended far beyond the original allegations, according to a BBC documentary and the Australian Financial Review.

The e-mails purport to show that security officers working for NDS were behind a piracy web site called The House of Ill Compute, or, where hackers posted codes that allowed users to pirate pay-TV services for Murdoch competitors. The e-mails also purport to show that NDS withheld from one its clients, DirectTV, methods to fight widespread piracy at the same time Murdoch was attempting to buy the company.

NDS reportedly paid a hacker named Lee Gibling about $8,000 monthly to run the site, which garnered up to 2 million hits a day during its heyday in 2000.

NDS claims the site was just a honeypot to learn how pirates were scheming to defraud NDS and other satellite TV companies and says it never promoted piracy. But e-mails and interviews with sources indicate that after hackers posted codes on the site that were designed to hack smart cards used with pay-TV systems overseas, such as Canal Plus Technologies and OnDigital, NDS leaked the codes to other piracy sites to encourage their use among satellite thieves. NDS also is accused of reverse-engineering competitors’ cards with the aim of creating cracks for them.

NDS is a British-Israeli company and a majority-owned subsidiary of Murdoch’s News Corp. The company makes access cards used by pay-TV systems to prevent piracy of satellite signals. The most prominent of its clients was DirecTV — itself a former Murdoch company.

NDS was the target of earlier hacking allegations that were part of a years-long lawsuit filed by Nagrastar and its parent company EchoStar, NDS’s chief competitor, which made access cards for EchoStar’s Dish Network and other runners-up in the market.

The case, which ended in 2008, involved a colorful cast of characters that included former intelligence agents, Canadian TV pirates, Bulgarian and German hackers, stolen e-mails and the mysterious suicide of a Berlin hacker who had been courted by the Murdoch company not long before his death.

It also involved a former U.S. hacker named Christopher Tarnovsky who worked for NDS and was accused of helping pirates steal services from NDS competitors.

According to allegations in the lawsuit, in the late ’90s NDS extracted and cracked the proprietary code used in Nagrastar’s cards, which NDS didn’t contest. But Nagrastar said that Tarnovsky then used the code to create a device for reprogramming Nagrastar cards into pirate cards, and gave the cards to pirates eager to steal Dish Network’s programming. Tarnovsky was also accused of posting to the internet a detailed road map for hacking Nagrastar’s cards.

The convoluted case raised more questions than it answered, but a jury in San Diego largely cleared NDS of piracy in that case, finding the company guilty of only a single incident of stealing satellite signals, for which Dish was awarded $1,500 in damages. EchoStar was instructed to pay $19 million in legal costs.

Tarnovsky, who sat for a lengthy interview with following the verdict and demonstrated how he reverse-engineered smart cards like those used for satellite-TV (see video above), has always asserted his innocence.

But according to the Australian Financial Times, Tarnovsky was just one of many actors associated with a secretive group of former policemen and intelligence officers within News Corp known as Operational Security.

That group, the paper says, embarked on a coordinated plan to derail Murdoch’s pay-TV competitors in Australia and elsewhere by distributing crack codes for competitor’s satellite services. According to the paper, which has published internal emails from the group, their actions devastated Murdoch competitors such as DirecTV in the U.S., Telepiu in Italy and Austar in Australia, and allowed Murdoch to then try and swoop in to buy up the businesses at reduced costs.