Stephen: Hot on the heals of yesterday’s story that the BBC’s Panorama program was set to reveal allegations that Rupert Murdoch’s News empire had been illegally copying its British Pay-TV competitors’ smart cards, comes today’s major, globally-focused expose based on a four-year long probe by The Australian Financial Review (AFR).
Because the paper is Australian, the story has a local intro but read on.
There are links to Israel, Asia and Europe and the AFR claims that News has used its PayTV piracy tactics in the US, Italy, Australia and Britain.
It’s a story involving dark games that have resulted in over $5billion for Murdoch – and the total destruction of rivals; sometimes to make them cheaper for News to buy up.
I have only posted the opening pars of this comprehensive piece. The link at the end will take you to the report’s main page, where you can read far more and also access numerous other background and side-issue stories that show the enormous scale of what’s been going on and its dramatic effect on people and businesses across the world.
You can also access the 14,400 leaked emails the AFR scoured to glean its story.
I have always felt that the preceding phone hacking scandal was just the tip of the iceberg. Now it seems a complete meltdown of the News empire could be forthcoming: the ramifications of today’s revelations are already thundering across the globe.
Pay TV piracy hits News
Neil Chenoweth – Australian Financial Review
March 27, 2012
http://tinyurl.com/cu6h5fl
A secret unit within Rupert Murdoch’s News Corporation promoted a wave of high-tech piracy in Australia that damaged Austar, Optus and Foxtel at a time when News was moving to take control of the Australian pay TV industry.
The piracy cost the Australian pay TV companies up to $50 million a year and helped cripple the finances of Austar, which Foxtel is now in the process of acquiring.
A four-year investigation by The Australian Financial Review has revealed a global trail of corporate dirty tricks directed against competitors by a secretive group of former policemen and intelligence officers within News Corp known as Operational Security.
Their actions devastated News’s competitors, and the resulting waves of high-tech piracy assisted News to bid for pay TV businesses at reduced prices – including DirecTV in the US, Telepiu in Italy and Austar. These targets each had other commercial weaknesses quite apart from piracy.
The Australian Competition and Consumer Commission is still deliberating on final details before approving Foxtel’s $1.9 billion takeover bid for Austar, which will cement Foxtel’s position as the dominant pay TV provider in Australia.
News Corp has categorically denied any involvement in promoting piracy and points to a string of court actions by competitors making similar claims, from which it has emerged victorious. In the only case that went to court, in 2008, the plaintiff EchoStar was ordered to pay nearly $19 million in legal costs.
The issue is particularly sensitive because Operational Security, which is headed by Reuven Hasak, a former deputy director of the Israeli domestic secret service, Shin Bet, operates in an area which historically has had close supervision by the Office of the Chairman, Rupert Murdoch.
The security group was initially set up in a News Corp subsidiary, News Datacom Systems (later known as NDS), to battle internal fraud and to target piracy against its own pay TV companies. But documents uncovered by the Financial Review reveal that NDS encouraged and facilitated piracy by hackers not only of its competitors but also of companies, such as Foxtel, for whom NDS provided pay TV smart cards. The documents show NDS sabotaged business rivals, fabricated legal actions and obtained telephone records illegally.
The email trail
The actions are documented in an archive of 14,400 emails held by former Metropolitan Police commander Ray Adams who was European chief for Operational Security between 1996 and 2002. The Financial Review is publishing thousands of the emails on its website at URL afr.com.
The email archive, which News Corp has previously sought to suppress, provides a unique insight into the secret side of Rupert Murdoch’s sprawling global empire – it reveals an operational arm that has generated multi-billion dollar windfall profits for the company.
The emails support claims by the BBC Panorama program, aired in the UK on March 26, that News sought to derail OnDigital, a UK pay TV rival to News’s BSkyB, that collapsed with losses of more than £1 billion in 2002, after it was hit by massive piracy, which added to its other commercial woes.
While News has consistently denied any role in fostering pay TV piracy, the Adams emails contradict court testimony given by Operational Security officers as well as statements by News lawyers in the past three weeks.
In addition to the controversy over OnDigital and Austar, the actions of Operational Security have triggered five separate unsuccessful legal actions by pay TV companies around the world, each claiming damages of up to $US1 billion.
Covert operations in Australia were directed by the head of Operational Security for Asia Pacific, Avigail Gutman. At the time Gutman was based in Taiwan, where her husband Uri Gutman was the Israeli consul, before she was promoted to be a Group Leader based in Jerusalem.
Battle of the boxes
In 1999, the battle to control the set-top box in Australia was at its height. The country’s first pay TV service, Australis Media, had collapsed in May 1998 leaving Foxtel, owned by Telstra, News Corp’s wholly owned Australian subsidiary News Ltd and Kerry Packer’s Consolidated Media, to pick up its satellite customers. At the same time News Ltd under Lachlan Murdoch focused on controversial strategies to rationalise the pay TV industry and bring it under News’s control.
At the time, Australia had no effective laws against pay TV piracy. None of the actions that followed would be illegal, senior lawyers told the Financial Review.
To read the rest of this detailed and comprehensive investigative report – and a variety of revealing side-issue stories – go here:
http://tinyurl.com/cu6h5fl
Access and view the 14,400 leaked emails that the AFR scoured for this story here:
http://www.documentcloud.org/public/#search/group: australianfinancialreview
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