Rupert Murdoch has a reputation for being incredibly brutal on his business opponents. Whether it be attempts to buy them, savage price wars or ferocious attacks in his media outlets, you don’t compete with the Sun King without being traumatised by the experience. The same goes for regulators and politicians who get in Rupert’s way.
But did the empire controlled by the world’s most powerful media mogul go too far in the global pay-TV wars of the 1990s?
Charlie Ergen’s EchoStar pay-TV company is suing News Corp subsidiary NDS in the US courts for $US1 billion, claiming that NDS had a hand in cracking and leaking its encryption codes for the smart cards that protect it from piracy.
The AFR’s Neil Chenoweth produced 5,317 words on this extraordinary saga yesterday and for a while there the paper took an enlightened approach by releasing this globally significant story on its website. Alas, it’s back behind the bone-headed subscription wall today.
The key court documents produced by EchoStar – including a startling affidavit from a now-dead Canadian hacker Reg Scullion – are available here.
Chenoweth’s piece is heavy with implication:
EchoStar and Nagrastar say their problems began in May 1997, when Rupert Murdoch walked away from an agreement with EchoStar founder Charlie Ergen to merge their US satellite interests.
The story talks about NDS operatives setting up a high-tech code cracking lab in Israel by mid-1997.
And these operatives that Rupert employed were something special. A former Scotland Yard commander called Ray Adams was the NDS security chief in the UK. The Guardian explained his colourful past in this story.
It was this story in The Guardian back in 2002 which caused the biggest impact because it directly linked Adams, and therefore the broader News Corp empire, to the piracy websites.
The French pay-TV company Canal Plus also sued NDS for $US1 billion but this was withdrawn when News Corp bought its business.
DirecTV, then controlled by General Motors, was also suing NDS for fraud when News Corp bought that business.
That left Charlie Ergen and EchoStar which is where Rupert’s problems might be just beginning.
Ergen is a tough poker-playing entrepreneur who is richer than the Sun King and won’t be selling out or settling any time soon. The case begins before a jury in the California District Court on April 8.
There are some pretty colourful affidavits by various hackers, but the NDS emails are the most interesting bit. NDS have put a court seal on anything to do with them, but there’s a lot of the detail in the copy of the complaint.
NDS has spent two and a half years trying to impose sanctions on EchoStar for allegedly stealing its documents. While the business implications are big, it is the reputational issues for News Corp that will really hurt because many of the revelation about its business practices seem quite extraordinary.