Reading this week’s media coverage of the NDS hacking and piracy allegations the first thing that springs to mind is that this continues an ‘Annus Horribilis’ for the Murdoch clan which began with News of the World in April 2011.
So far, the Australian Federal Police are saying they are waiting for a referral to launch an investigation into the continuing claims made in the Australian Financial Review that News Corp subsidiary NDS engaged in piracy and hacking in a bid to destabilise Australia’s pay TV industry, including Austar.
The AFR promoted the story on its website with links to an archive of 14,400 emails it claimed supported its allegations. The stories have suggested that News entity NDS encouraged hackers to spread code that allowed free downloads of competitor programs, which News has denied.
It comes as the BBC defended it’s current affair program Panorama against accusations by News Corporation that the program had “grossly misrepresented” it while airing an investigation into the computer hacking of British rival ONDigital.
The AFR says it is standing by its stories and sources, including over 14,400 leaked emails.
Yesterday Rupert Murdoch hit back on Twitter, saying the allegations are completely untrue and hinting that he might sue.
Murdoch’s tweet defence seemed a bit bizarre and the tweets that followed it became even more obscure. Perhaps there’s something to this, or maybe Mr Murdoch is showing his age and lack of social media savvy.
Here is the order in which Mudoch’s tweets appeared on Thursday afternoon Australian time:
In the space of 15 minutes Murdoch had moved from a plea for sympathy and understanding to issuing a cryptic war cry about freedom of thought and freedom of the market. He then attacked the Fairfax news media as a home for crazies.
It is no surprise that this provoked a backlash of tweeted derision against the 80 year-old. Many detractors pointed out that Murdoch has used his own media monopolies to gain and garner political favour and influence on four continents.
RT @AJLemP: @rupertmurdoch:‘Choice, freedom of thought and markets’. Says the man who profits from information control.
@rupertmurdoch Dude, just cause you seem ever so slightly paranoid today, does not mean, they are not out to get you. #Leveson #Kharma
If the allegations – that the News-owned NDS encouraged and promoted hackers and pirates to attack their Australian competitors – prove to be true, it could be the smoking gun that leads to the unravelling of the Murdoch brand in Australia.
That’s about the only certain thing we can say at moment, but it is worth observing that media inquiries into the allegations are uncovering some interesting links between the Murdoch empire and a whole platoon of retired senior military personnel and former spooks.
However, it is wise to be cautious here. There is no doubt these are serious allegations of potentially criminal behavior that will certainly attract police and regulator attention, but it is not directly linked to the UK phone-hacking scandal, nor to the News Limited newspapers in Australia.
This is a separate series of allegations about the pay TV operations that are at more than arms length from the daily management of The Australian, The Herald-Sun, The Telegraph, the Adelaide Advertiser and the Courier-Mail.
We should also remember that the alleged hacking and piracy happened more than a decade ago and such actions were not illegal under the Australian laws of the time. However, it is not a good look as Foxtel seeks to buy its competitor Austar.
News Limited and senior News Corp figures such as Chief Operating Officer Chase Carey have joined Murdoch in denouncing the allegations.
The company at the centre of the scandal, the UK-based NDS, has also issued strong denials. NDS is 49% owned by News Corporation and there has been speculation the piracy allegations could sour a deal under way to sell NDS to Cisco Systems for $5 billion.
Austar chief executive John Porter has also vigorously denied allegations in the AFR article, calling them “completely unjustified”. He’s been at the helm of Austar since 1995, so his views are worth noting.
This afternoon, Austar shareholders voted to approve the $2.5 billion planned takeover of Austar by Foxtel (which is 25% owned by News Limited) even though the corporate regulator has yet to approve the deal. Foxtel has not been alleged to have been involved in hacking.
This story has a long way to go before it fully unwinds and there’s lots of loose ends, including questions about the role of several former Israeli, US and British spies with links to Mossad and a shadowy “black hat” hacking operation based in Haifa, Israel.
But does it, as some of the more extreme and vocal of News Corp’s critics suggest, indicate a mafia-like culture in senior management circles at News, where a disregard for the law and a “We won’t get caught” attitude stands in for the hubris and certainty of being part of the seemingly invincible empire of the Sun God?
We’ll have to wait and see, but the scandal has the potential to damage Murdoch financially.
On Thursday, News Limited’s share price fell 1.8% and closed at $19.12. On Friday it again finished slightly down, at $19.05.
Unfortunately for the News Corp family the allegations come on top of bad news in other share markets; the resignation of heir apparent James from News International as his role in the NOTW scandal came under scrutiny; ongoing allegations of criminal behaviour by News employees in the UK and calls for the British regulators to now examine this latest set of piracy claims.
The AFR’s investigation was linked to the BBC’s Panorama program so the allegations are likely to continue to get plenty of oxygen in Britain where BSkyB is also in merger talks with a pay TV rival. Murdoch could also be a victim of the relentless 24-hour news cycle he and Foxtel helped to create as this story begins to play in the US and other markets too.