Sky is the UK’s biggest pay TV operator by a large margin with millions of subscribers. It is a very profitable business with many customers subscription charges over £30 per month, and a business that Murdoch’s News Corp has been attempting to acquire the remaining stake in for the last few months, as Murdoch’s newspapers have been under increasing scrutiny after the phone hacking revelations.
Recent revelations by BBC investigative reporters from Panorama, however, cast a dark shadow over how Sky became the dominant player in the market. The revelations revolve around allegations by Lee Gibling, who ran the hacker-focused website The House of Ill-Compute/Thoic in the late 90s, and how he claims he was paid to publish stolen information about rival TV company On Digital’s Pay TV encryption.
On Digital’s pay TV encryption was provided by NDS, the same company that provides the encryption for Sky’s satellite services and a company where BskyB owns 50% of their UK security arm. The claim is that NDS leaked On Digital’s encryption codes to Gibling who then offered them to would-be pirates – meaning that On Digital continually struggled to make a profit from its services, with anyone with an internet connection and a bit of curiosity could access their paid channels for free. On Digital, which later became ITV Digital, before collapsing in debt after a huge deal with the Premier League for football rights struggled to compete with Sky in this lucrative pay TV, and especially subscription sports TV, as people had to pay to access Sky’s channels, whilst On Digital’s could be watched with a relatively easy piece of digital hacking – and all accounts point to the leak coming form NDS.
For its part, NDS denies Gibling’s claims, and News Corp says that it has little knowledge in the day-to-day workings of NDS despite its 50% stake – but there is no doubt that these codes did get out somehow and they helped Sky secure its current dominant position in the marketplace. With the fallout from the phone-hacking scandal ongoing, this is yet more evidence to support the position that Murdoch gained his power and influence in the UK news market not by simply providing the best coverage or services, but also by hacking political figures, celebrities, the public, and now competing businesses. Ofcom is already investigating whether Murdoch and News International are “fit and proper” to have more influence in the UK news market than the BBC and acquire the rest of Sky – and it is quite apparent that they do not meet those requirements.
UPDATE
It now appears that these hacking allegations over TV encryption have gone international as the Australian Financial Review is claiming that the Australian arm of News Corp, News Ltd, engaged in similar practices against rival pay TV firms Austar and Optus. Their allegations have gone far enough that federal investigators are involved.
If I was a journalist at The Sun, I might go with the “Gotcha!” headline if it wasn’t so crass.