Could ITV Digital encryption claims land News Corporation with a £1bn plus bill?

Remember ITV Digital, OnDigital in its first incarnation? It was the pay-TV business set up by Carlton and Granada (who subsequently came together as ITV) which briefly challenged Rupert Murdoch’s BSkyB in the UK pay TV business.

ITV Digital eventually subsided in 2002 leaving ITV £1bn or so out of pocket, the most spectacular of a series of financial disasters that attended the formation of the biggest UK terrestrial commercial broadcaster.

Recently a number of media including the BBC’s prestigious Panorama have accused News Corporation subsidiary NDS (now part-owned by Permira), an encryption specialist, of playing the key role in undermining ITV Digital. NDS is alleged to have supplied ITV Digital encryption codes to hackers on an industrial scale, allegations News Corp hotly denies. News Corp and Permira were planning to sell NDS to Cisco for $5bn.

And, surprise, surprise, the allegations include charges that NDS used former policemen on its staff and the Surrey Police (which definitely shouldn’t have been on the payroll) to expedite its plot to undermine ITV Digital. News Corp denies this as well. News Corp’s cosy (and arguably illegal) relationship with the British police is a big factor in the current spate of UK investigations into its activities, most notably the News of the World phone hacking scandal that led to the closure of the paper.

Panorama has messed up its investigations before, it has a particularly dodgy record in investigating football corruption. But it’s hard to believe that it, and other media hounds on Murdoch’s tail including the Australian Financial Review and PBS Frontline in the US, is making it all up.

News Corp is wheeling out what big guns it has left to fight the allegations, most notably COO Chase Carey, the man many investors would like to see as CEO of the company. But News Corp’s credibility is severely weakened in the wake of phone hacking and various other scandals.

A point which won’t be lost on ITV’s lawyers who have probably already computed what £1bn plus interest accrued since 2002 would amount to (a hell of a lot). The NDS affair has the potential to be the most damaging and costly of all the Murdochs’ current travails.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.