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Murdoch empire faces new scandal, potentially far more damaging

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News Corp have denied allegations of wrongdoing, and indicated that it was preparing a legal challenge against the AFR and other news outlets reporting on the TV hacking. Mr. Murdoch dismissed the reports as "lies and libels" on Twitter.

Even if the allegations are proven to be true, however, Murdoch's rivals may not have any legal recourse against NDS and News Corp, since digital laws were still in embryo when the alleged hacking took place.

High-tech hacking

The phone-hacking scandal that embroiled News Corp's British newspaper holdings last year was a relatively low-tech enterprise, involving stolen passwords and simple tricks. But the alleged TV hacking is at an entirely different level.

This week's reports claim that News Corp operated a group of former intelligence and security operatives – known as Operational Security (OpSec) – who facilitated high-tech hacking of TV competitors' paid programming during the late 1990s and early 2000s.

The core technology at issue is the satellite TV set-top box. In order for satellite TV broadcasters to control access to their signal, they need to encrypt it so that only sets with corresponding decryption cards can unscramble the broadcast. The broadcasters make their money by selling customers the means to decrypt and access their signals, giving customers the ability to pick up the broadcasts on their set-top boxes. As such, it is critical to broadcasters that their decryption cards remain secure, since a hacked card will let a set-top box pick up any channel the broadcaster offers for free.

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