27/03/2012 06:06 BST | Updated 27/03/2012 06:41 BST

News Corp Firm Under Fire After BBC's Panorama Alleges Hacking Of ITV Digital

A News Corporation company allegedly employed a pay-TV piracy website to hack its rival's service and drive them out of business, a BBC Panorama programme has claimed.

According to the BBC, NDS, a company who made pay-TV smart cards, funded the expansion of a website set up to distribute codes to enable pirates to access ITV Digital television for free.

The programme claimed that NDS helped Lee Gibling, webmaster of a site called The House of Ill-Compute, gather and distribute codes to access ITV Digital after it was launched as 'ONdigital' in 1998.

Former employees of ITV say the hacking directly contributed to the venture going bust in 2002.

"They delivered the actual software to be able to do this, with prior instructions that it should go to the widest possible community," Gibling told Panorama.

Gibling said his website was in reality largely operated by NDS, and that he was paid up to £60,000 a year for his services.

"It was their baby," he said in the programme. "And it stared to become more their baby as they fashioned it to their own design".

WATCH: 'Murdoch's TV Pirates' Available To View On BBC iPlayer

Simon Dore, ITV Digital's former chief technical officer, told the programme that widespread piracy was the "killer blow" for the service.

"The hole beneath the water line was the piracy," Dore said. "We couldn't recover."

NDS says that Gibling was a consultant legitimately employed to gather intelligence about hacking. It told the BBC in a statement that at no time did it authorise publishing its rivals' codes.

Sky said that it never operated NDS, although James Murdoch was non-executive director of the company when ITV Digital was hacked.

Two former policemen who ran the NDS security team in the UK were secretly filmed by the programme, with one saying he "would have arrested" Gibling if he had known the ITV codes were being published online - despite internal documents appearing to show both were given a hacked code by an internal staff member.

Tom Watson MP called on Ofcom to investigate the allegations as part of a "fit and proper" examination of James Murdoch's right to hold a broadcasting license.

Watson said: "Clearly allegations of TV hacking are far more serious than phone hacking. It seems inconceivable that they (Ofcom) would not want to look at these new allegations."

The programme also described how, in a 2002 lawsuit, Canal+ alleged that NDS hacked its own codes.

The case was dropped after News Corp bought Canal+'s Italian company and merged it with its own assets to create Sky Italia.

NDS was an Israeli startup before it was bought by News Corp in 1992.

The company was recently sold to Cisco for $5bn, netting Murdoch's corporation a large profit.

Its encryption software is now used by a third of all pay-TV companies in the world, and its purchase Cisco's largest acquisition in seven years.