Murdoch's NDS faces $1bn lawsuit

SOFTWARE firm NDS, part of Rupert Murdoch's empire, is being sued for more than $1bn (£700m) after it was accused of aiding counterfeiters to access subscription TV channels without paying.

French TV broadcaster Canal Plus filed a lawsuit against NDS, which is 80% owned by Murdoch's News Corp. It alleges NDS, which makes security software for TV set-top boxes, 'engaged in a conspiracy' to damage Canal's position in the pay-TV market. The action pits Murdoch against rival Jean-Marie Messier, boss of Canal's owner Vivendi Universal.

NDS said the lawsuit was 'outrageous and baseless'. It plans to file a counter claim and argues that Canal's piracy problem is due solely to its 'inferior' technology. News Corp declined to comment.

The lawsuit could have massive implications for Britain's pay-TV market, where BSkyB (36% owned by News Corp) has a dominant position. Its rival ITV Digital uses Canal Plus 'smart card' technology and has lost tens of millions from piracy problems. ITV Digital is ' considering' whether it can join in legal action against NDS. BSkyB uses NDS software and has not suffered major counterfeit problems.

Canal Plus alleges that NDS 'spent large amounts of money and resources' to crack the code of its digital TV smart card, and then handed over the code to a website frequented by counterfeiters.

ITV Digital has been working with Canal Plus to try to discover how the piracy occurred. ITV Digital said the implications of the Canal Plus claim are 'truly shocking'.

Media analysts at CSFB described the lawsuit as very serious, saying: 'We have all the key ingredients for a high profile case, such as counterfeit, criminal organisations and $1bn in damages.'

NDS shares crashed $5.86 to $17.14, while News Corp fell 94 cents to $29.