Rupert Murdoch's $1 Billion Hacking Scandal You Haven't Heard About

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Meet Christopher Tarnovsky, a former U.S.-based hacker who once made his living under the employ of one of Rupert Murdoch's companies.

About 15 years ago, Tarnovsky helped DirecTV gain a top place as a leading satellite TV provider by working with the NDS Group -- a digital rights firm owned in large part by News Corp. -- to beat other hackers who were attempting to crack smart cards used to protect pay TV. Along the way, Tarnovsky got caught up in a drama that would eventually lead to a $1 billion lawsuit by some of Murdoch's competitors, who accused Tarnovsky and his employer of sabatoge.

If you've never heard of this $1 billion lawsuit, you're not alone. 

The drama has stayed mostly under the radar despite many years of hard-fought litigation. Now, as the saga surrounding News Corp.'s phone-hacking scandal continues to unfold, and journalists look to find a U.S. connection to the story, Tarnovsky's name has popped up. He says he's recently been approached by CBS and ABC to share his story.

"You're not the first person to call," he told us when we spoke to him Friday.

In the early 1990s, Tarnovsky worked on high-tech security for the U.S. Army. Some of his duties involved providing support to the National Security Agency for satellite transmissions to Europe.

His experience with satellite-TV systems eventually landed him some work back in the states after leaving the Army. He became known for some postings he made on online pirate forums and was contracted by another pirate who was interested in beating the electronic countermeasures that DirecTV had set up on smart cards used in set-top boxes to lock transmissions away from non-paying customers.

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Tarnovsky was quite successful in hacking these cards created by NDS. So much so that eventually, as he once told Wired, NDS offered him a job designing its countermeasures as well as infiltrating the piracy community. 

His successes, though, began to raise the suspicions of a rival, NagraStar, which makes access cards and systems for EchoStar’s Dish Network and other pay-TV services. In a billion-dollar lawsuit filed in 2003, NagraStar accused its Murdoch-owned competitor of hiring Tarnovsky and other hackers to manufacture and distribute counterfeit NagraStar cards so that pirates could steal Dish Network's programming for free.

After five years of litigation, NDS was cleared by a California jury of the most serious allegations. The company was only found to have illegally intercepted EchoStar's satellite signal in one of its tests. Echostar was awarded less than $46, but the case continued up to the Ninth Circuit over nearly $20 million in legal fees spent by both sides.

Meanwhile, Tarnovsky was eventually let go by NDS.

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Now a software security analyst at his own private firm in Vista, California, Tarnovsky believes we need to have a more nuanced view of the world of hacking.

"Every company out there hires hackers," he says. "When people jailbreak iPhones, Apple hires hackers to protect them."

On the other hand, Tarnovsky is disgusted like many by what he's seeing in the news about his former employer.

"All that sounds pretty low," he says. "To hack into dead people's voicemails is certainly not ethical."


Twitter: @eriqgardner