Image caption ITV Digital was plagued by piracy of its smartcards and went into administration in 2002

A News Corporation subsidiary company used a computer hacker to sabotage Sky TV's biggest rival, BBC Panorama has reported.

NDS is accused of leaking information from On Digital which could be used to create counterfeit smart cards, giving people free access to paid for TV.

The Carlton and Granada owned company folded in 2002 following rebranding which saw it renamed ITV Digital.

An NDS statement denied the claims, calling them "simply not true".

ITV Digital was first launched as On Digital and was set up as a rival to News Corporation's Sky TV in 1998.

But the widespread availability of secret codes to reproduce the cards needed to access the service meant ITV Digital's services could be accessed for free by pirates.

Hacking intelligence

NDS response to BBC Panorama: NDS is a global leader in the fight against pay-TV piracy, having repeatedly and successfully assisted law enforcement in that important effort. Like most companies in the conditional access industry - and many law enforcement agencies - NDS uses industry contacts to track and catch both hackers and pirates. This is neither illegal nor unethical. And, to ensure that all activity remains completely within legal bounds, NDS staff and their contacts operate under a clear code of conduct for operating undercover. These allegations were the subject of a long-running court case in the United States. This concluded with NDS being totally vindicated and its accuser having to pay almost $19m in costs.

The latest claims have been made by Lee Gibling - who set up a website in the late 90s known as The House of Ill-Compute, or Thoic.

Mr Gibling told the BBC he was paid to publish stolen information. His contact at NDS was Ray Adams, who at the time was head of UK security for the firm - which manufactures smartcards for all News Corporations' pay-TV companies across the world.

However, the company has denied Mr Gibling's claims and said Thoic was only used to gather intelligence on hackers.

"It is simply not true that NDS used the Thoic website to sabotage the commercial interests of ONDigital/ITV digital or indeed any rival," the NDS statement said.

"As part of the fight against pay-TV piracy, all companies in the conditional access industry - and many law enforcement agencies - come to posses codes that could enable hackers to access services for free.

"It is wrong to claim NDS has ever been in possession of any codes for the purpose of promoting hacking or piracy."

'Killer blow'

ITV Digital's former chief technical officer, Simon Dore, told the programme that piracy was "the killer blow for the business, there is no question".

"The business had its issues aside from the piracy... but those issues I believe would have been solvable by careful and good management. The real killer, the hole beneath the water line, was the piracy. We couldn't recover from that."

Analysis The Panorama programme will be watched by an Ofcom team that is already considering whether BSkyB is a "fit and proper" owner of a broadcasting licence. News Corp is BSkyB largest shareholder, with a 39 per cent stake, and James Murdoch - who was on the NDS board - is BSkyB's chairman. Ofcom says it will consider "all relevant evidence", but it won't comment on specific allegations. NDS has long denied promoting hacking or piracy. And though piracy was undoubtedly a problem for ITV Digital, few would agree that it was "the killer blow" in the fierce pay-TV battle with BSkyB. Poor reception, delays with set-top boxes and a weaker channel line-up were more important. It later paid too much for a package of Football League matches that few wanted to watch, which led to its closure.

Mr Gibling told Panorama that codes on the Thoic site originated from NDS.

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

Two former senior policemen ran the NDS UK security unit. Mr Adams had been head of criminal intelligence at the Metropolitan Police and Len Withall, who had been a chief inspector in the Surrey force.

Both men were secretly filmed by Panorama.

Mr Adams claimed he "would have arrested" Mr Gibling if he had known ITV Digital's code had been published on Thoic and denied having the codes himself.

But internal NDS documents, obtained by Panorama, show a hacked code was passed to Mr Withall and Mr Adams from a technology expert inside the company.

'Their baby'

Mr Gibling said NDS paid for Thoic's servers and was across all of its hacking and TV piracy.

"Everything that was in the closed area of Thoic was totally accessed by any of the NDS representatives," he said.

He added that although Thoic was in his name, in reality the website belonged to NDS.

Image caption There is no evidence that James Murdoch knew about the events reported by Panorama

"It was NDS. It was their baby and it started to become more their baby as they fashioned it to their own design."

Once ITV Digital's codes were published on Thoic, Mr Gibling said his site was then used to defeat the electronic countermeasures that the company used to try to stop the piracy.

He added that new codes, created by ITV Digital, were sent out to other piracy websites.

"We wanted people to be able to update these cards themselves, we didn't want them buying a single card and then finding they couldn't get channels. We wanted them to stay and keep with On Digital, flogging it until it broke."

NDS's UK security unit was 50% funded by Sky. But the satellite broadcaster, chaired by James Murdoch, told the programme it had no involvement in how the unit was run and was not aware of Thoic.

Mr Murdoch was a non-executive director of NDS at the time although there is no evidence that he knew about the events reported by Panorama.

'Fit and proper'

Panorama: Find out more Vivian White presents Panorama: Murdoch's TV Pirates

BBC One, Monday, 26 March at 20:30 BST Then available in the UK on the BBC iPlayer

Ofcom, the television regulator, is currently examining whether Mr Murdoch and News Corporation are "fit and proper" persons to be in control of BSkyB, the company that runs Sky TV. News Corporation currently owns 39% of BSkyB.

Tom Watson MP, a member of the Culture, Media and Sport Select Committee that has been examining the phone-hacking scandal, has called for Ofcom to examine these new allegations in their assessment.

"Clearly allegations of TV hacking are far more serious than phone hacking," he said. "It seems inconceivable that they (Ofcom) would not want to look at these new allegations. Ofcom are now applying the fit and proper person test to Rupert and James Murdoch. It also seems inconceivable to me that if these allegations are true that Rupert Murdoch and James Murdoch will pass that test."

NDS declined to be interviewed for the programme.

Panorama: Murdoch's TV Pirates, BBC One, Monday, 26 March at 20:30 BST and then available in the UK on the BBC iPlayer.