Murdoch empire faces new scandal, potentially far more damaging

Mr. Gibling says that NDS paid him to leak information about ONdigital's decryption cards on his website, a hacker community known as "The House of Ill-Compute," or Thoic, in order to undercut ONdigital's business. Gibling says his contact at NDS was Ray Adams, the source of the emails acquired by the AFR.

Why News Corp may not face legal action

This is not the first time that NDS has been at the center of legal claims over hacking. It survived at least two previous lawsuits, including one by decryption card maker Canal Plus and another by US-based satellite company Echostar. It may also survive these latest allegations.

Many of the alleged activities now being scrutinized took place over a decade ago, when digital communications laws were still in a nascent form. Only laws existent at the time could be used to bring charges or claims against NDS and News Corp, and even if an appropriate law existed at the time, the statute of limitations in Australia and the EU may bar any legal claims from being brought now.

But the possibility of an ethical scandal at the heart of News Corp's television holdings, which are far more valuable than its newspaper resources, could still prove financially damaging to Murdoch's empire if it spooks shareholders.

It may also prove more immediately problematic in Britain, where Mr. Murdoch's son, James Murdoch, has been called before parliament to explain his role in the phone-hacking scandal. While there is no evidence that he had any involvement in the TV hacking scandal, the Financial Times reports that British television regulator Ofcom is currently examining the younger Murdoch and News Corp to determine whether they are "fit and proper" to control TV broadcaster BSkyB. If they are not found to be "fit and proper," Ofcom could effectively force James Murdoch out of his position as chairman of BSkyB or even make News Corp reduce its 39.1 percent stake in the broadcaster.

British lawmaker Tom Watson, a member of the committee that has been examining the phone-hacking scandal, encouraged Ofcom to consider the new evidence in its investigation, reports the BBC.

"It seems inconceivable that they [Ofcom] would not want to look at these new allegations," Mr. Watson said. "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."

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