Rupert Murdoch, media tycoon, founder and Chairman and CEO of News Corporation, has been a fanatical supporter of tougher anti-piracy legislation including PIPA and SOPA in the US. But this week it was claimed that Murdoch’s piracy crusade is a rather hypocritical one, with his News Corporation now at the center of a major piracy scandal in which it’s accused of encouraging piracy to cripple competitors.

Troubled international media giant News Corporation felt the ice crack beneath its feet this week after years of enduring ill winds blowing from phone hacking scandals in the United Kingdom and United States.

The Australian Financial Review and the BBC’s Panorama programme combined to publish a four-year investigation into the operations of News Corporation subsidiaries, unveiling damaging claims of a plot to facilitate and encourage piracy with the aim of crippling pay-television rivals.

The allegations cast shadows across the main-stream media landscape, with implications for the conduct of news outlets and the arguments of anti-piracy lobby groups through to the structure of the pay-television landscape itself.

The reaction of News Corporation’s 81-year-old Australian founder and CEO was swift. Rupert Murdoch used his new love of micro-blogging platform Twitter to rubbish the claims, the publishers and make implied threats of legal action against those raising the allegations.

Murdoch’s sensitivity is understandable. The negative publicity generated by earlier phone hacking scandals could be alleviated in part by suggesting that if immoral – even illegal – activity had taken place, it occurred during the pursuit of journalism, however tawdry or overzealous.

Using piracy as a corporate weapon to damage competitors contains no such narrow mountain trail to the moral high ground. Worse, it undermines a global campaign against piracy led by Hollywood lobby groups such as the MPAA, of whom News Corporation is a major member via its entertainment subsidiary, FOX.

In Australia, the web becomes more tangled, ensnaring a current consultation process to control and limit file-sharing. Leading up to a secretive series of meetings held between the Australian Attorney-General’s department, copyright monopoly lobby groups and internet service providers, News Corporation unleashed an attack on media piracy via its local publications, as noted at the time by us.

The articles were backed by a study commissioned by the Australian Federation Against Copyright Theft (AFACT), of whom News Corporation is a member, again via its subsidiary FOX.

AFACT now has the onerous task of keeping a straight face during the closed-door discussions while it argues for the criminalisation of not-for-profit piracy as a major backer and publicity partner is embroiled in a corporate piracy scandal.

The Australian pay-television market is small compared to its foreign counterparts. Until last week it contained only two major players whom largely broadcast the same limited number of channels. The tiny size of the industry has been blamed on everything from over regulation to rampant file-sharing. The new piracy allegations suggest a more sinister story.

Last Friday, dominant player Foxtel, part owned by News Corporation, came a step closer to acquiring its smaller rival Austar in a $AU1.9 billion take-over which will deliver Foxtel a virtual monopoly of the cable-television market in Australia.

Moves from internet outsiders such as FetchTV, Netflix and local Netflix-clone Quickflix have made inroads into the medium, but all offer limited content and Netflix currently requires Australians to circumnavigate geoblocking. Television content sold via platforms such as Itunes is also routinely geoblocked and/or suffers from unexplained inflated pricing.

The US Embassy in Canberra views limited options for accessing content as a driver of piracy in Australia. Australia’s stunted pay-television market is part of this problem. Many popular television series appear months or years late, or not at all. The free-to-air television market has suffered decades of audience and revenue decline and can no longer afford to regularly syndicate high-cost content.

Australians are left in a shifting half-light of what is globally popular, forever reading about new content online, watching the trailers, inadvertently seeing spoilers in social media – while often being left with no legal way of participating.

The allegations against News Corporation in Australia have not been heard in any court, and may never be – the Australian Federal Police are reluctant to get involved, despite Federal Communications Minister Stephen Conroy urging the claims to be investigated.

If the Panorama and Australian Financial Revue’s claims are substantiated and it is proved one of the largest media corporations in the world engaged in predatory piracy to damage rivals, the fallout will be large. News Corporation bases much of its content sales on securing paywalls and selling entry. Competitors, audiences and governments will not be happy if it is established that News Corporation’s other business model was predicated on coldly and clinically facilitating the piracy of the content of rivals.

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