Murdoch's good week

Murdoch has nipped a potential rival in the bud

By Nick Higham Media correspondent

Last week Rupert Murdoch pulled off a double coup, put one over both the French and Italians, and ran rings round a company which until recently fancied itself as a possible global rival.

The first coup was a deal which made him the king of Italian pay-TV.

Stream, a joint venture between Murdoch's News Corporation and Telecom Italia with around 700,000 subscribers, bought its rival Telepiu, with 1.5 million subscribers and some of Italy's juiciest football rights.

The seller was Vivendi Universal, the French media conglomerate once led by Jean-Marie Messier.

Telepiu was part of Jean-Marie Messier's Vivendi empire

The over-ambitious Messier tried to catapult Vivendi into the same league as News Corp, AOL Time Warner, et al.

Instead Vivendi wound up burdened with debts, which is why it is having to sell off assets like Telepiu.

Murdoch is an immensely powerful player in the UK, US, Australia and Asia. Now he has a significant business in continental Europe as well - and at what the pundits reckon is a very good price.

Lawsuit

The second coup was one of the conditions attached to the deal. Vivendi has dropped a lawsuit brought by its subsidiary Canal Plus Technologies against an offshoot of News Corp called NDS.

Both companies make smartcards for digital television, but the Canal Plus cards - which were used by ITV Digital and by Telepiu - have been widely pirated.

Canal Plus blamed NDS, claiming it deliberately hacked its rival's cards and released the codes onto the internet.

NDS strenuously denied the charge, which it said was a smokescreen to distract attention from the inadequacy of Canal Plus's products.

The lawsuit was hotting up nicely. Canal Plus had produced an NDS whistleblower.

Conspiracy theories

Hacked smartcards have bedevilled the digital TV industry

The whistleblower in turn named the NDS employee in California who supposedly leaked the cracked codes: a man called Christopher Tarnovsky, to whom someone two years ago sent $40,000 hidden in a DVD player and a CD player (he claims the money was a set-up).

Conspiracy theorists were having a ball. Was NDS was deliberately undermining its rivals for the benefit of the wider News Corp empire?

ITV Digital went out of business, benefiting Sky; piracy weakened Telepiu, making it vulnerable to takeover by Murdoch's Stream.

Or was the Canal Plus lawsuit a negotiating ploy, designed to mask the shortcomings of the company's technology while Vivendi sought a buyer for it?

It has now been sold to the French technology company Thomson.

But while Canal Plus has dropped the lawsuit others haven't. NDS is still being sued by the US satellite TV operator EchoStar and its smartcard supplier.

More ominously still NDS is now being investigated by the US authorities with a view to possible criminal prosecution.

The allegations and counter-allegations look likely to continue for a while yet.