A BBC investigation has alleged that a division of media giant News Corporation hacked a rival company’s pay-TV system, leading to its commercial demise.

The Panorama programme alleged that digital TV technology supplier NDS paid hackers to crack the encryption used in ONdigital’s pay-TV cards. The encryption codes were subsequently posted on the Internet, allowing users to pirate TV programmes through the service.

ONdigital, which was owned by broadcaster ITV, went into administration in 2002. ITV’s former CTO Simon Dore told the programme that online piracy was "a killer blow for the business".

One of Panorama’s sources was Lee Gibling, who claimed that NDS paid him £60,000 a year to operate a pay-TV piracy website called The House of Ill Compute (THOIC).

NDS denied the allegations in Panorama’s investigation, saying that it used Gibling’s services to inform on pirates, not hack rival companies’ technology.

“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," an NDS spokesperson said.

“NDS never used or sought to use the "THOIC" website for any illegal purpose. NDS paid Lee Gibling for his expertise so information from "THOIC" could be used to track and catch hackers and pirates. It is simply not true that NDS used the THOIC website to sabotage the commercial interests of ONdigital / ITV Digital or indeed any rival.

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

In 2002, French broadcast Canal+ sued NDS, alleging that it had hacked the Mediaguard technology that it and ONdigital used. However, the case was dropped after News Corp bought Canal+’s Italian assets, creating Sky Italia.

Last month, Cisco announced its intention to acquire NDS for $5 billion.