Lack of Murdoch Testimony Could Cost NewsCorp a Fortune

Murdoch told ABC News he "absolutely" denied his company was involved.

February 19, 2009, 3:19 AM

May 5, 2008— -- If media baron Rupert Murdoch doesn't testify in a lawsuit that accuses one of his companies of corporate espionage, it could cost News Corporation hundreds of millions of dollars, according to the federal judge overseeing the trial.

"But without the ability of Mr. Murdoch" to get on the stand and "briefly say, 'I didn't do it,' and 'I didn't know about it,' there's a real risk," Judge David O. Carter warned lawyers, according to a transcript.

A News Corporation subsidiary, NDS, is accused in a civil lawsuit by the EchoStar satellite company of hacking into EchoStar/Dish Network's security code and then posting it on the Internet, allowing criminals to counterfeit the security cards used by subscribers to the Dish Network satellite service.

News Corporation has denied any wrongdoing, and its lawyers maintain Murdoch has no direct knowledge of the alleged hacking.

As chairman and CEO of News Corporation, Murdoch oversees a vast media empire that includes satellite systems, 25 newspapers, book publishers and the Fox television, cable and film operations.

The CEO of EchoStar, Charles Ergen, has already testified at the trial, alleging the Murdoch company took the action out of revenge for failed merger talks he held with Murdoch.

Judge Carter told lawyers that Murdoch's failure to appear and tell his side of the story before the jury presented a danger to the company.

"If you get to the punitive phase, and any one of these jurors assume that the top of the organization had any information concerning this or had information and didn't act upon it," said Judge Carter, "that could be hundreds of millions of dollars."

The alleged hacking took place in the late 1990s.

Murdoch told ABC News that he "absolutely" denied NDS was involved in any hacking. "We always have ethical business practices," he said.

Secret NDS documents introduced into evidence show the NewsCorp subsidiary did break EchoStar's code.

But NewsCorp lawyers say the company played no role in posting the information on the Internet and that "reverse engineering" is a common practice in the high-tech world.

EchoStar says once the information was posted on the Internet, its entire security system was compromised, forcing it to re-issue security cards for all of its subscribers at a cost of almost $100 million.

The trial, being held in Los Angeles, is expected to go to the jury later this week.

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