James Murdoch: No, we're not a mafia. Yes, the Sun may close.

James Murdoch was grilled by British lawmakers over the News of the World hacking scandal, which forced the tabloid to close earlier this year. He didn't rule out the possibility that the Sun tabloid may also be forced to close.

Media boss James Murdoch – son of global media magnate Rupert Murdoch – was today grilled by British Members of Parliament for a second time over the News of the World (NotW) hacking scandal, which forced the top-selling tabloid to close earlier this year amid allegations of illegal phone hacking.

At one point during the 2 1/2-hour interrogation by the House of Commons Culture, Media and Sport Committee, MP Tom Watson accused Murdoch of running a "mafia" style organization.

Looking visibly shocked, Murdoch dismissed the allegation, saying the comments were "offensive."

Murdoch also again denied knowing details of a £425,000 ($675,000) payment to a leading soccer figure and refused to say whether he would close the notorious Sun newspaper if reporters there were found to have hacked phones or e-mails.

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Future of the Sun

He was forced on the defensive over the future of the Sun when questioned by MP Steve Rotheram.

Following the arrest of former Sun news editor James Pyatt last Friday for allegedly paying police officers for information, Mr. Rotheram asked Murdoch whether he would close The Sun – or any other paper run by the News International parent company – if evidence of hacking emerged.

Murdoch replied, “I don't think we can rule out any corporate reaction to behavior or wrongdoing.”

Media analyst Claire Enders at the London-based Enders Analysis research firm says she doesn't see that happening in the short term.

“The Sun continues to be very profitable. The phone hacking and subterfuge would have to be on the extent of the News of the World operations for them to consider shutting or selling the paper – but who knows? Ultimately it was the hacking of [abducted teenager] Milly Dowler’s phone which condemned the News of the World, the exodus of advertisers and the realization that the brand had become toxic,” she says.

“James Murdoch is well aware of the lifespan of newspapers, their influence and king-making potential in the political life of Britain – and if they have passed their sell-by date, he will take action," she says. "But I don’t see that in the near future.”

Second grilling in four months

Today’s session was Murdoch’s second in the four months following his appearance in July alongside his father when Rupert Murdoch admitted the whole hacking scandal had been a "humbling" experience.

James Murdoch had been recalled by the committee after former NotW editor Colin Myler and legal manager Tom Crone gave contradictory evidence when they appeared before the panel in September. They claimed they told James about the extent of phone hacking, laid out in an internal e-mail, when agreeing to pay the head of the football players’ union Gordon Taylor £425,000 ($675,000) damages after he discovered his mobile phone voicemails had been hacked.

However, today Murdoch again denied knowing about the e-mail contents or the depth of the problem and claimed the two NoW executives were misleading the committee. The dispute is at the crux of the affair, because the newspaper had long claimed hacking was isolated to "rogue" reporter Clive Goodman and investigator Glenn Mulcaire, who were both jailed for hacking phones in 2007.

'Mafia' claims

In a largely measured and legalistic performance, Murdoch repeated much of his evidence from July except when confronted by Watson and his mafia claims.

In the exchange, Watson said senior NotW executives operated like the mafia with a code of silence known as "omerta," which he defined as "a group of people who are bound together by secrecy, who together pursue their group's business objectives with no regard for the law, using intimidation, corruption and general criminality."

The Labour MP asked, “Would you agree with me that this is an accurate description of News International in the UK?”

Murdoch said, “Absolutely not. I frankly think that’s offensive and it’s not true.”

Watson added, “You must be the first mafia boss in history who didn’t know he was running a criminal enterprise.”

The committee appearance came on the same day that the Metropolitan Police revealed that it was investigating 300 million e-mails from News International and that there could be between 1,800 and 6,000 victims of phone hacking.

It also came just days after the BBC reported that private investigator Derek Webb was employed by the NotW to carry out covert surveillance on 100 targets over an eight-year period up until the Sunday tabloid’s sudden closure in July. The targets included Prince William, London Mayor Boris Johnson, former Home Secretary Charles Clarke and professional soccer team manager Sir Alex Ferguson – as well as Watson and the two lawyers Mark Lewis and Charlotte Harris for which James apologized today.

Today the Guardian newspaper – which has led the coverage on phone-hacking – ran a story that News International is preparing to launch a Sunday Sun tabloid to effectively replace the NotW by secretly recruiting new staff. Quoting sources, it said the new paper could be up and running by January or February as the company attempts to claw back revenue and readership since the enforced NotW closure.