On Saturday morning, senior journalists at The Sun, Britain's biggest-selling daily, were arrested over allegations of corrupt payments to police officers and other public officials. The journalists were released on bail without being charged, but the arrests have caused a furor in the British media, and a serious conflict at The Sun, described by Guardian media commentator Roy Greenslade as a "civil war".
Time will tell how the crisis will affect News Corp in general and The Sun in particular, but Robert Andrews at paidContent has published an article suggesting that, as yet, the ethics scandal at News Corp has not impacted on The Sun's bottom line.
Andrews writes that although The Sun's circulation has declined by 15% over the past year, "last year's sales pattern merely followed that which has flowed for the last decade..."
He describes The Sun's circulation pattern as consistent, dropping in winter and rising again in January every year. Although he notes a "creeping and long-term decline" in The Sun's sales, he attributes it to a decline in the newspaper print industry as a whole, not to readers' perception of the British tabloid.
Andrews concludes that "The Sun so far has been unhurt by the whirlwind surrounding it". He also points out that The Sun is not only profitable, it makes enough money to support other members of the News Corp family, The Times and The Sunday Times.
The Sun's continued profitability had suggested to other media experts that it's unlikely that Rupert Murdoch would decide to close the paper in the same way that he shut down the News of the World last July.
"I can't imagine he'll close the Sun," states Roy Greenslade, quoted by Reuters, "it's a hugely profitable paper, it keeps the Times and Sunday Times going and it would literally be him saying goodbye to his whole kingdom and I think that is a step too far at this stage."
Greenslade states that the Murdoch might have closed the News of the World last summer out of "panic" but he adds "I think he'll be back to coldly calculating on this I'm sure. He's very aware of the fickleness of the public. The steps he will take will be very cleverly measured."
A News International memo told staff that Rupert Murdoch had given a "personal assurance" of his "total commitment to continue to own and publish The Sun newspaper".
However, while The Sun remains profitable, the arrest of key journalists at the paper potentially exposes News Corp to larger financial problems. The Guardian wrote yesterday that its becoming increasingly likely that US authorities might prosecute the company under the Foreign Corrupt Practices Act, which crimilises corrupt payments made to public officials abroad. If an FCPA prosecution were successful, it could cost the company millions of dollars.
The New York Times notes, however, that the FCPA includes a five-year statue of limitations, and it is not clear whether this time would have already passed on the allegations that led to the arrest of journalists from The Sun.