James Murdoch's comment follows the arrest of a senior reporter at the Sun, which threatens to spread the phone hacking scandal to News International's top-selling titleCredit: Lewis Stickley/PA
Speaking at his second appearance before MPs at the culture, media and sport select committee this morning, Murdoch was asked by Steve Rotherham MP: "If it's revealed that the Sun does appear in the Mulcaire file, will you close the paper like you did the News of the World?"
Murdoch replied: "I think it's important not to prejudge the outcome of any of the investigations. I don't think we can rule out any corporate reaction to behaviour or wrongdoing."
He added that any decision about closing the title would be "taken at the time".
News International has put significant effort into protecting its flagship tabloid from the fallout of the phone-hacking scandal, but the arrest this week of Jamie Pyatt, a senior reporter at the title, threatens the Sun's isolation from alleged criminality.
Sun editor Dominic Mohan held a meeting with concerned staff on Monday following Pyatt's arrest. According to a report in the Independent, Mohan said that he had met with Rupert Murdoch in New York to discuss the tabloid's future and Murdoch had assured him he was "up for the fight".
But James Murdoch's comments at this morning's select committee meeting will create further concern among staff at the Sun over the future of the newspaper if phone hacking allegations spread significantly.
His refusal to rule out closing the title follows reports today that the Sun has renewed plans to create a Sunday edition to cash in on around 2.6 million former readers of the News of the World.
Rotherham, who is from Liverpool and holds the Liverpool Walton seat, also asked Murdoch about the Sun's controversial Hillsborough coverage and whether the fact that the Sun "got away with it" led to a feeling at News International that it "could get away with things".
Murdoch denied the suggestion and apologised for the coverage.
A robust exchange with MPs during the session saw Murdoch claim that former News of the World editor Colin Myler and former legal manager Tom Crone had misled the committee in telling it he had seen the so-called "for Neville" email that contained evidence that phone hacking went beyond the newpaper's royal reporter Clive Goodman.
Murdoch told MPs that he had been made aware of the email in 2008 but had not seen it or been told that it contained evidence of wider phone hacking.
Murdoch's denial directly refutes evidence from the Myler and Crone, who both stated that Murdoch had been shown the "for Neville" email and informed about the opinion of the QC Michael Silverleaf, who said in 2008 that there was a "culture of illegal information access" at the News of the World and "overwhelming evidence of the involvement of a number of senior NGN journalists".