Have the Murdochs saved Rebekah and BSkyB? No

The decision of James (above) and Rupert Murdoch to close the News of the World on the eve of today's arrest of the paper's former editor Andy Coulson was audacious. But is it enough to draw a line under the phone-hacking scandal and save the family's bid to take full control of BSkyB?

• Does it bring the scandal to a close?

A resounding No. The arrest of Andy Coulson this morning on suspicion of phone hacking and making payments to police was quickly followed by the arrest of Clive Goodman, the former royal correspondent who has already done time for hacking into the voicemail of Royal Family members. This time he's being held on suspicion of paying police for information.

It can be assumed that some police officers will either be arrested or stood down pending inquiries in the coming days.

Coulson's is likely to be the most high-profile arrest. He was the paper's editor from 2003 to 2007, and went on to become David Cameron's top media adviser. He has continued to maintain his innocence in the face of growing evidence to the contrary.

In addition, the Guardian is reporting today that police are now investigating whether a News International executive might have deleted millions of emails from an internal archive dating back to January 2005. According to the Guardian's Nick Davies, the executive was apparently trying to obstruct the police inquiry into the phone hacking scandal.

• Is David Cameron off the hook?

No. The arrest of his former adviser simply strengthens the argument of those who have said all along that he should never have employed a man who had resigned his job at the News of the World because of the phone-hacking scandal, even if it was only on the 'buck stops here' principle.

Peter Oborne wrote on Thursday in the Daily Telegraph that Cameron "should never have employed Coulson" and that the PM's associations with News International have "permanently and irrevocably damaged his reputation".

Labour leader Ed Miliband said earlier today that Cameron must apologise for his "appalling error of judgment" in hiring Coulson and "come clean" about any conversations he and Coulson had about phone hacking.

Yet despite dogged questioning at a Number Ten press conference this morning, Cameron refused to apologise for appointing Coulson. He had no satisfactory answer for Gary Gibbon, political editor of Channel 4 News, who asked: "Didn't you turn a blind eye to what everyone else knows - that you couldn't be the editor of that paper without knowing what was going on?" and he happily admitted to another questioner that Coulson had become a friend "and is a friend".

• Did the Murdochs sacrifice the paper to save Rebekah Brooks?

It appears so. Politicians and others had been clamouring for the sacking of Rebekah Brooks, the chief executive of News International who was editor of the News of the World at the time Milly Dowler's voicemail was hacked in 2002 – news of which, produced by the Guardian on Monday, has proved to be the turning point in this saga.

As the BBC's Robert Peston put it, "None of those critics, to my knowledge, were demanding that the News of the World should be shut."

Certainly the sacked NotW staff believe they have lost their jobs so that the Murdochs can protect Brooks. "What's really tragic is that everyone in that room had nothing to do with what went on in the past," said columnist Carole Malone yesterday

Media commentator Roy Greenslade, blogging for the Guardian, says: "Most of the real hacking figures are long gone. Only Rebekah Brooks survives from that era – but if this dramatic, arguably heroic, gesture by Rupert is to have any value at all it must mean that she should go."

• Will the Murdochs now replace the NotW with a 'Sun on Sunday'?

Almost certainly. As I wrote yesterday in the immediate aftermath of the closure, insiders say this is definitely the plan. James Murdoch is said never to have liked the News of the World and had been wanting to make this change anyway.

The question is, how quickly can they get away with it? Commercially, every week without the NotW will lose News International more than £2.5m. According to the Guardian, the paper – by far Britain's biggest Sunday, with a circulation of 2.66m - was making £2m in circulation revenue and about £660,000 in advertising revenue each week.

Whether a 'Sun on Sunday' could hit such heights is debatable. The News of the World had a bizarre demographic for a tabloid: it was read by a surprisingly large number of ABC1s who bought the paper as a 'fun' read alongside the Sunday Telegraph or the Sunday Times. How many of those readers would be prepared to buy something called the Sun – which they would never dream of buying Monday to Saturday – nobody knows.

Politically, the general consensus appears to be that News International would not dare to bring out a Sun on Sunday too quickly. "If you do it too soon it would be seen as cynical and distasteful and they run the risk of destroying the Sun brand as well," one senior media executive told the Guardian.

The likelihood is that any launch will be delayed until after News Corp – parent company of News International – is sure that the BSkyB deal is going through. That decision is now expected in September. The timing is not bad: September, after readers are back from their summer holidays, is a traditional month for launching a new newspaper.

• But is the BSkyB deal now safe?

No – because the broadcasting watchdog Ofcom has finally indicated today that it wants to examine the takeover proposal on the grounds of "fit and proper" ownership.

The Murdochs will be furious. Making the BSkyB deal safe was the whole point of closing the News of the World. The takeover is more important to the Murdochs than anything – potential profits from television being counted in billions not millions.

BBC business editor Robert Peston made the point earlier today that while James Murdoch can now argue that the rot within his organisation has been cut out, he admitted in his statement yesterday that he and his father had failed to identify that the News of the World's newsroom was out of control for many years.

Peston concluded: "Some will say that this long inability to get to grips with the malaise at the News of the World means that News Corporation, a sprawling global empire, needs to demonstrate that it can exercise rather closer and more diligent control over a business, British Sky Broadcasting, that is vastly bigger and more important to the cultural life of the UK than the News of the World."

Now Peston says he has learned that Ofcom are concerned about the takeover. A formal announcement was expected this afternoon from the watchdog saying the bad practices at the News of the World are relevant to News Corp's fitness to run BSkyB.

Even before Peston posted this news the BSkyB share price had fallen today by almost five per cent, losing 39.5p to 772.5p after Jeremy Hunt said he would take "as long as is needed" to decide on the takeover - and Cameron questioned Rebekah Brooks's continued role as chief executive of News International when he said that he would have accepted her resignation. ·