Sharp Daily, the controversial free tabloid under the media empire of Jimmy Lai Chee-ying, will fold on Monday, just over two years after it hit the market.
Lai's group, Next Media, which also publishes Apple Daily, admitted it had overlooked the impact of mobile online news and had lost "several hundreds of millions of dollars" in running the daily, of which it had claimed to be giving out a million copies a day.
Sharp entered the field when there were already five competitors. Another free paper launched last year.
Staff expressed shock last night, while some observers and a competitor said they believed Lai adopted the wrong strategy.
In a statement filed to the stock exchange yesterday, Next Media said the move was to consolidate its print operations and enable the group to rationalise its resources and focus on profitable operations.
Lai declined to comment.
Next Media executive director Ip Yut-kin, who initiated the idea for the free paper, said the company had not expected the trend for reading news on mobile devices to develop so strongly and quickly.
The tabloid had a bad start when it was boycotted by parents, educational and religious groups and schools, who said it had too much adult content.
Shih Wing-ching, who launched the free am730 in 2005, described Sharp Daily's target of one million copies a day as "unrealistically ambitious".
He said it would have needed 90 full pages of adverts every day to support it if the target was to be met. "But we saw that the whole newspaper contained only about 40 to 50 pages."
Chinese University journalism professor Clement So York-kee said it was "an early signal that the market for free newspapers in Hong Kong has become saturated".
So's colleague, Grace Leung Lai-kuen, said the paper had said it would it aim at young readers.
"But many young people nowadays won't read newspapers. They read news online or on mobile devices," she said.
Sharp Daily employed 54 people, some of whom may transfer to Apple Daily, according to Next Media.