Shares in newspaper and magazine publisher Oriental Press Group (OPG) slumped 14 per cent yesterday after the announcement of a $501 million rights issue to help fund a billion-dollar printing works. Analysts gave the deal mixed reviews, as OPG's profits and share price have been hit in recent years by a price war in the crowded Chinese-language newspaper market. Salomon Smith Barney media analyst Kaushik Shridharani said it was imperative that OPG made investments to position itself for the future, even if earnings were hurt in the next several years. He said the problem was that Oriental Daily News' readership profile did not compare well with the Next Media Group's Apple Daily, whose readers were also typically younger and better educated. 'The readership of Hong Kong newspapers has been changing . . . it is this more sophisticated and younger group which attracts advertisers,' Mr Shridharani said. Observers said they suspected the increased capacity meant OPG would soon be going ahead with plans to add titles to its line-up, including a long-awaited financial newspaper spin-off from Oriental Daily News. It could also launch, as it planned last summer, a general interest newspaper aimed at readers between the ages of 25 and 35, analysts said. The new printing facility and a potential expansion of its line-up should also help it fend off competitors. Oriental Daily's spot as the top circulating Chinese-language daily has been challenged in recent months by Apple Daily. SBC Warburg media analyst Andrew Farrant said a financial newspaper spun off from Oriental Daily would probably lose about $90 million in its first year. He said advertising revenues were also substantially down - as much as 30 per cent or more - in light of the difficult business environment. 'It is a bold move on their part,' he said. Vickers Ballas analyst Paul Lee said he was not convinced about the viability of new publications at this point. 'I doubt if [their plans] will be feasible,' he said. Mr Lee said there was no room for more newspapers and he expected further consolidation in the industry to take place over the next several years. OPG said construction of the new printing facility would begin in January next year. Full operation was expected to start in 2001. Under the rights issue, no less than 363.3 million new shares would be released at $1.38 per share - a 25 per cent discount to Thursday's closing price, and a 12 per cent discount to yesterday's price of $1.57, which was down 26 cents on the day. BNP-Prime Peregrine and Asia Financial Capital are jointly underwriting the deal. The investment bank has been active since taking on most of the failed Peregrine Securities' China equities team. It was also involved in Kumagai Gumi's recent share placement to China Everbright International.