Sun halves cover price as free dailies eat into its already dwindling circulation Shares in Hong Kong's two largest newspaper publishers fell yesterday after the Oriental Press Group announced that it would halve the price of the Sun to $3 from today, sparking fears of a price war. Oriental Press, which also publishes the biggest-selling paper, Oriental Daily News, saw its share price drop 5.16 per cent to close at $1.47, while shares in Next Media, owner of the second-most popular paper, Apple Daily, fell 3.17 per cent to $3.05. 'The price reduction may have an impact on the profitability of the group,' Oriental Press said in a statement to the stock exchange yesterday. It added that it was not in a position to properly assess the impact of its decision because of the responses of its competitors. But Merrill Lynch said in a research note that the group's net earnings for the financial year to March would decline 13 per cent to $300 million, based on the assumption that only the Sun would cut its cover price. However, the risk of an all-out price war rose yesterday as Oriental Press announced that the Oriental and the Sun would also offer $3 supermarket coupons to readers from today. 'Even if the price of the Sun had remained unchanged at $6, from a reader's point of view the supermarket coupon tactic is the same as cutting the price to $3. It will have a big impact on the market,' said a source close to Next Media. 'We are still assessing the impact of the move, as circulation may be affected, but we will not follow the price cut at the moment,' the source added. However, Ming Pao Enterprise Corp, the publisher of Ming Pao Daily News, did not believe there would be a price war. 'In the past 10 years, there have been two price wars, but Ming Pao never cut its price to attract readers. The price cut [of the Sun] is only a marketing campaign, we will not follow it,' Ming Pao executive director Francis Tiong Kiew Chiong said. Market data shows the Sun has suffered most from the launch of three free dailies - the Swedish-owned Metro, Sing Tao News Corp's Headline Daily and property agent boss Shih Wing-ching's am730. Daily circulation has fallen from a peak of more than 200,000 copies two years ago to about half that now. Oriental has a circulation of between 400,000 and 500,000, while Apple sells about 330,000 copies. 'Circulation of Apple has fallen only 3 per cent since the launch of the two free dailies in the summer,' the Next Media source said.