Murdoch's Sun on Sunday will spark a renewed tabloid war

The Sun's editor Dominic Mohan (AFP)

The launch this weekend of The Sun on Sunday is set to trigger the biggest British tabloid battle for years and generate a cash bonanza for broadcasters as rival newspaper groups fight for advertising space to promote their titles.

Rupert Murdoch's News International (NI) is likely to offer his new paper at a cut price in an effort to lure back the 2.6 million readers the company lost with the News of the World's closure over the phone-hacking scandal last July.

But other newspaper groups, most notably Trinity Mirror and Richard Desmond's Northern & Shell, will challenge the media mogul with big advertising campaigns after enjoying a boom in circulation in the last seven months at a time when the press industry is struggling.

Mr Murdoch's decision to bring forward the launch of the new paper sparked a frenzy of activity in the media sector yesterday as newspaper companies sought to buy up air time for television advertising and to cut deals for promotional campaigns, including CD giveaways.

"We may see a good old-fashioned price war or some really innovative campaigns," Jeremy King, editor of Media Week, said. "One question from the point of view of media agencies would be whether advertisers who take strong moral stances would be happy to put their brand into a newspaper that's still highly associated with the News of the World. On the flip side, they will know that for the first few weeks everyone will want to see what this new Sun on Sunday looks like."

The Sun on Sunday, which will be edited by Dominic Mohan may, according to Sun sources, sell for a cut-price 50p or 75p in its first week, while being produced for only a third of the cost of the News of the World.

That could create a new price war in the Sunday popular newspaper market, something in which Mr Murdoch is very experienced. Only about 20 of the 200-strong former staff of the NOTW will find work at the new paper. Hayley Barlow, the former PR woman for NOTW, tweeted yesterday: "Thrilled colleagues & friends on The Sun live to fight another day. Meanwhile former NOTW colleagues & friends fight to live another day." Many of those laid off when the Sunday tabloid closed last July have not found work and some said last night that they were hoping NI would consider them for further positions.

NI is said to be planning an ambitious print run of 2.5 million copies and will be hoping to lure back the 800,000 buyers who have stopped purchasing a Sunday paper since the demise of the NOTW. But the company's rivals will not allow it to simply take back gains they have made.

Trinity Mirror has the most to lose. Its Sunday Mirror has seen sales increase from 1,087,000 last June to 1,753,000 last month.