UPDATE 1-Portugal says to issue new free-to-air TV licence

(Adds with Cofina interest, Impresa & Prisa shares in paragraphs 5-7)

LISBON, Jan 3 (Reuters) - Portugal will issue a new free-to-air television licence for the creation of a national channel to compete with the country's four existing channels, Minister of Parliament Affairs Augusto Santos Silva said.

He told journalists on Thursday, after the government's weekly cabinet meeting, the free-to-air tender would take place 180 days after a separate tender to operate a long-delayed digital television network.

He did not say when the digital television tender would take place but analysts expect it this year. The new free-to-air channel would operate through the digital television network.

The creation of a new national broadcaster and a digital television network means state-owned broadcasters RTP1 and RTP2 and privately owned Impresa's IPR.LS SIC and Prisa's (PRS.MC: Quote, Profile, Research, Stock Buzz) (MCP.LS: Quote, Profile, Research, Stock Buzz) TVI may see their advertising revenues diminish.

But it will give other local media groups like Cofina (CFN.LS: Quote, Profile, Research, Stock Buzz) and Controlinveste the chance to expand into the broadcasting market. Cofina, which owns several newspapers in Portugal, told Reuters it would bid for the free-to-air licence.

"More channels means existing broadcasters may see their slice of the advertising cake diminish as new players enter the market," said John dos Santos, an analyst at Lisbon Brokers.

The minister's announcement weighed on Impresa shares, which closed down 3.5 percent on Thursday at 1.91 euros while Prisa shares fell 1.01 percent to 12.70 euros.

Minister Santos Silva said he hopes Portugal will switch entirely from analogue to digital television by 2012.

(Reporting by Ruben Bicho, Translating by Henrique Almeida; Editing by Rory Channing)