GCap aims to double profit amid digital radio pullback

GCap Media Plc, Britain‘s largest commercial radio company, is to pull back from digital radio to help double profits as part of an overhaul by its new chief executive designed to maintain its independence.

GCap plans to close digital radio brands such as theJazz and Planet Rock, it said on Monday, and sell its Digital One multiplex, the pipework of transmission technology that broadcasts commercial stations nationally in Britain.

GCap said although there are longer-term opportunities in mobile telephony and broadcasting its stations via digital television, it sees better prospects in FM and broadband radio.

New Chief Executive Fru Hazlitt said her measures would leave GCap focused on five key brands across FM and broadband: Capital, Xfm in London, Choice, Classic and the One Network of local stations.

The digital pullback is part of a strategic review by Hazlitt unveiled two months after GCap rejected a preliminary approach from privately owned Global Radio, pitched at 190p per share, valuing it at around 313 mln pounds.

GCap shares closed down 2.9% at 184-1/4p. Britain’s Takeover Panel has given Global until March 5 to either make a bid or walk away.

According to industry data, digital-only stations account for less than 4% of all radio listening in Britain.

The radio group has also decided to ditch its policy of playing no more than two consecutive advertisements in favour of what it describes as a flexible policy with no more than nine ads per hour, in line with commercial radio norms.

Hazlitt said her measures would double profits to around 24 mln pounds and lead to annual cost savings of 8.8 mln before any closure and disposal charges.

As part of the revamp, GCap has agreed to sell Digital One to media transmission company Arqiva for a nominal sum, as well as terminate at no charge the transmission costs for all its capacity on Digital One except Classic FM.

The company plans to sell its Xfm regional analogue licences in Scotland, South Wales and Manchester. (Reuters)