GCap axes stations to cut costs by £9m

By Emma Thelwell

Last Updated: 1:12am GMT 12/02/2008

GCap Media, the owner of London's Capital Radio, has announced radical plans to cut costs by almost £9m by shutting down two radio stations and scaling back its investment in digital technology.

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The group also said today that it has new deals in place to build applications for Apple's iPod touch and Nokia handsets.


	Capital Radio DJ Johnny Vaughan

In a move to boost profits by more than £12m, GCap's new chief executive Fru Hazlitt unveiled plans to close non-core brands theJazz and Planet Rock.

The group will also look to sell of Xfm's regional analogue licences in Scotland, South Wales and Manchester, in order to refocus on its London brand.

Ms Hazlitt confirmed plans to dispose of the group's 67pc stake in the Digital One "multiplex", where the UK's only commercial digital radio stations with national coverage are broadcast.

GCap has already pulled the plug on two Digital One radio stations - Core and Life - in order to cut back on DAB transmission fees.

Ms Hazlitt admitted today that she would like to exit digital audio broadcasting (DAB) completely, but the company is unable to do so, as its FM analogue licence is renewed on a DAB basis.

She added: "We'd like to get out of DAB but we can't.

"So we've sold our stake in Digital One to transmission masts company Arqiva, to reduce our overall transmission costs.

"DAB take-up is incredibly slow - consumers are voting with their feet."

Only 9pc of consumers have switched to DAB radio, and within that figure just 4pc listen to DAB only.

Ms Hazlitt said: "FM is the backbone of radio, it's good quality for the consumer and we won't be lobbying to switch if off."

The radio company's turnaround plans follow takeover advances from Global Radio, a vehicle chaired by former ITV chief executive Charles Allen.

The group will suffer a one-off hit of around £7m as a result of its cost cutting measures.

GCap's network of 47 regional stations, which include BRMB in Birmingham and Invicta FM in Kent, as well as the group's head office in London's Leicester Square, are likely to see redundancies. The group's 1,500-strong workforce could be reduced by as much as 10pc.

GCap's shares slipped ½, to 189¼p in early morning trading.