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Last Updated: Monday, 11 February 2008, 09:58 GMT
Two GCap digital stations closed
Radio microphones
Classic is among GCap's stations
GCap Media, the UK's biggest commercial radio broadcaster and owner of Classic FM, is to close two digital radio stations, as it focuses on key outlets.

The Jazz and Planet Rock are to go, and GCap's stake in Digital One, a national broadcasting platform for digital stations, will be sold to Arqiva.

GCap also plans to boost advertising at its flagship Capital 95.8 station.

In January, GCap rejected an approach from rival Global Radio that valued it at about 313m.

We believe a further offer from Global Radio is likely and that other parties could also enter the fray
Roddy Davidson, Altium Securities

Chief executive Fru Hazlitt said digital "was not an economically viable growth platform for GCap Media".

She said GCap hoped to make 8.8m of annual savings through disposals and restructuring.

She also hopes GCap, whose stations include Choice and Xfm, can achieve profit margins of up to 19% by March 2010 under the "radical but realistic" plans.

In November GCap, hit in recent years by falling advertising revenues, reported a 3% fall in six month underlying pre-tax profits to 5.6m.

GCap's previous chief executive, Ralph Bernard, quit last year after profits fell on the back of sliding advertising revenues.

Altium Securities analyst Roddy Davidson said: "We believe a further offer from Global Radio is likely and that other parties could also enter the fray."

Meanwhile, BBC Radio and the 4 Digital Group confirmed their commitment to develop digital radio in the UK.

The two parties said they would look at ways of encouraging more rapid consumer take-up of digital radio and developing the available technology to secure a successful future for DAB.

"It is clear to us that DAB has an exciting future in a fast converging UK media industry," they said in a statement.

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