Southern FM owner GCap Media is expected to announce the sale of several of its regional radio stations next week as part of its strategic review.

The group, which will give details of its plans when it reports interim results on November 24, is due to announce a wholesale reorganisation of its business.

Chief executive Ralph Bernard is expected to say the group will be axing several of its brands, including the digital radio network Storm, and a number of local stations.

Instead GCap will focus on key stations such as Classic FM, Xfm and Capital FM, which will receive a big investment, according to reports.

The group was created in May this year by the merger of Capital Radio and GWR to create the UK's largest commercial radio group.

The £725 million deal saw GCap take control of more than 100 radio stations as well as regional stations such as Red Dragon in South Wales and BRMB in the Midlands.

But the new group has had a difficult six months as it suffered from the departure of several key executives, a weak advertising climate and falling audience numbers.

Pride was hurt last month when Heart FM, thanks largely to the pulling power of Jamie Theakston, leap-frogged Capital FM as the number one commercial radio station in London.

At the time GCap Media chief executive Ralph Bernard said "addressing audience issues" was a key focus for the group and was the rationale behind a cost restructure which would "enable us to target reinvestment in our priority areas".

Going on results alone, Southern FM is likely to escape the axe after audience figures showed the station had put on 25,000 more listeners in the last three months.

Quarterly figures from RAJAR, which measures audience figures for the radio industry, showed that Southern now has 320,000 listeners over the age of 15.

The Brighton-based station is now the most popular radio station in Sussex.

Private equity firms have been circling its parent, with CVC Capital Partners, Permira and Cinven all reported to have expressed interest in acquiring the group.

A GCap spokeswoman declined to comment on speculation about the outcome of the review ahead of the group's interim results next week.

In a trading update in September, GCap said like-for-like revenues for the first six months of the year were down nine per cent after a decline in advertising.

The company also warned of further job cuts as it revealed cost savings from the merger had soared from £7.5 million to £25 million.

Tuesday, November 15, 2005