Capital Radio, owner of Southern FM, is expected to scotch rumours of a merger with one of its rivals.

The group will deny holding talks with GWR Radio on an £840 million merger at its annual general meeting in London today.

A spokeswoman said: "Radio stations talk with each other all the time but, as far as formal talks with GWR are concerned, the answer is no."

Capital, which announces trading figures today, has been buoyed by recent research showing it has attracted 200,000 extra listeners across the group.

Southern FM moved up to second position in Sussex with 319,000 listeners and more than 17 per cent of the market. Radio 4 still maintains pole position in the county but the gap is closing with only a 1.2 per cent share separating them.

In December Capital revealed full-year pre-tax profits of £22.8 million compared with £27.8 million the previous year.

Radio audience figures showed Heart FM had beaten Capital to the top spot in London in terms of the number of listeners and hours listened to. But those standings have now been reversed with Capital leapfrogging Heart to reclaim the number one position.

Capital expects early signs of an improvement in the advertising market for 2004 and today's figures could justify that optimism.

chief executive David Mansfield said: "I am pleased to see the changes we put into place in 2003 are starting to take effect. At breakfast, the creativity of Chris Tarrant and the team has built a platform for Johnny Vaughan's arrival."

Capital owns 19 stations, including Capital FM, Xfm and BRMB in the West Midlands.

GWR runs 32 local stations. It has already denied holding talks with Capital.

Tuesday February 03, 2004