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GCap to woo investors with digital cutback

By Jon Rees
Updated: 08:17 EDT, 10 February 2008

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Fru Hazlitt, the new chief executive of bid target GCap Media, will rein in investment in digital radio and pledge to air more advertisements when she unveils her strategy for the group on Monday.

However, the City believes she will struggle to persuade shareholders that her plans will result in better returns than the takeover offer tabled by Global Radio in December.

The Irish group offered 190p a share, a 60% premium on GCap's then share price, and analysts believe a second offer of 210p would prove attractive to investors, which include DMGT, publisher of The Mail on Sunday.

GCap spends an estimated £16m a year on digital broadcasting. Hazlitt may announce the closure of some of its 100 digital stations and could even pull out of Digital One, the digital network majorityowned by GCap.

She is also expected to reverse Capital's controversial advertising airtime policy of never playing more than two adverts in a row, which could boost revenues by £4m a year.

Shares in GCap, which owns Classic FM and Capital Radio, closed last week at 189&frac;34;p, valuing the company at £312m.

• Channel 4 is being courted by private equity firms interested in teaming up with the broadcaster to make a joint bid for Virgin Radio, which has been put up for sale by owner SMG.

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