GCap Media hit by sluggish advertising

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GCap Media, the owner of Capital Radio, became the latest media group to be hit by the sluggish consumer advertising market, after announcing a 6 per cent fall in revenues for the three months to June.

The owner of Classic FM and XFM radio stations also confirmed poor trading conditions had persisted in July and said the outlook for August was also poor.

The announcement pushed GCap’s shares down by 16p to 197½p, below the psychologically important 200p level.

GCap blamed the decline on fewer advertising slots at Capital Radio, its flagship London station, a strategy which has been pursued since the start of the year to shore up rates amid a declining radio market.

The worsening revenue figures are likely to test the patience of shareholders, who have endured a sliding share price.

Media groups reliant on consumer advertising are facing increasing pressure from investors to produce top line growth at a time when the advertising market is deteriorating and digital platforms are taking consumer attention away.

Shareholder pressure last week prompted the departure of Andrew Flanagan as chief executive of SMG, while Charles Allen, chief executive of ITV, is expected soon to announce a departure date after criticism from investors.

ITV will present its six-month interim results on August 9 and is likely to announce an 8 to 10 per cent decline in advertising revenues for ITV1, its core terrestrial channel.

For the full year, some analysts and media buyers expect ITV1’s revenues to fall by about 12 per cent. Latest figures for August show ITV1 revenues are expected to fall about 15 per cent, while September figures are down about 12 per cent.

GCap said its board was confident that the management, led by Ralph Bernard, was taking the right steps with “improved presentation, music and general content” at Capital Radio.

The group expects the arrival in August of a new programme director from Daily Mail and General Trust’s radio operations in Australia, and will launch a marketing campaign for Capital. DMGT owns about 14 per cent of GCap and Peter Williams, its finance director, is a non-executive director of the radio group.

Media executives are focusing on the second quarter radio audience figures, which will be released by Rajar on August 3.

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