GCap shares drop to new low as weak ad market bites

by Daniel Farey-Jones, Brand Republic 24-Jul-06, 09:00

LONDON - GCap Media's second-quarter revenues have fallen by 6% year on year and the radio firm has warned that the worsening advertising market will further hit income in July and August.

The company's shares fell 7.26%, or 15.5p, on the news this morning to 198p. The group's share price is now at its lowest level to date and is less than half its level following its creation by the merger of Capital and GWR in 2005.

The company admitted that recent trading had been weaker than expected, and was hit by advertisers' reluctance to spend during the World Cup. July is forecast to be down 14%, which GCap sought to link to the World Cup effect.

It said that, as expected, revenues had been reduced by its policy of playing no more than two ads in a row on Capital Radio, as part of efforts to turn its struggling flagship London station around.

In a trading update issued this morning, Capital's performance aggravated the revenue fall during the quarter. If Capital is excluded the revenue decrease would be 3% instead of 6%.

The GCap board said it remained confident that Capital's management is taking the right steps to improve audience performance.

The station's managing, programme and marketing directors have all departed since April, and a new programme director, Scott Muller, is joining next month.

GCap's board said it remained committed to its strategy "against the backdrop of a difficult advertising market".

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