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The merger will create a group with a turnover of £243 million that will control more than 40 per cent of the UK's radio advertising market.

Ralph Bernard, the GWR executive chairman, who will take the same role in the new group, said the deal would help commercial radio take on the BBC. "This deal is about a lot of things, including synergies and better product, but most of all it is about listeners. We want to accelerate growth of audiences through analogue and digital and this will be in the interests of advertisers," he said.

Capital and GWR also confirmed the shape of the new, as-yet unnamed, company's commercial structure. Linda Smith, the group commercial director at Capital, will fill the same role in the new company. Job cuts in sales departments are expected, although numbers are yet to be set.

Duncan George, the managing director of Opus, GWR's sales operation, will report to Smith with responsibility for national sales. This puts the future of Linda Grant, Capital's national commercial managing director, in doubt. Smith said: "We're very anxious to see if we can find her another role but at the moment her position is at risk."

Capital and GWR said the merger would create £7.5 million in savings and some consolidation of commercial operations is expected. Capital's shareholders will own 52 per cent of the new company and GWR's 48 per cent.

The merger will create a group that owns 55 analogue stations, including GWR's Classic FM and Capital's 95.8 FM station in London, as well as 93 digital stations.

However, the merger is subject to regulatory approval from the Office of Fair Trading, which could refer it to the Competition Commission. Ofcom will assess if radio licence conditions are affected.

David Mansfield, the chief executive of Capital Radio, will take the same role at the merged company. He said: "We can't second-guess if the Commission will be involved. There will be a review by the OFT but early indications are we ought to be able to do this."

- Forum, p10.