Capital Radio shares dive ahead of profit warning

LONDON - Shares in Capital Radio dived 5% this morning amid speculation that it is set to issue its second profits warning in two months due to poor market conditions.

The announcement is expected tomorrow when the radio station owner reports its half-year results.

It follows a warning in March that annual profits will be down at least 10% year-on-year, largely because of the absence of dotcom advertising, which was particularly prevalent in London.

The station has also been hit by the general slowdown in advertising and a drop in audience figures, which could undermine station's advertising rates.

Recent Rajar figures show its listening hours are falling 4.8% year-on-year.

The group is expected to make full-year pre-tax profits of between £30m and £32m, compared with March's forecast of £35m and pre-tax profits of £40m a year earlier.

Capital's problems mushroomed this week when one of its most popular DJs, Steve Penk, quit for rival Virgin Radio. Penk, who is renowned for making a spoof phone call to Tony Blair pretending to be William Hague and other shock tactics, will host a drive-time show on Virgin.

Capital shares were trading at 690p this morning, a far cry from last March when it peaked at 1,900p. The group's shares have under-performed the media sector by 22% this year.