The win was sweeter for GCap because its predecessors Capital and GWR had never made a successful bid for a new licence, and it mitigates the departure of its star DJ Christian O'Connell to Virgin Radio at the start of next year.
Celebrating the eight-year-old station's success, its managing director Graham Bryce said: "If ever there was a radio station made for Manchester, Xfm is it. We did loads of research in Manchester and we were overwhelmed by the level of local support."
The advertisement of the licence drew 19 bids from the major radio operators, from Chrysalis to Emap, as well as the minnows.
It was very much a battle between rock and talk. Among eight formats offering the former were Kerrang! from Emap, The Storm from GWR and Virgin Radio Classic Rock. The seven talk formats included Saga Radio and AllTalk, a bid from The Wireless Group.
Xfm, with a playlist featuring Manchester bands such as New Order, Oasis, The Smiths and Doves, was one of the favourites.
Ahead of the decision, MediaVest Manchester's head of radio Gillean McLaren called Xfm the popular choice. She said: "GCap has existing studios in Manchester with Century -- but the two stations would have very different target audiences and geographical catchments."
McLaren also tipped Saga saying: "In what has been a declining commercial radio marketplace it makes perfect sense to target an audience that is currently only reached through the BBC stations," she said.
The prospects for talk radio, which is more expensive to produce compared with music radio, had seemed in question when Guardian Media Group Radio pulled out in February, saying it did not believe its speech-based format was viable given the transmission area's potential audience of 1.3m adults.
The other unsuccessful bids included three services for ethnic minorities and one for families with young children.
Xfm will provide an alternative channel for targeting Manchester's young audience, compared with the city's top two commercial stations, Emap's Key 103 and GCap's Century 105.4.
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