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As part of recently installed chief executive Fru Hazlitt’s new company strategy, unveiled to the City yesterday (Monday), GCap is to sell its 63% majority stake in the Digital One DAB multiplex to Arqiva.

In addition, the company announced the closure of its two digital-only stations, Planet Rock and theJazz, plus the sale of its Xfm analogue radio licences in Scotland, South Wales and Manchester.

The moves are aimed at cutting GCap’s cost base and improving profitability as it looks to appease shareholders being courted by Global Radio.

Speaking exclusively to Media Week, Hazlitt said the company’s future now rests on the FM and broadband platforms.

She said: “A new area is the integration of an application into Apple’s iPod Touch music player and the iPhone, which allows people to listen to our stations and buy music through these devices.”

Hazlitt’s strategy presentation noted that, although Digital One is forecast to make a profit of £5.9m for the year ending March, the company was braced for a significant downturn in the next financial year.

However, one industry rival accused GCap of failing to sell its digital-only stations properly. “[GCap] never had a proper strategy and was commercially unable to monetise it. It just looked at its balance sheets and culled anything that wasn’t making enough money.”

The importance of Hazlitt’s move to the rest of the radio industry was demonstrated by a rallying of support for DAB yesterday, including a joint statement from the BBC and Channel 4. Hazlitt said GCap is determined to push ahead with a focus on FM and broadband.

“Consumers are telling us they don’t see a point of difference between listening to FM compared to DAB in terms of quality,” she said. “FM is the backbone of the industry and is really good quality.”

Hazlitt described the reaction by the City to her new strategy as “reasonably positive” and will now go on a week-long roadshow to present it to the group’s shareholders.

However, one senior radio executive called it a strategy of cuts and predicted “you can’t cost-cut your way to growth”.

Another added: “GCap is getting out because it has no other options. It won’t convince the shareholders not to go for Global’s £313m bid.”

Hazlitt’s Gcap strategy

• Exit national DAB multiplex Digital One by handing its 63% stake back to partner Arqiva for a nominal sum
• Close digital-only stations theJazz and Planet Rock. Classic FM will continue on national DAB and existing FM stations will play on regional DAB multiplexes
• Team up with Apple to stream stations to Apple’s iTouch music player and iPhone
• Disposal of Xfm licences in Scotland, South Wales and Manchester
• Dropping the “two ads in a row” policy on Capital. It will now run nine minutes of ads an hour with the aim of generating an additional £2m in revenue over 2008 and 2009. Current policy cost it £5.8m in lost revenue in current financial year
• Scale back investment in Gold Network to a level that reflects its status as an AM-only station
• Lobby for the switch-off of AM platform
• Targeting full-year operating profit margin of between 12-14% in the next financial year, increasing to between 17-19% in the year ending March 2010