The group's flagship station, Capital Radio, has lost 389,000 listeners in terms of weekly reach in the past year, and its recent strategy of running no more than two ads in a row has not been backed by promotional activity.
Morgan Stanley says that without a campaign to push the strategy, there is little scope for the station to gain listener share in the short term.
However, at the announcement of its trading update for the quarter to 30 June, the firm said it was taking steps to boost audience performance, including a marketing push and improved presentation, music and general content across the station.
GCap added that recent trading has been weaker than expected, with a 6% year-on-year decline in its total revenues, and a 3% decline at Capital Radio.
Industry insiders say it is increasingly difficult for Capital to justify charging a premium for its ads, when its share of the London market has plunged from 8.1% to 5.5% over the past three years.
Looking ahead, developing non-traditional offerings is also seen as key to recovery.
The group recently hired Will Harding as director of strategy and development. Harding, who was previously commercial director of Sky Networked Media, has been tasked with developing fresh revenue streams.
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