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Ofcom's announcement four days before Christmas came as no surprise to GCap Media chief executive Ralph Bernard: the media regulator gave the green light to proposals allocating a block of spectrum to a second national digital multiplex.

Bernard may not be surprised but he is angry. As one of the prime stakeholders in the first national multiplex, through GCap Media's forerunner the GWR Group, he claims Ofcom had originally promised that the single national digital multiplex, which GWR had invested "millions of pounds" in developing, along with fellow investors NTL and Talk Radio, would stay an exclusive proposition.

He is furious that Ofcom is allowing the creation of another multiplex, even though the regulator has insisted the new allocation of radio services will not be able to compete head to head with the Digital One network. His competitors have been lobbying Ofcom to do a U-turn on spectrum allocation, a move which clearly incenses the GCap boss.

"The objection I have to people coming to the party now, is their argument that we have a monopoly to which we have no entitlement.

"The fact is this system would never have got off the ground had GWR not made that commitment. For people to say we're not entitled to get a return from our investment, just because it has now proven successful, seems unreasonable in the extreme."

Legal action

Bernard says he has done everything to avoid a stand-off, but now Ofcom has made its decision he has "no choice" but to start legal action against the regulator.

This is not the only blow Bernard has had to parry in recent weeks. His commitment to shave £25m off the GCap's operating costs led to what industry insiders saw as a fortnight of the long knives at the company. This kicked off with the departure of former chief executive David Mansfield (Bernard was then executive chairman) in September last year. Following Mansfield out of the Leicester Square offices were commercial director Linda Smith, operations director Paul Davies and Xfm, Choice FM and Capital Gold managing director Graham Bryce - all ex-Capital Group staffers - leading to accusations of a GWR takeover of the merged entity.

In fact, Bernard explains, Capital Radio Group received 52% of stock versus the 42% of stock of the merged group awarded to GWR.

As for the staff losses, Bernard pauses to consider his words, saying his most important responsibility is to the shareholders, not industry peers. "The shareholders only care about the value of the company and the opportunities it is creating for itself; they don't care about the individuals or the personalities. The only people who care about them are the individuals within the industry."

He does, however, admit the cost savings required meant that having two bosses - himself and Mansfield - became untenable.

The network will also have to make up a potential shortfall of £7m in revenue caused by Bernard's audacious step of reducing its advertising spots to no more than two per break. On one of GCap's prime stations, Capital Radio, this has been followed by the promise of less talk and more music to bolster flagging listener figures. Bernard insists the move is not as radical as reported and says the strategy mirrors that which the GWR Group instigated with Classic FM.

"The experience we had with Classic FM (dropping ad minuteage from 11 or 12 minutes an hour to six or seven minutes back in 1997), while it was a little painful to begin with, eventually recognised that fewer ads do mean a drop in revenue to begin with, but then the audience grew from around four million, broke through the five million barrier and is now hovering around the six million mark."

Listener losses

He says the bid to reduce channel-hopping caused by ad avoidance is crucial in turning around the station's fortunes, as the most recent Rajar results saw it slide from first to third in the London ratings battle. The station's premium to advertisers and their agencies has, he admits, been eroded by the loss of nearly a million listeners and a slide from 11% market share to a 5.1% share of the London market over the past four years.

"It's the quality of the audience, in both numbers and hours, that becomes the valuable commodity and that's what I believe people will be prepared to pay for.

"That's what happened at Classic, where prices went up in due course because the audience went up. More importantly, we sell in London on a cost-per-thousand basis and, ultimately, if we deliver more audience, we should deliver more revenue. If I'm wrong, then at least I've tried," he says.

Bernard is well aware there are several battles yet to be fought, and knows he can't shy away from them.

Aware of his reputation within the radio industry, he says: "I always seem to be on some crusade or other." There's few who would disagree with him.

CV

2005: Chief executive GCap Media

2002: Awarded CBE

2001-2005: Executive chairman GWR Group, to executive chairman GCap Media

1987-2001: Managing director and chief executive of GWR Group

1983-1987: Managing director of Wiltshire Radio

1982-1983: Programme director of Wiltshire Radio.