Capital Gold to go digital as GCap plans AM switch off

GCap Media is planning to switch off the analogue signal for its radio stations still broadcast on the AM frequency, such as Capital Gold, to encourage more listeners to switch to digital. The move could come as early as the spring of 2007.

GCap - which unveils its maiden annual results this week as well as its strategy since it was formed from the merger GWR and Capital Radio - is gearing up for the looming land grab for digital radio listeners.

The company estimates that 3 million digital radio sets will have been sold by Christmas while industry forecasts estimate that by 2009, 40 per cent of households will have a set.

GCap is also spoiling for a fight over plans by Ofcom, the regulator, to release new digital radio bandwidth. It is also set to clash with rival radio companies, Emap, Chrysalis and Virgin Radio.

GCap threatened legal action last week when it submitted its response to last month's proposals to allocate another national multiplex, a portion of digital bandwidth.

GCap operates the only commercial digital radio platform, Digital One, which has access to the only existing national multiplex. GCap claims that the predecessor to Ofcom, the Radio Authority, promised Digital One in 1998 that it would have the "one and only" national multiplex. GCap, which has hired lawyers to prepare its case, does not have a formal contract to prove this, but points to press releases and ministers' statements at the time to support its case.

It is understood that GCap, which will not accept compensation in return for dropping its legal threat, is prepared to use European competition and human rights legal provisions.

As well as proposing a new national multiplex, Ofcom also said it would release three extra local multiplexes. GCap also argues that, as well as being illegal, another national multiplex would also deny some local stations access to digital bandwidth, preventing universal digital radio coverage in the UK.

Emap, Chrysalis and Virgin Radio (owned by SMG) argue that a second national multiplex will increase competition and choice for listeners.

Ralph Bernard, the chief executive of GCap, is pushing for the Government to announce a date for the switch off of the analogue radio signal. The analogue switch off for television starts in 2008.

"It would be a massive undertaking," he said. "But there are lots of examples of where this has happened in media and entertainment, such as with television. You can't have radio in an analogue black out when everything else is going digital. The only question is how long it will take?"

Mr Bernard is under pressure from the City over the company's dividend policy and to improve its trading performance in a tough advertising market.