GCap told to ditch either chairman or chief executive

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The Independent Online

Shareholders are to tell GCap Media, the radio group formed by the merger of Capital Radio and GWR, that it wants either chairman Ralph Bernard or chief executive Dave Mansfield to stand down.

Shareholders are to tell GCap Media, the radio group formed by the merger of Capital Radio and GWR, that it wants either chairman Ralph Bernard or chief executive Dave Mansfield to stand down.

The newly formed group has been told by a number of top shareholders that they are unhappy with the structure created by the £711m merger of the two groups. This has made Mr Bernard executive chairman and Mr Mansfield chief executive.

The structure is similar to that proposed by Granada and Carlton Communications when they merged to form ITV in 2003. Then shareholders, led by Anthony Bolton of Fidelity, forced Michael Green to resign as executive chairman, leaving Charles Allen as chief executive.

Fidelity is one of the largest institutional shareholders in GCap, along with Morgan Stanley, M&G, Axa and Legal & General. All are known to have strong views about corporate governance and what is the ideal structure of boards of public companies.

In presentations ahead of the completion of the merger, last week, GCap argued that having both Mr Bernard and Mr Mansfield in executive positions would work. It said that Mr Bernard, who is credited with the success of GWR's Classic FM station, would be in charge of the groups strategy and move into digital radio. Mr Mansfield would then be free to concentrate on operational issues, managing the 56 analogue stations and eight digital stations that together control 40 per cent of the radio advertising audience in the UK.

But two pieces of bad news in quick succession have persuaded shareholders it is time to act.

First, Capital Radio, GCap's flagship FM station, fell behind its rival, Chrysalis's Heart, as London's most listened to radio station. The loss of breakfast DJ Chris Tarrant has been key to this poor showing.

Second, radio advertising figures for April showed a 17 per cent fall, leading to City analysts slashing profit forecasts and a fall in GCap's shares.

A number of issues were blamed for the advertising slump, including the difficulties on the high street, the success of the BBC relative to commercial radio and the decision to slash the combined advertising sales force of the merged companies from 230 employees to 120.

"We feel that the group may have to take some difficult decisions, and to turn the ship around you need only one hand on the tiller," said one leading investor.

The radio sector has been an exciting place in recent months, with Wireless Group, owner of talkSPORT, sold to Ulster TV and Chrysalis being prevented from bidding for Guardian Media Group's radio assets by its major shareholders.

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