Revenues at GCap Media's flagship station, Capital Radio, have plunged 26 per cent in recent weeks, with no recovery likely for a year.
The company, the biggest radio group, which also owns Classic FM, admitted yesterday that a new strategy was not showing signs of paying off in the numbers for Capital Radio, which has already been in sharp decline for the past five years.
Ralph Bernard, the chief executive, said: "We are expecting Capital to go down [further] before it goes up. This is a long-term fix."
Mr Bernard said that reaction among advertisers and listeners had been positive to the decision to limit advert slots to just two in any commercial break on Capital Radio. The company released research which found that listeners were 38 per cent more likely to recall an advert in a two-ad break, compared with the five-ad breaks that are the norm in the industry.
"There was advertising clutter. Listeners were irritated by the over-commercialisation. We decided to do something radical, that would also increase the effectiveness of advertising," Mr Bernard said.
The new advertising policy was put in place at the end of last year, while in January Capital Radio's content was overhauled to appeal more to younger women and to be more relevant to London.
Mr Bernard said he did not expect an upturn in audiences to show up until the figures for the fourth quarter of 2006, which are published in February next year - the consequent rise in revenues from selling ad slots would take a further few months after that.
Steve Liechti, an analyst at Investec Securities, said: "They are talking the talk but revenues are still below expectations. People say things have stabilised but that is not coming through at the revenue or profit level. Meanwhile, the ad markets continue to be very tough."
For the year ended 31 March, group revenues were down 13 per cent at £220.2m. Pre-tax profits slumped 40 per cent to £22.2m. Revenues for April and May are down 4 per cent for the group as a whole but within that, Capital Radio is 26 per cent lower than last year. The company added that June was looking to be no better. Analysts pointed out that the falls were compared with an April-to-June quarter last year that had itself been down 10 per cent.
Mr Bernard said the company had received no bid approaches from private equity groups, despite recent feverish speculation a takeover offer is imminent.