This, after all, is one of the few media purchases he has managed to make for Liberty, his nascent media empire, after failing to land bigger fry such as The Observer, Today and the Express. For now, at least, he has settled for the tiny radio station and the resurrected Punch magazine. He is determined to turn both round, and he has given responsibility for Viva! to Mike Hollingsworth - husband of Anne Diamond, former director of programmes at TV-am, and one-time editor of Good Morning with Anne and Nick.
Last year, Hollingsworth hit the headlines when he attacked BBC staff for treating his wife "as the lowest of the low" on Good Morning with Anne and Nick. Now, as managing director of Liberty Broadcasting, he is defending al-Fayed. "He's been very successful in all areas where he has put his money," he claims. "He is astute enough not to put it into something which might fail."
In an echo of its rival Talk Radio's attempts to turn itself around, al-Fayed has authorised an expensive policy of hiring well-known names. Hollingsworth has used his generous budget to put together an impressive line-up of presenters, poaching the agony aunt Anna Raeburn from Talk Radio, signing up celebrities such as Anthea Turner, Caron Keating, Zoe Ball and Emma Forbes, and appointing the GMTV presenters Penny Smith and Sally Meen and ex-Radio 1 DJs Simon Bates, Bruno Brookes and Richard Skinner. He is now in discussions with the GMTV director of programmes Peter McHugh about closer links between the stations - either through simulcasting the breakfast TV show or, in a more minor way, sharing editorial resources.
"Peter and I have had a theory for quite some time that GMTV could be incrementally used in other ways," Hollingsworth explains. "GMTV is where we expect our audience to be if they are not listening the radio. As they leave the house each morning, we hope to carry them through." Preliminary conversations with the Radio Authority and Independent Television Commission indicate such a plan would be allowed.
963 Liberty replaces Viva! after al-Fayed purchased the ailing women's station for pounds 3 million earlier this year. The station's previous owner, Golden Rose Communications, was only too happy to sell. For the brief life of Viva! 963 is a sorry tale. The station launched amid high hopes and earnest celebrity backers including PR supremo Lynne Franks, ex-Marie Claire editor Glenda Bailey, Virago founder Carmen Callil, Eve Pollard, former editor of the Sunday Express, and Barbara Follett, aspiring MP and wife of Ken Follett, the Labour-supporting millionaire novelist. Led by GRC, which also operates Jazz FM, this group of power-lunchers won a licence to run a station catering for women's interests, aimed at Londoners aged between 25 and 44.
It seemed such a good idea - on paper, at least. With the media dominated by male executives and male interests and the women's magazine sector booming, why not women's radio, too? But two early problems emerged. The first was that the station's own research suggested that women would be unlikely to listen to a radio station which their partner did not like. The second was the illness of Katy Turner, the former director of Jazz FM who put the bid together, which forced her to step down. Her clear vision was sorely missed. The earnest worthiness of the station's chair, Lynne Franks, alienated many. The quality of output was described as "boring", "banal" and worse.
Viva! launched with a target audience of 400,000; within six months, it was clinging to 59,000. The killer blow was that the station turned out to be affected by such poor transmission facilities that much of the capital unable to receive its signal. GRC struggled to cut costs. Viva! was left to a skeleton and demoralised staff to run, and visitors to the station were struck by its empty, echoing studios. All looked lost ... when al-Fayed stepped in. The colourful owner of Harrods had recently launched Liberty Publishing. His first acquisition was Punch, which he re-launched in September; his second was Viva!
Under Hollingsworth's guidance, 963 Liberty is positioning itself not as women's radio, but as an entertainment station with female appeal. This is as far as he can get from its remit without breaking the terms of its licence. "I don't come at this as a women's station - it is a station that should appeal to everyone," he says. "If we get more women than any other listening group, I will be satisfied. But the proposition that you can provide something exclusively for women is extremely foolish."
The station's launch director, Rob Jones, also doubts the demand for a women's station. "My gut feeling is that if we researched it, we'd get a resounding `No'," he admits. "Women I know said they wouldn't listen to Viva! because it was a women's station." Even so, 963 Liberty will have to stick to the Viva! promise of performance detailed in its licence, which stipulates a 50:50 ratio of music to speech, and the retention of its female appeal. But Jones insists: "There's nothing in the licence to say we have to market it as a women's station."
A high-profile marketing campaign breaks next week featuring an androgynous smiling mouth and the strapline: "Putting a smile on the face of London". Chat will be about issues rather than trivia, but it will take a tabloid approach. Unlike many other stations, different shows will start on the half hour. In the all-important breakfast slot against Capital Radio's Chris Tarrant and Radio 1's Chris Evans will be Richard Skinner and ex- Big Breakfast producer Carol McGiffin, with Simon Bates at 8.30am.
Bruno Brookes will host the drive-time slot from 4.30pm to 7pm. "He will be broadcasting to women in their late 20s and early 30s, who were listening to him doing the same slot on Radio 1 10 years ago," Mr Jones says. "People are comfortable with voices they know - it gives you a head-start."
963 Liberty is an important building block in al-Fayed's fledgling media empire, Hollingsworth explains - a format viable across the rest of the UK. "I am very excited about the possibility of a new and completely independent media empire, one that seems to believe in a greater freedom for the individual in a society which is increasingly over-governmentalised," he says. In the light of al-Fayed's Court of Appeal victory in his battle for British citizenship last week, it will be intriguing to see if al- Fayed can make his vision come true