GCap shelves legal challenge over new digital licence

GCap Media, the UK's biggest radio company, has decided not to pursue a legal claim against its regulator Ofcom over a decision to award a second licence for digital stations.

The company owns a majority stake in Digital One, the "multiplex" or set of frequencies awarded by the regulator for national commercial services, as the "first and only" such licence in 1998.

However, to the fury of GCap, Ofcom said it wanted to award a second multiplex licence, prompting the company to threaten to take the dispute to the courts.

Ralph Bernard, GCap's chief executive, said in 2003 that by allowing another company to own a digital radio multiplex, "Ofcom would be breaking a commitment that was utterly clear and completely unequivocal, which led to us and others investing millions and millions of pounds".

In December, Ofcom announced it would go ahead with the award of a second licence. GCap has been working on an application for a judicial review of Ofcom's decision but has now shelved such a plan.

Its decision is explained in part by a series of assurances that it has been able to get from Ofcom. Firstly, the owner of the second multiplex will be able to put on it only radio station formats that do not compete directly with the eight already broadcast on Digital One - which include GCap's Classic FM and SMG's Virgin Radio. Secondly, GCap will be allowed to bid for the second licence.

Mr Bernard said yesterday: "We have been in the vanguard of digital radio development in the UK since the beginning and as sales of DAB [digital radio] sets reach the 3 million mark, we are confident the next phase of development is intended to truly broaden choice for listeners."

Digital services are a fast-growing new technology for radio, allowing a clearer reception, more stations and advanced services such as music downloads.