LBC to stay on air as receivers called in: Rhys Williams reports on the latest troubles to hit Britain's oldest commercial radio station

Britain's oldest commercial radio station, LBC, has gone into receivership six months before its successor is due to take over.

The station, which has been dogged by financial troubles throughout its 20-year history, ended a week of speculation late on Tuesday night when it called in Arthur Andersen to act as receivers.

James Worsley, a spokesman for the administrators, said the station would continue to broadcast: 'The receivers understand that LBC's audience levels are increasing and they intend to carry on trading whilst they review the company's future prospects.' LBC was due to come off-air this October after losing its franchise last autumn to London News Network, a rolling- news service chaired by John Tusa, the newsreader and former head of the BBC World Service. It is thought that receivers were kept at bay while the company bid for the third independent national radio franchise, INR3.

When that failed a fortnight ago, Dame Shirley Porter, who rescued the station from bankruptcy in January last year, stepped down as chairman saying she had run out of ideas on how to keep it afloat.

Negotiations reopened between LBC and LNR with a view to the new station taking on LBC operations to ensure a smooth transition in October. However, no agreement was reached.

It is thought that the receivers will now try to offer LBC as a going concern to LNR or the eventual winner of the national franchise. LNR is unlikely to want LBC's frequencies to go dead as it will make the job of holding on to its predecessor's 1.4 million listeners extremely difficult. 'People are not going to keep their radios tuned to a station that is not broadcasting,' a source close to LNR said. At the same time, the network is running on a tight schedule to meet its planned October launch and, therefore, could probably not cope with accepting the licence any earlier.

A spokeswoman for the Radio Authority explained that any early transfer of the licence to LNR would have to be approved by the authority, adding: 'It is not in our remit to ensure there is a sustaining service. Although it's in everybody's interest that there would be no dead air.'

Since it began broadcasting in 1973, LBC has been dogged by such financial and management strife that at times the Radio Authority feared it might disappear overnight. It pioneered the phone-in format, but the introduction of TV personalities, including Michael Parkinson, Angela Rippon and Frank Bough, prompted criticism that the company was spending money on high-salaried presenters while skimping on journalism.

It made a small profit in the mid- 80s before disastrously splitting frequencies in 1989. After ill-judged moves into France, its parent company, Crown Communications, finally went into receivership in January last year. Chelverton Investments, run by Dame Shirley's son, John, and partner, Matthew Cartisser, stepped in and quickly restored the station to profit.

But the loss of the London licence and the failure to win the third national franchise proved too much. Although presenters Mike Carlton and Richard Littlejohn bailed out, the station has been busy signing up new names, including James Whale, Sue Carpenter and Simon Bates.

Final hopes lay with an application for one of the four London- wide franchises available from the beginning of next year. That prospect too has now faded.