Chrysalis, the music to broadcasting group, today blamed a difficult radio advertising market for a slump in profits and said that it was on course to complete a review of its radio business by the end of the summer.

Last month The Times revealed that the group was under pressure to sell stations individually after it failed to attract key buyers for the whole of its radio division in the first round of bidding. UTV, the Northern Irish media group, and private equity firms dropped out of the auction.

Chrysalis last week lost pole position in the London radio market, when Emap's Magic overtook Chrysalis's flagship Heart station. Heart's total number of listening hours fell 25 per cent to 12 million in the first quarter of the year, weakening its market share.

Pre-tax profits of the group, which also owns London's LBC and Galaxy branded stations in the UK, fell from £2.2 million in the six months to February 28 to to £200,000 in the same period last year.

Group revenues dipped from £68.7 million to £58.3 million, with the group blaming a 9 per cent drop in demand for radio advertising in the first half of the year.

However, the company indicated that the radio advertising market is set to improve and that bookings for the fourth quarter pointed to "strong double digit growth".

Richard Huntingford, the chief executive, said that a strategic review of the group's radio assets was still going on and would be complete by the end of the summer. However, he sought to play down reports that the company was struggling to find a buyer for the stations.

He said: "We are making good progress with the review, having received a range of different proposals and a number of offers, and we will provide further updates in due course."

The company said that its music recording and publishing business, which recently signed up Blur's Damon Albarn, saw a 7.6 per cent rise in its share of royalty income in the first half of the year to £5.6 million.

Mr Huntingford said that the group remains on track to meet full-year expectations.

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