OUTSIDE in Leicester Square, soggy film fans are waiting for the stars of Sweeney Todd, the new film of the bloodthirsty barber, to arrive for its rainswept premiere. Inside, at the offices of GCap Media, Richard Eyre, the radio group’s chairman, is braced for his own close shave.

Charles Allen’s Global Radio will undoubtedly make another attempt at buying the owner of Capital Radio and Classic FM. Allen, the former chief executive of ITV, is too experienced a dealmaker to lay out his best price first. At 190p, valuing Britain’s largest commercial radio broadcaster at £313m, shareholders are so far not biting. Never mind that the price was a hefty 54% premium to GCap’s market value on December 17, the day Allen called Eyre with the good news.

Eyre says: “The board took the view that with a first offer, in the context of our share price over a period of time rather than on that specific date, that trotting off to shareholders and saying ‘What would you like us to do?’ was an entirely inappropriate response.

“I think if we had gone to shareholders with 190p it would be signalling that we thought it was a sensible offer and it was the starting point for discussions – and we really didn’t think that was the case.” Averaged over three months, the offer marked a 21% premium to GCap’s share price; over six months it was just 1.5%. But even at its low of 120½p, some argue that shares in GCap – created from the 2005 merger of Capital Radio and GWR – were trading more expensively compared with the takeout price for Emap Radio, based on 2008 forecast earnings.

However, Emap stripped out central costs from its radio division, making comparisons slightly unfair. Still, GCap has fallen a long way. When Eyre was chief executive of Capital from 1991 to 1997, Chris Tarrant was rocking a quarter of Londoners from Euston Tower every morning. Today, Tarrant’s breakfast-show replacement, Johnny Vaughan, has 1m people tuning in, but Capital Radio has slipped to No 3 in London due to competition from Heart and Magic.

Last year, Eyre rejoined a group that has failed to diversify revenues beyond FM advertising. Digital radio has been slow to take off. And deeper pockets to attract big-name talent such as Jonathan Ross have given the BBC a near-record lead over the commercial sector. He admits the group is vulnerable.

“We are in a hiatus between the resignation of the previous chief executive and the arrival of a new one. The market now waits to hear her strategic thoughts.”

For Allen, the issue is when. He knows how to pick his moments. Six days from walking down the aisle to marry her hedge-fund-manager fiancé Charlie Porter, founder of Thames River Capital, Fru Hazlitt, GCap’s new boss, must know how Rocco Forte felt. He was famously shooting grouse when Allen, then at Granada under Gerry Robinson, unfurled a bid for Forte’s hotel empire.

The commercial-radio industry exhibits all the hallmarks of the television sector Allen knows so well. It is fragmented, has regional ownership, a stringent regulatory regime, and advertising revenues, its main lifeblood, are under considerable pressure.

When he missed out on Emap’s radio stations to Bauer, the German magazine owner, stymieing round one of his consolidation hopes, GCap was the next obvious target. Even Eyre was not surprised by the move.

That he has struck so soon shows Allen’s depth of ambition and the deep pockets of his backers – the Irish entrepreneur Michael Tabor and horseracing tycoons JP McManus and John Magnier.

Although Fidelity and Schroders have slightly larger stakes, winning the support of 14%-owner Daily Mail and General Trust (DMGT) is key to Allen’s success.

But as GCap’s profitability has unravelled, so has the amount anyone can borrow against the company, leaving few candidates to join an auction this time. One would-be bidder said: “It is not that private equity is unwilling to participate in the radio sector. The problem goes back to GCap just not making the profits it should.”

With a new chief executive, Martin Morgan, observers think DMGT could be talked out of its stake this time round. Foreign buyers such as Bauer, TV and radio group RTL and Denis O’Brien’s Communicorp could also be drawn in. Eyre adds: “I don’t need a white knight.I don’t consider that our role is one of defence at all costs.”

Patrick Yau at Ingenious Securities believes Global could squeeze out £15m of costs by combining GCap with its Heart and Galaxy stations, bought for £170m in June from Chrysalis. That would include £3m-£4m from reversing a decision limiting adverts to no more than two in a row, designed to preserve premium pricing. He says Allen could easily strip up to £3m from GCap’s £15m digital radio budget and the rest from plc costs, DJ salaries and online spending. Hazlitt is expected to borrow from that for her own turnround strategy, due in early February. Eyre says.

“Her intention is to be pretty frank with the market about her perspective on what has gone well in the past asa precursor to what she will change.” She is working on ways to ease back from digital radio, though GCap is locked into long-term contracts. “It’s an issue and it needs addressing,” Eyre added. There is also the opportunity to cut back on local programming. Ofcom has loosened rules on how many shows can be produced centrally and broadcast across GCap’s network of stations.

“To give people the opportunity to hear a great presenter [like Johnny Vaughan] surrounded with all of that localness, I think that is a strong proposition,” Eyre said. One rival radio boss is doubtful that GCap can hold on to its independence. He said: “Fru is going to have to come up with something unbelievably dramatic to give shareholders the belief that they should stick with her for a year.”

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