British commercial radio company GWR Group has suffered a "brutally difficult year" in the advertising market, but nonetheless unveiled slightly better-than-expected results for the year to 31 March.

GWR, which owns a string of local radio stations as well as Classic FM, said it was withdrawing from overseas markets in order to concentrate on the UK, where ongoing deregulation is likely to provide opportunities.

At the same time, the firm denied persistent rumours that it was in talks to buy Capital Radio, a London-based rival.

Capital, meanwhile, issued a more guarded statement, saying that it was engaged in "informal discussions" with various parties from time to time.

Down but not out

GWR posted a 63% fall in pre-tax profit to £7.7m for the year to 31 March 2002, on turnover barely changed at £128m.

The profit figure was a shade higher than analysts' consensus of £7.1m pounds.

GWR hopes that its latest results bring to a close one of the most difficult years the radio businesses has ever suffered,

Advertising, by far the biggest source of revenue, is showing signs of picking up after a heavy crash late last year.

But the broadcasting group is not celebrating yet.

"We cannot be certain whether this encouraging performance is merely a World Cup phenomenon or a longer-term trend towards recovery," Chairman Ralph Bernard said in a statement.

He also called for the government to ease lingering restrictions on commercial broadcasters, a process currently before parliament.

"The Communications Bill marks a watershed for the UK media industry. GWR is committed to a focused strategy on the UK so that we may gain the maximum value from this period of unprecedented opportunity," Mr Bernard said.

Radio's rebound

Until recently, British commercial radio was seen as a booming business.

Deregulation of an industry previously dominated by the BBC, together with an apparent surge in the overall audience for radio, created opportunities for a host of new entrants to the market.

Now, analysts say there is likely to be a fresh wave of mergers, as firms that have survived the advertising slump seek to optimise their position.

New firms could also be looking for cheap acquisitions in the sector.

At the same time as GWR announced its results, Mean Fiddler, a firm that specialises in live music shows, made its first foray into commercial radio, snapping up the Ritz 1035 station from Ritz Radio.