Diamond brands his ex-bosses 'morons'

Fru Hazlitt, GCap's chief executive, last week announced the sale of Xfm Scotland along with sister stations in Wales and Manchester. Observers suggest the move was part of a defence plan designed to fight off a £313 million takeover bid from Global Radio, the company chaired by former ITV chief executive Charles Allen.

Speaking exclusively to the Sunday Herald, Diamond claims GCap failed to understand the Scottish market, starved the station of funds and proved unable to make the decisions needed to ensure Xfm Scotland's future. Diamond last year lost out to Chris Evans for a prestigious Sony award. Had he won the gong, Diamond claims he would have used his acceptance speech to demand GCap fund the station properly.

Diamond - who now presents a show on Edinburgh-based Talk 107 and has not made his criticisms of GCap public before - said those at the company's London headquarters responsible for managing Xfm Scotland were "complete and utter idiots who didn't understand either the music or the market".

Diamond, who left Xfm Scotland under a cloud in June last year, reportedly after his request for a higher salary was turned down by London studio bosses, adds: "They just lost any shred of credibility. When figures started to go down they panicked and made the music choice too narrow and too mainstream - the listeners didn't want to be beaten over the head with the same seven songs played over and over again. They were morons, and if, in business, your boss is a moron, then you're screwed."

Audience listening figures add credence to Diamond's view. The station, which went on air in January 2006, created from the ashes of youth station Beat 106, had been struggling to find a market for its guitar-driven music selection. Figures released last month from radio audience measurement group Rajar showed the station's audience share had dropped to only 2.8%, far beneath the 4.8% it achieved in the first quarter of 2006. Xfm Scotland bosses hoped the station would do much better, capturing a larger number of youth listeners across central Scotland, a challenge it proved unable to meet.

Figures obtained from Companies House make similarly depressing reading for Xfm Scotland bosses. They show that Xfm Scotland, in the year ending March 31 2007, made a pre-tax loss of £1.7m, compared to the previous year's loss of £598,000.

The station had made several bold programming moves in the past months, including scrapping all DJs between 10am and 4pm, asking listeners to choose the songs through their website instead.

Although the Xfm licence to broadcast on FM radio to central Scotland will be sold, the Xfm Scotland brand will no longer be used. Any potential buyer will give the station a new name and keep the music policy and presenters as they are. GCap says it has several interested parties, although it remains tight-lipped on their identity.

Alternatively, the buyer could launch a station based on a different premise that stays within the licence restrictions - an r'n'b station, for example, or another format to serve its youth market.

Hazlitt announced the sale of Xfm Scotland while outlining a controversial new strategy for GCap. The new plans will see the radio business - also home to Classic FM - end its previously substantial investment in digital audio broadcasting (DAB) radio in a move Hazlitt claims will save £8.8m a year.

DAB was widely considered to be the future for the entire radio industry, but this week Hazlitt changed all that, betting her reputation and possibly her career on the belief that broadband radio, accessed via the internet, will soon make digital radio obsolete.

Now the Xfm Scotland brand will join DAB in Hazlitt's bin. GCap will continue to run Xfm London, the only one of the four Xfm stations that makes a profit, claiming it to be a "better fit with the new strategy". Jane Wilson, GCap's head of communications, said she hoped Scottish fans of the Xfm brand would still tune in through their computers, although she refused to say how many listeners they expected to do this.

The company hopes the sale of the three regional Xfm licenses will boost its profits by £1.5m.

GCap also axed its digital-only stations, Planet Rock and theJazz, and Hazlitt says she will do everything she can to withdraw from DAB radio entirely; some stations, including Core and Life, will continue to be broadcast due to licence requirements. GCap will sell the three Xfm stations' licences but is unlikely to regain the £35m it paid for the Xfm Scotland licence alone, with insiders saying that obtaining even a quarter of that figure would be considered a bonus.

Billy Anderson, managing director of rival station Real Radio, agrees with Diamond's harsh verdict on Xfm Scotland's management. He says the station's London bosses viewed it as a regional operation rather than a national one and treated the station accordingly. This attitude ultimately led to the station's failure, Anderson believes.

"It had great potential. I'm not criticising the people who are there. It would have been difficult for anyone to run that business. They were forced to conform to a format that was designed for the London market."

Anderson says the station's basic remit - to serve young listeners in central Scotland - was strong, but that Xfm Scotland's programming failed to deliver on it: "I don't think they have put as much effort into the content as they could have and the local managers haven't been in a place to challenge that."

Wilson denied any connection between Xfm Scotland's poor listening figures and the sale of the station. She said GCap would "quite possibly" have decided to sell the station even if it had achieved its target of 500,000 weekly listeners by 2009, a figure well in excess of its current performance.

Wilson says the idea behind Xfm Scotland - building a "listening community based on music taste rather than on geography" or other factors - was one that GCap no longer believed in. She says the company decided that Xfm in London, broadcast through the internet, would perform better than three regional stations broadcast on analogue radio.

All the moves GCap is making, Wilson insists, are part of the new strategy focused on pulling the entire company away from DAB, and not on any individual station's performance. She roundly denies all of Diamond's points, saying the station was managed efficiently by the "locally well regarded" Xfm Scotland chief executive Alan Gibson. Gibson declined to comment on the allegations his team had little control on the key decisions on the day-to-day running of the station.

Wilson says Xfm Scotland was never the victim of cost-cutting: "In terms of costs, Xfm stations have been run no differently from other stations in the group. We certainly haven't cut costs at our station to pay for digital development."

However, one senior Scottish radio industry source, who asked not to be named, is not so sure. He agrees the end of Xfm Scotland must be seen in the context of the radio industry's future but warns against accepting GCap's strategy at face value.

"Fru Hazlitt had to come up with a special package to ease discontent from her shareholders. GCap is under pressure because Charles Allen-headed Global Radio has made a reasonable offer.

"The bottom line is there are a lot of problems at GCap, they've spent a lot of money on DAB radio. Xfm Scotland has definitely been the victim of some pretty over-zealous cost-cutting to feed the ugly monster that is DAB radio. It has to get its money back from somewhere."

Diamond is less diplomatic about GCap's future. Asked if he agreed with Hazlitt that DAB was finished, he says: "GCap is dead as a business. I don't think there's any future in it."