The Chrysalis station has slipped in the hard-fought battle for supremacy of the London airwaves. Jeremy Lee reports

The disappointing performance of Heart 106.2 in this month's Rajars will not have enhanced the value of Chrysalis Radio, which is currently the subject of a strategic review by its parent company Chrysalis Group and could be jettisoned as part of a £200m fire-sale of its radio assets.

The figures make bleak reading for potential bidders - the middle-of-the-road radio station saw its share of listening slip from 7.1% for the last quarter of 2006 to 5.4% in the first quarter of this year, with Emap Radio's easy-listening station, Magic, elbowing it aside to become the most listened-to commercial station in London. Heart suffered an 8.4% drop in reach over the same period.

The misery was compounded by the revelation that the station's breakfast show, hosted by Jamie Theakston and Harriet Scott, had lost the coveted crown of most listened-to show in London to Capital's Johnny Vaughan after just one quarter at the top. Vaughan attracted 854,000 listeners compared with 825,000 for Theakston and Scott, who shed 123,000 listeners from the previous quarter. Just days after the Rajars were released, Chrysalis Radio, which also owns talk station LBC as well as the Chrysalis network, released its interim results for the six months to February. The news was not good: total revenues were down 9.1% to £30.1m from £33.1 last year. At the same time, Chrysalis announced that LBC had increased its revenues by 2.5%, but, revealingly, there was no mention of the profit or loss statistic for Heart 106.2.

In its statement to the City, Chrysalis Group claimed that the decline in revenue was 'consistent with that of UK radio advertising as a whole'. Against the seemingly unassailable and arguably over-funded BBC radio, all commercial stations are having a torrid time. Nonetheless, Chrysalis Radio seems to be suffering more than most and Heart is at the very root of its problems. If chief executive Richard Huntingford is to be successful in finding a buyer or another business to merge its radio stations with, urgent action is required.

So how can Heart pull itself back into shape? We asked media expert Thayne Forbes, joint managing director of Intangible Business, and Marc Mendoza, managing partner at Media Planning Group, what action Chrysalis needs to take.

DIAGNOSIS 1 - THAYNE FORBES, JOINT MANAGING DIRECTOR, INTANGIBLE BUSINESS
Heart was a great easy-listening radio station but has lost its sense of identity, having tried to move into current pop and chart hits. This is a different customer segment, which is not as interested in great old songs as cool current music and is greatly influenced by personalities such as Radio 1 DJ Edith Bowman, who give their opinion on what should be included in an up-to-date music collection.

By making this move Heart has run headlong into serious long-established competition, not least Radio 1 and Capital. And while it has been doing this, Magic has made serious inroads into its easy-listening niche with a proven strategy of 'less talk, more tunes'. Fellow Chrysalis station Smooth has also encroached on Heart's easy-listening territory. Radio listeners tend not to browse or switch too readily, so Heart's short-term fall from 7.1% the previous quarter to 5.4%, in the context of a long-term decline, is potentially disastrous. Heart therefore needs to reinvent itself with a bold personality, promoting a clear and distinctive offering to listeners.

REMEDY

• The station should return to its easy-listening roots, but introduce fresher tunes and a more contemporary playlist.
• Make efforts to increase the amount of air time spent playing great music.
• Use more personalities and celebrities, aside from Jamie Theakston, to underscore the validity of the music.
• Introduce new shows based on stories that offer insights into the music that is being played.

DIAGNOSIS 2 - MARC MENDOZA, MANAGING PARTNER, MEDIA PLANNING GROUP
Heart 106.2 and owner Chrysalis are now the unfortunate recipients of bad press and growing concerns and speculation over their futures as a brand and a business. And this over three months after revelling in the position of being London's number one commercial station. With Capital radically changing its music policy to draw younger, 'cooler' audiences away from Radio 1, there seems to be an opportunity for other commercial stations to exploit the vast London 'housewife' market. Heart 106.2 is pitching in younger than Magic, so there should be plenty of room for both. So, are these really disastrous times for Heart 106.2 or just a dodgy one-off Rajar result? I suspect the latter. Heart 106.2 also received poor results in the first quarter of 2006, but the overall trend has been positive and the longer-term results offer the more robust indicators.
I see no major problems. Results have been broadly positive, the station's sound and presenter line-up is as strong as it ever has been and its target audience still exists as it did three months ago.

REMEDY

• Keep going and don't panic - winning five out of the last nine Rajars suggests that something is working.
• Don't be tempted to broaden out too much to the older audience. Magic and Smooth will have a strong hold there.
• Monitor Capital and Radio 1 playlists to find potential gaps in the market.
• Do not be tempted to compromise on the marketing budgets - listener loyalty is perhaps not as strong as it used to be.