Classic FM owner GWR today warned about the "inconsistent" radio advertising market, predicting that its revenues would fall this month 4% year on year.

That would come on top of a 3% decline in the three months to December 31, and the outlook for advertising remains "short term", the company said in a gloomy trading statement.

Updating the City this morning, the group also said its merger with Capital Radio was expected to be completed in early May.

GWR's predictions for advertising came a day after upbeat statements from Emap and Scottish Radio Holdings, which both reported good trading conditions.

Classic FM drove growth in the company's best month, December, with national revenues up 10% at the station.

Overall December saw growth of 5%, offsetting declines of 9% and 7% in the preceding months.

Classic's total revenues for the quarter were down 7%, compared with a 12% rise in the last three months of the previous year.

Total revenues at the Local Radio Group - which includes Trent FM, Essex FM and Leicester Sound and accounts for 70% of GWR's revenues - were down 3% over the three months, compared with 13% growth in the same quarter in 2003.

GWR said it was encouraged by sales of digital radio sets over Christmas, which took cumulative sales past 1.2m.

The group also said it was involved with Capital in discussions with the Office of Fair Trading to agree an undertaking to disposal of the 106 Century FM station in Nottingham.

"[We] can progress the merger once the OFT's statutory consultation is completed and we have formal acceptance of the undertaking," the company said in a statement. "We anticipate that the merger will complete in early May."

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