Reports emerged yesterday afternoon that Fox was considering his position after losing out in the race for the breakfast show, which Chris Tarrant is giving up next spring after 17 years.
Instead, the job was given to Johnny Vaughan in a deal believed to be worth between £3m and £5m over three years.
It had been reported that Foxy, as the DJ is now known, had a get-out clause in his contract if he was overlooked for the breakfast show. He has worked at the station for 16 years, almost as long as Tarrant.
In a statement released by Capital last night, Foxy, who is also a judge on ITV's 'Pop Idol' along with Simon Cowell, said he "loved working at Capital".
"After celebrating 16 years at the station, I think that the Drivetime show is going from strength to strength and I'm proud that I've made the 'Hit 40UK' chart show the biggest in the country," he said.
Fox has previously stood in for Tarrant on the breakfast show and been a ratings winner. He is reported to have criticised the station's management, calling it "appalling" and saying he was led to believe the job was his.
He said last night that 'Pop Idol' was "crazy" at the moment and that he had other ITV1 shows in the pipeline, but that he found it "challenging trying to balance it all together".
He said that he was disappointed at not getting the breakfast show, but added that Vaughan was a great choice for the show.
"I'm obviously disappointed about not getting breakfast -- who wouldn't be? But Johnny is an excellent broadcaster, a good friend and I think he's a great choice for the show. We've also got some big plans for my drivetime show and I'm sure between us we can give London listeners a kick-arse start and end to the working day," he said.
The news that Tarrant is leaving the broadcaster sent Capital's shares crashing down as much as 7% yesterday, to close at 472.5p, down 5% on the day.
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