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It is part of a package of reforms she says will increase annual profit by £12.3m with the aim of preventing a takeover by Global Radio.
Hazlitt said DAB was "not an economically viable platform for the company" which wants to focus "on platforms that listeners want and that generate higher revenues and profit".
The company will give its 63% stake in the Digital One DAB multiplex to partner Arqiva for a nominal fee.
It will also prioritise "brands and content that can win within a multi-platform environment" which means closing "non core" stations the Jazz and Planet Rock, the chief executive said.
GCap will sell its Xfm regional analogue licences in Scotland, South Wales and Manchester under the proposals and focus "on Xfm’s heritage as a London brand and with a national broadband footprint". It will also increase advertising on Capital 95.8.
Hazlitt, unveiling the proposals to investors today, said the "radical but realistic" changes would make "significant improvements" to profits and position the company "for long term sustainable growth".
“GCap Media will become a leaner and more dynamic company focused on maximising the revenue and profit potential of five key brands on FM and broadband, the platforms that we believe consumers want," she said.
“Capital 95.8 will have a new flexible inventory policy with up to nine minutes of advertising per hour and we plan to dispose of our interest in Digital One, reflecting our view that DAB is not an economically viable platform for the company."
Hazlitt took over the company late last year and has been resisting a takeover bid by rival Global in recent months.
However, its chief executive Charles Allen said over the weekend GCap would have to “present to shareholders a plan to treble profits, not just double them” if she wanted to contend with his offer of 190p per share.
Analysts told the Financial Times a Global takeover remained likely.
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