Thjis might seem a silly question,but are the batteries ok?
It seems as though the fm local oscillator is stopping below 96mhz,and thi s may be due to low supply voltage.If the batteries are good,or better still if you have a mains adaptor,you can check the supplies at the tuner module.The red wire should carry 7volts,and the dark blue wire 5.9v.
There are two 470uf 6v electrolytic caps on the main board,and I would change these as a matter of course,although one of them is involved in the output amplifier,the other one is the supply decoupling for the tuner.They can both leak and are "usual suspects" regardless of problem.
The tuner is mechanical in this model rather than voltage tuned as found in later equipment,although there is dc afc,but his wouldn't cause the drop off you're noticing.
The actual fm local oscillator transistor may be faulty within the tuner module too,but check the voltages and replace the caps first.
Regards,
Nick