Update: News Corp. Reportedly Buying Chris-Craft

Updated from 5:51 p.m. EDT

Chris-Craft Industries(CCN Quote), said late Friday that it and its subsidiaries were involved in merger negotiations with another big media company after its talks with Viacom(VIA Quote) broke down.

Although Chris-Craft did not identify its latest suitor, the Wall Street Journal and the Associated Press reported late Friday that News Corp.(NWS Quote) had agreed to buy the television station company for $85 a share. Those reports, which did not identify their sources, could not be immediately confirmed Friday evening. But such a deal would represent a 37% premium over Chris-Craft's closing stock price Friday and would value the company at more than $3.5 billion.

The Associated Press noted, however, that Rupert Murdoch's News Corp. would face big regulatory obstacles if it attempted to acquire Chris-Craft because the company's Fox television operation would exceed the current federal limits on station ownership.

The proposed acquisition is expected to be announced Monday, the Journal reported on its Web site.

Earlier, Chris-Craft's shares tumbled Friday after Viacom, long regarded as the company's likely buyer, said it had ended acquisition talks with Chris-Craft and its subsidiaries.

Viacom said it announced that discussions had broken down "in response to market speculation." Before the announcement, shares of New York-based Chris-Craft were up 1 3/4, or 3%, to 71 3/4. After the announcement, which came late in the trading day, Chris-Craft fell 8, or 11%, to close at 62.

Viacom finished up 1 1/2, or 2%, at 71 15/16.

The two companies have been flirting since January, but negotiations reportedly stalled in the spring, reportedly over price. Talks, however, resumed again in June, after Viacom completed its merger with CBS. In March, the companies resolved what was then regarded as a key sticking point when Viacom agreed to buy out Chris-Craft's 50% stake in the UPN network for $5 million.

Chris-Craft is widely regarded as an attractive target for Viacom because it owns 10 TV stations through its BHC Communications subsidiary, many of which would give Viacom duopolies, or ownership of two stations in the same market. Under Federal Communication Commission regulations, no company can reach more than 35% of the viewing public, but duopoly rules allow a company to own two stations in the same market without it counting as an increase of the broadcaster's national reach.

Viacom currently reaches 42% of the country, but if it is able to own two stations in big cities such as New York and Los Angeles, it could swap out of cities in which it doesn't have duopolies, thus reducing its reach to comply with the FCC rules.