NEW YORK (AP) _ News Corp., which owns the Fox network, has agreed to buy TV station owner Chris-Craft Industries Inc. for $3.5 billion, sources familiar with the matter said.

News of the deal came late Friday after Viacom Inc. issued a statement saying it had ended talks with Chris-Craft over a possible deal. Chris-Craft's shares were halted on the New York Stock Exchange after plunging 11 percent to $62 as news circulated that the talks with Viacom had ended.

News Corp. was expected to pay $85 per share for Chris-Craft, valuing the company at about $3.5 billion, said a source familiar with the situation, who spoke on condition of anonymity. An announcement could come as early as next week.

The deal would face a major regulatory obstacle by putting News Corp.'s Fox television business over the current limits on station ownership set by the government. Fox already reaches 35 percent of U.S. TV audiences, the maximum allowed.

Those rules, however, may change under heavy lobbying pressure from News Corp. and other major broadcasters. The Federal Communications Commission has loosened other rules on broadcasting but has so far left in place the 35 percent ownership cap.

For News Corp., the deal with Chris-Craft would allow it to take advantage of a recent FCC decision allowing one company to own two stations in the same market. Both Chris-Craft and News Corp. own stations in three major U.S. cities: New York, Los Angeles and Dallas.

News Corp. owns 22 television stations, while Chris-Craft owns 10.

Chris-Craft, which used to be in the boat-building business, recently sold its 50 percent stake in the UPN television network to Viacom, which owns the other half.