Reliance Capital Group was dealt a setback.

The Federal Communications Commission rejected a trustee arrangement proposed by Reliance to facilitate its takeover of John Blair & Co., a New York-based broadcast company whose holdings include five television stations. Reliance already has received about 90% of Blair's common shares under a tender offer that closed July 3. However, before Reliance could move forward on the deal, it needed to gain FCC acceptance of a trusteeship that would hold the tendered Blair shares and operate Blair while the FCC formally reviewed the transfer of Blair's broadcast licenses to Reliance. Reliance now intends to continue holding the tendered Blair stock while it resubmits a new trusteeship plan to the FCC.

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