Gannett Co. and Combined Communications Corp. yesterday announced plans to merge in a $370 million exchange of stock that would be the largest transaction in newspapaer industry history.

If the preliminary proposal is approved by stockholders and government agencies, Combined would become a Gannett subsidiary and the parent company would become publisher of 79 daily newspapers and owner of 21 radio and television stations - the maximum number of broadcast outlets permitted by government regulations.

In a joint announcement, Gannett and Combined said directors of both firms met Sunday and approved the agreement i principle, which calls for an exchange of 1.2 shares of Gannett for each of the 7.2 million Combined shares outstanding.

A Justice Department officials said the Antitrust Division will take a "preliminary" look at the proposed merger, a routine practice when plans for large corporate mergers are announced.

Gannett and Combined Communication excetuves hac been discussing a possible combination for at least several weeks, and executives of the two firms said yesterday that a "basic policy of public service to readers, viewers, listeners and advertisers will remain unchanged from that now practiced . . ."

However, Rep. Morris Udall (D-Ariz.) called the Gannett acquisition of Combined "an alarming development and one that ought not to go unnoticed by concentrated communications power."

Udall, who with 71 other House members has introduced legislation to provide tax incentives that would protect independent newspapers from being acquired by chains, called the Gannett-Combined deal "a case of a whale swallowing a whale."

Allen Neuharth, president and chief executive of Gannett, declined to comment last night on Udall's charge. It was Gannett's acquisition of a newspaper in Tucson that sparked Udall's interest in stopping what he yesterday called "the onslaught of the giants . . ."

Neutharth said Combined Communications President Karl Eller will join the "office of chief executive" at Gannett, based in Rochester, N.Y., once the merger is completed. "In that capacity, Karl will share responsibility for the overall top management of the expanded company," the Gannett officer added.

In addition, Eller would be president and chief executive of the Combined Communications subsidiary, which would continue to be based in Phoenix.

Three directors from Combined would join the 14-member Gannett board, including Eller and Combined's chairman, John Louis.

Gannett has become one of the most rapidly growing communications firms in the nation. Started in 1906 in Elmira, N.Y., Gannett became a publicly owned firm in October 1967 with 28 newspapers in 5 states (most of the papers were iNew York State).

Today Gannett owns 77 dailies in 30 states and 2 U.S. territories, mostly in medium-sized or smaller communities. The Rochester company also owns the polling firm of Louis Harris and Associates, newsprint interests, a radio station and a television station, and weekly newspapers in six states.

Much of the Gannett expansion has come in the past two years, including a $170 million stock exchange for the Speidel newspapers of Reno last year (13 dailies in 9 states), the purchase for $60 million in cash of the Wilmington, Del., Morning News and Evening Journal in Coffeyville, Kans., and Daily News of the Virgin Islands.

To this stable of publications would be added Combined's Cincinnati Enquirer and Oakland Tribune, with a combined daily circulation of 359,000 and a Sunday circulation of 484,000.

Gannett already is the largest newspaper firm in terms of number of papers, and merger with Combined Communications would rank Gannett second only to the Knight-Ridder Newspapers in terms of U.S. circulation.

The 32 Knight-Ridder dailies sell 3.43 million copies a day, and Gannett Combined's papers would have a circulation of 3.37 million, surpassing Co. of Chicago. On Sundays, Gannet would continue to rank fourth in circulation, with 50 papers selling 2.9 million copies a week.

According to John Morton, a Washington newspaper industry analyst for John Muir & Co., 167 groups own two or more daily newspapers in the U.S., accounting for 1,082 dailes (61.4 percent of the national total of 1,759, compared with 58.8 percent a year ago). Of total circulation, the group newspapers account for 72 percent of daily and nearly 80 percent of Sunday sales.

In addition to the two daily newspapers, Combined is a major force in outdoor advertising, which accounts for about two-fifths of its annual revenues. Combined owns seven TV and 13 radio stations, and yesterday's agreement stated that one of the Combined TV stations or the Gannett TV station in Rochester would be sold because of a government regulation that prohibits ownership of more than seven stations.

Combined also will have to divest its AM and FM radio stations in Phoenix to retain its TV station there under Federal Communications Commission policy prohibiting joint media ownership in future transactions.

Gannett sales have grown steadily over the past decade and reached a record $558 million last year, on which profits totaled $69.4 million. The Rochester firm's profitability growth also has been steady, in good times and bad.

Combined last year earned $20.6 million on revenues of $227 million. The Phoenix firm earlier sought unsuccessfully to buy WJLA-TV here from Washington Star Publisher Joe Allbritton, and has been the subject to rumored takeover attempts.

In addition, Combined has a high level of long-term debts ($149 million), could not expand in broadcasting because of FCC rules, and reportedly found it difficult to acquire newspapers - prices have soared in recent years.

American Financial Corp. of Cincinnati, which owns a 1.5-million-share bloc of Combined stock, said yesterday it would wupport the merger. Combined also noted that at three-for-two stock split is scheduled for May 31, which would make the exchange ratio eitht-tenths of a share of Gannett for each share of Combined after the split.

The exchange of stock is based on last Friday's closing prices - $42.50 for Gannett and $41 for Combined. In trading yesterday, Gannett declined 5/8 to 41 7/8 while Combined picked up 1 7/8 to 42 7/8. By moving to acquire a major broadcast business, Gannett signaled a shift in corporate policy. The Rochester firm had divested most broadcast properties previously owned.