Gannett Co. Inc. claimed yesterday that it has become the largest newspaper chain in terms of circulation, thanks to this week's acquistion of the San Rafael (Calif.) Indepenendent Journal.

Gannett Chairman Allen Neuharth told a meeting of Gannett officials here that the chain's circulation now totals 3.52 million daily, putting it about 30,000 higher than the Knight-Ridder newspapers.

The Independent-Journal, in suburban San Francisco, has a circulation of about 47,000.

Gannett already led the nation number of individual newspapers owned, with the latest acquisition bring that total to 79. And, Neuharth told his executives, 1979 will be the first time the company's revenues will exceed $1 billion.

The announcement of the new circulation milestone came, ironically, on the same day the company was sponsoring a debate on the issue of concentration of ownership in the newspaper industry.

In that debate before the Gannett audience, Rep. Morris Udall, decried the increasing size of newspaper chains and corresponding loss of independent newspapers.

"I worry about the day when four people (heads of newspaper chains) will decide if John Connally will be president, or if Ted Kennedy should be vice president, " Udall said.

In response, former FCC commisioner Lee Loevinger said, "I don't think big is bad. And as bad as the media are, they'd be worse under government control."

Loevinger said that the average newspaper chain in the United States has "less than even newspaper," and added that many chain newspaper are better products than they were when they were privately owned.

In an interview following the circulation announcement and the debate, Gannett's Neuharth said that modern day newspaper chains could never exert the kind of editorial power that the Hearst chain did a few decades ago.

"Hearst went from 10 percent of the market to about 2 percent in the 1940s and 1950s precisely because readers would not buy that kind of journalism," Neuharth said. "And readers today are far more sophisticated. They would revolt against and desert newspapers that tried to tell them what to do."

"Most of the major chains today are public corporations," he added, "And Gannett's 10,000 stockholders are a pretty good check and balance on how we run our operations. Don't think they would put up with something like that because of the effect it would have on the business. It would be suicidal for us to try that sort of thing."

The Hearst Corp. was, and still is, a privately held corporation.

Still, the power of the newspaper chain was clear at the Gannett meetings, Republican presidential candidates Connally and Sen. Howard Baker (R-Tenn.) addressed the group yesterday morning, while a luncheon session was interrupted by a surprise visit from Democratic hopeful Sen. Edward M. Kennedy. The Kennedy visit had been arranged only an hour or so earlier by Gannett's Nashville Tennessean editor and publisher John Siegenthaler.

Neuharth said the concentration of Gannett in the future would remain in the newspaper area, although the company was pursuing other print properties.

He said he was particularly happy with recent Gannett performance in larger cities, like Oakland, Calif., where the company launched a new morning newspaper to complement its recently acquired afternoon Tribune.

That morning paper, which sells for 10 cents; is selling 40,000 copies only a few weeks after its introduction.

A similar new 10-cent morning product in Westchester, N.Y., called Today, also is selling about 40,000 copies, he said.