A special committee of the Hearst-Argyle Television board today rejected Hearst Corp.'s offer to acquire that stock in the publicly traded station group that it doesn't already own

The committee called the $23.50-per-share bid “inadequate and not in the best interests on Hearst-Argyle shareholders.”

In a bid to take Hearst-Argyle private, Hearst last August offered $23.50 or $600 million for the balance of the company's shares.

But from the start shareholders grumbled that the bid was too low. Indeed, the stock is currently trading $2.50 higher, underscoring Wall Street belief that the stock is worth at least $26. Victor Miller, a Bear, Stearns analyst, believes the right price is between $26.50 to $27.

The formal rejection of the bid opens the door for Hearst to make a higher one.