Specific to your example, can't you just do something as follows:
in_file = open(fileName, 'r')
file = in_file.readlines()
new_list = [''.join(file[i*4:(i+1)*4]) for i in range(int(len(file)/4))]
list_no_n = [item.replace('\n','') for item in new_list]
print new_list
print list_no_n
[EXPANDED FORM]
new_list = []
for i in range(int(len(file)/4)): #Iterates through 1/4 of the length of the file lines.
#This is because we will be dealing in groups of 4 lines
new_list.append(''.join(file[i*4:(i+1)*4])) #Joins four lines together into a string and adds it to the new_list
[Writing to new file]
write_list = ''.join(new_list).split('\n')
output_file = open(filename, 'w')
output_file.writelines(write_list)