News Corp May Have Tried to Buy Skype

By Ed Oswald, BetaNews

August 8, 2005, 11:30 AM

Coming just a few short weeks after its much-publicized purchase of personal site MySpace, news surfaced Sunday that Rupert Murdoch's News Corp. had been in talks with VoIP service Skype over a $3 billion takeover bid.

British daily The Independent reported on Sunday that sources close to the two companies said that talks had broken down, but had given no reason as to why.

Skype has denied talks were taking place and said it is not for sale. However, analysts believe that the company is ripe for takeover, as its leading position in the VoIP market is attracting the attention of larger and more established companies.

39-year-old Swede Niklas Zennstrom and 29-year-old Dane Janus Friis, who started the online file swapping service Kazaa, head the two-year old company. Both left Kazaa shortly after the record industry began taking legal action against P2P services.

The paper says that Skype would have fit in nicely to News Corp's satellite entities, which include a controlling minority in BSkyB in the UK and DirectTV in the US. However, talks soured shortly before Rupert Murdoch's son Lachlan announced his resignation from the family business.

It is unknown whether his resignation may have been spurred on by the deal's failure.

If the sale of Skype had gone through, founders Zennstrom and Friis, as well as Hotmail investor Howard Hartenbaum, would have made a huge profit off their investment. Together, they contributed some $20 million to get the Skype service off the ground in 2003.