The newspaper, citing unnamed well-placed sources, said the talks betweenand News Corp. fell apart last month, just before Murdoch's son Lachlan quit his father's empire.
The paper said privately held, Luxembourg-based Skype had denied it was for sale, but industry sources had said that they expected the company to be taken over shortly.
Executives at News Corp. and Skype were not immediately available for comment.
Operated out of London, Skype was founded by, a Swedish businessman who also co-founded Kazaa, the file-sharing software provider and rival of Napster that enables people to download music from the Internet for free. Skype's free software allows users to make Internet-based calls worldwide at no cost and is seen as a threat to traditional telephone companies. The company's free software is used by over 42 million users, with 150,000 new users signing up daily.