The relationship has cooled between Universitas 21 and Worldwide Learning, the News Corporation company with which U21 intended to establish a joint-venture company offering distance-learning courses.
Negotiations floundered on the size of the investment Worldwide Learning was willing to put into the venture company. Other sticking points included a lack of clarity on the technology used to deliver the courses.
U21 - a British company formed by 18 universities worldwide - had signed a memorandum of understanding with News Corporation in April. The partnership aimed to have established the new company this month and offer its first courses by mid-2001.
After weeks of intensive negotiations, however, the agreement collapsed.
James MacManus, chief executive of Worldwide Learning and TSL Education, which publishes The Times Higher Education Supplement, said: "We have great admiration for U21 chairman Alan Gilbert, and his futuristic vision for e-education is impressive. However, together we failed to agree on a realistic business model to translate that vision into reality."
Worldwide Learning remained willing to work with U21 or its individual members, he added.