News Corp. fired Regan in December 2006, alleging that she had made anti-Semitic statements to a company attorney, but said Friday: "After carefully considering the matter, we accept Regan's position that she did not say anything that was anti-Semitic in nature, and further believe that Regan is not anti-Semitic."

The once-rancorous clash between the two sides ended in a series of mutually complimentary statements: News Corp. called Regan a "talented publisher," thanked her for her "outstanding contributions" and wished her "continued success." Regan, in return, said: "I am grateful for the opportunity to have worked with so many gifted people and am looking forward to my next venture."

Regan filed her $100-million defamation lawsuit against News Corp. in November, alleging that she had been asked by company officials to lie to federal investigators in order to protect former New York Mayor Rudolph W. Giuliani's presidential bid.

Regan had also alleged that company officials had orchestrated a "smear campaign" to discredit her after her promotion of a controversial memoir by O.J. Simpson. Regan, who had pushed for the publication of "If I Did It" and also planned to broadcast a TV interview with Simpson, was fired as public outcry mounted.

Earlier this year, according to sources, the two parties reached a tentative agreement in principle, whereby Regan would forego a suit and avoid disparaging her former employers in exchange for around $6 million. (According to one source, News Corp. wanted to space the payments out over time to keep Regan on a leash.)

But the deal fell apart nearly three weeks ago for reasons that are unclear. The source close to Regan said one sticking point was control over books in development at Regan Books, which has been temporarily renamed HC. A News Corp. spokesman declined to comment, and Regan's lawyer, Bert Fields, did not reply to a query.