Details of a failed military rescue operation and hefty ransom demands in the case of beheaded American journalist James Foley continue to emerge.

Officials said Wednesday that they believed they had identified the location in Syria where Foley and other hostages were being held. But the intelligence was wrong.

Several dozen special operations forces dropped by aircraft into Syria but were unable to locate the hostages. The forces engaged in a firefight with Islamic State militants, killing several of them, before departing, according to the U.S. Department of Defense.

U.S. officials revealed details of the failed rescue operation one day after Islamic State militants released a video showing the beheading of Foley and threatened to kill a second hostage, Steven Sotloff, if U.S. airstrikes against the militants in Iraq continued.

Foley, a freelance journalist, was on assignment when he disappeared in Syria in November 2012.

A U.S. official told The Associated Press on Thursday that Foley’s captors had demanded 100 million Euros in ransom for his release.

The captors also reportedly contacted Foley’s family and employer, demanding ransom money.

The head of Boston-based media company GlobalPost, the company Foley was freelancing for when he went missing, said the email sent to his family a week before his death was "full of rage."

However, Philip Balboni said the captors made no demands for money and ignored pleas for mercy. 

“Obviously we hoped and prayed that would not be the case, and we communicated as quickly as we could with the captors, pleaded with them for mercy,” Balboni told reporters.

He said that GlobalPost worked on Foley’s case for two years and hired a team of investigators in the Middle East to try tracking down his whereabouts.

U.S. policy prohibits the government from negotiating with terrorists, including paying ransom.

Hostage taking 'extremely lucrative': expert

John Thompson of Strategic Capital Intelligence Group told CTV News Channel on Thursday that hostage taking is “extremely lucrative” for terrorist groups.

“The broad principle is that it is dumb to pay ransom, and that you shouldn’t be giving millions of dollars to an aggressor that may not deliver the captive alive,” Thompson said. “But there will be families and NGOs that may be desperate to get somebody back.”

He pointed out that Islamic terrorist groups have “years and years of experience” in taking and hiding hostages.

“It’s always been very, very hard to rescue the people that they’ve held,” he said.

Thompson said the admission that the secret U.S. military operation ultimately failed in rescuing Jim Foley could be interpreted as a “damaging leak.”

“It wasn’t exactly the soundest thing for them to do,” Thompson said. “It really was, I think, a damaging leak of U.S. methodologies and it shouldn’t have been released to the general public.”

With files from The Associated Press