Sky and Virgin Media Kiss and Make Up After Dispute Over Channels

Tough times call for desperate measures and prompted BSkyB and Virgin Media to agree to go back to square one after nearly two years of a very public row over distribution of Sky's basic package to Virgin Media customers.

As from November 13th, 3.5 million cable viewers will be able to access Sky1, Sky2, Sky3, Sky News, Sky Sports News, Sky Arts and Sky Real Lives and will be an additional bonus for Sky for whom this was a major advertising blow.

Concurrently, Sky will carry Virgin Media's own basic channels which include Living, Bravo, Trouble, Challenge and Virgin 1 for the next 30 months.

Both companies will be charging fixed annual carriage fees to carry their respective channels and will have capped payments which will be payed out based on performance.

The dispute between the two media giants culminated when both companies went to the High Court to settle their dispute and saw BSkyB purchase a significant stake in ITV in a bid to fend off competition from Virgin media.

Sky has just cancelled its own Freeview-like service, Picnic and with the current economic downturn, the satellite TV company was under the constant danger of being caught up by a higher churn rate as the credit crunch bites hard and forces people to downgrade to Freeview and basic TV channels.

But BSkyB is also eyeing Tiscali's broadband user base to shore up its audience numbers (and at the same time, trying to overtake Virgin).