Sky and Virgin Media have failed to reach an agreement on renewing the contract under which Sky channels have been available to Virgin Media (the supplier formally known as NTL) customers, resulting in those channels no longer being available from midnight tonight.

Virgin Media are claiming that Sky has upped the price massively, to which Sky respond that this is because they've added more channels to the mix, and Virgin say they don't want those channels: so the deadlock is reached.

Customers of (almost) all pay TV services are familiar with bouquet- purchasing: where a bundle of channels must be bought to get the one or two you actually want. In effect, Sky is scaling up this idea to apply to an entire network. If Virgin Media want Sky 1 then it must also pay for Sky Three and Sky Arts.

Sky says it is still open to negotiations, but it will be interesting to see how quickly it starts advertising the fact the Sky 1 is no longer available on Virgin Media. According to industry scuttlebutt, such an advertising campaign is already planned and prepared, which would belie Sky's claim.

This isn't the first time Sky have been accused of overcharging to drive a competitor out of business: ITV Digital made such complaints shortly before its demise. But with exclusive deals for a great deal of popular content Sky is in a seller's market.

The Sky-Virgin spat is good news for BT Vision and Orange, which today announced that their IPTV service will be available in the UK later this year. Such services are licensing content - TV shows such as 6 Feet Under and 24, direct from producers, and can show it without going cap-in-hand to Sky. ®

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