Virgin Media customers will lose Sky's channels, which show programmes such as 'The Simpsons' and '24', if an agreement is not met between the two broadcasters by midnight tomorrow, but The Daily Telegraph reports that Sky is now offering to cut Virgin Media's fees for carrying Sky News, Sky One and Sky Two in an attempt to break the deadlock.
The news follows yesterday's announcement that Virgin Media had signed a deal with ABC to screen hit drama series 'Lost' as part of a video-on-demand service as it aims to hold on to cable viewers should its existing content deal with BSkyB end and not be renewed.
Sky has said it would be prepared to cut its previous offer of 95p a month a subscriber for Sky One, Sky Two and Sky News by 5p, which would equate to a £32m yearly saving for Virgin Media.
Sky plans to remove Freeview access to Sky One, Sky Two and Sky News this summer, and will replace it with its own digital terrestrial service.
The broadcaster is asking for a 30% increase in channel subscription from Virgin Media, which it is refusing to meet. Should negotiations break down, Virgin Media's 3.3m customers face being cut off from 'The Simpsons' and 'Battlestar Galactica' mid-series.
Jeremy Darroch, chief financial officer at Sky, has defended media criticism of the current dispute between the two companies, stating BSkyB would always put "the interests of customers first".
He said: "Should Virgin Media ultimately turn down this offer and decide that its customers do not value our basic channels at three pence per customer per day, then we are prepared to continue to offer our channels on cable at no cost to Virgin Media by obtaining direct access to its cable network."
Sky yesterday accused Virgin Media of "walking away" from negotiations, but said it was hopeful a deal could be struck before tomorrow's deadline is met.