Channels including Sky1, Sky News and Sky Sports News will be available to Virgin Media customers again from November 13 after the cable TV company and BSkyB today reached a deal to end their 20-month row over distribution.
Sky and Virgin Media have today agreed two new carriage deals and will drop high court proceedings against each other.
From November 13, Sky's basic package of nine channels - which includes Sky1, Sky2, Sky3, Sky News, Sky Sports News, Sky Arts and Sky Real Lives - will return to Virgin Media's 3.5m cable TV households.
The second agreement is a new deal for Virgin Media TV's basic channels, including Living, Bravo, Trouble, Challenge and Virgin 1, to continue to run on Sky's digital satellite TV service. Both deals will run concurrently until June 12 2011.
BSkyB's basic channel package was removed from Virgin Media homes in March last year after an acrimonious spat over the price the cable company should pay to distribute them.
Virgin Media subsequently filed high court proceedings, claiming that Sky was abusing its dominant position in the pay-TV market and had levied "onerous" rates for the carriage of the cable company's channels on its satellite TV service.
The return of Sky's channels to cable will be a boon for Sky Media, the satellite operator's sales arm, heading into the critical TV trading season that determines ad spend for next year.
The loss of Sky1 from the Virgin Media's 3.5m households stripped away about one-third of the entertainment channel's audience.
Sky Media saw about 8% of the commercial advertising airtime it could offer customers disappear after Sky's channels were taken off Virgin Media's service, costing the operation about £25m annually.
Today's agreements include fixed annual carriage fees for the channels with both companies able to secure additional payments if their services meet "certain performance-related targets".
"We are pleased to bring our carriage negotiations with Sky to a successful close," said the Virgin Media chief executive, Neil Berkett. "I believe this agreement represents a fair deal and is the right thing for our customers."
The BSkyB chief executive, Jeremy Darroch, added: "This is great news for Sky and Virgin Media customers alike. We want our channels to be enjoyed by as many people as possible so we're delighted to secure their return to the Virgin Media platform."
It is thought that relations between the two companies thawed after Darroch was promoted in December last year from chief financial officer to become BSkyB chief executive, replacing James Murdoch.
BSkyB's dominant position in the UK pay-TV market has meant that it has always had difficult relations with rivals including Virgin Media.
Relations between the two companies were further soured with Murdoch's swoop to secure a 17.9% stake in ITV in late 2006, thwarting a potential takeover by Virgin Media.
In September, Ofcom published the long-awaited findings of its review of the UK pay-TV market, determining that BSkyB displayed "market power" over live Premier League football and Hollywood films.
In a joint submission to Ofcom last year Virgin Media, alongside BT, Setanta and Top Up TV, accused BSkyB of overseeing a "vicious circle" of control over key film and sports rights that crushed competition in the pay-TV market.
It is understood that BSkyB came close to agreeing a wholesale distribution pricing deal with Ofcom earlier in the summer. However, the deal fell through.
News of the carriage deals boosted both companies' share prices today.
BSkyB's share price leapt by 8.07%, or 31.5p, on its opening level to 422p at 15.55pm.
Virgin Media, which is listed on the Nasdaq in New York, also saw a hefty surge of 16.72%, up $1.1 (68p) at 15:34pm, from a previous close of $6.64 on yesterday's trading.
The return of Sky Sports News to its cable TV service means that Virgin Media customers will now have a choice of two sports news channels.
Virgin Media decided to launch Setanta Sports News, in a joint venture with Irish pay-TV operation Setanta, after Sky Sports News was taken off its cable TV service last year.
Setanta Sports News launched on November 29 last year| with output produced by ITN under a three-year contract.
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