It's been rumoured on and off for a while now, but bitter rivals Virgin Media and Sky have agreed a deal that will see the satellite broadcaster acquire VMtv and take on responsibility for its channels for £160million in cash.

In addition, Virgin Media will receive Sky 1, Sky Arts and VMtv's channel line-up, such as LIVING, Bravo and a soon-to-be-renamed Virgin 1, as part of a wholesale distribution agreement.

The cable operator will also have the option, for an incremental wholesale fee, to offer its subscribers a selection of Sky's basic HD channels, including Sky Sports HD 1, Sky Sports HD 2, and the Sky Movie HD channels.

Finally, a range of content from Sky's premium and basic channels will be available over Virgin Media's on demand services. Plus, the cable provider will have access to Sky's red button interactive sports coverage, and receives the option to stream the satellite broadcaster's standard definition programming over the Internet, like with Sky Player and Sky Anytime Plus.

Both companies are notably happy with the deal, and while it leaves Virgin Media as just a service provider, rather than broadcaster, the potential benefit to subscribers is massive: "The sale of our channels business has generated substantial value" says Neil Berkett, CEO of Virgin Media. "Together with the new commercial agreements we've announced today, it will allow us to focus more closely on our strategy of exploiting Virgin Media's super-fast connectivity to offer our customers a range of the very best content through a highly versatile next generation entertainment application."

Whereas Sky gets LIVING and a host of American serial shows (now that Lost and 24 are finished). Surely that was its main target.

Well it wouldn't be Challenge Jackpot now, would it?