BSkyB's news and entertainment channels will return to Virgin Media later this month after the two companies patched up their 18-month-old quarrel over fees.

There were no immediate details of the terms that had been struck but both sides hinted that concessions had been made with, significantly, Sky agreeing to a new agreement to carry Virgin Media's entertainment channels.

Talks between the two sides broke down last spring when Sky demanded £48.4 million a year for the right to transmit its basic channels, including Sky One, Sky News and Sky Sports News. At the time, Virgin Media complained that Sky wanted double what the channels were worth.

Sky, which is 39.1 per cent owned by News Corporation, parent company of The Times, is unlikely to have achieved the price it sought. However, it is likely to have have gained — Sky had previously given warning that the loss of its channels from the Virgin Media service would cost it £60 million a year in operating profit because of lost carriage fees and advertising.

In turn, Virgin Media's second agreement with Sky is expected to have made Sky pay more to carry Virgin Media's basic channels, which include Living, Bravo and Trouble.

Virgin Media had received £23.6 million from Sky in 2006 but, after a fraught negotiation, had reluctantly agreed for that fee to be slashed to £5.1 million in 2007.

The bad feeling from that negotiation formed the backdrop for the decison by Virgin Media to refuse to accept the Sky channels at the price the satellite broadcaster wanted.

Neil Berkett, chief executive of Virgin Media, said: "I believe this agreement represents a fair deal and is the right thing for our customers."

Jeremy Darroch, chief executive of Sky, said: "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."

Both new agreements will run until June 12, 2011.

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