BSkyB is understood to be preparing to outmaneouvre Virgin Media with a surprise tie-up with Tiscali.

The Italian-owned internet television group is believed to be in advanced talks with BSkyB, which is 39.1 per cent owned by News Corporation, parent company of The Times, about an agreement to run the basic channels that have been pulled from Virgin Media’s service after a feud between it and the satellite operator.

The deal, which could be announced within weeks, will enable Tiscali, the owner of HomeChoice, to offer channels including Sky One, Sky Sports News and Sky News to its 1.48 million broadband customers.

Sky’s basic channels were removed from Virgin Media’s service at the end of February after a dispute over the price that Virgin should pay. The feud has hit Virgin hard, contributing towards a customer exodus of nearly 47,000 in the last quarter.

The cable operator, which has 3.4 million customers, recently played down the threat from smaller rivals such as Tiscali, but a tie-up between Tiscali and Sky could add to Virgin’s customer losses. It could also strengthen Sky’s bargaining position with Virgin. The price-per-subscriber rate being offered by Tiscali is understood to be higher than Virgin Media’s last offer to Sky.

Tiscali’s base will also strengthen considerably if it acquires Pipex’s 1.4 million-strong broadband customer base. On Friday Tiscali said that it was running a slide rule over the internet service provider.

A spokesman for Sky yesterday declined to comment on “speculation”. However, the pay-TV operator has said previously that it would seek the widest possible distribution for its channels.

Consolidation in the telecoms and media sector and the emergence into the mainstream of previously niche technologies, such as television over the internet, is providing a greater variety of distribution platforms.

Virgin declined to comment.

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