Announced today, the satellite broadcaster has acquired Virgin Media Television (VMtv) and will assume full responsibility for selling adverting on its channels from January 2011.
Sky will pay a total of £160 million for VMtv, with £105m to be paid on completion of the deal and the remainder coming after a "regulatory process" has been concluded.
Completion of the deal is now just "conditional on obtaining merger control clearance in the Republic of Ireland".
Under the agreement, Virgin Media will continue carriage of its former channels on its cable television platform.
For an "incremental wholesale fee", Virgin will also secure the option to carry Sky's basic HD channels, including Sky Sports 1 HD, Sky Sports 2 HD and the Sky Movies HD channels.
Additionally, the cable operator will be able to make content from Sky's main channels available on its on-demand platform
"VMtv is an attractive investment opportunity which complements our existing content business and delivers strategic and financial benefits," said Sky chief executive Jeremy Darroch.
"We are pleased that, through commercial negotiation, we have been able to ensure wide distribution of our channels to a growing pay TV universe."
Virgin Media chief executive Neil Berkett added: "The sale of our channels business has generated substantial value.
"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."
Sky said that it will not license the Virgin brand and will instead announce new channel branding for Virgin1 "in due course".