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You also need to consider this. Sky WOULDN'T move on its price, but it did offer Virgin the chance to keep the Sky channels going, however it (Sky) would bill VM customers directly, without any compensation to VM for carrying it.
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In one of the news broadcasts with a Sky representative, they mentioned that they did lower the price a few times, as well as offering to throw in extra channels as well as HD content too. It seems like Sky was willing to negotiate to an extent, moreso than it seems Virgin was willing. Virgin walked away from negotiations, not Sky.
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VM have been upfront with their customers, and they have said that they will not hold any customer to term of contract if they want to switch to Sky, providing they cancel before 31st March this year.
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Originally they were not letting customers out of contracts. It was only after the NCC raised the issue, hit the news, and commented that the least VM could do was allow customers out of contracts. Then Virgin agreed to do so up until the end of March, possible to avoid losing face and the bad PR that would have arisen otherwise.
As for being upfront, the press releases and the messages gave were rather one sided and had a lot of Virgin spin to them, implying Sky withdrew the channels and Sky left the negotiations, and acting as if they are the victim. While I don't know what happened between them precisely, other than the news reports, Virgin's side doesn't really appear to have much to stand on, other than big bad sky was too expensive, but look at our great video on demand service, it's much better than Sky's rubbish channels!
I personally think there is something rather suspicious about the entire ordeal. The flextech deal (for Virgin's channels) and the Sky deal were set to expire at the same time. That way, they could have done the deals together and made sure they were both fair for each other. Instead, Virgin accepted a very large hit in profits, and asked to postpone the Sky deal for 3 months. Sky agreed, and 3 months later, Virgin refuse to pay for the channels and try to make it look like Sky withdrew them (or maybe Virgin was hoping that Sky would return the favour and take cuts for the Sky channels, so they could lower their prices and keep advertising their whole Sky isnt the cheapest place to get Sky ads). Virgin then complain that Sky didn't pay them enough for their channels and abused their monopoly position. Meanwhile, with all the extra cash saved from not buying the Sky channels, Virgin has been quick to start spending money on more VOD content and things like big brother sponsorship, and they have knocked the competition (Sky One) out of the way to Virgin customers, all the while trying to gain public sypathy and challenging Sky in the courts. Seems it worked out quite conveniently for Virgin, without looking like they did anything wrong.