Video Networks, the company behind Homechoice, is set to cut its price in an attempt to attract a buyer as it faces ever stiff competition from the likes of NTL and BT.
In November, Video Networks appointed investment bank CSFB to assess the options for the service, which has around 45,000 customers, compared with Sky's 8.1m and NTL/Telewest's 5.5m.
However, Video Networks racked up losses of £46.5m in 2004, up from £1.5m the year before.
BSkyB was reported to be one of the firms interested in the video-on-demand business, which also offers home telephone.
Sky could use the company for its own plans for video-on-demand and broadband, having raised just over £1bn by selling a three-part bond last year, which it has been suggested could be used for acquisitions in the broadband arena.
BSkyB bought Easynet for £211m in October, which it could easily merge with Homechoice to form an enlarged business.
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