According to a spokesman for the English clubs' organisation, Epruc, Sky is prepared to nullify the heads of agreement already signed by the Rugby Football Union and negotiate another deal worth in the region of pounds 80m - to be shared equally among all four home unions.
It would mean England would be back in the Five Nations and Sky would no longer have exclusive live coverage. The other three nations, led by the Welsh, want the championship to be broadcast on a 50-50 basis between satellite TV and its terrestrial cousins.
"We are not in this merely for the money," one Welsh Rugby Union member said yesterday. "We want to safeguard the game and ensure that is is available to the widest possible audience.
"There can be no compromising on the equal share-out of TV money and we stand by our decision that it must be a collective deal. The Five Nations contract needs to go out to tender, and that is what we expect and hope to happen."
The RFU made a conciliatory move yesterday, with the new president, John Richardson announcing that he and the chairman of the RFU executive committee, Cliff Brittle, would be leading a Twickenham negotiating team to meet the other home unions next Tuesday.
This came the day after Brittle had called on the people who had negotiated the England-Sky deal to resign. "The situation is most sensitive and I ask all members of the Union and our rugby public to be patient while we seek to resolve this issue and ensure the continuance of the Five Nations' Championship," Richardson said.
Richardson's move drew a good response from Alan Hosie, one of Scotland's representatives on the Five Nations Committee. "Any initiative that can improve the situation has to be welcomed," he said. "No one wants England to be excluded from the northern hemisphere championship if it can be avoided.
The news of Sky's intentions, which came after a meeting between the chairman of Epruc, Donald Kerr, and Sam Chisholm, Sky's chief executive and managing director, is deeply worrying for the clubs, who stood to gain pounds 22.5m under the deal with England. With the RFU taking only pounds 20m if the suggested new arrangement becomes reality, the clubs face a massive shortfall as they try to finance the professional era.
"We are alarmed by this possibility, and so should all of English rugby," Kerr said yesterday. "It is not just the senior clubs that will lose out, but every club, right down to the junior clubs."
Another side-effect of yesterday's news is that the workings of the RFU are likely to be overhauled. Richardson announced that the RFU committee had agreed on a special working party, with two independent, non-committee members, to investigate the working practices between officers, committee, subcommittee and staff, in order to make policy recommendations to be adopted. This was announced at last week's annual meeting in London and has now been rubber-stamped by Twickenham. It is likely to redefine the roles of key RFU officers and committee men.
The Welsh Union has told the RFU that the proposed Anglo-Welsh club competition cannot take place until a joint TV and sponsorship package has been negotiated.
Will Carling, who resigned as England skipper last season, has been appointed vice-captain of his club, Harlequins.Reuse content