What went sour for VMTV/Flextech was Virgin's losses back in the day - in order to recoup from the losses made by NTL, Telewest and the early years of Virgin Media, they decided to sell their non-core assets - VMTV was one of them.
Sky bought them eventually and were completely integrated with the Sky business - while also culling channels such as Bravo and Channel One.
I personally felt shocked at hearing of Bravo's closure - Sky claimed it was because male audiences are served well with Sky1 - which is questionable now considering that it's been propped up to attract a much wider audience. It was also well-established, why shut it off? I think that Sky execs are rethinking on what they've done - they've left an entire demographic for ITV, UKTV, Discovery and Viacom to gobble up. It's also even worse for them now that they're struggling to carve out an identity in the case of Sky Living, and spreading content thinly between 1, Living and Atlantic.
Channel One speaks for itself - there's no way that Sky would have to deal with breaking the now archaic three channel threshold on COM5/Mux C, as well as spreading content too thinly across their channels. They also had a Freeview channel in Sky3, making it pointless to keep it running.
Not hating on Channel One though, it was one of my favourite channels on Freeview at the time - but Sky wasn't prepared to struggle filling channels with a limited house of content that would go into furnishing its own services such as Sky1, Living and Atlantic. Aspects of the former Virgin1 service can still be seen in Pick now these days.
I do think selling VMTV also made Virgin Media hit a snag with their TV service until recently, with new exclusive content and the V6 box.