screenshot of the Guardian's story taken before it was pulled. The story is backed up by a tweet from the BBC's technology correspondent who says he was at a Microsoft event "where the firm is unveiling a TV content partner."
Emphasis seems to be on sport, as Sky has arguably the best sports coverage in the country. The story states 360 owners will also be able to access interactive leaderboards and news through the service. Unfortunately, users will need a Sky subscription, which for sports is around £34 a month. Clearly this is Microsoft's way of combating the fact that the 360 -- unlike the PS3 and Wii -- cannot access services like the free iPlayer due to the lack of a web browser. Not to mention the brilliant PlayTV for PS3.
No doubt we'll hear confirmation within the next few days if this is true but, judging from the evidence, all signs point to "real."
[Update] Reuters confirms it. Apparently the service will go live this autumn, though no pricing or channel details were given by either Sky or Microsoft.