Utah isn't making a demand but discussing the current situation. BYU could say yes, and keep the thing going, they clearly didn't and I don't blame them frankly.
I think it is more the "we would like to keep it going but here is our situation" type discussion. The landscape changed for Utah when they entered the PAC 12 and are feeling their way in unknown territory. BYU has a choice and took the expected path, and probably the right path for them.
Utah didn't 'demand' anything. It was a discussion and it didn't work.
Any BYU fan who believes the University of Utah Administration doesn't fully respect BYU is nuts. There is very healthy respect but it just may not work for a while.
It's too bad really. It would be great to have the game continue.