Viacom, Time Warner Cable face midnight deadline

Viacom Inc. has threatened to pull its programming in a high-stakes showdown over pricing. Nearly 2 million homes in the Los Angeles area that are customers of Time Warner Cable Inc. could lose such Viacom channels as Nickelodeon, MTV, VH-1, Comedy Central, Spike, TV Land and BET.

Viacom blamed the cable company for the stalemate.

"We've been attempting to negotiate in good faith but they seem to have taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom. The company's two-year contract with Time Warner, the nation's second-largest cable company, which provides service to 12.3 million homes, expires at midnight.

The two sides could still resolve their dispute today, allowing Time Warner customers on New Year's Day to see "Engaged & Underage: The Bridal Bowl" on MTV or an episode of "iCarly" called "iCarly Saves Television" on Nickelodeon.

On Tuesday, however, both sides appeared to be dug in to their positions, with Viacom placing newspaper ads and TV spots utilizing characters such as Dora the Explorer to encourage viewers to call Time Warner and complain. The media giant used similar tactics in a dispute with satellite broadcaster EchoStar Communications nearly five years ago.

"It rarely comes to this," said television consultant Larry Gerbrandt of Media Valuation Partners in Beverly Hills. "If they go off the air, no one wins. Customers will get upset at Time Warner and they could lose subscribers, and Viacom will lose important advertising revenue."

For its part, Time Warner said Viacom's demands for higher fees were "egregious," particularly at a time when the country is in the throes of an economic recession and subscribers are sensitive to costly cable bills.

"We are being put in an awkward spot," Time Warner Cable spokesman Alex Dudley said. "Advertising revenue stinks so they are looking to stick our customers for the difference. We have to hold the line for our customers."

SNL Kagan cable analyst Derek Baine said, "It's a really bad time to be squeezing people for a rate increase."

Viacom, however, said it was asking for only a modest increase of about 25 cents a month, or $3 a year, per subscriber for its package of 20 channels.