Blackout looms as Time Warner, Viacom talks stall

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New York: Viacom Inc and Time Warner Cable remained at a standoff on Wednesday, but were hopeful that top executives would step in to resolve a dispute that threatens to prevent more than 13 million US subscribers from seeing "Dora the Explorer" and Jon Stewart.

No face-to-face meetings between executives have occurred for several weeks, sources on both sides said. The sources asked to remain anonymous because they were not authorized to discuss the situation publicly.

At issue is an extra $35 million to $40 million that Viacom wants Time Warner to pay for carrying its cable channels, including MTV, Comedy Central and Nickelodeon.

Time Warner has refused saying the economic climate makes it impossible to pass along such costs to its customers. Viacom has denied Time Warner's request for an extension of the current terms.

Instead, Viacom threatened to pull its TV networks from Time Warner at midnight on January 1 unless a deal was reached. Viacom also wants Time Warner Cable's Chief Executive Glenn Britt to become more active in the talks, sources said.

Although disagreements between cable carriers and programmers are common, this one is particularly notable given it involves two major companies, threatens top shows, and has prompted a high-profile advertising campaign.

Time Warner is a major outlet for programmers with its 13.3 million video subscribers and presence in New York, Los Angeles, Dallas and Cleveland.

But Viacom has an equally strong hand. It controls 19 cable TV networks that offer "Dora the Explorer" and "The Daily Show with Jon Stewart" among others.

Viacom has taken its case to the public in an ad campaign.

"Why is Dora crying?" read an advertisement Viacom placed in The New York Times. "Time Warner is taking Dora off the air tonight! Along with 19 of your favorite channels."

HIGH STAKES STANDOFF

Affiliate fees have become even more important as the recession has crimped advertising revenue.

But neither side is well-positioned for a long standoff. Time Warner Cable is about to lose the protection of parent company Time Warner Inc, with a planned split off in early 2009. Viacom, meanwhile, has come under scrutiny as its controlling shareholder, mogul Sumner Redstone, faces his own debt crunch.