BSkyB warned today of a possible £20m hit to profits if a row with Virgin Media leads to its basic channels being pulled from the cable network.
Virgin Media's contract to air Sky One, Two, Sky News and Sky Sports News ends at midnight on Wednesday unless the two sides can agree on a renewal price.
BSkyB, chaired by Australian media mogul Rupert Murdoch, said today that it hoped a deal could still be done - but admitted Virgin Media appeared to have "walked away" from negotiations.
It estimated that, if an agreement was not reached in the remainder of its financial year to June 30, it could see a reduction of between £15m and £20m in operating profits.
This reflects lower carriage fees and weaker advertising revenues, but does not include the potential benefit of cable customers switching to Sky.
Virgin Media, rebranded from NTL earlier this month, claimed on Friday that Sky had tried to deliberately sabotage the negotiations by doubling the price of its channels.
Chief executive Steve Burch called Sky's behaviour "heavy handed and anti-competitive".
Last month, BSkyB today reported its best quarter for new customers in six years. The group said it attracted 432,000 new digital-to-home customers in the final quarter of 2006.
Sales of Sky Plus boxes exceeded 2m, while demand for Sky's high-definition product almost doubled.
BSkyB's fledgling broadband service also got off to a good start - with bookings reaching 343,000 by the end of January.
But half-year operating profits slipped to £395m from £414m, due partly to costs of getting the broadband service up and running.
Tycon Sir Richard Branson launched Virgin Media earlier this month following cable operator NTL's takeover of Virgin Mobile and Telewest last year.
The newly-named company competes with BSkyB to provide the "quadplay" of digital TV, broadband internet access and mobile and home phone services.