Sorry, but it sounds like it's fucked. My PS2 did the same thing (my first one) except it did it with games as well. It was out of warranty. I bought my friend's PS2 for $140 (this was back when PS2's were $300).
First-gen PS2's are known for having major technical issues like the first-gen PS1's did. Try to get a new or used PS2. There's not a very big chance of getting it repaired.
Maybe the $99 price drop is more than a rumor. Maybe it's not. Either way, I'd be getting a new one. There's a ton of great games coming out for PS2 in the next two months.
-Lasereth