The Justice Department said yesterday it would file suit to block a revised plan to merge three movie studios with Showtime and the Movie Channel, the nation's second and third largest pay television networks.
Word of the decision came in a brief announcement by William Baxter, assistant attorney general for antitrust, and follows by just 10 days the presentation to Baxter of a revised merger agreement by the firms' executives.
A government spokesman said the proposed changes were not significant enough to alter the department's position.
On June 10 the antitrust division announced it would sue to block the deal, which involves Paramount Pictures; Universal Studios; Warner Brothers; Showtime, a subsidiary of Viacom International Inc.; and the Movie Channel, a joint American Express Inc.-Warner Communications Inc. venture.
Under the terms of the latest arrangement, the studios' productions would not be licensed exclusively to the pay television operation and would be made available to other services at the same rates, sources said.
There was no immediate substantive comment from participants in the merger. "Obviously we're disappointed," said a spokesman for Warner Communications. "The group will now contemplate its next step," said Terrence Elkes, president of Viacom.
The companies could drop one of the studios or pay services or perhaps challenge the government in federal court, although officials of both pay channels say they are willing to operate the services as stand alone businesses if the deal falls through.
Showtime, with about 4 million subscribers, and the Movie Channel, with about 2.5 million subscribers, have struggled for profitability, while HBO, with its 12.5 million subscribers, has become the bedrock of Time Inc.'s growing video division.