• BusinessWeek, Thursday, September 18, 2008 9:15 AM

MGM, Lionsgate and Paramount have been working to create a premium movie channel that would take on HBO, Showtime and Starz. They were counting on Comcast to be a partner and distribute their channel, but Comcast recently pulled out.

Now the three Hollywood studios are scrambling to find distribution partners--including offering "market exclusive" deals with satellite or telephone providers eager to steal subscribers from Comcast. "We're flexible," says Mark Greenberg, the executive who runs the venture, called Studio Three Partners.

Observers point out that movie watching is declining on channels such as HBO and Showtime, which now entice viewers with original programs like HBO's "Entourage." Nonetheless, the studios have committed around $100 million to launch the yet-to-be named channel in the fall of 2009.

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