One emerging cable network could benefit from EchoStar Communications' proposed acquisition of direct broadcast satellite (DBS) rival DirecTV.

Moviewatch, a startup channel owned by Hubbard Media that promotes upcoming movies, has a preferred-provider contract with DirecTV that essentially guarantees distribution to DirecTV's 10 million subscribers. That could give Moviewatch an inside track to carriage to the combined satellite company's 17 million households and pressure cable operators to carry it as well.

Hubbard obtained preferred-provider status as a condition of the sale of the satellite provider U.S.S.B. to DirecTV in 1998. Neither DirecTV nor Moviewatch would disclose the terms of the confidential contract, but those types of contracts generally guarantee the next open channel available on a distributor's platform to a commercially viable network, said Jedd Palmer, a consultant with Buss-Palmer Consultants.

?If they do open up any new channels, they have to carry Hubbard Media,? he said.

EchoStar is not obligated to carry Moviewatch, and EchoStar spokesman Marc Lumpkin said it's too soon to tell whether the channel will be provided to EchoStar subscribers. ?We've got 9 to 12 months to review contracts, review programming and programming duplications that we do today so we can begin to learn how to get rid of duplicated carriage, which will free up channel space.?

But network executives hope EchoStar will be attracted to Moviewatch because of its programming and marketing value. Moviewatch is also offering favorable financial terms.

The network plans to survive on advertising revenue alone. Instead of charging operators a license fee, Moviewatch is offering to pay the distributor if carried to a large volume of households, said Gary Thorne, president and COO of Moviewatch. For example, if Time Warner Cable were to carry Moviewatch to 1 million households, the emerging network would pay Time Warner a quarter of a cent per subscriber.

The network's original programming will promote movies being launched in the pay-per-view and subscription windows and should increase buy rates for cable operators and satellite providers, said Rod Perth, president of television for Moviewatch.

Between its movie-oriented shows, including a weekly reality program about struggling actors, Moviewatch will offer interstitials highlighting precisely where and when a movie can be watched on each distribution system. This localization would help drive subscribers to PPV movies and subscription channels, such as Home Box Office or Showtime Networks. ?We want localization to become the equivalent of traffic reports in Los Angeles,? Perth said.

The localization is expensive. One source said Hubbard will spend $100 million developing the network.

Time Warner Cable has seen the new network's presentation but would not comment on whether it would carry Moviewatch, spokesman Mike Luftman said.

Jack Myers, president of the research and consulting company Myers Reports, says the channel fills a niche, because VOD is the highest priority for cable operators right now.

?Cable definitely needs to find better ways of promoting and marketing pay-per-view and video-on-demand, so Moviewatch is definitely the right time and the right place,? he said.

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