Paramount, which is owned by Viacom, will enter a partnership with Lionsgate Entertainment and Metro-Goldwyn-Mayer studios on the project. The channel is expected to go on the air in September 2009.
"This venture has the potential to be a game-changer for the industry," said Philippe Dauman, CEO of Viacom. "We are creating a premium film and television programming brand with unique flexibility to bring consumers the very best blockbuster movies and innovative TV series."
The Los Angeles Times said Monday films that could be available to Paramount and its partners include new releases, such as "Iron Man" and "Cloverfield" as well as the James Bond and "Saw" franchises.
Viacom also owns CBS, which is the parent of Showtime.
The Times said Viacom had stated in the past that its individual companies would be free to pursue their own projects regardless of whether bumped heads with any of their sister companies.