NEW YORK, May 19 -- Showtime Networks has announced a pact with Paramount Pictures that gives the premium cable channel exclusive rights to the studio's releases beginning in 1998. The seven-year deal, said to be worth about $1 billion, has been widely expected since Showtime's parent company, Viacom, acquired Paramount last year for $10 billion. Paramount's current exclusive license with Showtime rival Home Box Office, owned by Viacom competitor Time Warner, expires at the end of 1997. The agreement, which covers 196 feature films Paramount plans to produce between 1998 and 2004, also includes the rights to 300 titles from the vast Paramount Pictures' library. The deal could be worth far more than $1 billion to Paramount if the studio hits paydirt with a series of blockbusters. Hollywood trade papers reported the agreement has a sliding-scale clause that ties Showtime's license fee for each new title to the film's performance at the box office. Cable industry analysts said the agreement with Paramount is crucial for Showtime because the network will lose some of its current exclusive licenses with other studios to the upstart Starz! premium cable channel in the next few years. Showtime currently has deals with Disney's Touchstone and Hollywood Pictures, MGM, TriStar Pictures, Castle Rock and PolyGram Pictures. Industry trade papers reported HBO didn't put up much of a fight to renew its Paramount license once Viacom completed its acquisition of the studio. HBO, which has about 20 million subscribers compared with Showtime's 7 million, has exclusive arrangements with Warner Bros., 20th Century Fox, Columbia, Savoy and the fledgling DreamWorks studio founded by Steven Spielberg and two other moguls.

In other cable industry news, HBO has announced a joint venture with the British Broadcasting Corp. to co-produce four films, industry trades reported. The BBC and HBO previously collaborated on the acclaimed 1992 documentary 'Disaster at Valdez.' The first movie produced under the new deal will be 'Black Tuesday,' a World War II-era drama about the relationship between a black American serviceman and a young Englishwoman. Singer-actor Harry Belafonte will be involved in the project as an executive producer.