WASHINGTON, Aug. 12— The Justice Department said today that it would permit a merger of Showtime and The Movie Channel, the second- and third-ranking pay television companies, because the proposal no longer includes two major movie distributors as co-owners.
The department had announced in June and again in July that it objected to merger proposals on the ground that they violated antitrust laws.
But today, Assistant Attorney General William F. Baxter, who heads the antitrust division, said he no longer objected, primarily because the new proposal involved only one motion picture distributor, Warner Brothers. The earlier proposals would have included Paramount Pictures, owned by Gulf and Western Industries, and Universal City Studios Inc., which is owned by MCA Inc.
The three motion picture distributors account for a large portion of the movies licensed by major pay television services. Second- and Third-Largest
Showtime is the second-largest pay television service, and The Movie Channel ranks third. The largest pay television service, with 60 percent of the market, is Home Box Office, owned by Time Inc. Together, the three services control nearly 100 percent of the market. But Mark Sheehan, a spokesman for the Justice Department, said that the focus of its antitrust objection was not on the pay-TV services as such, despite their scope. He said that there was a low barrier to entry into this area by other companies and that the merger would not make the development of such competition any more difficult.
The Justice Department said it had informed attorneys for Warner Communications and American Express, which own The Movie Channel, and Viacom International Inc., which owns Showtime, that it would not challenge the merger. Under the current proposal, Viacom and Warner Amex, a joint venture of the other partners, would each own 50 percent of the Showtime/Movie Channel services. Competitive Aspects
Dave Fluhrer, a spokesman for Viacom in New York, said the company was very pleased by the Justice Department decision. But he declined to speculate on what financial effects the merger would have on Showtime and The Movie Channel as a result of the merger.
In opposing the earlier merger proposals, the Justice Department had argued that they would have stifled competition among distributors in the sale of movies and other programs to cable systems and pay channels.
The merger would increase concentration in the field, but if the merged company raised prices significantly, other services could easily enter the market, Justice Department officials said. ''That new competition would prevent any anti-competitive effect from arising,'' said Wayne Collins, Deputy Assistant Attorney General. ''It's very easy to enter into direct competition,'' he added.
Mr. Sheehan, the department spokesman, said the decision was not a reversal for the department.
''They modified their earlier proposal, which we turned down on July 28,'' he said. ''The more they talked to us, the more they got an idea of what we would or would not object to.''
The previous proposal involving the three studios would have brought together distributors of about half of the market of movies for television.
Such a combination would produce incentives for the merged company to raise prices. ''They could make their product prohibitively expensive for other pay television services,'' Mr. Sheehan said.