I don't know for sure, but I'm guessing UPN asked WWE to produce a show for them, and WWE may have just requested it to air on Thursdays to compete with Thunder. If the show was originally WWE's idea I don't see how UPN would have come into the equation, I guess they would have asked USA to air it because at that time they aired all of their programming.
Back in 1999, the WWF had a product that demanded another show. Getting onto a network was the potential for great exposure. But the WWF were willing to do business with whoever was going to give them the time of the day once they were public. They put Heat on USA, then moved it to MTV and also gave them Tough Enough too. They also had plenty of stuff floating around in syndication and for international use as well.
Thunder came about because TBS wanted to get in on the wrestling craze. WCW didn't really want to do it, haha. It was kind of an albatross for them. The WWF wasn't "worried" about Thunder at all.