MGM bid battle on the horizon

LEGENDARY movie studio MGM may become the subject of a full-scale bid battle as major media groups signal their interest in the company which is already negotiating with Sony.

General Electric's increasingly acquisition-hungry media arm NBC has expressed interest, as has Time Warner, which is believed to be considering a partnership with buyout specialist Thomas H Lee Partners to launch a joint bid.

Its position has been strengthened by a big leap in profits thanks to a sharp increase in advertising on its TV networks. The company yesterday reported a first-quarter rise in profits of 143% to $961m (£542m).

Sony has been talking to MGM for more than a week about buying the studio whose major shareholder is the unpredictable financier Kirk Kerkorian.

Its interest appears to have spurred other companies to look at MGM. The Japanese company is discussing a leveraged buyout worth about $5bn which it would finance in partner-ship with private equity firms Providence Equity Partners and Texas Pacific Group. It continues to look like the front-runner in the race to buy MGM.

Kerkorian has bought and sold large stakes in MGM twice before. The studio has also, in the past few years, talked about a deal with several potential buyers, including Sony and TW, but nothing came of them.

Time Warner's strong result has put it firmly in the focus of analysts. 'They did fantastic,' said Richard Greenfield, an analyst at Fulcrum Global Partners.

Its AOL online business reported another drop in subscribers during the quarter, but chief executive Richard Parsons said the unit was building impressive momentum.

There had been strong speculation that the company wanted to unwind its disastrous merger with AOL as soon as possible. However, speculation mounted that it may sell off CNN, its cable news division after Mel Karmazin, head of network TV channel CBS, said he would interested in buying it.