MGM enters second round of sale bidding, sources say

Lions Gate Entertainment Corp. and the Weinstein Brothers are among the potential buyers of Walt Disney Co.'s Miramax film unit, sources familiar with the situation said.

Independent studio Summit Entertainment, which is behind the popular Twilight franchise, could also be interested in Miramax, said the sources who spoke on condition of anonymity.

The potential sale of Miramax comes as the auction for another storied Hollywood studio, Metro-Goldwyn-Mayer, entered a second round of bidding.

The New York Post reported that Lions Gate could initially bid from $500 million to $600 million for Miramax. This would be five times the studio's roughly-$100 million in annual cash flow and about twice its $300 million in revenue.

Disney has put Miramax up for sale because its library of mostly small, independent films does not mesh with the media giant's plan to overhaul its movie operations, a source close to the company said.

Disney is focusing on its own movie brand, as well as films made by its Pixar division and the newly-acquired Marvel, and a distribution deal with Steven Spielberg's DreamWorks studio.

Disney is asking between $650 million and $800 million for Miramax, home to art-house fare like Clerks and No Country for Old Men, said a source close to one potential bidder.

But a $500 million to $700 million price tag is seen to be more realistic, according to another source.

While DVD sales have slumped and will likely hurt the price of any studio sale, the libraries of both MGM and Miramax still generate cash flow through licensing deals for television and other distribution channels.

But a person familiar with Lions Gate, home to the popular "Saw" franchise, said the company was "price sensitive" and not as aggressive as the Post story suggested.

Initial bids, including from Time Warner Inc. and Lions Gate, had come in below $2 billion, sources have said.

MGM has said it is conducting due diligence with select bidders and that "process is expected to run for the next several weeks". MGM is considering a pre-packaged bankruptcy along with a sale, other familiar sources have said.

The studio has a library of more than 4,000 titles, including the James Bond and Pink Panther franchises.