A bidding war has broken out for Metro-Goldwyn-Mayer Inc. (MGM), with Time Warner Inc.  (TWX) making a nearly $5 billion offer for the venerable Hollywood studio, according to newspaper reports.

The New York Times and The Wall Street Journal reported in Thursday editions that Time Warner has made a preliminary offer for MGM that rivals overtures from Sony Corp (SNE).

The reports of the rival bid for MGM sent the company's shares surging 68 cents, or nearly 6 percent, to $12.78 in early trading Thursday on the New York Stock Exchange.

MGM chairman and chief executive Alex Yemenidjian alluded to a bidding war during a presentation Tuesday to shareholders at the Beverly Hills Hotel. "We have more strategic alternatives available to us than we realized," he told about 100 shareholders.

MGM, famous for "The Wizard of Oz" and the James Bond (search) and the Pink Panther (search) series, has been in talks with Sony for months over a sale that would value the studio at $5 billion. MGM continued talks with Sony even after a 15-day exclusive negotiation period expired in late May.

Under that proposed deal, Sony would contribute about $1.5 billion of the $3 billion in cash needed to close the deal. The rest would come from Sony's financial partners, which include Texas Pacific Group and Providence Equity Partners.

Sony has not been able to close the deal due to a snag with its partners on financing terms. At issue is how soon the partners would be bought out of their investment by Sony, sources familiar with the talks have said.

Billionaire Kirk Kerkorian (search) owns 74 percent of MGM, which is being courted primarily because of its vast film library of more than 4,000 titles.

A bid from Time Warner could raise warnings flags with antitrust regulators since the giant media company already owns Hollywood powerhouse studio Warner Bros.

A strong bid from Time Warner would also mark a return to the deal-making table for the media giant after several years' absence. Time Warner has spent the last few years repairing its balance sheet and reorganizing its management and corporate structure following the disastrous merger with America Online in 2001.

In recent months, the company has been carefully considering new deals, including a possible offer for cable systems owned by now-bankrupt Adelphia Communications Corp.

Time Warner remains hampered in its deal-making by a continuing investigation into its accounting practices by the Securities and Exchange Commission (search), placing limits on its ability to issue new securities.