SANTA MONICA, Calif. ( TheStreet) -- Lions Gate Entertainment ( LGF) hinted it would drop out of the auction for Metro-Goldwyn-Mayer, leaving only two bidders for the debt-ridden film studio, a report says.

The move comes after MGM indicated that it found Lions Gate's $1.3 billion to $1.4 billion offer insufficient and was preparing to ask for a higher bid, the Wall Street Journal reports, citing people close to the company. Lions Gate decided not to submit another offer, these people told the newspaper.

Lions Gate's decision to back out of the MGM auction was unrelated to recent events involving activist investor Carl Icahn, who has offered to buy all of the Lions Gate shares he doesn't currently own for $6 apiece, these people told the Journal.

With Lions Gate out of the picture, only two offers remain: one from Time Warner ( TWX) and another from billionaire Len Blavatnik's Access Industries. Both offers are for $1.5 billion or less, lower than MGM's expectation of $2 billion, the Journal says.

MGM declined to comment for the Journal.

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