U.S. film studio Spyglass Entertainment has emerged as the leading contender to run debt-ridden Metro-Goldwyn-Mayer Inc, the Wall Street Journal reported, citing people familiar with the matter.

Under a plan being discussed with the MGM's creditors, Spyglass co-heads Gary Barber and Roger Birnbaum would run the studio as co-chief executives, the paper said.

Both sides are pushing to get a deal done before a waiver on MGM's debt expires in mid-July, the newspaper said.

Spyglass is the preferred choice of a group of hedge funds holding large amounts of MGM's debt, according to the paper.

Hedge funds including Anchorage Advisors, Highland Capital Management and Davidson Kempner Capital Management are part of a group that holds more than a third of MGM's bank debt, the paper said.

Summit Entertainment, which has also been in discussions with MGM and its creditors, remains a candidate to run the company, the newspaper said.

A merger of the two studios could mean an initial public offering down the line, the paper said.

MGM and Spyglass were not available to comment.

MGM, which has a film library that includes the James Bond and Pink Panther franchises, has been struggling to create new hits and is also coping with plunging DVD sales as consumers move to viewing online.

A $2.85 billion buyout in 2005 saddled the company with debt.

(Reporting by Anne Pallivathuckal in Bangalore; Editing by Dan Lalor)