Time Warner Inc, Lions Gate Entertainment Corp and billionaire Len Blavatnik's Access Industries put up rival bids of $1.2 billion to $1.5 billion for studio Metro-Goldwyn-Mayer, sources familiar with the matter, told Reuters on Monday.

Time Warner put in the highest bid of the three, the sources said. The company has been seen as most likely to walk away with MGM and its library of mostly classics, such as the James Bond franchise.

The offers were far less than MGM first expected. MGM, which is struggling with $3.7 billion in debt, had initially hoped for bids of at least $2 billion.

The studio said in a statement on Monday it received a number of bids which it will review over the next several weeks.

The Friday deadline for a second round of bids for MGM was unofficially extended after Time Warner did not immediately put in a bid, the sources said.

MGM also said it expects to work with lenders to extend the forbearance period on its bank debt, which ends March 31, and that it expects to seek a forbearance agreement for its revolving line of credit, for which a payment is due April 8.

Independent studio Lions Gate, industrial holding company Access and Time Warner declined comment. The sources spoke on condition of anonymity because details of the auction have not yet been made public.

MGM studio said in November it was exploring a potential sale of the company.

A committee of MGM's creditors is expected to meet on Tuesday and will assess the company's situation, the sources said.

DEBT STRUGGLES, FEW BUYERS

The storied movie studio, which enlisted turnaround specialist Stephen Cooper last year to help it restructure, has been saddled with the debt from a 2005 buyout and also has a $250 million revolving credit facility maturing in April.

MGM, whose vaults contain more than 4,000 film titles, received a lot of initial interest from rival media companies and buyout shops, but not all of it has translated into actual offers.

Liberty Media Corp, AT&T Inc and independent studio Summit Entertainment were among the companies that signed non-disclosure agreements to look at the business.

News Corp offered to provide cash and help with restructuring debt, but it has not put in a bid for the company, sources said.

MGM's library includes the James Bond and Pink Panther franchises. The studio also owns a piece of the two Hobbit films to be produced by Lord of the Rings director Peter Jackson. But it has been struggling to create new hits and is also trying to cope with plunging DVD sales caused by consumers moving online.

MGM's debt stems mainly from a $2.85 billion buyout in 2005 by a group including four private equity firms -- Providence Equity Partners, TPG, Quadrangle Group and DLJ Merchant Banking Partners, a unit of Credit Suisse -- and media companies Sony Corp and Comcast Corp.

The Lions Gate bid comes just after billionaire investor Carl Icahn offered to buy Lions Gate in a move designed to forestall the studio's bid for MGM.

Even though shareholders are unlikely to bite because Icahn's offer is low, Icahn's argument that Lions Gate should focus on consolidating film and TV distribution rather than buying film libraries, could complicate matters.

(Reporting by Jui Chakravorty, Yinka Adegoke and Alex Dobuzinskis; Writing by Alex Dobuzinskis; Additional reporting by Megan Davies and Emily Chasan; Editing by Carol Bishopric)

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