By Jessica Toonkel and Liana B. Baker
(Reuters) - MGM Holdings Inc is in talks to acquire the 81 percent of Epix it does not already own from two of its partners in the premium U.S. channel, Viacom Inc and Lionsgate, people familiar with the matter said on Thursday.
The deal would give MGM, a privately held U.S. movie studio best known for its classic film library, control of Epix and would be a boon to its TV business, as it seeks to build a stronger platform to distribute its content.
Viacom is looking to sell its 50 percent stake in Epix to help pay down its $12 billion debt load, the sources said.
Lionsgate has already said it is exploring options for its close to 32 percent stake in Epix following its $4.4 billion acquisition of pay TV network Starz Entertainment LLC.
Under the terms being discussed, Paramount and Lionsgate would continue to distribute their shows and movies through Epix for several years, according to one of the sources, cautioning that there is no certainty an agreement will be reached.
Any deal would likely value Epix, which comes with an online streaming service, between $1 billion to $2 billion, the sources added.
The sources asked not to be identified because the negotiations are confidential. Representatives for MGM, Epix, Lionsgate and Viacom declined to comment.
Famous for its library that includes James Bond, Rocky and other classic movies, MGM co-produces and distributes television shows such as Teen Wolf on MTV, Vikings on A&E and Fargo on FX. It also owns MGM-branded U.S. channels that largely play its films and international networks.
Viacom CEO Robert Bakish, who took over as CEO late last year, is looking to turn around the media company's business, which has underperformed due to lackluster ratings and ad revenue.
Bakish told investors at Deutsche Bank's media and telecommunications conference this week that he is looking to make Viacom's debt investment grade, and that the company will sell non-strategic assets.
Epix, whose shows include "Berlin Station" and "Graves," has about 14 million subscribers, according to research firm SNL Kagan. MGM has been exploring its options for some time following its emergence from bankruptcy six years ago. It is controlled by hedge funds including Anchorage Capital Partners and Highland Capital Partners.
(Reporting by Jessica Toonkel in New York and Liana B. Baker in San Francisco; Editing by James Dalgleish)