By Benjamin Mullin, Cara Lombardo and Juliet Chung

MGM Holdings Inc., the movie studio behind the "James Bond" franchise, is exploring a sale, according to people familiar with the matter, betting that its library of content will prove attractive to companies pursuing growth in streaming video.

Closely held MGM has tapped investment banks Morgan Stanley and LionTree LLC and begun a formal sale process, the people said. The company has a market value of around $5.5 billion, based on privately traded shares and including debt, some of the people said.

The studio has contemplated a sale at various points over the past few years, but potential suitors have previously balked at the price MGM was seeking. MGM is hopeful the current process will generate interest beyond Hollywood's traditional players, from international media companies, private-equity investors and blank-check companies, one of the people familiar with the matter said.

MGM's biggest shareholder, New York hedge fund Anchorage Capital Group, has come under pressure in recent years from weak performance and defecting clients, and its illiquid investment in MGM has become a larger percentage of its hedge fund as it shrinks.

MGM's exploration of a possible sale comes amid a bidding war for content to fill a new wave of streaming-video services. MGM's library of titles could make it an attractive target, its investors say.

The film studio has produced or distributed movies and TV shows including the "Rocky" franchise, "The Handmaid's Tale" and "Vikings." It has struck deals to license movies from its library, including "Silence of the Lambs," "Dances with Wolves," "Rain Man" and "The Terminator."

MGM's biggest asset is the "James Bond" franchise, which it shares with Danjaq LLC, a holding company owned by the Wilson/Broccoli family, that co-owns the copyright to existing "Bond" movies and controls the future of the franchise.

MGM also owns Epix, a premium TV channel and video-streaming service, and purchased an ownership stake in "Survivor" producer Mark Burnett's production ventures.

In 2018, MGM fired its then-chief executive, Hollywood veteran Gary Barber, for having early, unsanctioned conversations with Apple Inc. to sell the studio for more than $6 billion. The preliminary talks fell apart when he was ousted. MGM board chairman Kevin Ulrich, co-founder of Anchorage, told studio investors at the time he could sell MGM for more than $8 billion in two to three years, The Wall Street Journal previously reported.

But the price of the company's shares, which are privately traded, has dropped steeply since then. It trades around $80, well above the $17 a share it commanded coming out of bankruptcy in 2010 but below the about $120 it traded around in 2018 in hopes of the Apple deal.

Mr. Ulrich has told clients in recent months he was working toward a deal for the studio and has spoken of big technology companies as logical buyers, investors have said.

Anchorage and several other hedge funds bought MGM's debt before it filed for bankruptcy in 2010 and then became shareholders of the restructured studio. They and other hedge funds that later got involved made a canny bet that distributors would make a land-grab for content.

Their plan was to boost the value of MGM's library with new hits and then exit through an initial public offering or the sale of the studio. Few expected to remain in MGM a decade on.

Mr. Ulrich and other investors had been hoping for a deal around the release of "No Time to Die," expecting the film's release would increase the library's value while creating publicity that could spark interest from a buyer. MGM's postponing the premiere of "No Time to Die" from November to April 2021 so it could be seen in theaters is expected to deliver a blow to MGM's 2020 earnings before interest, taxes, depreciation and amortization, a measure of cash flows.

While movie theaters have remained dark for most of the year as a result of capacity restrictions, the pandemic has proved a boon in some ways for MGM. Its production business suffered earlier in the year, but its library has benefited from strong demand because of the broad dearth of new content, MGM said earlier this year.

In a third-quarter earnings call, Chief Operating Officer Christopher Brearton said production had picked back up and that MGM was possibly on track to have its biggest year for new content in 2021.

In the first three quarters of 2020, MGM reported $181 million in adjusted Ebitda, compared with $123 million over the same period last year. It attributed the growth to the studio's stronger television-licensing revenue and lower marketing expenses, though MGM noted it was partially offset by film releases delayed by the pandemic.

Possible suitors expressed interest in MGM this spring as people stayed home and demand for streaming picked up, a person familiar with the process said. Interest has picked up recently as companies look ahead to a long winter and an uncertain time frame for reopening, this person said.

--Joe Flint contributed to this article.

Write to Benjamin Mullin at Benjamin.Mullin@wsj.com, Cara Lombardo at cara.lombardo@wsj.com and Juliet Chung at juliet.chung@wsj.com

(END) Dow Jones Newswires

12-21-20 1853ET