Spyglass Entertainment heads Gary Barber and Roger Birnbaum and MGM are in talks on how a partnership between the companies would look, reports THE HOLLYWOOD REPORTER. According to WSJ.com MGM would be valued at $1.9 billion and Spyglass execs would hold a 4% share in a new joint venture.

The biggest stumbling block is how productions would be funded. Spyglass has been unable to come up with new equity capital, which is key to MGM's deals with its creditors. Spyglass receives its production cash from Cerberus Capital, but Cerberus is not interested in providing funds for MGM productions.

Additionally, MGM is still talking to Lionsgate. A new proposal would give Lionsgate's activist shareholder Carl Icahn a seat on the combined company's board, hopefully removing him as a roadblock to any deal moving forward.

Summit Ent. has an offer on the table as well.

MGM is in nearly $4 billion worth of debt and its owners, which include Providence Equity, TPG Capital, Sony, Comcast, DLJ Merchant and Quadrangle, would like to avoid bankruptcy because it would remove their equity share in the company.