Koch MGM Bid: Dead in Water? : Entertainment: French bank Credit Lyonnais let it be known it wasn’t interested, sources say.

The bizarre soap opera surrounding Metro-Goldwyn-Mayer Inc. took a new turn Thursday with prospective MGM suitor William Koch and adviser Jeffrey Berg apparently shelving plans to make a bid for the company.

The millionaire computer executive, in a letter to Credit Lyonnais Director General Francois Gille, said that for now he is abandoning plans to make an offer to buy the ailing studio from the French bank. He left open the possibility that he may be an interested buyer in the future.

The decision was made after Credit Lyonnais stiff-armed Koch by making it clear it is not interested in selling MGM until the company is rebuilt, sources said.

“The fact is, they don’t want to talk,” one source said.

Koch announced Monday he was interested in buying MGM, and since then has publicly discussed plans on talk shows and news programs. But Credit Lyonnais, which inherited the studio when it foreclosed on former owner Giancarlo Parretti, has repeatedly said it isn’t interested.

Berg’s involvement with Koch, who bankrolled the last America’s Cup victory, has been criticized by some who suggest he is trying to undermine a rebuilding effort led by his chief rival, Creative Artists Agency Chairman Michael Ovitz. CAA was hired in the spring to advise Credit Lyonnais on the studio, a move that Berg publicly criticized as a conflict of interest.

Frank Mancuso, the former Paramount Pictures chairman hired to revive MGM, has reacted angrily to Koch’s overtures and to the advisory role of Berg. Mancuso has privately suggested that the bid could undermine rebuilding efforts.

Koch’s campaign has been awkward at best. His efforts to pressure Credit Lyonnais and MGM have largely backfired, causing most people in Hollywood to dismiss it.

A news release Monday trumpeting Koch’s desire to buy the studio mistakenly referred to it as “Metro- Golden- Mayer.”’ On Thursday morning’s “Good Morning America,” Koch was asked by host Joan Lunden if “French Lyonnais” is the correct name of the studio owner.

“Yes, that’s right,” Koch responded, according to a program transcript.

In the same interview, he said, “We’re babes in the woods when it comes to movies and dealing in Hollywood.” And in his announcement, he said he would like to use MGM to show off America.

Others note that rumors of a new MGM suitor surface virtually every month. Also contributing to the skepticism is the absurdity of previously rumored bidders, ranging from Minnesota grain trader Cargill Inc. to jet-set playboy Bernie Cornfeld.

Most now believe the bank plans to keep the studio for at least 2 years before selling, which banking laws require it to do by 1997.