The Philadelphia-based Reading Company said it was leading an investor group for MGM, which is Britain's biggest cinema chain with 98 traditional theatres and 18 multiplexes. The sighting price is believed to be around pounds 180m.
Reading said it was discussing with its largest shareholder, Craig Corporation, the possibility of it participating in the transaction. It is understood that the other two in the consortium are Virgin and the investment bank CS First Boston.
The emergence of the Reading group as the preferred buyer is a blow for Michael Green's Carlton Communications, which appeared last weekend to be the front-runner to capture MGM.
It also stymies the expansion hopes of Rank Organisation, another bidder, which had hoped to more than double its considerable UK cinema presence.
The Reading group now has exclusive rights to negotiate the deal with Credit Lyonnais's adviser, S G Warburg.
The company was obliged to put out an announcement under the rules of its stock exchange, the Nasdaq. It said: "It is not the company's practice to comment on ongoing transactions, and the company will have no further comment until such time as an agreement is executed. No assurances can be given that any transaction will ultimately be consummated."
It is thought that Virgin believes there is massive scope for revenue enhancement in British cinemas, which are seen as old-fashioned and unimaginative by American standards. It sees opportunities for everything from Virgin in-cinema stores to fresh popcorn.
Its partner, Craig Corporation, is one of the biggest cinema operators in California. Craig is credited with inventing the drive-in movie-house. It made a fortune in the 1960s and 1970s converting those drive-ins into shopping malls.
The MGM sale has been twice delayed already. A new difficulty could present itself next week.
Giancarlo Paretti, the former owner, is attempting to stop the sale and is due to issue a writ in the Los Angeles Supreme Court on Tuesday as part of a $4bn (pounds 2.5bn) claim against Credit Lyonnais.