Gannett follows Express Newspapers owner Richard Desmond, who pulled out of the race to buy the Daily Telegraph on Friday when his Northern & Shell holding company failed to bid high enough.
The Sunday Times cited an unnamed executive at Gannett as saying that the price being asked by Hollinger International for the Telegraph Group was "crazy".
In the second round of bidding the billionaire Barclay brothers are said to have offered a sum of around £670m for the Telegraph titles.
The Daily Mail & General Trust is thought to have offered a similar sum, with reports suggesting that its offer is £700m in a bid made in conjunction with private equity partner Cinven.
Desmond is understood to have submitted an offer that was lower than £550m and it is believed that Gannett, which owns regional newspaper group Newsquest in the UK, refused to bid more than £600m for the UK's biggest broadsheet newspaper.
However there is speculation that Desmond could yet rejoin the race and bounce back with a higher offer.
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