Disney Plans a Mainstream Record Label : Entertainment: The firm says it will start from scratch because mergers have pushed acquisition prices out of sight.

In a widely expected move, Walt Disney Co. announced Tuesday that it will wade into “the mainstream” of the recorded music business by starting a new label to be run by Peter T. Paterno, an industry lawyer who has represented heavy metal acts.

Disney--which already owns the largest children’s music company in the world--recently told Wall Street analysts that it would enter the industry’s mainstream, and Paterno told The Times last month that discussions about his hiring were under way.

In a prepared release, Disney Chairman Michael D. Eisner said the company elected to start from scratch because a wave of mergers “has driven the cost of record company acquisitions beyond feasibility.”

The name tentatively selected for the new unit is Hollywood Records, the company said.

Some industry executives have questioned whether image-conscious Disney has the stomach for hard-rock albums, which have drawn fire from pulpits and Capitol Hill, but Disney has apparently given its answer with the hiring of Paterno as president of the division. His clients include Metallica (a band that delivers with “fury,” according to one reviewer) and Guns N’ Roses, which became a phenomenon several years ago with its “Appetite for Destruction” album.

A start-up operation is “difficult, but they’ve always been in the record business,” said Gordon Crawford, a senior vice president of Capital Research Co. who specializes in entertainment stocks. “I don’t doubt their abilities to do much of anything,” Crawford continued, praising the Eisner-led management. “Since taking over the company, they’ve done everything right.”

Eisner told a news service that he expects the launch to cost less than one motion picture movie, which averages about $18 million these days, but the costs could be even lower. Warner recently reached an agreement to spend $50 million to $60 million over five years to launch a new record operation with former MCA Records chief Irving Azoff, an industry source said.