Company Town : Time Warner Stock Slips as Seagram Weighs Sale : Wall Street: There is fear that the media company’s shares may be dumped on the market in the wake of MCA deal.

Time Warner Inc.’s stock dropped Monday in the wake of Seagram Co.’s purchase of 80% of MCA Inc., reflecting investor fears that Seagram might soon flood the market with some of the 56.8 million shares it owns in the media conglomerate.

Time Warner shares slid $1.25 to $37 on the New York Stock Exchange. Seagram eased 12.5 cents to $26.375.

In a Securities and Exchange Commission filing Monday, Seagram issued a standard statement saying that it is evaluating its options, “including the possible sale of all or a portion” of its Time Warner shares.

In an interview Sunday, Seagram Chief Executive Edgar Bronfman Jr. said he has not had time to consider what to do with Seagram’s Time Warner investment because he has been preoccupied with making the deal to buy control of MCA for $5.7 billion, as well as selling $8.8 billion in DuPont stock back to the company. Bronfman said he expects to turn his attention to the Time Warner issue in the next few weeks.

Analysts are speculating that Seagram will either sell its Time Warner stock in sizable chunks over the next six to nine months to institutional investors or attempt to find a single buyer interested in taking a large position in Time Warner, possibly even one interested in making a bid for the company.

The latter is considered a long shot because there is a short list of buyers who can afford to buy all of Seagram’s shares, which have a current market value of about $2.1 billion. Even fewer could afford to bid for all of Time Warner, which has a market value of $14 billion.

Speculation has been that Bronfman might sell the stock to regional telephone company US West, which owns 25% of Time Warner Entertainment, a limited partnership controlled by Time Warner. But US West said Monday that it won’t be buying the stock.

Although Bronfman could conceivably keep his investment indefinitely, analysts expect him to sell the stock in the next few months because Time Warner is one of MCA’s chief competitors. Bronfman is likely to want to use the proceeds to invest in MCA.

Sources said it is unlikely that Bronfman will be under any antitrust pressures because he exerts no control at Time Warner and doesn’t even hold a seat on the company’s board.

In any event, Seagram’s prospective stock sale is not good news for Time Warner Chief Executive Gerald M. Levin, who is under pressure from stockholders to boost the price of the company’s shares. The stock has remained relatively flat for most of the last two years.

Time Warner declined to comment.