The Talk at Time Warner: Music Division May Get Ax : Entertainment: Company denies it, but insiders say the rap debate is casting too dark a shadow over cable plans.

Could fear of political retribution cause embattled Time Warner Inc. chief Gerald Levin to get out of the music business?

As pressure mounts for Time Warner to stop selling violent and sexually explicit rap and rock music, speculation swarmed throughout the media company Tuesday that its own financial analysts were not only examining the possibility of severing ties with controversial Interscope Records, but selling off the entire music division.

A Time Warner spokesman denied late Tuesday that the company was considering selling the music division.

But there is rising concern among company insiders that Levin’s cable television strategy is not compatible with the pop music business--specifically when it comes to cutting-edge rock and rap, which often includes profane lyrics involving stark depictions of violence, sex and alienation.

Insiders say that because the cable industry relies on government licensing, Time Warner is left vulnerable to political pressure. None of Time Warner’s five major competitor’s in the music industry are involved in the cable business.

“It’s no secret that Time Warner’s board of directors has no love for the music business in 1995,” one executive said. “They value cable and view the music division as a bastard child. They’re willing to take the profits, but only if they don’t have to face any political heat for it.”

The firm’s vulnerability was highlighted this week as the Senate prepared to consider a bill that would free cable systems from rate regulation within a year--legislation that is strongly favored by the cable industry. The proposal, which is expected to be introduced today, would also bolster Levin’s vision of making Time Warner cable systems into telephone companies.

Senate Majority Leader Bob Dole (R-Kan.) will play a key role in shaping the bill. Dole, a presidential candidate, in recent weeks has made a field day of chastising Time Warner for its promotion of what he calls violent and degrading rap and alternative rock music.

Dole press secretary Clarkson Hine said concerns about the senator using the legislation to leverage action from Time Warner are “ridiculous.” Dole’s views regarding entertainment have “absolutely nothing to do with his views on telecom and cable,” Hine said.

Tim Boggs, senior vice president for public policy at Time Warner, concurred.

“It should not be surprising that people inside the company are anxious about the potential fallout from this controversy,” Boggs said. “But there has been no evidence whatsoever that Sen. Dole has been using this legislation to pressure us.”

That some Time Warner executives fear Levin might sacrifice the music division to protect the company’s cable interests underscores the high level of concern inside the world’s biggest media conglomerate.

Insiders believe that the controversy over rap will escalate next month when Interscope releases the debut album from controversial gangsta rappers Tha Dogg Pound, which is expected to enter the nationwide pop charts at No. 1.

Time Warner board member Henry Luce III said Tuesday that he and other directors are troubled by the controversy and have asked management to resolve the problem.

“I find some of the lyrics on these records to be offensive and shocking,” Luce said. “I disapprove of them and do not favor publishing them in the future.”

Time Warner music executives met Monday to discuss ways to defuse criticism of the firm’s explicit lyrics policy, including the possibility of introducing a rating system or an NC-17 sticker to alert retailers to potentially offensive material.

Those officials are expected to meet in Washington on Thursday with other executives in the Recording Industry Assn. of America to discuss the possibility of implementing a stricter labeling system. The nation’s six major record conglomerates already attach an industry-approved “Parental Advisory” sticker to potentially offensive products, which was introduced by the recording association in 1990.

If the industry does not back Time Warner’s plan, a spokesman for the company said, its board expects the firm to forge ahead with a more restrictive label on its own.

Sources in the music division, however, said that any edict to restrict explicit lyrics or require additional warnings could be considered a breach of Time Warner’s contract with Interscope Records, home to Snoop Doggy Dogg and Nine Inch Nails, two of the most acclaimed and criticized acts on Time Warner’s music roster.

Before the controversy erupted, Levin seemed committed to Interscope’s philosophy. He pledged his support for the Westwood label in a meeting with Interscope co-founder Jimmy Iovine two months ago and paid him $80 million to raise Time Warner’s equity stake in the company to 50%. Time Warner has invested an estimated $120 million in Interscope since 1990 and retains an option to acquire the remaining 50% in two years.

However, Interscope’s contract with Time Warner grants the Westwood label complete creative control over its products and could allow Iovine to leave if the board chooses to impose lyric sanctions. Insiders said Interscope will have no problem finding another partner in the event of a showdown with Time Warner.

A high-level Interscope source said Tuesday that the firm would “not compromise any artist on the label and would refuse to participate in any new stickering program that is not universally accepted by the entire record industry.”