DISNEY PULLS LEWD ALBUM; REVIEW-PROCESS BREAKDOWN CITED.

Byline: Dave McNary Daily News Staff Writer

Walt Disney Co., in an embarrassing flub, announced Thursday that it has pulled a just-released hip-hop album from record store shelves because it contains offensive lyrics.

The removal of Insane Clown Posse's ``The Great Malinko'' album comes a week after the Southern Baptists Convention announced a boycott of Disney to protest the entertainment giant's ``gay-friendly'' policies. The religious group was particularly upset with the ABC-TV series ``Ellen,'' whose title character recently disclosed she was gay.

But Burbank-based Disney, whose holdings include the television network, denied its action was related to the boycott and blamed a breakdown in its internal review process.

``We use self-restraint and editing in many other matters and will continue to do so,'' said Disney spokesman John Dreyer. ``We make our decisions based on our own best judgment and not because of special-interest groups.''

However, the Rev. Wiley Drake of First Southern Baptist Church in Buena Park, said the boycott - which calls on the church's 15.7 million members to refrain from patronizing any Disney product or venue - was directly responsible for Disney's decision.

``It's Baptists 1, Disney zip,'' said Drake, a driving force in pushing the boycott. ``I believe Disney is trying to send us a message by pulling the album. This is clearly a step in the right direction.''

Analysts have said the boycott is likely to have little impact on Disney, which has annual revenues of $20 billion. But Burbank-based Disney is scrupulous about maintaining its image as a purveyor of wholesome family entertainment, such as its animated ``Hercules'' movie opening today.

Dreyer said Disney's decision about the album does not mean it wants to stifle artistic creativity. He stressed that its policy is to include a wide variety of artistic viewpoints.

The obscenity-laden album, which went on sale earlier this week on Disney's Hollywood Records label, becomes the first major release to be pulled out of circulation since MCA Inc. yanked rap group FU2's single ``No Head, No Backstage Pass'' in 1992 because of lyrics describing a violent sexual attack.

Senior Disney executives became aware of the content problems over the weekend and decided at that point to pull ``Malinko'' even though it already had been shipped. Dreyer said the complexity of the nation's record retailing system made it impossible to notify all outlets to halt sales immediately and conceded some albums still may be on store shelves.

Industry sources said about 100,000 copies of the album were released to stores before being pulled.