Warner Communications Inc. said yesterday it had dropped consideration of a proposal by Forstmann Little & Co. to buy 66 percent of MTV Networks Inc.

Warner, which controls MTV Networks through Warner Amex Cable Communications Inc., is conducting "very serious negotiations" to sell its stake in MTV to at least one potential buyer, said Geoffrey W. Holmes, a Warner spokesman. He declined to identify the possible bidder, or say whether there is more than one.

Forstmann Little, a New York brokerage firm, said it was "disappointed" by Warner's decision, and contended that Warner had earlier approved the firm's offer.

Warner Amex owns two-thirds of MTV, which operates two 24-hour cable music-video stations and a children's cable channel, Nickelodeon. One-third of MTV's stock is publicly held.

Warner in turn owns half of Warner Amex, and said Aug. 9 that it would exercise its option to buy the other half from American Express Co. for $450 million. Warner would then own two-thirds of MTV and would have received $310 million from its sale under Forstmann Little's original offer.

Forstmann Little had offered to buy all of MTV's stock for $470 million, or $31 a share, through a leveraged buyout involving MTV management. In a leveraged buyout, a company is acquired largely with borrowed funds that are repaid through operating revenue or sale of the company's assets.

The brokerage disclosed yesterday that it had raised its bid to $33 a share earlier this week, "subject to Warner's agreement that it not take certain actions . . . that could be damaging to MTV."

The new offer included "terms and conditions that were just not acceptable" to Warner, which then began "serious negotiations with other parties," Holmes said.

Theodore J. Forstmann, a general partner of the brokerage firm, said in a statement, "We were informed Aug. 9 that the board of directors of Warner Communications had approved our offer that day," subject to approval by American Express. Forstmann Little's proposal then received American Express approval last Tuesday, he said.

"Representatives of Warner Communications did not advise us of the rejection of our proposal or of the fact that negotiations with others for the sale of MTV were continuing until after our offer had expired" on Thursday, Forstmann said.

Warner's board had only authorized negotiations and "never approved" the Forstmann Little offer, Holmes said.

After the Aug. 9 board meeting, Warner announced that it had entered into an agreement with Viacom International Inc., giving Warner the right to sell Warner Amex's share of MTV to Viacom for $310 million within 90 days. That agreement is merely "one alternative option" Warner is considering now, Holmes said.

If Warner exercises its Viacom option, the terms of their agreement will give Viacom the right to acquire 50 percent of Warner Amex for $400 million in cash. That acquisition would include part of MTV but would exclude Warner Amex's 19 percent stake in Showtime/The Movie Channel. The net result of the complex agreement, if triggered, would leave Warner, which already owns 31 percent of Showtime, and Viacom each owning half of Warner Amex and half of Showtime.