According to the NY Daily News, Sean “P. Diddy” Combs could be exiting Universal. Reportedly, the mogul is scoping out a new deal for his record label, Bad Boy Entertainment.

Lately, Diddy has been making the rounds of the major record labels. "He's exploring his options," the senior record exec said.

Music giant Universal is lukewarm on renewing Bad Boy's contract, which expires next year, sources said. The two sides struck a distribution deal two years ago reportedly valued at $20 million.

With the exception of a couple of releases, namely the "Bad Boys II" soundtrack, P. Diddy's Bad Boy label has had no blockbuster hits lately.

While sales have been solid for artists like Mase, they have not been enough to justify Bad Boy's high costs, insiders said. Other releases from acts like Loon - who recently exited the label - and boy band New Edition, failed to move the needle.

Combs doesn't deny that he's looking around.

"We have had a string of platinum and gold hits with Universal and we have a great relationship with them," said Combs. "I can guarantee you that with the albums we are going to release in 2005, I feel confident that we are going to have a great year."

Combs runs a $300 million urban empire, spanning hot clothing line Sean John, restaurants, and a marketing company. Insiders note that the record company became less of a focus as the streetwise entrepreneur got busy with other things, including his starring role last year in Broadway's "Raisin in the Sun."

"He's been an absentee father," a source said. "(Bad Boy) has not been his biggest priority."

Meanwhile, Bad Boy has been losing key execs, including its president, Lewis Tucker.

Still, music industry sources said Combs remains a key figure in the hip hop world and top execs at the large music companies are taking his meetings.

"He's still important," the record exec said. "He's talking to everyone. It's all about the right price."

Bad Boy is said to be working on new releases, including a P. Diddy solo album. Also in the works is a CD of duets pairing the recordings of deceased rapper Notorious B.I.G. with current artists.