Shame it is entertained by outsiders in party (4)
I believe the answer is:
pity
'shame' is the definition.
('pity' can be a synonym of 'shame')
'it is entertained by outsiders in party' is the wordplay.
'is entertained by' means one lot of letters goes inside another (I've seen this in other clues).
'outsiders in' means to remove the middle letters.
'party' with its centre removed is 'py'.
'it' going inside 'py' is 'PITY'.
(Other definitions for pity that I've seen before include "Sympathy and sorrow" , "Sorrow, compassion" , "Cause of disappointment" , "true compassion?" , "Have sympathetic feelings toward" .)