NEW YORK -- Time Warner Inc. was born of debt in 1989.
Executives at Time Inc. and Warner Communications Inc. knew their planned merger using stock would be defeated by shareholders.
So Time borrowed heavily and acquired Warner in a transaction that didn't require stockholder approval.
Since then, borrowing has become a habit.
The movie, publishing, music and cable-television company has paid down some debt from time to time by selling stakes in its businesses to other companies. But the total load continues to grow.
In the past several weeks, Time Warner announced plans to acquire two cable-TV companies that will add $3.2 billion to its long-term debt.
Phelps Hoyt, an analyst at Duff & Phelps Investment Research Corp., says the new long-term debt total will be $19.5 billion. That will be up from $14.8 billion at the end of 1989.
Time Warner last week said it would buy Cablevision Industries Corp., a privately held company based in Liberty, N.Y., for common and preferred shares and the assumption of $2 billion in debt.
The week before, the company said it would buy the cable-TV business of Houston Industries for stock and the assumption of $1.2 billion in debt.
L Expanding Time Warner's cable business may be good strategy.
The acquisitions add customers in New York state, for instance, where Time Warner already has cable operations.
Analysts agree with the company that such "clustering" will make cable systems more efficient and financially stronger in the face of new competition from telephone companies.
But there's an increasing risk, too.
Analysts said Time Warner's ability to make its debt payments will be about the same after the two acquisitions as before.
Some of them also figure that the new Republican-controlled Congress will deregulate the cable companies, letting them charge customers whatever the market will bear.
That might increase cable systems' cash flow if the old cable monopolies had remained.
But well-heeled phone companies such as Bell Atlantic Corp., Ameritech Corp. and Nynex Corp. are starting to offer cable-TV service to their phone customers.
Rate competition could decrease the cash flow from Time Warner's cable system, reducing its ability to pay debt.
Time Warner's debt already eats up huge chunks of the company's cash flow.
Time Warner said last week that after all its debt service, its fourth-quarter profits were a mere $12 million, or 2 cents a share, on sales of $4.6 billion.
For all of 1994, the company lost $91 million on sales of $15.9 billion.
Time Warner Chairman Gerald Levin said last week that the company planned to raise $2 billion to $3 billion from the sale of assets, money that could be used to reduce debt.
Mr. Levin mentioned Time Warner's stake in Turner Broadcasting Inc. and cable systems outside the company's "clusters" as possibilities.
But will those assets be worth as much as Time Warner thinks when it goes to sell them?
L What's more, $19.5 billion minus $3 billion is still a pile.
Moody's Investors Service Inc. said last week it wouldn't reduce Time Warner's credit rating because of the increased debt since the company said it would reduce its borrowings significantly in the next 12 to 18 months.
Moody's rates Time Warner's senior unsecured debt at "Ba1," or at the junk level.
Shareholders have been pushing the company to separate its cable business from the rest, saying the current structure was too complicated to value properly.
On Wednesday, Mr. Levin said the company would do that.
Mr. Hoyt, the analyst, responded, "It will provide a higher stock price."
But it won't reduce Time Warner's debt.