Time Inc. President James R. Shepley said today that losses at the Washington Star could have peaked in 1979, although the newspaper will continue to lose money this year.

Shepley told stockholders at Time's annual meeting that the company believes the Star, which it acquired in 1978, "can be a classic turn-around situation, financially and editorially, with 1979 losses at the bottom of the curve. So far this year the trend is encouraging, although the full year's results will still be unprofitable.

Although Time will not reveal how much money the afternoon newspaper lost in 1979, informed sources estimate the Star was about $16 million in the red. The paper made some small circulation gains last year as well as a small gain in advertising market share.

Shepley and Time Chairman Andrew Heiskell will retire this year and Shepley, 62, will become chairman of the Star for two years.

Overall, Shepley said, many of Time's major ventures -- including magazine and book publishing -- are being squeezed by higher costs.

In the first three months of 1980, Time's earnings were up $1.7 million to $28.3 million ($1 a share), a 6.4 percent rise. Its revenues, however, were up nearly 24 percent during the same period.

Shepley said that because of the decline in home building, Time's building materials subsidiaries were down sharply in the first quarter.

He said magazine revenues increased 17 percent, but "magazine profit increases were substantially less than the rise in revenues, due to extremely high inflationary costs."

Time publishes Time, Fortune, People, Life, Sports Illustrated and Money magazines. Its Time-Life Books is one of the largest book publishers in the country.

It also owns the old-line Boston publisher Little, Brown and Co. as well as the Book Of The Month Club. It also is in the forests product industry and owns Home Box Office, the pay television network, and the American Television and Communications Corp., a cable television company.

Shepley told shareholders that while many of the company's operations will suffer from the current recession, the Home Box Office operation so far has suffeed no adverse effects from the economic slide. "However, pay-cable is a new kind of business, with no precedent to suggest how it would be affected by a deep recession. We are optimistic on this front, but we have no proofs to offer," said Shepley.

He said that if a severe recession occurs, Time will not match 1979's earnings this year.