American Broadcasting Cos. Inc. yesterday said its profits dropped to $19.4 million in the first three months of this year because of falling sales and costs associated with its pending merger.

Time Inc. said its net profit edged up 1 percent in the first quarter of 1985 from a year earlier.

ABC, the third-largest U.S. television network, said its profits were down compared to last year because it did not have the extra revenues this year that coverage of the Winter Olympics brought last year.

ABC said its first-quarter earnings this year came on sales of $797.8 million compared with $23.9 million of profits on $836.7 million worth of sales during the 1984 first quarter.

It said its broadcast group's profits of $56.8 million were about the same as last year's but that losses in other areas pulled down the overall company's earnings.

ABC is in the process of merging with Capital Cities Communications Inc. in a leveraged buyout announced last month.

* Time Inc. earnings rose to $44 million (70 cents a share) from $43.5 million (67 cents) in the first three months of last year. Revenue increased 8 percent to $747.4 million from $693.8 million.

One weak spot was the Home Box Office Inc. pay-television service, for which profits were lower "due to somewhat disappointing subscriber results," Time said. But it said the decline in that unit was more than offset by higher earnings from Time's American Television and Communications Corp., which operates cable television systems.

Meanwhile, Time President J. Richard Munro said magazine advertising revenue rose 11.6 percent in the first quarter. He also reported gains from the company's book publishing subsidiaries and its marketing services unit.

In another announcement, Munro said Time's board approved new film licensing agreements for Home Box Office's HBO and Cinemax pay-TV services, one with Columbia Pictures Industries Inc. and the other with Tri-Star Pictures.

The similar agreements adjust and extend current licensing arrangements with the film companies, covering motion pictures that have commenced or will begin principal photography between 1984 and 1989 as well as films acquired by the studios for distribution that are released through 1990.

* Lockheed Corp., a leading aerospace company, said yesterday its first-quarter earnings rose 23.6 percent from a year earlier, spurred by increased government defense spending.

Profit increased to $84 million ($1.27) from $68 million ($1.06) in the first three months of last year. Sales rose 31.2 percent to $2.1 billion from $1.6 billion.

Lockheed said 89 percent of its sales were to the U.S. government, and 80 percent represented Defense Department orders. Most of the military contracts represented work on the Trident II missile, the C5-B and C130 air transports and the super-secret "stealth" jet fighter designed to elude enemy radar.

Sales to foreign governments accounted for 8 percent of Lockheed's revenues, while sales to commercial customers added 3 percent.

Meanwhile, sales by the company's Information Systems Group also increased, said spokesman Hal Hurlocker.

Since the end of 1984, Lockheed employment has increased by 900 to 82,200.

* Dow Chemical Co. said its first-quarter profit fell 16.7 percent from a year earlier.

Dow Chemical, headquartered in Midland, Mich., said net income fell to $110 million (58 cents) from $132 million (67 cents) a year earlier. Sales dropped to $2.75 billion from $2.92 billion.

Dow Chemical President and Chief Executive Paul F. Oreffice said prices for most of the company' products have stabilized, but that prices for basic chemicals and plastics "are still below levels of the early 1980s and improvement is necessary."

"Imports of these products continued to increase because of the strong U.S. dollar, and this created pressure on their prices in U.S. markets," Oreffice said.

* Safeway Stores, the international supermarket chain, reported a 16.6 percent rise in earnings and an increase in revenues of 3.4 percent in the first quarter.

A Safeway spokesman said yesterday the company had sales of $4.5 billion with profits of $25.6 million (43 cents). For the same quarter of 1984, Safeway sold $4.4 billion worth of goods and made $22 million (37 cents).

During the three-month period, Safeway opened 40 new stores and closed 24 stores, giving the chain a total of 2,587 outlets in the United States, Canada, the United Kingdom, Australia and Germany.

* The Kroger Co. reported a 67.4 percent increase in net earnings for the first quarter of 1985.

Officials of the company, which operates the second-largest chain of supermarkets in the country and other businesses, said net earnings were $31.4 million (70 cents), compared with earning of $18.8 million (42 cents) for the same period last year.