Time Inc., the nation's largest magazine publisher and second-largest cable TV operator, yesterday reported a slight drop in earnings for 1985 and said it would freeze all hiring in New York and eliminate 136 magazine jobs.

The layoffs, in addition to 52 previously eliminated magazine positions that will not be filled, make up about 5 percent of the magazine group's 3,742 employes, Time spokesman Mike Luftman said yesterday. The elimination of an additional 62 editorial and 74 publishing jobs is part of a previously announced program to reduce Time's operating expenses by $75 million this year.

Wall Street analysts said Time's decision to focus on costs is a response to softening magazine and cable TV profits. Time executives are concerned that unless they take aggressive steps to keep the company's stock price up, Time could become the target of an unsolicited, hostile takeover bid.

Time employes learned of the employment cuts yesterday in an internal memo from Editor-in-Chief Henry Grunwald and Time Vice President Kelso Sutton.

"In the past five years, the editorial and publishing staffs of our magazines have increased substantially," the memo said. "Since 1980, they have grown by one-third, not including magazine development. In short, some of the increases were necessary, but surely some were less so. As [Chairman] Dick Munro said in his memo to you on Oct. 11, circumstances have made it absolutely essential for Time Inc. to reduce and control costs; we must run leaner operations.

" . . . As you know, many corporations, especially in the media, have been going through similar belt-tightening for the last 18 months. It is a painful process, but one that is necessary for the health and vigor of Time Inc."

In an environment of relatively weak national advertising revenue, Time yesterday reported an increase in revenue and a decline in net income for 1985. Time said it had revenue of $3.4 billion and net income of $199.8 million ($3.15 a share) in 1985 versus revenue of $3.1 billion and net income of $216.4 million ($3.37) the prior year.

In 1985's fourth quarter, Time had revenue of $945.2 million and net income of $51.4 million (81 cents) versus revenue of $851 million and net income of $66.7 million ($1.06) the prior year. The difference in the fourth-quarter numbers includes two extraordinary items: a one-time expense of $13 million (11 cents) for the estimated cost of the staff reductions announced yesterday and a one-time gain of 19 cents a share in 1984's fourth quarter from the sale of Time's Pioneer Press subsidiary, which publishes newspapers in suburban Chicago.