Time Inc. and Warner Communications Inc. announced Saturday that they plan to merge to form the largest media and entertainment conglomerate in the world.

Time is a major force in book publishing and cable television, and Warner is a large producer of movies and records that also has a large cable television operation.The merger would create a company with a total stock market value of $15.2 billion.

The combined company, to be known as Time Warner Inc., would have a total value of $18 billion, including long-term debt, and annual revenue of $10 billion.

The deal would create a media giant, making it a substantial force in both the production and distribution of movie and television programming, as well as in magazines and book publishing.

The merger would insure Time Warner a place in the 1990s as one of a handful of global media giants able to produce and distribute information in virtually any medium.

The agreement is subject to approval by the shareholders of both companies and government regulatory agencies.

The chief executives of the two companies said the deal would help the United States compete against giant European and Asian companies.

"Only strong American companies will survive after the formation of a unified European market in 1992," said Steven J. Ross, chairman of Warner.

The merger, involving an exchange of stock in which no cash will change hands, was billed as a merger of equals in which the Time chairman, J. Richard Munro, and the Warner chairman, Steven J. Ross, would share power on an equal basis as co-chairmen and co-chief executive officers, but in which Time's president, N.J. Nicholas Jr., would eventually take control.

Time Warner would replace Bertelsmann A.G., a privately held German publisher known primarily for its book division, as the world's largest communications company in terms of revenue. Bertelsmann's revenue in 1987 was placed at more than $6 billion.

The merger was unanimously approved by the Time board, but there was one abstention on the Warner board. A Warner official said Herbert Siegel, chairman of Chris-Craft Industries and a frequent opponent of Ross, was the holdout. Siegel could not be reached for comment.

The merger unifies two media giants that have felt the pressure of Wall Street's demands for performance and have long been the subjects of takeover rumors. The deal would create a much larger company that would therefore make it a more difficult target in a hostile takeover.

"Neither of these companies was forced into doing anything," Munro said. "We both could have survived alone. But this gives us a very strong balance sheet.

"We won't have to fire anybody; we don't have to sell anything; and we don't have to borrow to accomplish this. It gives us a very large treasury - and we have plans to use it."