Video Firm Expected to Reduce Size : Distribution: Live Entertainment of Van Nuys, partly owned by troubled Carolco Pictures, is facing financial difficulties of its own.

Could Live live without Carolco?

Analysts say yes, although the future of Live Entertainment Inc., a Van Nuys videocassette distributor and retailer, is by no means assured. With or without Carolco Pictures Inc., Live’s financially troubled 53% owner and its biggest supplier of films to release on video, Live is likely to end up a much smaller company, analysts say.

“Live has a life of its own apart from Carolco,” said analyst Jeffrey Logsdon at Seidler Amdec Securities Inc. in Los Angeles. “But there’s a lot of ‘what ifs.’ ”

The two companies had planned to merge, but called off the deal last month after their stock prices plunged. By last week, industry talk was rampant that Los Angeles-based Carolco was on the brink of bankruptcy--even though it produced “Terminator 2: Judgment Day,” 1991’s box office champ with more than $200 million in ticket sales.

For now, at least, Live appears to have escaped from finding out what life would be like if Carolco were terminated. On Thursday Carolco announced a tentative agreement with its foreign partners and banks on a $45-million refinancing plan that would allow it to meet its current obligations and continue producing films. Part of the refinancing package is a $32-million loan from Carolco’s foreign investors to be secured by Carolco’s stake in Live.

Analysts said the proposed refinancing, if completed, would give Carolco some breathing room and allow it to complete some of the movies on its slate, including “Basic Instinct,” a Michael Douglas thriller scheduled for release in March. That’s good news for Live, which needs more Carolco films to release on cassettes.

But, analysts said, neither company’s financial future is secure yet.

One reason is the Carolco refinancing isn’t a done deal and the plan contains some conditions that might prove tricky, including approval by a majority of Carolco’s high-interest bondholders of a controversial offer to buy back the notes at 65 cents on the dollar.

Even with the cash from the refinancing, Carolco’s future wouldn’t be assured, analysts said. The plan would only delay repayment of the company’s loans until Nov. 30.

Carolco has long been known for its big budget movies and lavish spending, even by Hollywood standards. But now, analysts said, Carolco must scale back its operations, keep a closer eye on costs and probably produce far fewer movies than it has in the past. The company has already laid off 25% of its work force, but if its upcoming movies bomb, Carolco’s ability to raise more money would be doubtful.

Live has its own financial troubles to deal with. Live had a $40-million third-quarter loss, its video sales have been hurt by the recession, and its ailing video and recorded music retail stores division is reportedly up for sale. The company is also negotiating with its banks for an extension on $70 million in debt that was due Jan. 1, and one of the conditions of Carolco’s refinancing package is that Live be granted an extension to Nov. 30.

Regardless of what happens with Carolco, Live is expected to emerge from its current problems as a much smaller company. Although Live distributes videos of films made by other production companies--New Line Cinema’s “Teenage Mutant Ninja Turtles,” for instance, was a big hit for Live--it’s doubtful another independent producer could make up for fewer films from Carolco, analysts said. Live’s only option, they said, is to cut its overhead drastically.

“They’re going to have to do everything they can to be leaner than before,” said David Rose, an analyst at investment banking firm Cruttenden & Co. in Irvine.

Michael J. White, Live’s general counsel, wouldn’t comment on any possible plans for selling assets or cutting overhead, saying only that there have been no layoffs so far.

White conceded, “If we didn’t have Carolco product, the business would be more difficult.” But, he added, “We would still have a business.”

Meanwhile, the stocks of both companies rose only modestly after the news of Carolco’s proposed refinancing. Carolco, whose stock plummeted to $1.50 a share earlier this month, contrasted with a 1991 high of $10.875, closed Monday at $3.

Live’s stock traded as high as $25 a share in 1990 and in the $10 to $12 range just before the announcement in November of its proposed merger with Carolco. By last week Live’s stock had fallen to $2.75 a share, and closed Monday at $3.50.

The stocks have been selling “like they’re in bankruptcy already,” said Lee Isgur, an analyst at the San Francisco investment firm Volpe, Welty & Co.

Some relief of Live’s financial problems will probably show up in its fourth-quarter results because of strong sales of “Terminator 2” videos, analysts said. And the company’s management turmoil has quieted for the moment. Wayne Patterson, who resigned as chairman and chief executive shortly before the merger deal collapsed, was replaced as chief executive by David A. Mount, president of Live’s home-video unit for the past two years. Entertainment industry veteran Alan J. Hirschfield, a Live director, has temporarily stepped in as chairman.

But Live’s creditors are no doubt watching developments at Carolco very closely, said analyst Steven E. Hill at the investment firm Sutro & Co. in San Francisco.

If it appears that Carolco is having trouble getting “Basic Instinct” into theaters on time, he said, “there would be a lot more pressure on Live from its creditors.”