AS TIME WARNER AND AOL wrestle themselves into bed, the word from inside the megaconglom’s walls is that big-time cuts are coming.

Sources at both parties say Warner Bros. and New Line will eventually nip and tuck between $100 million and $200 million; they say cuts could range anywhere from 10% to 20%.

Time Warner CEO Gerald Levin and AOL boss Steve Case made a promise to Wall Street one year ago — at merger time — that they would make $1 billion in cuts, or, as was judiciously explained, “savings to the company.”

Back then, of course, a $1 billion cut was feasible. Now, it feels a bit more draconian.

Though Warner CEO Barry Meyer and New Line topper Bob Shaye can choose how to “save” their money, they could make cuts in staff, in salaries, in spending or in their own bonuses.

Yeah, right.

“All the division heads got a number,” said a source.

That doesn’t bode well for New Line, which suffered a debilitating year with “Little Nicky” grossing less than half of its budget and the upcoming “Town and Country” skyrocketing in cost.

One possibility may be cutting back on production spending overall.

Hollywood is enamored of split rights and co-financing deals. And Warner Bros. already has such pacts with Village Roadshow and Bel Air, as well as distribution deals with Franchise and Morgan Creek.

New Line has no such arrangements, but could start looking soon if the AOL-ization of Time Warner is ultimately as dramatic as some people think it may be.

Both New Line and Warners would not comment on the situation.

DEPARTING DE LUCA: Now that Michael De Luca has ankled his father-son relationship with Bob Shaye, New Line is off the hook for De Luca’s wild child antics. But the studio may be in for more trouble than it knows.

De Luca’s production staff is fiercely loyal to him and though New Line wants him to stay on in a production capacity, if he were to exit to create a new company, he would likely be followed by more than a few, barring contractual complications. This could potentially mean a reconstitution of the New Line staff.

Insiders claim new prexy of production Toby Emmerich will take a good look at the staff and decide who goes and who stays, regardless of the De Luca situation. But if he has to start from scratch as execs follow De Luca out the door, it’s destined to be difficult.

As for NL’s pic slate, some speculate that Emmerich wants to move back to more niche fare, which is how New Line was built in the first place.

If that’s true, then the studio will be able to more easily meet the new cost-cutting measures under the Time Warner/AOL marriage.

NOT SO CLASSIC WARNER: The Warner Classics division is putting the brakes on. Again.

Despite talks with Sundance chief Geoffrey Gilmore, the studio has pulled back from its original idea to create a small indie division, reporting to prexy of production Lorenzo Di Bonaventura.

Gilmore is staying put at Sundance (Daily Variety, Jan. 18). And Warner, possibly because of the budget cuts that are demanded by the TW-AOL merger, is not moving forward at this time.

DANA DOES DOWNTOWN: Dana Giacchetto, former money manager to the stars, looked beleaguered in his court appearance Wednesday. Wearing prison scrubs, Giacchetto looked on as Judge Robert Patterson became irked as his lawyers attempted to shift the wording of the sentence. They did their best to keep Giacchetto out of a maximum security prison.

Giacchetto, however, was all ears when Victoria Leacock spoke up. Leacock, who maintains she’s still a friend of Giacchetto’s, lost more than $100,000 in his Peter-paying-Paul schemes.

“I just keep hoping that someone will help me figure out how to seek restitution,” she told the judge. “It’s small in comparison to the other people, but it was more than I made in six years of work.”

Meanwhile, Giacchetto’s sentence was pushed back three weeks to Feb. 7.

PARTYING HARDY: Ever the non-partisan political potentate, the artsy Creative Coalition will be mixing martinis with both Democrats and Republicans at its inaugural bash Saturday night in Washington, D.C.

Considering the Coalition’s view of the incoming George W. Bush presidency — which many in the Coalition believe will be less than responsive to the arts — it could be considered hypocritical.

Still, exec director Robin L. Bronk said it’s incumbent upon the Coalition to placate both sides. “Any public advocate worth its salt understands that our issues cut across party lines,” she said. “No matter who got into office, we have to insure (that) issues of arts advocacy, public education, freedom of expression and campaign finance reform are brought to the attention of the new Congress and the new administration.”

The expected party list includes a lot of conservative stars, including Bo Derek, Tom Arnold, Gerald McRaney, Rick Schroder, Delta Burke, Juliette Lewis, Joe Piscopo, Drew Carey, Ben Stein, Ricky Martin, Tony Goldwyn and the Oak Ridge Boys.

Though Bronk maintained that party affiliation is not a requirement, Vice President-elect Dick Cheney is rumored to be going.

Dubya, on the other hand, is expected only as a no-show.

(If you have information or just gripes, please contact Dan Cox at dcox@cahners.com)