Steven Ross, Chairman of Time Warner, Dies at 65 : Business: The charismatic executive was the driving force in the global expansion of the media conglomerate.

Steven J. Ross, the charismatic chairman and co-chief executive of Time Warner Inc., died Sunday in University Hospital near USC, where he had been undergoing treatment for cancer for two months. He was 65.

Since November, 1991, Ross had been battling prostate cancer, first with chemotherapy and then with surgery last month at USC’s Kenneth J. Norris Jr. Cancer Hospital. Close associates said they were heartened by his progress in recent weeks and expected him to travel to Scottsdale, Ariz., for the holidays until complications required emergency surgery Saturday.

Although the severity of his illness had kept him out of his Manhattan office for more than a year, Ross continued to call some critical shots at the giant media and entertainment company, as demonstrated by the ouster of his co-chief executive, Nicholas J. Nicholas Jr., in February.

Ross worked the phones until the Time Warner directors installed his preferred candidate, Gerald M. Levin, as the new co-chief and president. Thus, Ross, even from his sickbed, succeeded in cutting a larger-than-life figure in American business. He died less than 48 hours after published reports of a major struggle on the Time Warner board.

On Sunday, Levin issued a statement saying: “Steve Ross’ clarity of vision, exceptional intellectual and personal magnetism were the driving force in creating Time Warner and in securing its leadership in global media and entertainment.”

Although the Brooklyn-born high school athlete was admittedly no scholar, he was only in his 20s when he began demonstrating a flair for deal making that would transform his in-laws’ funeral business into a conglomerate called Kinney National Service Inc.

That company--re-christened Warner Communications Inc. in 1972--merged in 1990 with Time Inc. in a spectacular deal that conferred $196 million on Ross and guaranteed him the chairman’s job for 10 years.

Ross was not a hands-on executive, but he had a gift for finance, and he inspired tremendous loyalty from the strong-willed executives he recruited to run Warner’s core entertainment businesses. He did not meddle, and he paid exceedingly well. With his tall frame, silvery hair and broad smile, he courted Hollywood talent and Wall Street investors with equal success.

Warner was always perceived as “Steve Ross’ company,” even though he never owned more than 1% or 2% of its stock. He repelled a takeover threat by media magnate Rupert Murdoch in 1984 by welcoming a friendly investment by Chris-Craft Industries Chairman Herbert J. Siegel. And though that relationship soon soured, Ross continued to dictate the company’s strategy, even after Siegel increased his stake to 29% of Warner’s stock. In an ending worthy of Hollywood, Ross enriched Siegel’s company by $2 billion with the sale of Warner to Time Inc.

Still, some longtime associates believe that happiness eluded Ross because he remained an outsider in the buttoned-down business Establishment of New York. In the last decade of his life, Ross was alternately hailed as a financial genius and vilified for his unorthodox management. He also was roundly criticized over a bribery-kickback scandal in Warner’s executive ranks and for paying mind-boggling compensation to executives.

Emanuel Gerard, who shared Warner’s presidency from 1976 to 1984, said: “I think Steve wanted the respect of the business world more than anything else . . . but he was too out-of-the-mold.”

Social register, he was not. Born in the Flatbush section of Brooklyn, Ross told one interviewer that his father lost his home building business in the Depression and changed the family name from Rechnitz to Ross in order to get a job as an oil burner salesman. Later, the family moved to Manhattan where young Ross won an athletic scholarship to the private Columbia School, graduating in June, 1945.

Ross enlisted in the Navy, but saw no wartime action, according to Richard M. Clurman, who dug into Ross’ past for his 1992 book, “To the End of Time.” Clurman found that Ross--and his early press agents--greatly embellished his biography. Although Ross claimed to have served in the Pacific, the war there ended before Ross could join his ship in Norfolk, Va.

In 1946, Ross enrolled in the first class at Paul Smith’s, a two-year junior college in Upstate New York. Clurman unearthed a 1947 college newspaper that reported a touch football injury to Ross, which required hospitalization and a steel plate in his arm. But the author found no evidence that Ross joined the Cleveland Browns’ training camp in 1948, as Ross claimed. (The Time Warner chairman told interviewers that his career as a defensive end for the professional football team was cut short by a broken arm in training camp).

These embellishments were overlooked by most associates, however, because as Gerard put it: “I think that comes with a lot of successful people.”

Ross was a clothing salesman until his 1954 marriage to Carol Rosenthal, daughter of the owner of the Riverside Funeral Home on Manhattan’s West Side. He went to work for his father-in-law, and began concocting ways to expand the business.

It was Ross who had the idea of leasing out the idle limousines at night when they were not in use. He then started a rent-a-car firm with five partners. When the car rental business foundered, Ross had the idea of offering free parking in congested Manhattan. He persuaded Kinney Service Corp.--the city’s largest parking lot operator at the time--to accept a 25% stake in the rental company in exchange for free parking for car rental customers and the use of its name.

The success of the venture led to a 1961 merger, which included the funeral chain and a brother-in-law’s office cleaning business. The 34-year-old Ross was named president, and five months later the company sold shares to the public.

In 1966, Kinney changed its name again and gained a new chairman and co-chief executive in William V. Frankel, son of the founder of National Cleaning Contractors. Renamed Kinney National Service Inc., the company embarked on a search for businesses with growth potential. In 1967, Kinney acquired Ashley Famous Agency Inc., a talent agency, and the next year it bought Panavision and National Periodical Publications, distributor of Mad magazine.

During the same period, Kinney continued to acquire cleaning companies and funeral homes, but the die was cast with the 1969 acquisition of Warner-Seven Arts Limited for $400 million in stock. In 1971, the company sold its funeral operations, and spun off Kinney’s real estate and parking lots to a company called National Kinney Corp., retaining a 50% stake.

The next year, the company invested in two cable TV companies and renamed itself Warner Communications, shortly before the death of Frankel, its first chairman. For the next 18 years--until the $15-billion merger with Time--Ross was the sole chairman and chief executive.

“He was financially brilliant,” said Gerard, now a principal of a Wall Street investment firm. “He was never fettered by what other people said you could not do. At his best, he was capable of bringing his senior people into a room and getting them to make a decision about the fundamental corporate direction. He could make a large organization make decisions, to get on with its life.”

The pace altered Ross’ personal life. After 20 years of marriage and two children, he was separated from his wife in 1974, and divorced four years later. In 1979, he married Amanda Burden, the glamorous daughter of Barbara (Babe) Paley, second wife of CBS Chairman William S. Paley. Barely two years later, that marriage ended.

In fall 1982, Ross married Courtney Sale, a Texas-bred, Skidmore-educated documentary filmmaker, in a star-studded gathering at the Plaza Hotel. Weeks later, he had to contend with the collapse of Warner’s lucrative Atari video game business, and a federal prosecutor’s public accusation that Ross was “the real culprit” behind Warner’s dealings with the Mafia-linked Westchester Premier Theater. Ross was never charged with a crime, but two Warner executives were convicted in connection with a bribery-kickback scheme.

The Atari losses mounted to nearly $1 billion before Ross could sell the video game company to Jack Tramiel. The mid-1980s were painful, as Ross was forced to sell off nearly everything Warner owned except its Warner Bros. studio, recorded music business and cable television holdings.

By 1987, Warner Communications was making its comeback. Ross proved that he had not lost his nerve with the shrewd acquisition of Chappell & Co., the world’s largest music publishing company. In a three-year period, Warner doubled its revenues, and by the end of 1988 posted net income of $423 million. In 1989, Warner acquired the powerful television production company Lorimar Telepictures--and in Ross’ career “capper”--agreed to merge with Time.

Initially, Time and Warner planned to merge through an exchange of stock, but Paramount Communications Inc. changed their plans by making an unwelcome cash bid for Time Inc. In a controversial move, the Time directors voted to acquire Warner with mostly borrowed funds, saddling the conglomerate with nearly $11 billion in debt in 1990.

To reduce that debt, Ross refused to sell assets, embarking instead on a search for foreign partners who might be willing to acquire minority stakes in certain Time Warner businesses. Ultimately, two Japanese companies agreed to invest $1 billion, but only after Time Warner raised $2.7 billion from shareholders in 1991 in a controversial “rights” offering.

Nicholas, the veteran Time executive who shared the chief executive title with Ross, disagreed with Ross’ financial strategy. But it was Nicholas who was ousted in February by Time Warner directors who heeded the wishes of the ailing Ross.

Even toward the end of his illness, Ross’ lifestyle was the stuff of legends. He chartered a yacht last summer to escape the hubbub of East Hampton during the height of its season, but continued to entertain some celebrity friends aboard ship. When he came to Los Angeles on Oct. 30., he did so under an assumed name.

Robert Daly, chairman of the highly successful Warner Bros. subsidiary in Burbank, said Sunday: “I think he was one of a kind. He was a total visionary.”

Ross is survived by his wife, Courtney, and their daughter, Nicole, as well as children Mark and Toni from his first marriage.

Funeral services will be private and a memorial service for family and friends will be held in January.

BOARD SHAKE-UP: Time Warner Inc. is dropping six directors from its board. D1