Part IThe Story
Two Days Before Christmas
By half past ten on the morning of Wednesday, December 23, 1992, limousines filled the small drive in front of Guild Hall in East Hampton. It was cold enough that nobody could wait outside, so the mourners crowded into the vestibule. Tony Battisti, Steve Ross's bodyguard of more than ten years, stood at the door and looked at each face as it came in. Guy Salvadore had spent the previous three days flying people in from across the country. In the 1960s he had worked for Ross at the Kinney company, and after Kinney bought Warner Bros.-Seven Arts he became something called "head of transportation," running a fleet of limousines, helicopters, and planes that kept growing. Ross had died in the early hours of Sunday in Los Angeles, after a year of prostate cancer and a last radical surgery that his biographer Connie Bruck called "a kind of Hail Mary play." Christmas was two days off and most of the people who mattered were somewhere else. Salvadore found them and brought them anyway.
Before the business, there had been limousines. That is the right place to begin, because the limousines are where Ross began.
The vestibule held people who did not want to be in a room together. In the days before Ross died, Gerald Levin, his co-chief executive and a Time Inc. man, had reorganized the Time Warner board and pushed off several of Ross's most loyal directors. Levin had not known Ross was dying. He had known Ross was weak and out of touch, and he had used the moment. Martin Payson, Warner's general counsel for twenty-two years, had been ejected from the board and then resigned from the company. He stood in the crush looking straight ahead. Arthur Liman, Ross's lawyer and his defender for more than two decades, had had a furious scene with Levin earlier that week. Liman had also talked Courtney Ross into inviting Levin, on the reasoning that leaving him out would become a cause célèbre. She refused, however, to invite J. Richard Munro, the former chairman of Time Inc., who had acted as Levin's agent in the board maneuver and had been an especially combative one. The rest of the board got invitations. Munro did not.
Herbert Siegel of Chris-Craft Industries stood at the edge of the crowd. He and Ross had fought the longest and most bitter corporate battle of Ross's life, and people were surprised to see him. Jay Emmett was not there. He had been the closest friend Ross ever had, and in 1981 he had pleaded guilty in a scandal Ross only barely escaped. Solomon Weiss was there. He had refused to cooperate with the government in that same scandal and had been convicted of felonies for it. Bruck noted these facts without comment, and they need none. The man who protected Ross was present. The man Ross used for protection was absent.
The stars came too: Spielberg with Kate Capshaw, Dustin and Lisa Hoffman, Quincy Jones with Nastassja Kinski, Chevy Chase, Paul Simon, Barbra Streisand, Anouk Aimée. Mixed in among them were a few people from Ross's earlier life. Caesar Kimmel, who had run Kinney Parking and now managed a gambling casino in Moscow, had first met Ross in the late fifties at the Riverside funeral home. The investment banker Felix Rohatyn liked to say that he and Ross made their first deal on the back stairs of the Campbell Funeral Home while a funeral went on inside. Thirty-odd years later, waiting for this funeral to start, Rohatyn was gloomy. He told Albert Sarnoff, Ross's former brother-in-law, that it was "what the Greeks call fate" for Ross to have built the Time-Warner merger and then not been given the time to make it work.
"Although it may have been undoable," Rohatyn said. "As I get older, I am struck more and more by how, in these things, it is the intangibles that matter most — personality, culture, ego."
Sarnoff would not hear it. "Steve would never have thought that," he said. "He was the eternal optimist."
"But now," Rohatyn said, "it's like Schubert's 'Unfinished Symphony.'"
Then the doors opened.
Courtney Ross had decided the Guild Hall auditorium was too austere. She chose the art gallery instead. In two days the pictures came down, the walls were repainted, a carpet was laid up the center aisle, a stage was built, and the lighting was redone. On the back wall, facing the audience, she hung a large de Kooning that had been one of her husband's favorites. Ross was not observant, so she did not ask a rabbi to lead the service. She asked Gershon Kekst, a religious man and a public-relations executive who had worked for Ross for years. Much of the audience assumed he was a rabbi. That a PR man presided suggested, fairly or not, a service managed to project a particular image, and the list of speakers supported the suspicion. Ross's whole life had been his business, but Liman was the only business associate who spoke.
Everything else in this story comes back to that room: the limousines out front, the friend who wasn't invited, the enemy who came, the PR man in the rabbi's place, the de Kooning on fresh paint. It is a funeral produced like an opening night, for a man who started out in funerals and learned there that the two businesses were not so different.
By the Numbers
From Mortuary to Media Empire
$12.5MMarket valuation of Kinney when it went public in 1962
$400MPrice Kinney paid for the ailing Warner Bros.-Seven Arts in 1969
$1Price at which the Cosmos' ten original investors sold the club to Warner Communications
77,691Crowd at Giants Stadium for the Cosmos' first playoff game, August 14, 1977
$14BValue of the 1989 Time-Warner merger, creating the world's largest media company
$78.2MRoss's personal earnings in 1990, a lightning rod in the executive-pay debate
1–2%The most of Warner's stock Ross ever owned, though it was always 'Steve Ross' company'
The Night Shift of the Dead
His name was Steven Jay Rechnitz. His father, a Jewish immigrant in Brooklyn, lost everything in the Depression and changed the family name to Ross, hoping it would make finding work easier. That was the first rebranding in the family. The son, a high school athlete who admitted he was no scholar, spent two years at Paul Smith's College, a junior college in upstate New York, then served in the Navy. Afterward he sold trousers at an uncle's store in the Garment District. Nothing in that record predicts what came next. It describes a handsome, restless young man that the stock-market vocabulary of the 1950s had no word for.
In 1953 he married Carol Rosenthal. Her father, Edward "Eddie" Rosenthal, ran Riverside Memorial Chapel, the largest funeral company in the United States, and Ross went to work there. Stan Cornyn, the Warner Bros. Records executive who later wrote the label's history, places him at the chapel on West 76th Street selling caskets. Ross described what he learned there in plain terms: "You learn about people's needs and feelings at an emotional time for them, a funeral. You service their needs." Cornyn adds that he learned to put his hand on a buyer's shoulder. Years later, Ross liked to tell people that show business and the funeral business weren't that different, since both were "people businesses." Anyone who saw him with a grieving family and then with an insecure movie star might have agreed. When his daughter Toni was born, her birth certificate listed her father's occupation as "undertaker." She smiled when she told people this.
What Ross noticed at Riverside was an idle asset. The company had a fleet of limousines, about a hundred by one count, and they worked during the day following hearses to cemeteries. At night they sat in the garage. Ross persuaded his father-in-law to let him start a separate company leasing the cars out in the evenings. The cars that carried mourners by day carried theatergoers by night. The venture made solid money, and that track record got him bank financing for a rental car company, Abbey Rent a Car.
This is the founding idea of the whole career, and it is a modest one. It took no invention, just attention to the hours when something valuable was doing nothing. Ross did not create value at the start. He found it parked.
What followed is uglier, and his friends' accounts tended to soften it. Ross merged Abbey with the Kinney Parking Company, which was owned by the underworld figures Manny Kimmel and Abner "Longy" Zwillman. Cornyn notes that the merger came about a year after Zwillman, a Mafia boss, died by suicide. Ross then added an office cleaning business that was jointly owned by the funeral home and a cousin of his father-in-law. Funerals, cars, parking, cleaning: it was not a company with a theme. It was a family, an adjacent family, and the businesses those families happened to own, combined and taken public. Reviewing Bruck's biography for the New York Times, Richard Clurman called the result "a motley patchwork of mortuaries and Mafia-scented parking lots." Thomas Rosenstiel, in the Los Angeles Times, was blunter. To take the family company public, he wrote, Ross "merged it with a parking lot company that apparently was a Mafia front."
Kinney went public in 1962 at a valuation of $12.5 million. Albert Sarnoff, Ross's brother-in-law, joined him for it. Rohatyn was already around. So was the Kimmel family, and thirty years later a Kimmel was standing in the vestibule in East Hampton, now running a casino in Moscow.
From the start, Ross took particular pride in Kinney's shareholder meetings. Bruck describes how he prepared: he challenged his associates to come up with a question that would stump him, the way a contestant prepares for one of the TV quiz shows he loved. He also had a theory of them: "You never play a shareholders' meeting to win, you play to tie." Once he was at the podium fielding questions, he seemed to want it to go on indefinitely. "To make him stop answering questions," said Allan Ecker, the company's longtime secretary, "you'd have to turn out the lights."
He also liked telling a story about one of those early meetings going wrong. Kinney was still in parking then, and a woman asked why the company had no garage at a particular location in Brooklyn. Ross gave some answer. She said, "You're making fun of me because I'm from Brooklyn."
He was from Brooklyn too, and by then that may have been the one thing he wanted nobody to notice.
Stones for a Diamond
Writing in Colossus in 2026, the strategists Jay Barney, Haiyang Zhang, and Jerry Neumann posed a puzzle about Ross that business school does not handle well. In their account he "essentially picked up a bunch of stones off the ground and traded them in for a diamond." Funeral homes, parking lots, rental cars, and cleaning crews have no moat. Anyone competent could have started or bought them, and the crowds of competitors in those fields show it. Yet the stones paid for the diamond.
The middle of the 1960s was the stone-gathering period. In 1964 Kinney paid $15 million for Circle Floor, a wood flooring manufacturer, buying it from Seymour and Paul Milstein, and Paul stayed on to run it until 1971. The Colossus authors list painting, carpentry, and plumbing businesses too. Ross moved the company out of downtown to 10 Rockefeller Plaza, which says something about where he meant to go: from the narrow streets where trades were done to the center of Manhattan. By 1966 the company was called Kinney National Services, Inc., and Ross was running all of it.
According to one biographer quoted in the Los Angeles Times, Ross eventually got tired of these businesses because they lacked "charisma." It is a frivolous word, and an honest one. A parking empire generates cash, but nobody hires Quincy Jones to sing at a parking executive's funeral.
In 1967 he bought the Ashley-Famous talent agency, founded by Ted Ashley. Agencies own little except relationships, and they walk out the door at six o'clock. Ashley introduced Ross to the entertainment industry, and Ross learned fast. That same year, more or less, Kinney bought National Periodical Publications, the comic-book publisher that later became DC Comics, along with Mad magazine. The future Batman empire came in with the cleaning crews.
The big target came up in 1969. Warner Bros.-Seven Arts was weak: the studio had seen much better days, the film business was unsettled, and Eliot Hyman, who had put the combination together only two years before, wanted to sell. Ross faced a long fight with the financier Bernie Cornfeld and Commonwealth United, and won. Kinney paid about $400 million, in stock, for a studio, a television business, and a record business. Colossus puts the figure at roughly $3.5 billion in today's dollars. Coming from a company whose cars had followed hearses ten years earlier, it struck Wall Street as almost absurd.
Stan Cornyn makes the important point. By 1969, Warner-Seven Arts was not really a movie studio that also owned record labels. It was a group of people with good ears, and they could leave. Warner-Reprise depended on Mo Ostin and Joe Smith, and Hyman had just gotten them re-signed, with difficulty. Atlantic was riskier. Ahmet Ertegun, his brother Nesuhi, and Jerry Wexler had already sold their label and felt little loyalty to the new combined company, though they held shares in it. And Frank Sinatra owned 20 percent of Warner-Reprise and would have to approve a new owner. Whoever bought Warner was mostly buying the willingness of a dozen temperamental people to stay. Ross understood this better than the bankers did.
Kinney went on to add the Elektra and Asylum labels and three cable television companies. Then Ross did the most telling thing he could do with a successful legacy business: he let it go. By mid-1971 the non-media operations had been split off into a separate entity, National Kinney Corporation. On February 10, 1972, what remained was renamed Warner Communications Inc. Bruck describes funerals, parking, and cleaning as "merely the detritus from his launch." Saul Bass designed the "Big W" logo. The company moved to 75 Rockefeller Plaza. Ross was co-CEO from 1969 to 1972, and in 1972 he became chairman, president, and chief executive.
So the Rechnitz name was dropped in one generation and the Kinney name in the next. Each time, the change helped someone find work with less trouble.
Fathers and Fiefs
The executives who were at Warner in the seventies talked about that decade with emotion. In Bruck's account, there would be more wealth, more growth, and bigger deals later, but they remembered the seventies as the best time. The explanation is not complicated. Ross hired people with strong opinions, paid them very well, and left them alone.
Kathryn Harris wrote in the Los Angeles Times that he "did not meddle, and he paid exceedingly well." He introduced incentive-based compensation and pushed real authority down to his managers. Rosenstiel adds a remarkable fact: until the last decade of his life, Ross paid his executives more than he paid himself. He told them to "dream" every day and then go do it. Edward Bleier, who worked under him, later summed up the approach as two things: hire, empower, and keep the best executives to assemble world-class content, and aggressively build or buy new media where that content could be sold. The studio went through Ted Ashley, Frank Wells, Bob Daly, Terry Semel, Barry Meyer, and Leslie Moonves, and the continuity was deliberate. "The record of our company's longevity of management," Daly said after Ross died, "was a philosophy that came from Steve."
Bruck's book jacket describes the result as "more medieval fiefdom than corporate bureaucracy," and both words in that phrase matter. Each fiefdom had its own lord. Above them was a king who did not tax much, did not ask questions, and expected loyalty in return for land.
Ross also had a way of turning employees into family, and the strength of it is still unsettling. "Steve was very much what I wish my father was," Steven Spielberg said. Spielberg dedicated Schindler's List to him, and while preparing the film he showed Liam Neeson home movies of Ross so the actor could study how he moved: Oskar Schindler, the operator who rescues people, partly modeled on a man from Warner Communications. At the Carnegie Hall memorial in February 1993, both Spielberg and Bob Pittman said they would miss Ross's "fatherly advice." Pittman called him the "patron saint of dreamers." At the funeral, Streisand said she had loved Ross as if he were her father and sang "Papa Can You Hear Me?"
— Arthur Liman, eulogy at Guild Hall, December 23, 1992There was a personal side to every relationship with Steve. It was never all business. He derived his authority from his relationships, not his position.
There are many stories of his generosity, and some are clearly staged. Beverly Sills told one at the funeral. She had come to Ross to ask for money for her bankrupt opera company, armed with a complicated proposal involving a Warner Bros. opera film and a PBS tie-in. His aide Carmen Ferragano had told him to see her and mentioned that she was called Bubbles. "Bubbles," Ross said, "I never heard a more cockamamie idea in my life. Why don't you just ask me for the money?" He gave her the more expensive package on the condition that she join the Warner Communications board. The gift came with a seat at his table, which made the gift a deal.
At Carnegie Hall, Sills told another story she had heard from Bert Wasserman, the chief financial officer. Waiting for his car outside the Beverly Hills Hotel, Ross dropped a quarter. The bellman picked it up and handed it back. Ross tipped him five dollars.
It is a small story and it may have been improved in the retelling. Even so, it captures the arithmetic of how Ross worked. The quarter meant nothing to him. The bellman's honesty was worth twenty times as much, because it was a relationship, and Ross priced relationships at a premium that was hard to explain.
The Independent's obituary described the other side of this. The company's jets and helicopters were constantly at the service of "some self-important rock star or under-appreciated board member," and when a celebrity wanted a facelift, Warner was "only too happy to pick up the tab." The Independent called him "Hollywood's biggest sugar daddy." Stan Cornyn called him "born-to-hug-ya" and described him as "six-feet-plus-one-melon tall." Tim Wu, writing in Slate, said the typical photograph showed Ross in a tuxedo with a large bow tie, his silver hair shining, next to a celebrity or one of his cronies.
Then there were his actual children. At the funeral, Mark Ross introduced each speaker and spoke last. He looked very much like his father, and one gesture in particular, a slightly awkward, sweeping wave of the hand, was so much his father's that people were startled. Mark admitted ruefully that he had helped set the order of speakers and had still put himself after Streisand, something his father, who planned such things carefully, would have told him not to do. "I can hear my father saying, 'Never follow Barbra!'" Then he said what was really on his mind.
— Mark Ross, at his father's funeralI struggled to find my place in the ceremony today, as I struggled to find my place in my father's life. It was hard to have a father who shared his self with so many people, and who considered so many people a part of his family.
Looking at the casket covered in roses, he said: "I realize part of your legacy to me is your love for other people, but many times I just wanted you all for myself."
What made the fiefdom system work at the company was a father dividing himself among a huge adopted family, and that same division cost his own family. Bruck writes plainly that however much the stars thought of him as a "father," it "had not, in reality, been his best role."
Seeing Around Corners
One of Ross's friends said he had "the ability to see around corners." It sounds like flattery until you list what he was actually doing early.
In 1971, when three broadcast networks controlled American television, Warner started buying small cable systems. The networks did broadcasting: one signal to everyone, programmed for the broadest audience. Ross believed in something then called narrowcasting, separate channels for narrow audiences, the way radio stations already worked. That idea now describes most of what anyone watches, but at the time it ran against the main money machine of American media.
In 1977, in Columbus, Ohio, Warner launched QUBE, an interactive cable system that let viewers answer back through their sets. It did not work as a business. The Wikipedia entry offers the usual excuse, "ahead of its time," which is also what people say about losing bets. QUBE did produce a line of descendants, including the Full Service Network launched in Orlando in 1994. By the 1990s, the Independent noted, Ross could not give a speech without mentioning the experimental 150-channel interactive system in Queens. He kept believing in two-way television for the rest of his life.
Cable was expensive, and Ross did not have the money, so he found someone who did by selling them a story. In 1979 he persuaded American Express that Warner's cable subscribers would be a direct channel for selling AmEx cards. Warner-Amex Cable was formed, and Warner got the capital it badly needed. The cross-selling never happened. In 1984 Warner bought out American Express's share. The pitch was wrong and the money was real, and Ross knew which mattered more.
The joint venture's programming arm, Warner-Amex Satellite Entertainment, launched MTV, Nickelodeon, and VH1. MTV started as a music-video channel for teenagers and Nickelodeon as a channel for children, both deliberately narrow. Both became central to American culture. Both were later sold. According to Bleier, the boardroom fight that followed Atari forced Ross to sell the cable programming business cheaply to Viacom's Terry Elkes in May 1986, and Elkes's later ouster delivered that business to Sumner Redstone. Ross saw the channels coming before anyone. He did not get to keep them.
That turned out to be a pattern. He bought Atari in 1976 and put the first widely successful home video-game console into millions of homes. He pushed home video, pay-per-view, and international markets before rivals did. The Independent said he "had an uncanny feel" for how technology was transforming what he called the "entertainment software" business, a phrase that sounded odd in 1985 and sounds obvious now. Wu called him "the first of a new archetype: the media conglomerator," the model for Levin, Michael Eisner, and Barry Diller. Wu also noted that a Google search ranked him behind a yoga author with the same name. He would have been upset by that.
"If you're not a risk-taker," Ross once said, "you should get the hell out of business." His record supports him and also shows the cost: cable a success, MTV a success that was sold too early, QUBE a failure that led somewhere, Atari a huge success and then nearly fatal. You can see around corners and still get hit by the car coming from the other direction.
Five Contracts for the King
The New York Cosmos began with a favor to keep one man.
Nesuhi Ertegun had come to Warner when Atlantic was acquired. At some point he had a business opportunity that would have taken him away from the company. Ross, who would offer almost anything to keep a man with good ears, asked what it would take. Ertegun said he wanted a soccer club. Ross liked sports generally and agreed. After the 1970 World Cup in Mexico, where the Ertegun brothers threw lavish parties to build connections in the soccer world, one of which Pelé attended, they came back to New York and held Ross to the promise.
In early 1971, Ross and Jay Emmett, his longtime associate and best friend, recruited eight other executives to put in $35,000 each to start a franchise in the struggling North American Soccer League. Clive Toye, an Englishman, was the first general manager. Gordon Bradley, 37, played and later coached. The first season was semi-professional and drew few fans. The investors worried about losing money and sold their stakes to Warner Communications for $1, so the club ended up inside the empire where Ross could spend whatever he liked on it.
What he wanted was a network television deal for the league, and he figured that required a star. NASL commissioner Phil Woosnam and Toye had talked about Pelé since 1970 and had already approached him once, in the spring of 1971. In 1975 Ross was ready to pay real money. He sent Emmett, Toye, Cosmos vice president Raphael de la Sierra, and Nesuhi Ertegun to Brazil. They met the 34-year-old Pelé at a seaside resort and played soccer with him on the beach. Real Madrid and Juventus were interested too. The Cosmos offered something those clubs could not: the chance to make the game big in a country that barely knew it. Pelé agreed in principle that same day.
The money was harder. Ross sent Warner lawyer Norman Samnick to Brazil. Ross was willing to risk $2 million for three years. Pelé wanted $5 million for two. The final agreement was a complicated five-part contract worth about $4.5 million: $1 million for three years of playing, $1 million for ten years of marketing rights, $1 million for a fourteen-year public-relations contract, and $1 million for a music contract. It was the funeral-home lesson again. If the asset's best years are short, sell its other hours, its image, its voice, its long life after it stops playing. Pelé was treated less like a player than a library.
There was also a political problem. Pelé was considered a Brazilian national treasure, and the president of Brazil asked him to play one more year at home for the good of his people. Ross used his connections and eventually reached Secretary of State Henry Kissinger, who called his Brazilian counterpart and told him that Pelé's move to New York would be a big step forward for relations between the two countries. A parking-lot executive from Brooklyn had gotten American diplomacy involved in a transfer.
What came next looks less like a sports team than a Warner production, and an indulgent one. The Cosmos missed the playoffs in Pelé's first season, so Ross added more stars. Giorgio Chinaglia, a temperamental Italian striker from Lazio, scored 19 goals in 19 league games and alienated nearly everyone except Ross, who became his close friend. The team moved to Yankee Stadium. Pelé and Chinaglia did not get along. The team reached the playoffs and lost to the Tampa Bay Rowdies in the conference semifinals. Ross was furious, and he immediately sent the team on an expensive European summer tour through England, France, Belgium, Switzerland, and Italy that generated a lot of publicity for Warner Communications.
In 1977, Pelé's last season, the club moved into the new Giants Stadium in New Jersey, dropped "New York" from its name, and became simply the Cosmos. Ross added cheerleaders, halftime shows, and mascots, while the roster drew players from all over the world. Early crowds of about 20,000 did not satisfy him. In May he signed Franz Beckenbauer, 31, from Bayern Munich. Then he called in Warner's own talent: Streisand, Mick Jagger, Phil Collins, Robert Redford, Muhammad Ali, Quincy Jones, Andy Warhol, Kissinger, and Spielberg all became familiar faces in the locker room and the luxury boxes. Toye and Bradley were fired. Eddie Firmani, Chinaglia's friend, came from Tampa Bay to coach, reportedly at Chinaglia's urging. When the team slumped again, Ross signed Carlos Alberto, the former captain of Brazil, who was nearly 33 and arrived with four regular-season games left.
On August 14, 1977, 77,691 people filled Giants Stadium for the Cosmos' first playoff game against Fort Lauderdale. Later that month the Cosmos beat the Seattle Sounders in the Soccer Bowl. Beckenbauer was league MVP and Pelé retired with a title.
The Cosmos were Ross's management style in small, with every feature exaggerated: buy the stars, pay for their extra hours, fill the stands with friends, fire the original builders when the new favorite asks, keep spending until the room is full. It worked, and it was also fragile, because everything depended on one man's checkbook and one man's friendships.
Five years later, in November 1982, Colombia gave up hosting the 1986 World Cup. Ross used every soccer contact he had to bring the tournament to the United States, including meetings with FIFA president João Havelange. In May 1983 FIFA chose Mexico. The United States hosted in 1994, two years after Ross died. Pelé spoke at his memorial at Carnegie Hall.
The dates are worth noting. Ross was lobbying FIFA in late 1982, the same weeks that Atari's earnings shortfall was announced and Warner's stock started an eighteen-month fall.
The Buffer
According to Bruck, the good years ended with a cluster of disasters. Ken Rosen, a close friend and colleague, suffered brain damage after being thrown from a horse. Amanda Burden left him. She was the daughter of Barbara "Babe" Cushing Mortimer and the stepdaughter of CBS chairman William S. Paley, and she was exactly the kind of New York society figure Ross had married to reach. They wed in 1980 and divorced sixteen months later. And a long criminal investigation into illegal dealings between Warner executives and the Westchester Premier Theatre, a mob-run venue, became, in Bruck's word, his crucible.
The facts are bad. In 1981, Jay Emmett, co-president of Warner Communications and Ross's best friend, the man who had raised Cosmos money with him in 1971 and traveled to Brazil for Pelé, pleaded guilty to felony charges involving false vouchers. Solomon Weiss, the assistant treasurer, went to trial and was convicted of mail fraud, racketeering, and perjury, and was sentenced to five years of probation and community service. Ross barely avoided indictment. Bruck writes that he used a legal strategy in his deposition that "used Emmett, his best friend, as a buffer to protect himself." The Simon & Schuster description of her book says it more directly: "He saved himself and let his best friend, Jay Emmett, take the fall."
Eleven years later, Emmett was not invited to the funeral, and Weiss, who had kept quiet, was there. Ross's loyalty went to people who protected him. People who needed his protection got less.
Before the Westchester case had faded, Atari collapsed. In just a few years the division had produced the kind of growth Wall Street loves, peaking at $2 billion in sales, and by 1982 Warner was a market favorite largely because of it. Bruck reports there had been warning signs for some time. Ross had already announced his intention to sell stock and kept talking enthusiastically about Atari. Bruck says he finished selling about $20 million of his shares one month before Atari's earnings shortfall was announced in December 1982. The publisher's description adds that he had announced a stock buy-in to support the price before his own sales. The stock then crashed. Bleier, who admired him, explained what happened at Atari as a failure of the trust Ross placed in its management: early success led to "hubris, product incompatibility, heavy debt." The approach that made the music and movie divisions thrive, leaving them alone, let a hardware company run into a wall. Bruck writes that over the next eighteen months Atari brought Warner "to the very brink of bankruptcy."
The company was exposed, and Rupert Murdoch came after it. Ross stopped him by bringing in a white knight, Herbert J. Siegel of Chris-Craft Industries, who bought a large stake (described in Wikipedia as 20 percent) and blocked Murdoch.
The rescue became its own war. Ross could not stand Siegel's intrusions on his authority, and the two men fought for years. Siegel eventually raised his stake to 29 percent. Bruck writes that throughout these years Ross was written off again and again, but he was "more than anything else — a survivor," with "the resilience of a fierce competitor, to whom adversity was one more contest to win, and he had the ruthlessness to do whatever the winning required."
Reviewing Bruck, Rosenstiel noted that Ross's favorite film was It's a Wonderful Life and that he saw himself as George Bailey, the generous builder who looks after his town. Rosenstiel's verdict was that "in real life Ross was also the greed-soaked, unfeeling villain of the film, Mr. Potter, who used people to enrich himself." Bruck, more measured, describes a man who believed nothing was impossible and was therefore "daring and bold," who "saw with fresh eyes," and who, "feeling exempt from legal, ethical and moral standards, … abrogated them at will."
The historian Neal Gabler, who never met Ross, objected two weeks after his death that obituaries had given "a minor scandal" in Westchester nearly as much space as the revival of Warner Bros. He was right that the scale was off, and right about the press's growing appetite for flaws. He was wrong that the scandal was minor in its meaning. It was the clearest view anyone got of what Ross would trade, and what he wouldn't, when he was in danger.
The Most Impossible Deal in the Whole World
By 1986 Warner had recovered. Over the next three years revenue doubled to $4.2 billion and profits doubled to $423 million. Lorimar-Telepictures came in to expand the television business. Ross had survived Atari, Murdoch, and the prosecutors, and he still had Siegel on his board, a partner he couldn't get rid of. He found a solution larger than the problem.
Time Inc. was the most respectable name in American journalism: Time, People, Sports Illustrated, twenty-three magazines in all, plus Home Box Office and a large cable operation. Its culture was everything Warner's was not. The Times review of Bruck's book quotes a Warner executive starting to describe the difference: "There we were, some of us never went to—" and the excerpt breaks off there, which says enough. Time was 91 percent domestic. Warner was 40 percent international. Time had no record business, and Warner had the largest in the world. Warner had no magazines. Both were heavily invested in cable, where size mattered. Every column on the spreadsheet fit together. The only things that didn't were the ones Rohatyn later named on the cold morning in East Hampton: personality, culture, and ego.
The talks took about three years. On March 4, 1989, the two companies announced a merger that would create the largest media company in the world. Ross was 61, and he and J. Richard Munro were to be co-chief executives. Munro said he would retire within two years. Ross secured the chairman's title for ten. The companies valued the combination at $18 billion including debt. Under the terms, Warner shareholders would get nearly 60 percent of the new company.
Asked whether this was the crowning achievement of his career, Ross said no. "I hope what we're going to do next year will be the crowning achievement."
Then Paramount Communications made a hostile bid for Time to break up the deal and filed suit in Delaware. The courts sided with Time twice. The cost was that the merger had to be restructured: instead of a stock swap, Time took on heavy debt to buy Warner's shares outright. Bleier recalls that Warner stock had been around $39 before the deal and that Time ended up paying $72. Ross took home $196 million. Chris-Craft, Siegel's company, made about $2 billion. Ross ended the Siegel war by making his enemy very rich and making his stake irrelevant. The deal closed January 10, 1990.
— Eddie Rosenthal, Ross's former father-in-law, in Connie Bruck's Master of the GameTo me, this was the most impossible deal in the whole world. Henry Luce must be turning in his grave.
The undertaker who had lent his son-in-law the night use of his limousines lived to see that son-in-law take over the company Henry Luce founded. Rosenstiel's phrasing in his review of Master of the Game is precise: Ross ended up "acquiring Time Inc., all the while making Time executives think they were acquiring Ross' Warner Communications." Legally, Time was the buyer. In terms of power, the buyer was the man from Kinney.
By 1990 Time Warner owned Time, People, and Sports Illustrated, the three biggest advertising draws in American publishing. It owned the Warner Bros. studio, the Warner, Atlantic, Elektra, and Asylum labels, Warner Books, DC Comics, HBO, and some of the country's largest cable systems. It was the largest media company in the world. It also carried about $10 billion in debt.
The good feeling lasted only briefly. Ross's 1990 compensation was $78.2 million, the largest pay package of any American executive that year, and it became a symbol of overpaid CEOs. In March 1992 the New York Times ran Roger Cohen's piece with the headline "A $78 Million Year: Steve Ross Defends His Paycheck." His plan to reduce the debt prompted a revolt among his own shareholders. Writing in June 1992, Richard Guilliatt of the Australian Financial Review said Ross had "displayed remarkably poor image-building skills" for someone running the world's largest entertainment company, and that the deal had become "mired in $10 billion of debt and countless internal power struggles." The fix came from Japan. In October 1991 Time Warner announced that Toshiba and C. Itoh would each invest $500 million for 6.25 percent of a new entertainment partnership. The deal closed on June 30, 1992, by which time Ross was too ill to run the company day to day.
Kathryn Harris wrote at his death that some longtime associates thought happiness eluded Ross because he "remained an outsider in the buttoned-down business Establishment of New York." The Times review of Bruck's book said he "never quite reached the heights of international society to which he aspired." From that angle, the Time merger was part balance sheet and part entrance ticket, the Luce name serving the same purpose that the Paley stepdaughter had served earlier.
What happened afterward played out without him. Time Warner bought Turner Broadcasting in 1996, a deal Bleier says Ross had already put in motion. In 2000, Bob Pittman, the protégé who called Ross the "patron saint of dreamers" at Carnegie Hall, helped merge AOL with Time Warner. In 2002 the combined company reported a $99 billion loss, the largest in corporate history at that point. Many of the expected synergies never materialized because, as the company's own history puts it, most Time Warner divisions were "independent fiefs that rarely cooperated." When Pittman tried to make them work together, the old-guard division heads resisted. Jeff Bewkes later called the AOL merger "the biggest mistake in corporate history." In 2019, after AT&T bought the company, the Wall Street Journal summed up the reorganization in a headline: "No More Fiefdoms." By then the fiefdoms Ross built had lasted nearly half a century beyond the man who could hold them together.
George Bailey Checks In
The cancer was diagnosed in November 1991. He had chemotherapy and stayed away from the office for more than a year. He still decided things. In February 1992 he ousted his co-chief executive, Nicholas J. Nicholas Jr., and worked the phones from his sickbed until the board installed his choice, Gerald M. Levin, as co-CEO and president. In June he announced an indefinite leave of absence. Levin took over.
In November, at the University of Southern California's Kenneth J. Norris Jr. Cancer Hospital, Ross had the radical surgery. When he was admitted for the last time, he used the name George Bailey.
Rosenstiel's review records one friend's reading of that choice: "He figured he was probably going to die, and he wanted to try to convince God he was George Bailey." It would be one last deal, presented to the final counterparty as a man whose life mattered because of how many people he helped, as a man who handed a bellman five dollars for a quarter. Rosenstiel and Bruck both supply the other half: a man who let Jay Emmett take the fall and sold $20 million in stock a month before the bad news. The Capra film has both characters. Ross may have believed he was only the first. The way he lived suggests that for the length of a negotiation he could become whoever the other side needed.
His associates were encouraged in December. He seemed to be improving, and there was talk of spending the holidays in Scottsdale. Then complications forced emergency surgery on Saturday, December 19, and he died early Sunday morning, less than 48 hours after published reports of a major board fight at Time Warner. Levin released a statement praising Ross's "clarity of vision, exceptional intellectual and personal magnetism." Two months later, Lorne Michaels produced a two-and-a-half-hour memorial at Carnegie Hall with Quincy Jones as musical director. Natalie Cole sang "Unforgettable" in duet with a recording of her dead father. Jesse Jackson led a standing ovation. Jack Murofushi of ITOCHU, one of the Japanese partners whose money had saved the merger, spoke. So did Pelé. Three months after Ross's death, Clint Eastwood accepted the Best Picture Oscar for Unforgiven and dedicated it to him. Before the year was out, Spielberg's Schindler's List opened with its own dedication.
All that came later. Back in East Hampton on December 23, Spielberg told the gallery about the first time he met Ross. Ross was on the phone yelling about something that had to be "bigger, more ambitious, more colorful, bigger." Spielberg thought, a typical CEO, building empires. Then he realized Ross was talking about the 1981 annual brochure. "He was like an art director!" Spielberg said he had felt cold for two days, "like there's a draft through my heart," and imagined Ross up there trying to figure out how to plug the holes. "Being in his life," he said, "was like being in a world that spun a lot faster than it is." Sills said Ross was like an opera singer: "he knew how to make grand entrances," "he was always on a diet, and he knew how to share curtain calls." Paul Simon sang "Bridge Over Troubled Water." Streisand had told Terry Semel on the Time Warner plane that she could not sing at the funeral. She sang.
Then came Mark, the hand gesture, and "Never follow Barbra."
A cold rain was falling as the procession drove through East Hampton. It passed Nick & Toni's, the restaurant Toni Ross ran with her husband, which had a huge banner across it: Goodby, Steve, We Love You. At Green River Cemetery, Ross's nine-year-old daughter, Nicole, and her friends handed out single long-stemmed roses from baskets, one for each mourner to place on the casket. The grave was on a hillside where only a few other graves were visible. The night before, more than a dozen pine trees had been planted around it, along with azaleas in full bloom.
Ross had recently taken up fine gardens. There were azaleas like these at the family's East Hampton estate, and he loved them, and he resented how briefly they bloomed. He had grown used to getting any material thing he wanted, and he said more than once that he wanted azaleas that would bloom longer, even in winter. Liman had said at the service that to Ross nothing was impossible.
The line moved forward. Toni Ross got her mother's attention. Carol Rosenthal, now Carol Maslow, had been the undertaker's daughter he married in 1953. Toni pointed at the bright pink bushes around the grave, blooming on a gray December day of sleet.
"See?" she said. "There they are."
Part IIThe Playbook
Ross's methods were never taught in business school, and many of his peers expected them to ruin him. Some nearly did. What follows is not a set of instructions for becoming Steve Ross, which would be impossible and in places illegal. It is an analysis of the structural moves underneath the theatrics: how he built leverage from ordinary assets, why his talent system worked and where it broke, and what the end of his career shows about the limits of running an institution through personal relationships. Each principle comes from the record above. Several are warnings.
The principles
- 1.Monetize the idle hours.
- 2.Gather stones to buy a diamond.
- 3.Buy the ears, not the building.
- 4.Pay above yourself, then get out of the way.
- 5.Derive authority from relationships, not position.
- 6.Narrowcast before the market has a word for it.
- 7.Unbundle the price of a star.
- 8.Rent capital with a story, but know who's renting whom.
- 9.Play to tie in public; win the structure in private.
- 10.Underwrite the intangibles before the merger, not after.
- 11.Hand-off loyalty doesn't transfer.
- 12.Your loyalty ledger is being audited.
W
The Arc of an Empire
From the night shift of a funeral fleet to the world's largest media company.
1953
Marries Carol Rosenthal; joins Riverside Memorial Chapel, the largest funeral company in the U.S.
1962
Kinney, a merger of car rental, parking, and cleaning, goes public at $12.5 million.
1964
Buys Circle Floor from the Milsteins for $15 million.
1967
Acquires the Ashley-Famous talent agency; Ted Ashley becomes his guide to show business.
1969
Pays $400 million in stock for Warner Bros.-Seven Arts.
1972
Spins off non-media assets; company renamed Warner Communications.
1975
Signs Pelé to a five-part, ~$4.5 million contract.
1976
Acquires Atari.
1977
QUBE interactive cable launches in Columbus; Cosmos draw 77,691 and win the Soccer Bowl.
1979
Warner-Amex Cable formed with American Express capital.
1981
Jay Emmett pleads guilty in the Westchester Premier Theatre case.
1982
Atari shortfall announced in December; Warner begins an 18-month slide.
1984
Chris-Craft's Herbert Siegel blocks Murdoch's approach and becomes Ross's adversary.
1989
Time-Warner merger announced March 4; Paramount sues and loses.
1990
Merger closes January 10; Ross's pay hits $78.2 million.
1992
Ousts Nicholas in February; Toshiba–C. Itoh deal closes June 30; dies December 20.
Principle 1
Monetize the idle hours
The entire Ross empire started with roughly a hundred funeral limousines that sat unused overnight. He did not invent a product or win a market. He noticed that a valuable asset was fully paid for and doing nothing for about half of each day. Renting the cars out after dark created revenue with almost no new capital, and it gave him something more important than the revenue: a history of profitability that a bank would lend against. Abbey Rent a Car was financed on the back of the night shift.
This is different from the usual advice to look for underused assets. Ross treated the time an asset spent idle as a separate product that could be packaged, priced, and used as collateral. He did the same thing twenty years later with Pelé. A player's years on the field are short, so Ross bought the decade of marketing, the fourteen years of PR, and the music contract that came after. The athlete's other hours were the larger part of the deal.
The point for operators is that a company's balance sheet usually understates what it owns, because it records assets and not the time those assets sit unused. The time is the opportunity.
Tactic: List your most expensive assets and calculate how many hours of each day, week, or year they earn nothing, then design a product for that empty time.
Principle 2
Gather stones to buy a diamond
The Colossus essayists asked how a man could build enough wealth from businesses with no competitive moat to buy one of Hollywood's great studios. The answer is that Ross never treated funeral homes, parking lots, cleaning companies, and flooring makers as businesses he meant to keep. They were currency. Each acquisition increased Kinney's size and cash flow, which raised the value of its stock, and that stock is what paid the $400 million for Warner Bros.-Seven Arts.
The non-obvious part is the attitude. Most people who run ordinary businesses become attached to them. Ross got bored with them, finding that they lacked "charisma," and that boredom kept him focused on the exit. When the trade was done, he spun off what Bruck called "the detritus" without sentiment. Unglamorous cash flow is not a lesser business. It is a launch vehicle, and launch vehicles are designed to fall away.
There is also an observation here about market structure. Boring industries are crowded with operators but have few sophisticated capital allocators. Someone who can combine them into a public company is doing something most of those operators cannot, even if any one of the businesses is easy to copy.
Tactic: Before acquiring a cash-generating business, write down in one sentence the larger asset that its cash flow and stock are meant to buy, and the date you expect to sell the stepping stone.
Principle 3
Buy the ears, not the building
As Stan Cornyn tells it, the main issue in the 1969 Warner purchase was not the studio lot or the film library. It was whether Mo Ostin and Joe Smith would stay at Warner-Reprise, whether the Erteguns and Jerry Wexler would stay at Atlantic, and whether Frank Sinatra, who owned 20 percent, would approve. Without the people with good ears, a buyer would end up with a famous name and a lot of empty offices.
Ross's first entertainment acquisition, the Ashley-Famous agency, was pure human capital with no real physical assets. That purchase taught him what he was actually buying, and he applied the lesson for decades. When Nesuhi Ertegun thought about leaving, Ross offered "anything" to keep him, and agreed to start a soccer franchise as a retention bonus. The Cosmos were a talent-retention expense that turned into a cultural phenomenon.
In a talent business, the people decide whether the acquisition is worth anything. Investment bankers price the assets. Ross priced the willingness to stay.
Tactic: In any acquisition, identify the five people whose departure would destroy most of the value, and secure their commitment before signing, not after closing.
Principle 4
Pay above yourself, then get out of the way
Until the last decade of his life, Ross paid his top executives more than he paid himself. He introduced incentive compensation, gave his division heads real autonomy, and, as Harris put it, "did not meddle." The results were a run of studio leadership that Bob Daly credited directly to Ross's philosophy, and a decade that Warner veterans remembered as the best of their careers.
The less obvious part is what the high pay was for. Generous compensation together with true autonomy produces loyalty in a way that pay alone does not. It also sets up the failure that hurt Ross most. The same approach applied to Atari, a hardware company growing fast in a market that was about to crash, turned out to be dangerous. Bleier, an admirer, said that at Atari "Ross' trust in management failed." Autonomy works when the managers are better at the business than the owner. It fails when nobody is.
?
Ross's Bets: A Scorecard
The same willingness to fund and delegate produced spectacular wins and near-fatal losses.
| Bet | What he saw | Outcome |
|---|---|---|
| Warner Bros.-Seven Arts (1969) | A troubled studio whose talent could be kept | Scale Became the core of the empire |
| Cable systems (1971) | Narrowcasting would beat broadcasting | Scale Cornerstone of the company until the 2009 spin-off |
| Atari (1976) | Video games in every home | Risk $2B peak sales, then near-bankruptcy |
| QUBE (1977) | Television that talks back | Try Failed, but led to the Full Service Network |
| Cosmos / Pelé (1971–77) | A star could make a sport | Try 77,691 fans; no lasting network TV deal |
| MTV / Nickelodeon | Channels for youth audiences | Scan Invented, then sold to Viacom under pressure |
| Time Inc. merger (1989) | Perfect strategic complementarity | Risk World's largest media firm, ~$10B debt |
Tactic: Pair autonomy with an early-warning system that is not run by the division it monitors, so trust doesn't turn into blindness.
Ross never owned more than 1 or 2 percent of Warner's stock. It was still always "Steve Ross' company." Arthur Liman described the source of that control precisely: "He derived his authority from his relationships, not his position." Ross gave Beverly Sills the more expensive donation, on the condition that she join his board. He tipped a bellman five dollars for returning a quarter. He made Spielberg, Streisand, and Pittman think of him as a father.
This was strategy, not just personality. Ross had very little equity and ran a company full of people who could leave, so personal relationships were the only reliable source of control he had. The relationships were his ownership stake.
There was a cost, and his son named it at the grave: "It was hard to have a father who shared his self with so many people." Authority built on relationships has to be maintained constantly, and that maintenance comes out of somewhere. Usually it comes out of the people closest to you, who are assumed to be secure.
Tactic: If your control depends more on relationships than on equity, map those relationships explicitly and budget time for them the way you would budget capital, including the ones at home.
Principle 6
Narrowcast before the market has a word for it
In 1971 three networks controlled American television, and their economics rewarded programming aimed at everyone. Ross bought small cable systems and bet on the opposite: many channels, each serving a narrow audience. That approach produced MTV and Nickelodeon and, eventually, the cable landscape of hundreds of specialized channels.
The less obvious lesson concerns timing and failure. QUBE, Ross's interactive cable test in Columbus, failed commercially. It still led to the Full Service Network in 1994 and kept Warner thinking about two-way television well before the internet. Ross was willing to fund ideas that would fail locally and pay off across the industry. He also lost MTV, Nickelodeon, and VH1 in a forced sale to Viacom after the Atari crisis. Being early is worth something only if your balance sheet lets you stay long enough to collect.
Tactic: Pair each early bet on an emerging behavior with a separate financial cushion big enough that a crisis elsewhere in the company can't force you to sell the bet before it pays off.
Principle 7
Unbundle the price of a star
The negotiation for Pelé stalled on a $3 million gap. Ross would risk $2 million for three years of play, and Pelé wanted $5 million for two. The solution was not to split the difference. It was to break the price into pieces: $1 million for playing, $1 million for ten years of marketing rights, $1 million for a fourteen-year PR contract, and $1 million for music. Each piece was a separate asset with its own term, and together they made a headline number that worked for both sides.
This is the limousine idea again. A star's playing career is short. The star's image, voice, and reputation last for decades. By paying for those, Ross turned a short-term expense into a long-term rights portfolio, and his company, which included records and publishing, could earn from each piece. A conglomerate can pay more for talent than a pure sports team because it can use more of the talent.
Tactic: When a key hire's price looks too high, break it into separate rights with different time horizons, and price each against the specific part of your business that can earn from it.
Principle 8
Rent capital with a story, but know who's renting whom
Ross was very good at bringing in other people's money. He convinced American Express that cable subscribers would become cardholders, and that never happened, but Warner got its capital. He convinced Herbert Siegel to rescue Warner from Murdoch, and Siegel did. Later, Toshiba and C. Itoh put in $1 billion combined to relieve the Time Warner merger debt.
The Siegel case shows the risk. The white knight arrived with his own plans, eventually held 29 percent, and fought Ross for years. Ross could not tolerate interference with his autonomy, and it took a $14 billion merger, which paid Chris-Craft about $2 billion, to remove him. Outside capital comes with expectations, and the person who brings it in may be the one who later wants to own you.
$
Capital Partners and Their Price
Every rescuer arrived with terms, and some with ambitions.
| Partner | The pitch | The reality |
|---|---|---|
| American Express (1979) | Sell cards to cable subscribers | Try Cross-sales never came; bought out in 1984 |
| Chris-Craft / Siegel (1984) | White knight against Murdoch | Risk Years of fighting; stake rose to 29% |
| Toshiba & C. Itoh (1991–92) | $500M each for 6.25% of entertainment unit | Scale Debt relief without giving up control |
Tactic: Before accepting rescue capital, write out what the investor will want three years from now and decide in advance what you will give up to unwind the arrangement.
Principle 9
Play to tie in public; win the structure in private
Ross's rule for shareholder meetings was "You never play a shareholders' meeting to win, you play to tie," and it explains his biggest deal. The Time merger was announced as a combination of equals, with co-chief executives and a balanced story. On the details that mattered, Ross came out ahead: Warner shareholders were to get nearly 60 percent of the new company, Ross got the chairmanship for ten years while Munro planned to retire within two, and, after Paramount forced a cash restructuring, Warner holders received a large premium. Rosenstiel observed that Ross acquired Time while Time's executives believed they were acquiring Warner.
The idea is to keep the public picture balanced so the other side's pride isn't threatened, and concentrate your advantage in terms the public story doesn't emphasize: tenure, governance, economic share. In the room, appear to tie. In the documents, win.
Tactic: In any merger, let the other side have the titles and announcement language, and negotiate hard on governance tenure, board composition, and economic split.
Principle 10
Underwrite the intangibles before the merger, not after
On paper, Time and Warner fit almost perfectly. Waiting for Ross's funeral, Felix Rohatyn, who helped put the merger together, said what the spreadsheet left out: "It is the intangibles that matter most — personality, culture, ego."
T
The Perfect Fit on Paper
Every quantifiable dimension of the 1989 merger was complementary.
| Dimension | Warner Communications | Time Inc. |
|---|---|---|
| International revenue | 40 percent | 9 percent (91 percent domestic) |
| Magazines | None | 23 titles |
| Recorded music | World's largest record business | None |
| Cable | Major systems | Major systems plus HBO |
| Culture | Fiefdoms, flamboyance, autonomy | Establishment, journalism, hierarchy |
The aftermath confirmed what he said. The merged company was weighed down with debt and internal power struggles. Levin restructured the board while Ross was dying. The divisions stayed, as the company's own history put it, "independent fiefs that rarely cooperated," and that is a large part of why the AOL merger failed a decade later. Ross's style of personal, relationship-based authority could hold such a company together only while he was there to do it. Culture problems are not resolved at closing. They come due later, usually after the person who could have handled them is gone.
Tactic: Before any merger, assign someone senior to write the case against it on cultural grounds alone, and require a funded integration plan that works even if the leader behind the deal leaves.
Principle 11
Hand-off loyalty doesn't transfer
In February 1992, Ross ousted his co-chief executive and arranged for Gerald Levin to take his place. Ten months later Levin used Ross's absence to push his loyalists off the board. The man Ross chose to protect his position turned against his allies before Ross was dead. Martin Payson, a twenty-two-year Warner veteran, ended up leaving the company.
The lesson is not that Levin was disloyal. It is that loyalty to a founder is personal and does not pass to a successor. Ross built a company where authority came from relationships, so his authority could not be handed down. He picked a successor while the merger was still unsettled and while he was too sick to enforce his decision. A succession plan carried out from a hospital bed is a hope, not a plan.
Tactic: Turn the loyalties you depend on into formal governance, such as board seats, contracts, and charter provisions, years before you might need them, because personal loyalty won't survive you.
Principle 12
Your loyalty ledger is being audited
The funeral guest list is the most revealing document in this story. Jay Emmett, Ross's closest friend, who pleaded guilty after Ross's deposition used him as "a buffer," was not invited. Solomon Weiss, who refused to cooperate with prosecutors and was convicted, was there. In the Atari episode, Ross sold about $20 million in stock a month before shareholders learned of the shortfall. These actions kept him safe, and they shaped how he was remembered: the obituaries, as Neal Gabler complained, gave the Westchester scandal nearly as much space as rescuing a major studio.
The point is not just that ethics matter, although they do. A leader whose power comes from loyalty is being judged all the time on how that loyalty flows back. Every executive who watched Emmett take the fall learned exactly what Ross's protection was worth when Ross himself was at risk. Rosenstiel's description of him as both George Bailey and Mr. Potter is not a contradiction. It describes a man whose generosity was real and also conditional on his own safety.
Tactic: Decide now, while nothing is at stake, what you will refuse to let a loyal colleague absorb on your behalf, because everyone watching you will learn the real answer.
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Part IIIQuotes and Maxims
In their words
— Steve RossIf you're not a risk-taker, you should get the hell out of business.
— Steve Ross, on his years selling caskets at Riverside Memorial Chapel, as recounted by Stan CornynYou learn about people's needs and feelings at an emotional time for them, a funeral. You service their needs.
— Steve Ross, on shareholders' meetings, in Connie Bruck's Master of the GameYou never play a shareholders' meeting to win, you play to tie.
— Steve Ross to Beverly Sills, as recounted at his funeralBubbles, I never heard a more cockamamie idea in my life. Why don't you just ask me for the money?
— Steve Ross, March 1989, on whether the Time merger was his crowning achievementI hope what we're going to do next year will be the crowning achievement.
Maxims
- Rent the night. Your most expensive assets are often idle half the time, and that idle time is a product nobody has priced yet.
- Treat boring businesses as currency. Unglamorous cash flow is valuable for the larger asset it can buy.
- Buy the people with good ears. In a talent business, the value walks out at six o'clock, so secure the people before you sign.
- Pay your lieutenants more than yourself. Generous pay plus real autonomy produces loyalty, as long as you are watching for blind spots.
- Unbundle the star. Pay for the long-lived image and rights as well as the short career, and let the whole company earn from them.
- Fund the experiment that fails locally. QUBE failed and still pointed the industry toward interactive television.
- Know what your rescuer will want later. The white knight can become the next adversary.
- Concede the announcement, win the structure. Give the other side titles and language, and keep the governance and economics.
- Culture comes due after closing. Personality, culture, and ego decide whether a merger that works on paper works in practice.
- Personal loyalty doesn't pass to a successor. Put the relationships you depend on into formal structures while you're still able to.
