Steven Ross, Time Warner Inc. Chairman

NEW YORK - Steven J. Ross, chairman and co-chief executive of Time Warner Inc., the world's biggest media-entertainment company, died yesterday of cancer. He was 65.

During the 1980s, Mr. Ross capped his reputation as a consummate dealmaker by negotiating the merger of his Warner Communications Inc. with Time Inc. In 1990 alone, his compensation amounted to about $78 million, including about $74 million in payouts for his stock and additional stock options.

"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," said Gerald Levin, Time-Warner's co-chief executive.

Mr. Ross, who was born Sept. 17, 1927, in New York City, built his father-in-law's funeral-home business into a coglomerate - Kinney Service Corp. - worth nearly $4.2 billion by 1988.

Kinney acquired a talent agency in 1967, bought the movie company Warner-Seven Arts in 1969 and began making such hit films as "Dirty Harry" and "Klute."

As part of the deal, Kinney also acquired the Warner Bros., Reprise and Atlantic record labels, and from that base the company began exploring two areas of later explosive growth, videocasettes and cable television.

The company changed its name in the early 1970s to Warner Communications Inc. and shed its peripheral businesses to concentrate on entertainment.

It merged with publishing and cable TV giant Time Inc. in 1989,

with Mr. Ross becaming co-chairman and co-chief executive with Time's J. Richard Munro in July 1989. When Munro retired in May 1990, Ross became sole chairman.