(FORTUNE Magazine) – It's been a bang-up summer for CBS: With quarterly earnings rocketing skyward and its prime-time lineup leading the Nielsens, the company seems finally to be emerging from the hole dug for it by Larry Tisch, its chairman from 1986 until 1995. Equally surprising, Tisch's reputation is undergoing a revision. Long reviled by media types as the ogre who dismembered the Tiffany Network, the billionaire hotel-and-insurance magnate is becoming known in academic circles as the philanthropist who rebuilt New York University.

Even as he was downsizing CBS, Tisch led NYU's transformation from middling commuter school to top-flight university--donating (with other family members) $43 million in the 20 years he chaired the school's board and helping to raise $1.8 billion. At a black-tie thank-you banquet last spring, even Dan Rather had warm words for him.

For a frugal investor like Tisch (a 1942 graduate), NYU was a good philanthropic fit. It didn't have ivy-covered halls or even a proper campus, just some old buildings in Greenwich Village. Founded in 1831 for the children of tradesmen and immigrants, it served as a private-school alternative to the City University of New York, which was free but far more selective. When CUNY switched to open admissions in 1970, NYU discovered that mediocre but expensive no longer worked.

Tisch, elected chairman in 1978, buttonholed other local bigwigs with the pitch that their money would be spent to build a world-class institution, not socked away in an investment account. In a series of power breakfasts, he helped recruit for the board such big givers as Bear Stearns Chairman Ace Greenberg, Salomon Smith Barney's Lew Glucksman, now-retired Chase Manhattan President Thomas Labrecque, former Met Life CEO John Creedon, and publisher Mort Zuckerman. Their money was spent to lure top professors and build dorms and classrooms. Twenty years, 141 new professorships, and 22 buildings later, U.S. News & World Report ranks NYU's law school No. 4 and its Tisch School of the Arts No. 1. Applications are up 190%.

It was a different story at CBS, where Tisch eviscerated the fabled news department, sold music and publishing, sat out the explosion in cable, and lost NFL football and a slew of affiliates to Fox. Tisch defends his record: "We did very, very well for our shareholders." True enough: While the company withered, its market cap soared--largely because Tisch did things like use $2 billion from the sale of music and publishing to finance a stock buyback. NYU, perhaps fortunately, doesn't have shareholders. Which is another way of saying it's a public trust--while CBS merely thought of itself as one.

--Frank Rose