The Inheritance.(Company overview)

With a doomsday clock ticking for newspapers as we know them, no one has more at stake than fourth-generation New York Times publisher Arthur Ochs Sulzberger Jr., who is scrambling to keep his family's prized asset alive. Some see him as a lightweight cheerleader, others as the last, best defender of quality journalism. Talking to company insiders, MARK BOWDEN examines the nexus of dynasty and character that has brought the 57-year-old Sulzberger to the precipice

I was in a taxi on a wet winter day in Manhattan three years ago when my phone rang, displaying "111-111-1111," the peculiar signature of an incoming call from The New York Times.

"Mark? It's Arthur Sulzberger."

For weeks I had been trying to talk with Arthur Ochs Sulzberger Jr., the publisher and chairman of the New York Times Company. We had met once before, on friendly terms, and sometime after that I had informed him that I was hoping to write a story about him. I figured he was calling now to set something up. Instead he asked, "Have you seen the New Yorker piece?"

The article in question, just published, was bruising. It had surely been painful for him to read. Among other indignities, it featured a remark by the celebrated former Times man Gay Talese, the author of one of the most popular histories of the newspaper, The Kingdom and the Power. Speaking of Arthur, the fifth member of the Ochs-Sulzberger dynasty to preside over the paper, Talese had said, "You get a bad king every once in a while."

I told Arthur that I had not yet fully read the story. "Well, I'm getting out of the business," he said. Startled, I gazed through the window at the cars and people shouldering through the cold rain, the headline already forming in my mind: PUBLISHING SCION RESIGNS! "Wait, Arthur," I said. "Is this a major scoop? Or are you just saying that you aren't talking to writers anymore?" He laughed his high-pitched, zany laugh. "The latter," he said.

Now, I respect people who avoid the spotlight, and a reluctance to be publicly vivisected is a sure sign of intelligence. But ducking interviews is an awkward policy for the leader of the world's most celebrated newspaper, one that sends a small army of reporters1,300 of theminto the field every day asking questions. Still, I could understand Arthur's decision. After presiding or helping to preside over a decade of unprecedented prosperity, the publisher and chairman of the Times had recently begun to appear overmatched. Two of his star staffers were discovered to have violated basic rules of reporting practice; he had been bullied by the newsroom into firing his handpicked executive editor, Howell Raines; and he had spent much of the previous year in a confusing knot of difficulty surrounding one of his reporters and longtime friends, Judith Miller. For an earnest and well-meaning man, the hereditary publisher had begun to look dismayingly small.

He has been shrinking ever since. In 2001, The New York Times celebrated its 150th anniversary. In the years that have followed, Arthur Sulzberger has steered his inheritance into a ditch. As of this writing, Times Company stock is officially classified as junk. Arthur made a catastrophic decision in the 1990s to start aggressively buying back shares ($1.8 billion worth from 2000 to 2004 alone). This was considered a good investment at the time, and had the effect of increasing the stock's value. Shares were going for more than $50. Now they are slipping below $4less than the price of the Sunday Times . Arthur's revenues are in free fall: the bottom has dropped out of both newspaper and Internet advertising. He has done more than anyone in the business to showcase newspaper journalism online. It hasn't helped much. The content and page views of the newspaper's Web site, nytimes.com, may be the envy of the profession, but as a recent report from Citigroup explained, "The Internet has taken away far more advertising than it has given." Layoffs have occurred in the once sacrosanct newsroom.

Having squandered billions during the newspaper's fat yearsbuying up all that stock, buying up failing newspapers, building a gleaming new headquartersArthur is scrambling to keep up with interest payments on hundreds of millions in debt, much of it falling due within the next year. To do so, he is peddling assets on ruinous terms. Arthur recently borrowed $250 million from Carlos Slim HelA*, the Mexican telecommunications billionaire, who owns the fourth-largest stake in the Times Company. Controlling interest is held closely by the Sulzberger family, which owns 89 percent of the company's Class B shares. These shares, not traded publicly, are held by a family trust designed to prevent individual heirs from selling out, and ultimately to shelter editorial matters from strict concern for the bottom line. The family owns about 20 percent of the Class A shares, which is about the same percentage owned by the hedge funds Harbinger and Firebrand. The third-largest Class A shareholder is T. Rowe Price, with 10 percent. Slim comes next, with 7 percent. Given the current state of the investment and credit markets, Slim would appear to have the inside rail should the paper ever be sold, a prospect once unthinkable. It is now very thinkable. Among the other prospective buyers whose names have surfaced in the press are Michael Bloomberg, the billionaire mayor of New York; Google; and even, perish the thought, the press baron Rupert Murdoch, whose Wall Street Journal has emerged as journalistic competition for the Times in a way it never was before. (Murdoch has publicly dismissed reports of his interest in the Times as "crap," which has served only to heighten speculation.) This quarter, for the first time since Times Company stock went public, in 1969, the fourth- and fifth-generation Sulzbergers who hold shares (there are 40 of them in all) received no dividends. As recently as last year they divvied up $25 million.

Beyond these professional trials, Arthur has personal ones. He has separated from his wife of more than three decades, Gail Gregg, a painter, and embarrassing speculation about his sleeping partners has surfaced in the tabloid columns. His son, Arthur Gregg Sulzberger, is now working as a reporter at the paper, as his father and grandfather once did, but, for the first time in five generations, the heir apparent's inheritance is in doubt.

While the crushing forces at work in the newspaper industry are certainly not Arthur's fault, and many other newspapers have already succumbed to them, the fate of The New York Times is of special importance: it is the flagship of serious newspaper journalism in America. The Times sailed into the economic storm that began in 2001 in good financial shape, bearing the most respected brand name in the profession. It was far better equipped than most newspapers to adapt and survive. What is increasingly clear is that the wrong person may be at the helm. Arthur Sulzberger's heart has always been in the right place, but he assumed leadership from his father uniquely ill-equipped for this crisisnot despite but because of his long apprenticeship. To their credit, the Sulzbergers have long treated the Times less as a business than as a public trust, and Arthur is steeped in that tradition, rooted in it, trained by it, captive to it. Ever the dutiful son, he has made it his life's mission to maintain the excellence he inheritedto duplicate his father's achievement. He is a careful steward, when what the Times needs today is some wild-eyed genius of an entrepreneur.

The Sulzbergers embody one of the newsroom's most cherished myths: Journalism sells. Arthur says as much at every opportunity, and clearly believes this to his core. It encapsulates his understanding of his inheritance and of himself. But as a general principle, it simply isn't true. Rather: Advertising sells, journalism costs. Good journalism costs more today than ever, while ads have plummeted, particularly in print media. This is killing the Times, and every other decent newspaper in America. Arthur has manfully tied himself to the wheel, doggedly investing in quality reporting and editing even as his company loses more and more money. Few investors or analysts consider this to be sound business practice.

Many people are rooting for Arthur Sulzberger, and many people like him. It can be hard to persuade those who know him to talk candidly on the record. For this story, Arthur stuck by his decision to get out of the business of being interviewed, and he also declined to permit his employees to talk to me. Nevertheless, many did. I interviewed dozens of current and former Times reporters, editors, and business managers, as well as industry analysts, academics, and editors and publishers at rival newspapers. Nearly every one of them hopes that Arthur will succeed. Few expect that he can.

Only two years ago the New York Times Company moved into a new skyscraper on Eighth Avenue designed by Renzo Piano. Its faAs.ade rises into the clouds like an Olympian column of gray type. Whether owing to hubris or sheer distraction, the erection of a new headquarters often seems to spell trouble for corporations, and many had questioned the wisdom of this investment. The new Times building has now been sold, one more measure to relieve the company's mounting debt. Eyeing the handsome grove of birch trees planted in its soaring atrium, one reporter told me, "We used to joke about how many trees died for a story. Now we ask, How many stories died for those trees?"

The Sword and the Stone

America is not kind to the heir. He is a stereotypical figure in our literature, and not an appealing one at that. He tends to be depicted as weak, pampered, flawed, a diluted strain of the hardy founding stock. America celebrates the self-made. Unless an heir veers sharply from his father's path, he is not taken seriously. Even in middle age he seems costumed, a pretender draped in oversize clothes, a boy who has raided his father's closet. The depiction may be unfair, but it is what it is.

Arthur Ochs Sulzberger Jr. is fair-skinned with small, deep-set light-brown eyes. He has a high forehead with a steepening widow's peak, his crown topped …