Who will control the New York Times?

Times publisher Arthur Sulzberger Jr. says his family is not interested in selling the Times.

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LOS ANGELES (Fortune) -- Every day for months now, pundits and peanut gallery members have weighed in on the subject of what The New York Times might do to save itself. The prevailing wisdom is that the Times - arguably the most influential and well-regarded newspaper on the planet - is in peril of disappearing, and jeez, if the Grey Lady can't survive, who will, and what does that portend for the future of journalism? But that's an overstated view - in reality, the Times newspaper is holding up better than many of its competitors amid the media meltdown, and the company's problems are largely corporate in nature. So a better question is: who might end up controlling the newspaper and what will they do with it?

Just in the past several weeks, two overtures involving the largest block of The New York Times Co. (NYT) shares outstanding and two of the biggest names in media and technology offer a glimpse at the intrigue surrounding the company. Last month, sources tell me, former Hollywood mogul David Geffen made an offer to buy the 19% stake in the Times held by hedge fund Harbinger Capital Partners, but no deal was struck. (Geffen and Harbinger declined to comment.). And a few weeks before that, Scott Galloway, a Web entrepreneur and New York University Business School professor who is one of two Harbinger appointees on the Times board, made an overture to Google (GOOG, Fortune 500) co-founder Larry Page about Google buying the Times Co. Even though Google CEO Eric Schmidt has publicly lamented the state of the newspaper industry and dismissed the notion of Google investing in it, people involved said the company looked seriously at the opportunity before deciding to pass.

I spoke to Times chairman and publisher Arthur Sulzberger Jr. at a newspaper convention in San Diego last month (I wrote for the Times between 2005 and 2007) and mentioned Galloway's approach to Google. He paused and said, "things to worry about, things not." He also declined to be interviewed, and neither Google nor Galloway would comment. But a couple of weeks later, at the company's annual meeting, Sulzberger reiterated the stance that his family, however depleted their fortune may be, is not interested in selling the Times, which a family trust controls through a class of super-voting shares.

Harbinger Capital Partners acquired its 19% stake in Times common shares in 2007, and the fund won two slots on the Times' board after threatening a proxy fight. Since then, the $500 million investment has lost more than three quarters of its value.

The Times Co. is grappling with two chief problems, one financial, the other more esoteric. The first is too much debt and the results of a litany of questionable corporate moves and missed opportunities over the last decade or so that have been well catalogued before. The steps the Times has taken since the beginning of the year - selling much of its two-year-old headquarters, borrowing $250 million on steep terms from billionaire Carlos Slim, threatening to close The Boston Globe, putting its stake in the Boston Red Sox up for sale, and so on - are intended to keep the company solvent. The company lost $74 million last quarter and if it lost roughly another $600 million between now and 2011 (not counting special charges) it would face default on its chief line of credit, according to John Puchalla of Moody's.

More broadly, the company suffers from a kind of genetic disorder stemming from the high-minded public goals of the Ochs-Sulzberger trust - whose chief mandate is to protect the editorial independence of the Times - and the demands of running a public company, which the Times became 41 years ago.

While the Sulzberger ownership has not yielded corporate brilliance of late, it has done some prescient things with the core brand in recent years, including building the most popular online newspaper Web site and emphasizing national advertising - rather than disappearing print classified ads - as the paper's biggest source of revenue. The Times and associated publications including the International Herald Tribune account for around two thirds of the company's $2.9 billion in annual revenue, with The Boston Globe and other New England properties, regional papers in Florida and the Web site about.com accounting for the rest.

Among its pluses, the Times has managed to increase its print circulation revenue over the last couple of years, no easy feat these days. It boasts more than 830,000 print subscribers who have taken the paper for two or more years, so the presses are not turning off any time soon. But the downturn and general devaluation of advertising by the Web has wreaked havoc with the cost structure of all print publications, the Times included. Newspaper analyst Craig Huber of Barclays Capital believes the company's common stock will be trading for $1 a share within a year (it is currently around $7).

Meanwhile, the company is looking at everything the pundits are calling for and more: charging for some content via its Web site, embracing Kindle-like devices, publishing a less sprawling and comprehensive paper, maybe even less frequently, written and edited by fewer people and targeted at a narrower, even more elite, audience. Or, as some have proposed, figuring out a way for all or part of its operation to become a not-for-profit.

For months, the Times has had two internal task forces comprised of journalists and business executives meeting weekly. One is looking at how the news operation would need to reconfigure under different scenarios, while the other explores every new potential revenue stream from new products like the Kindle and its ilk. Executive editor Bill Keller described the process to me as "an intensive and systemic investigation of how you remake the business model for the long haul. And we don't have five years to figure it out, we have a year or two."

The betting continues to be that Carlos Slim is in the catbird seat to end up controlling the Times should it slip out of the Sulzbergers' grasp. "He's basically trying to get his nose under the tent and position himself as a distressed buyer and doing it in a friendly fashion," says Henry Ellenbogen, who oversees the media and telecommunications fund for T. Rowe Price. (The company owns a large stake in the Times via other funds.). "If the economy stays like it is, they'll probably need a large capital source to bail them out - and he's positioning himself to do that." (For the record, Slim's spokesman says "the only thing we want is for the business to be successful.") Howard Milstein, a New York-based financier, has also been buying shares. And though nothing has come of Geffen's offer, his interest signals that there are other billionaires out there who may yet come out of the woodwork, either for financial or altruistic purposes. Watch the front page.