(FORTUNE Magazine) – Who needs a scary movie to send chills up the spine? Meet Guy Tell, a mustachioed archer who performs in P.T. Barnum's Kaleidoscape, an upscale one-ring circus that's the latest creation from the people at Ringling Bros. First, Tell uses his crossbow to shoot a long-stemmed rose out of the mouth of his assistant, Regina. Upping the ante, he sends five bolts flying toward her simultaneously at 90 miles an hour; each strikes within inches of her body. Finally, Tell carefully lines up a dozen crossbows in the 45-foot ring, pointing one crossbow at the next, which points at the next, and the next--until he takes aim and squeezes the trigger, setting off a rapid-fire chain reaction that ends when the last arrow pierces an apple sitting atop his own head. Yikes!

As the crowd erupts with cheers, no one claps louder than a nattily attired gentleman seated on a red-velvet sofa in the front row. It's Kenneth Feld, 51, the man who owns the circus--not only Barnum's Kaleidoscape but also the two traveling editions of the Ringling Bros. Barnum & Bailey big show; nine touring ice shows, including Disney on Ice; and Las Vegas' top-grossing act, the illusionists Siegfried & Roy. Feld personally produces every show, and he has watched Guy Tell for years, so tonight his eyes are on the crowd. If the customers are happy--and they seem to be--then Feld is happy. "That's what this business is all about," he says. "Generating the smiles--and the dollars."

Feld Entertainment generates plenty of both. Its live performances are seen by about 25 million people a year, more than those of any entertainment company except Disney with its theme parks. The privately held firm doesn't disclose its finances, but knowledgeable insiders say the company brings in $500 million a year in revenues. (As chairman, CEO, and owner of nearly 100% of the company, Feld is said to be personally worth well over $650 million.) And these days he's on a growth kick. Investing $10 million, he built the luxurious 1,800-seat Kaleidoscape circus from the ground up in an effort to reach the affluent, older audiences who made the Montreal-based Cirque du Soleil a hit. It's winning raves from critics. He wants to extend the Ringling Bros. brand into new venues--television, perhaps themed restaurants, certainly the Internet. "Now we come to you once a year as a big event," he says. "We'd like to be there every day." That won't be as easy, since much of the circus' charm stems from the notion that its annual visit is a special occasion. Meanwhile, Feld has begun to ponder the day he will have to turn the circus over to others, so he has hired senior executives from Turner and Disney to help him modernize a family-run enterprise that's been around since 1871, longer than AT&T, Coca-Cola, or Sears.

With a lineage reaching back to P.T. Barnum's Grand Traveling Museum, Menagerie, Carnival & Circus--whose stars included Tom Thumb the midget and Jumbo the elephant--the Ringling Bros. Barnum & Bailey circus predates not just movies and TV but also the spread of electricity and the car. Yet the three-ring extravaganza that has billed itself as The Greatest Show on Earth ever since Barnum's day remains a big draw, even for kids raised on Nickelodeon and Nintendo. "We live in a world of two-dimensional entertainment--movies, TV, the Internet," Feld says. "This is special."

If you expect to encounter a modern-day P.T. Barnum when you go to see Kenneth Feld, you'll be disappointed. While the Feld Entertainment offices in suburban Vienna, Va., are festooned with clown costumes, a gaudy floor-to-ceiling circus mural, and a miniature train, the man in charge turns out to be reserved, soft-spoken, balding, and slight. There's no bluster about him. "Kenneth is not an extrovert," says Stuart Snyder, a former Turner executive who became Feld's second-in-command in 1997. "He's reflective, quiet, and low key." But Feld's passion for the circus runs deep. He is hands-on, sometimes to a fault, picking out even the fabric that covers the seats at Kaleidoscape, and he is close to the performers, many of whom he's known for decades. "No one in our company has a job," Feld says. "This is a way of life." Since he owns the railroad cars where the performers live as the Ringling Bros. units go from city to city, Feld is not only employer but also landlord to about 250 tightrope walkers, acrobats, jugglers, and clowns; an equal number of stagehands; and about 100 animals. (Even the elephants travel by train.) Think of him as the mayor of two small traveling towns without zip codes. "I see more of life every day than some people see in a lifetime," he says. When two performers were killed, 15 injured, and many more left homeless after a Ringling Bros. train derailed in central Florida in 1994, it was up to Feld to put the pieces back together.

Feld did not have to run away from home to join the circus. It came to him when his father, Irvin Feld, a Washington, D.C., drugstore owner and music promoter, saved Ringling Bros. from ruin in 1956. The next year Irvin Feld and his brother, Israel, took over booking and promotion for the money-losing circus, folded the Big Top for the last time, and moved the show into the indoor civic arenas where the Felds were booking rock & roll acts like Chuck Berry and Fats Domino. By doing away with the tent and the freak shows that went with it, Ringling Bros. was able to slash its payroll from about 1,500 to 300 and return to profitability. In 1967, Irvin and Izzy joined with Roy Hofheinz, builder of the Houston Astrodome, to buy the circus from John Ringling North for $8 million. They put $100,000 down, borrowed the rest, and sealed the agreement at a ceremony in the ancient ruins of the Roman Colosseum. Irvin explained: "You could hardly have done the thing anyplace else."

By all accounts, including his son's, Irvin was a character. "You'd go into his office, and it'd be about 55 degrees, winter, summer--didn't matter," recalls Kenneth. "And he didn't have any chairs in front of his desk, so there were very short meetings. People would be standing there in overcoats." Father and son were close, particularly after Kenneth's mother, Adele, committed suicide when he was 10. Later, when Kenneth went to work for his father, they spent long days side by side and ate dinner together each night. "And dinner, for my father, was at least three hours," Kenneth says. "We would sit and he'd smoke a cigar, and we'd have cognac, and it would go all night, and we'd go over every minute detail of the day. He was probably the greatest teacher anyone would ever know."

He was also a shrewd businessman. Remember the $8 million Irvin paid for the circus in 1967? He took Ringling Bros. public in 1969, sold it to toymaker Mattel for $47 million in 1971, continued to run it during the 1970s, and then reacquired it for just $22.5 million in 1982, by which time the package included a couple of ice shows and a Las Vegas nightclub act. "We were the only logical buyers," says Kenneth Feld. "Who else was going to manage the thing?" Two years later, at age 66, Irvin died suddenly of a cerebral hemorrhage.

By then Kenneth was immersed in the business. He had scouted talent in Eastern Europe, developed the second touring unit of the Ringling Bros. show--naturally, both were still called The Greatest Show on Earth--and launched Disney on Ice. More recently Feld dramatically upgraded the production values of the big show, commissioned new music, and hired Ringling Bros.' first black ringmaster and its youngest ever, a strapping 23-year-old named Jonathan Lee Iverson, whose commanding tenor can fill a cavernous arena. "Ringling has made tremendous strides when it comes to lighting design, original music, costuming, staging, scenery, as well as the talent," says Greg Parkinson, a circus historian who runs the Circus World Museum in Baraboo, Wis.

Feld's not above deploying a little gimmickry, either; it was his idea to update the circus with new acts like the Living Unicorn, a mid-1980s attraction that was actually a goat whose horns had been surgically fused. The stunt boosted sales but drew criticism from animal-rights activists, who remain vocal critics. (See www.circuses.com, which turns out to be a Website produced by People for the Ethical Treatment of Animals.) Today Feld says his people take pains to treat their animals humanely; the company operates its own 200-acre breeding and research facility for Asian elephants in central Florida. "I'm just so sick of having to defend something that we're doing that I know is right," he says.

Several years ago Feld decided he needed help running the company, both to drive growth and so that he could devote more time to creative pursuits. "We had grown from one circus to the largest mom-and-pop operation in entertainment," he says. "It was either going to explode, or I had to make changes." For the first time, he brought in management consultants and an executive recruiter; eventually he hired Snyder from Turner Home Entertainment to be president and chief operating officer. The first outsider to take a top job with Feld, Snyder got the circus to act more like a big media company; he commissioned a brand-equity study and in-depth audience research, revamped concessions, and hired new managers, all with Feld's close involvement, of course. Eric Stevens, a marketer from DreamWorks, brought in a new advertising agency to refine the company's message. "Past advertising focused on the circus coming to town and here are the new acts," Stevens says. "Now we're selling the emotional experience: looking at the smile on your child's face and sharing something special." The new management team seems to be working, although Snyder has just left to take a job working for Barry Diller at USA Films. And all agree that Feld finds it hard to let go. "Kenneth is very hands-on, and I say that very affectionately," Snyder says.

Unfinished business for Feld includes finding a new national marketing partner and developing TV projects in partnership with a big Hollywood talent agency. Feld talks about creating an educational show based on the science, history, and sociology of the circus, as well as a prime-time soap opera featuring circus characters. Past efforts to stretch beyond the firm's core competency haven't paid off, however. Several Ringling retail stores closed their doors, and a videogame called Sim Circus never made it into production.

At a minimum, getting help in the home office enabled Feld to throw himself into producing Kaleidoscape, which, if all goes well, will grow into a robust business and stand as his greatest creative triumph. For the first time since his father shut down the Big Top, Feld has put a Ringling Bros. production under tents: Kaleidoscape unfolds under two of them, one for the circus itself and another where guests mingle with the performers before and after the show and snack on Wolfgang Puck pizza, cappuccino, and tiramisu. (Traditionalists can find cotton candy, but peanuts are nowhere in sight.) As ticket buyers settle into their plush red-velvet seats, the experience feels like a catered gala or a high-class theme-park attraction. Feld is so proud of what he has wrought that he took FORTUNE on a tour of the restrooms--they're staffed by attendants and decorated with circus posters--when we went to see Kaleidoscape during its opening last summer in Los Angeles' Century City. The show has since traveled to San Francisco and Minneapolis, and it will make its way east next year.

Watching Kaleidoscape with Feld is like getting a museum tour from the curator. The Madrid-born performer Picasso Jr. juggles five orange ping-pong balls in his mouth. "He's a college-educated economist," says Feld, "and his wife's a lawyer." Bulgarian tightrope walker Alex Petrov keeps his balance while his partner, Lucy Kirilova, does a handstand on a 13-foot pole perched on his forehead. "I've known him since he was a boy," Feld says. "His father did the exact same act." Sylvia Zerbini, who does double duty as horse trainer and trapeze artist, is recovering from a severe shoulder injury. "She's lucky she wasn't killed," Feld says. "She fell 25 feet." That leads into a discourse about how the only insurance company that will handle his business is Lloyd's of London, and about the bravery of circus folk. "There aren't a lot of professions where people go out ten times a week and risk their lives for your business and for the audience's pleasure," Feld says. As Zerbini displays her grace and beauty--she's wearing a translucent, skin-tight leotard--he observes, "These performers exude an exoticism and an eroticism as well. Every little girl who sees this show wants to be Sylvia Zerbini because she wants to be a trapeze artist or horse trainer, but there's also every little girl's father who--well--just wonders."

Critics have swooned over Kaleidoscape. "Thrilling and intimate," said the San Francisco Chronicle. "The breathtaking stunts and athleticism create dramatic rushes," said the Minneapolis Star Tribune. The Los Angeles Times summed up: "Kaleidoscape entrances."

But making the economics work could be a challenge, because the 1,800-seat house is relatively small. Tickets cost $22 to $52, a hardcover program is $15, and Feld keeps all the concession revenues, but the big payoff won't come unless he can produce several Kaleidoscapes and build a new brand. Kaleidoscape could, for instance, travel abroad, which isn't practical for a three-ring circus.

So Feld has plenty to juggle in the months ahead: new acts to scout, new shows to produce, a new president to hire. He gives no hint of whether he's planning to ultimately sell the circus, take the company public, or pass it on to his three daughters. "Each year the company should become less dependent on me. That's the strategy," he says. "Then all the options are open." And then Kenneth Feld will attempt his trickiest act of all--figuring out how to run away from the circus.