The New York Times: Battle of 8th Avenue

When engineers craned into place the final section of the 300ft steel mast atop the New York Times tower last November, the 52-storey skyscraper became Manhattan's third-tallest building.

Designed by Renzo Piano, the man behind the Pompidou Centre in Paris, the exterior is almost wholly made up of floor-to-ceiling windows, all curtained by a trellis of ceramic tubes that will reflect light and shift colour during the day. Modest, it is not.

When the New York Times journalists take to their new desks on 8th Avenue in the spring, the building will be a topic of contention not just among the architecturally aware. The opening coincides with, and looks sure to inflame, a vicious showdown between Wall Street and the Ochs-Sulzberger family, whose 111-year control of the company is under threat as never before.

Some shareholders have been incensed that the Times should have poured $500m (£254m) into the development at a time when print journalism is in a nerve-racking transition to a digital era, when the Times's own revenues are stagnating and when the share price has been sliding away.

Today, a new "trophy headquarters" would look extravagant for any newspaper group - even one whose achievements tower above those of all but an elite handful of the world's media.

The broadsheet, under its legend, "All the news that's fit to print" and reflecting the glory of 94 Pulitzer prizes, has the best claim to be the paper of record of the United States, probably of the world. It is a bastion of serious journalism and a beacon of liberal politics. And its heavyweight content fans out across the globe through its sister paper, the International Herald Tribune, and a syndication operation that net tens of millions of dollars a year. It was with the New York Times syndicate that Mikhail Gorbachev, former Soviet leader, agreed a return to the world stage as a columnist this month - answering queries on weapons of mass destruction and poverty, as a sort of agony uncle.

The Times is an "international newspaper", says Arthur Ochs Sulzberger Jr, publisher and chairman of the company. He is determined to resist gathering fury on Wall Street, convinced that capitulation would mean the Times has to sacrifice the quality of its domestic and foreign bureaux in favour of short-term profits. In the face of falling readership in New York, the Times has kept its circulation above one million by expanding distribution across the US, and topped up advertising by selling space on the website, which attracts up to 22 million visitors a month. All this would be at risk if dramatic cost cuts ruined the Times's image, he says.

In a telling move, the paper last week hired Dean Baquet to head its Washington bureau. Baquet became a folk hero among journalists last year when he was fired as editor of the Los Angeles Times for refusing to implement cost cuts in the newsroom.

The Times' rebel shareholders say they are just as determined to maintain quality journalism and expansive foreign coverage. Indeed, they say this is what is under threat from the family-controlled board, which has already mismanaged the other assets in the company's portfolio - including The Boston Globe, where revenues are sharply deteriorating, and which has just been forced to close its foreign bureaux. The New York Times group admitted last week it had plunged into the red at the end of 2006 because it had to write off $814m of its investment in the Globe and other New England papers.

"Without independent action by the board, further strategic missteps, capital misallocation, franchise abuse and overly generous compensation are inevitable," wrote Hassan Elmasry, fund manager at Morgan Stanley, which holds 7 per cent of the company's shares. "We are concerned that the sharp deterioration at The Boston Globe may well be a preview of what will happen at The New York Times."

Morgan Stanley's anger has been simmering since Sulzberger inherited the chairmanship from his father "Punch" Sulzberger in 1997. The junior Sulzberger has been nicknamed "Pinch".

Throughout the Times's twin debacles of the past few years - the Jayson Blair scandal, when a young hack was exposed as a serial fabricator of stories and sources, and the Judith Miller affair, when the senior Washington journalist was accused of too-close links to the Bush administration - Sulzberger has jumped to the defence of his journalists and editors, but many have complained he did not prove himself weighty enough as it became necessary to shore up the Times's public reputation.

Elmasry wants the Sulzbergers to cede control, giving up special voting shares that allow them to dominate the board with placemen, even while they own less than a fifth of the company. He also wants Sulzberger to give up some of his power. As publisher and chairman, he essentially reports to himself, while influencing the remuneration of the rest of the board. That is too cosy in an era when "corporate governance" tops of Wall Street's agenda.

On the business front, Morgan Stanley is not alone in its criticisms of Sulzberger's internet strategy, which has failed to generate the subscriber numbers seen by rivals, or of the pay and perks enjoyed by directors. Wall Street believes a dynastic management cannot be a dynamic one, but the dual structure is an article of faith for the Ochs-Sulzbergers. When the company went public in 1969, it did so in a way that gave the family the best of both worlds - by means of shares it could use for acquisitions, without having to bow to holders of those shares.

"Why change it?" Sulzberger asked, in the American Journalism Review. "It gives you the protection so critical to ensure that our journalism is kept at the forefront of all that we do."

Having been refused his request for a vote on the dual-ownership structure, Elmasry is trying to round up supporters for an even bigger protest against directors at the next annual meeting, in April. If he succeeds, it may not be possible for Sulzberger to ignore no-confidence vote. But whether that would force him to give up one or both of his jobs, or corner the Ochs-Sulzbergers into buying out other shareholders, The New York Times will continue to be under intense scrutiny.