More on the contretemps between the Los Angeles Times' publisher and editor and their corporate betters at the Tribune Co. in Chicago, who wants budget and staff cuts. Those corporate betters are in turn under pressure from major investors who think Tribune Co. stock is undervalued.

An excerpt from the Sept. 21 NYT story:

... Some of Los Angeles’s most prominent citizens are up in arms over what they say has been the Tribune Company’s diminution of a prized public trust, with three local billionaires stirring the pot with their own separate plans for buying the paper.

But it is Tribune’s handling of the growing rebellion in Los Angeles that has riveted the attention of the newspaper industry.

At The Los Angeles Times, the fourth-biggest newspaper in the country, more than 400 members of the 940-member editorial staff have signed a letter to Tribune supporting Mr. Johnson and Mr. Baquet. Strikingly, some on the paper’s business side, too, are expressing frustration with management, citing tensions between centralized control from Chicago and local control in Los Angeles, particularly over the newspaper’s Web site. “The challenge the Tribune is struggling with is that Los Angeles is such a large brand, they don’t really know how to handle it,” said one business executive at the paper.

In a statement last night, Scott C. Smith, president of the Tribune Publishing division, said: “Our commitment to great journalism will not waver.”

Still, the question remains: Will Mr. FitzSimons fire Mr. Johnson and Mr. Baquet and thereby risk a full-scale revolt at Tribune’s biggest property? Or will he try to smooth things over and thereby risk undermining his authority with his other editors and publishers? “Tribune is in a box,’’ said Conrad C. Fink, who teaches newspaper management at the University of Georgia.

“Their instinct probably was to immediately fire both the publisher and the editor and for some reason they hesitated, and now the staff have signed a petition and they would be out in the streets with placards in 30 seconds,’’ he said. “But all reason in management practice would say the publisher and editor must go.’’

Mr. Johnson and Mr. Baquet, both of whom assumed their jobs last year, have told friends they do not know what to expect regarding their futures. Before Mr. Johnson left Chicago Tuesday, they had told friends they could be fired. But with the company facing so many other problems, those friends said, they could be safe, for now.

In a memo to his staff last night, Mr. Johnson said that during his meeting in Chicago, he had “reiterated our commitment to build a credible financial plan in the coming weeks that is grounded in actions and initiatives that efficiently build readership and revenue.”

Last year, Mr. Johnson and Mr. Baquet oversaw $10 million in cuts and the loss of 85 jobs. According to a Tribune executive, the new demands on Mr. Johnson and Mr. Baquet now include keeping the paper’s expenses flat for 2007, forgoing an expected $3 million increase; cutting the editorial staff of 940 by an unspecified number that could exceed several dozen; and making an additional $17 million, or 7 percent, in profits, which could also require additional cost cuts since revenue has been flat.

The company has been under pressure from shareholders to improve its stock price, as have many media companies. Ariel Capital Management, a Chicago-based money management firm, and one of Tribune’s biggest investors, suggested yesterday it expected the company to take some sort of action.

“We support the board in taking steps to close the substantial gap that exists between the stock price and the intrinsic value of the company,’’ said Charles K. Bobrinskoy, vice chairman of Ariel. While the stock closed yesterday at $30.69, some industry analysts have placed the value closer to $45 a share.

“Whether these steps involve taking the company private, selling the L.A. Times or the Cubs, or spinning off broadcasting, as some have speculated, all are viable options,’’ Mr. Bobrinskoy said. “We have every confidence that the board will choose the options that are in the best interests of shareholders and the company.’’