On a balmy evening in late January, Bruce Sherman, C.E.O. of Private Capital Management, hosted a dinner for 36 guests at his 12,050-square-foot penthouse overlooking the Gulf of Mexico in Naples, Florida. It was a party with a title—“Essential Indulgence”—held on the eve of the Naples Winter Wine Festival, an annual charity-auction-cum-fete that draws the elite to the city’s Ritz-Carlton Golf Resort. Indulged, indeed, were the attendees, including Martha Stewart, wine critic Robert Parker, and Judith Sheindlin, Sherman’s cousin, better known as television personality Judge Judy. Master chef Daniel Boulud flew to Naples to prepare an elaborate menu that featured foie gras tartlets with quince.

The 58-year-old Sherman was in good spirits. Surrounded by friends and family, he exuded the confident contentment of someone who had ascended to rarefied heights of money and power—a middle-class public school kid from Queens, New York, now managing $24 billion, with deepening roots in the Naples philanthropic scene. But the evening’s festivities belied a more ­turbulent reality: Sherman’s billion-­dollar-plus newspaper investments in a landscape shifting toward digital media had cost his clients plenty. Long ­accustomed to betting correctly, Sherman was moving to rectify this uncharacteristic state of affairs with ­actions that have cast him uncomfortably as a central figure in the drama now upending American journalism.

Sherman (no relation to this writer) is the mysterious investor who forced Knight Ridder to sell itself last year to the McClatchy Co. in a $6.5 billion deal. Journalism has since suffered what might best be described as a collective panic attack. After all, Knight Ridder, owner of the Philadelphia Inquirer, the Miami Herald, and 30 other daily papers,  had been the second-largest newspaper publisher in the country, with 2005 revenues of $3 billion, and it was bought by a company half its size. Moreover, it was the first time that an activist shareholder had successfully engineered the breakup of a publicly traded newspaper company, and it left Knight Ridder C.E.O. Anthony Ridder reeling from the rope-a-dope tactics Sherman used to oust him. Sherman, it turns out, is a guy who doesn’t like surprises but who is adept at springing them.

As part of the deal, McClatchy promptly put 12 of Knight Ridder’s papers up for sale, roiling their newsrooms with uncertainty. Other large publicly traded newspaper chains that were cobbled together in the 1970s and 1980s may soon face similar pressures. Not even the most vaunted press institutions are immune.

Sherman has since joined with other large shareholders, such as Hassan Elmasry of Morgan Stanley’s $11.5 billion Global Franchise Fund, to wage a proxy campaign against chairman Arthur Sulzberger Jr.'s dynastic control of the New York Times Co. They argue that the company should rescind its class B stock—a barricade against takeovers—because its top management is overpaid and unaccountable. Also, they decry the Times Co.’s decision to partner with a developer to build an opulent new $850 million Manhattan headquarters as against its shareholders’ interest. Publicly, Times Co. management scoffs at this, but in private it has been trying to win over the agitators. In February, the Times Co.’s board invited Elmasry to a meeting in New York. Sherman also recently met with Sulzberger at the Times building in New York, and in March, the company’s C.E.O., Janet Robinson, had dinner with Sherman in Naples. Still, with the Times Co. shareholder meeting planned for late April, management was bracing for a repeat of last year, when shareholders, emboldened by dissidents like Elmasry, withheld more than 30 percent of votes for the company’s slate of directors.

Into the swirling chaos of the newspaper business stepped a parade of billionaire would-be press barons. In April, after a protracted auction for the Tribune Co.—owner of 11 daily papers including the Chicago Tribune and the Los Angeles Times—­office property mogul Sam Zell emerged as the winning bidder in an $8.2 billion deal. (Last September, the Tribune Co. had been put up for sale under pressure from its largest shareholders, the Chandler family.)