It’s a bright morning in April when Arthur Ochs Sulzberger Jr. takes the stage in a crowded auditorium in midtown Manhattan. “This company is not for sale,” he says, his voice sounding heavy. He wears a charcoal suit with a red tie, and his shoulders sag slightly, as if the ghosts of three generations of Ochs-Sulzbergers, publishers of the New York Times, are pressing down on them.

Several hundred New York Times Co. stockholders are gathered at the paper’s sleek new headquarters, in an amphitheater overlooking a garden of birch trees. All eyes are on Sulzberger. Like most newspaper concerns today, his company has routinely been described as embattled, but this particular meeting seethes with even more tension than usual. Two hedge funds have amassed a 20 percent stake in Times Co. stock, so Sulzberger, 57, the company chairman and the publisher of its flagship daily, needs to make a determined stand. “Every member of the family deeply cares about this company and its mission,” he says.

As he speaks, his eyes dart toward a corner of the room, where his father and predecessor as publisher, Arthur Ochs “Punch” Sulzberger, 82, sits frozen in an electric wheelchair in the front row, wearing a crisp checkered shirt with a yellow silk pocket square. A young woman hovers beside him, spooning what looks like yogurt into his mouth. For a moment, the son stares at the father. “This company will continue to have the ownership that it has today,” Sulzberger says.

That same day, some 850 miles to the south, Raymond Harbert is preparing for a round at the Mountain Brook Club, according to a golf-shop employee. The club is an oasis where the elite of Birmingham, Alabama, go for golf, tennis, lunch, and gossip. Harbert, 49, is an heir to the largest private fortune in the state and, almost by chance, a key figure in this latest assault on the venerable old newspaper. (View a slideshow comparing the Sulzbergers with the Harberts.)

Harbinger Capital Partners, a hedge fund founded seven years ago with Harbert family money, is currently the largest Times Co. shareholder outside of the Sulzberger family. In the spring, the fund, along with a partner, forced two representatives onto the Times Co.’s board of directors with the stated aim of pushing management to improve the stock price—although some fear they are after much more. It is an understandable worry. The move comes soon after Rupert Murdoch bought the Wall Street Journal from the Bancroft family, proving—once again—that blood ties and family tradition are no match for determined billionaires.

And so the fate of the country’s (and perhaps the world’s) most esteemed journalistic institution will be determined, in part, by a fortune that was made a half-century ago in the coal mines of Kentucky and on the highways of Alabama by a man who carried a sidearm into union drives and never met a Republican he didn’t like. It’s an irony fit for the pages of the New York Times.

After Atlanta, Birmingham is the No. 2 financial hub in the South, a small city whose downtown, crowded with undistinguished office buildings, is home to corporations such as Regions Financial and HealthSouth. The area, prone to summer thunderstorms of biblical proportions, is no longer known by its old nickname, Bombingham, which stems from an incident in which four black girls were killed by the Ku Klux Klan in a 1963 church blast. The city was built by industrialist owners of steel mills and coal mines, and the Red Mountain Expressway leads south from town toward the homes of many of their heirs in the neighborhood of Mountain Brook, where rich people live in pretty mansions in the hills.

Raymond Harbert is one of them. Described as street-smart and astute by those who know him, Harbert, in 1990, at the age of 31, took over Harbert Corp., the $500 million conglomerate his father, John Harbert III, created just after World War II. Since then, Harbert has transformed it from a company that built power plants, pipelines, and highways around the world into a passive investment firm, Harbert Management Corp., which manages $25 billion for the Harbert family and many outside clients. Through it all, he has been living a mostly quiet life with his wife and three kids. But when H.M.C. took an aggressive stake in the New York Times Co. In January, people started to wonder who this secretive Southern mogul was, where his money came from, and what he was doing mucking with the Times.

He lives in an enormous brick house near where he grew up, in Mountain Brook Estates, the most exclusive of Birmingham’s suburbs. He doesn’t have an engineering degree, like his father. He studied business at Auburn University—a respectable state school—and went straight to work for the family firm. It is difficult to pinpoint his net worth, but it is safe to say that he has done very well.

Harbert tries hard not to draw attention to himself or his money. He rarely talks to reporters and declined to be interviewed for this article. But his money has spoken for him. He donated $5 million to his alma mater, just as his father did (although Raymond’s appli­cation to join the school’s board of trustees was sidelined by the Alabama state senate). His political contributions suggest that he’s a devoted Republican, and a report by the watchdog organization Public Citizen has identified him as a low-profile contributor of funds to a group lobbying to permanently eliminate the estate tax—which makes sense if he’s to inherit a chunk of the estimated $1.6 billion fortune his mother, Marguerite “Wita” Jones Harbert, now 85, will someday bequeath her children. (According to Harbert’s spokesman, he is no longer involved with the estate-tax group.)

When I ask people about Harbert, they don’t have much more to add, although they all seem to remember his father. It’s impossible to understand Raymond and the way he operates, they say, without first knowing John. One close watcher of the Harbert family remarks that “it’s difficult to follow a very strong-willed, successful, and dynamic father and become very successful in your own way, and that’s what Raymond’s done.”

John Harbert III was born in Greenville, Mississippi, and made his life in Birmingham. His legacy looms—literally—over the city. He built one of its tallest buildings and blasted his way through a mountain to lay a highway that runs through town. He was the kind of man who always carried a pocketknife to cut his apples with. “They don’t make ’em like that anymore,” says William Powers, who worked with John from 1968 to 1990. Referring to John’s legendary powers of persuasion, Powers says, “He could sit you down and talk with you, and you’d whip your weight in wildcats.”

After returning home from W.W. II, John started Harbert Construction using cash from his war bonds and winnings from shooting craps, according to a biography commissioned by Wita after his death in 1995. His first project was building a bridge over a creek in Autauga County, Alabama. The company soon expanded across the South and then to South America and the Middle East. In 1969, John began buying leases for about 240,000 acres of coal mines in Kentucky, eventually spending a total of $150 million, according to Forbes. The venture didn’t come without challenges: He was vehemently antiunion, and during a United Mine Workers strike in 1971 he led an armed convoy of trucks across the picket line to prevent the union from organizing his men.

In 1981 came a watershed event in the life of the company, now called Harbert Corp.: John sold the firm’s Kentucky coal mines to Standard Oil. Three years later, he was named to the Forbes 400 list for the first time, with an estimated net worth of $500 million.

In a 1975 address at Birmingham’s Samford University, John shed some light on his attitude toward home life. “In many cases, a man’s wife and children must take second place in receiving his attention,” he said. “The life of a construction man means a sacrifice by his entire family.”

The family had no shortage of material comforts. They lived on an estate that covered 13 wooded acres on a Mountain Brook hill, where there was plenty of space, even with the staff Wita employed. The house was so isolated that Raymond’s sister, Margie, 47, could remember only one visit from a trick-or-treater. John acquired a 2,000-acre farm in St. Clair County, Alabama; a mountain retreat in North Carolina; and Pinebloom, a 10,000-acre hunting plantation in Georgia where he and Wita shot quail, which was the inspiration for the plantation in Tom Wolfe’s A Man in Full.

The three Harbert children were known as the little princes and princess of Mountain Brook, members of Birmingham’s first family. When I ask Margie what it was like growing up privileged in the civil-rights-era South, she says she was only vaguely aware of her family’s status, because money was never discussed. She remembers asking a childhood friend to explain what “keeping up with the Joneses” meant. “You are the Joneses,” her friend replied.

Presiding over the family then and now is Wita, the matriarch. Since John’s death from pancreatitis in 1995, his widow has become a target of gossip and speculation around town—the rich old lady sequestered in a mansion on a hill. She still lives in the family’s Mountain Brook compound with her son Jay, 55, and the staff of attendants—including her beloved Jamaican manservant, Neville—who look after her.

Contacting Wita is no simple task. She’s hidden away behind imposing stone gates, with layers of helpers standing between her and the outside world. But one evening in June, something unexpected happens: Wita answers the phone.

“Hellooo…?” she warbles.

It’s after dinner, and Wita seems happy to talk, especially about John. During a rambling conversation, she makes it clear that she’s plenty proud of her children. But she perks up at the mention of her husband. “John Harbert loved construction and was a builder,” Wita tells me, listing some of his projects. “He was an engineer and built things all over the world.” She and John were philanthropists, she explains, and collected art and antiques together. “I got him interested in that,” she says.

And what about Raymond? Wita pauses and says, “I think he’s mighty hardworking.”

This spring, when Arthur Sulzberger Jr. was fending off the huns of Wall Street, a salvo was also being fired in a family dispute that has riven the Harbert clan. In 2006, Margie filed a lawsuit charging that her brother Raymond had essentially robbed her of her share of the family company. Her attorney asked the court to compel Raymond to reveal all of his company’s closely held financial information. Raymond and his lawyers have vigorously resisted his sister’s efforts. The suit is wending its way, slowly and painfully, through Jefferson County Circuit Court.

Margie and her husband, Sam Gray, an obstetrician, live with their three children in a Mountain Brook house of their own. Her suit relates to events that date back to 1990, when John decided to retire at the age of 69 and appoint Raymond C.E.O. By that time, Raymond had married his college sweetheart, Kathryn, and was serving as a vice president of Harbert Corp., responsible for mergers, acquisitions, and the evaluation of venture capital investments.

That year, Harbert Corp. found itself in dire financial straits. “We had gone into oil and gas and real estate development,” William Powers says. “Unfortunately, we also thought we could finance power plants.” The company was overextended, with money tied up all over the country and no banks willing to lend more.

Part of Raymond’s solution was to sell the construction business. He then renegotiated the company’s bank debt, culled underperforming units, and fired employees in a way that his father never would have, according to Powers. But these moves may have saved the firm.

Margie’s complaint states that Raymond then proposed starting a new company, to be called Harbert Management Corp., in which he would have a majority stake and to which he intended to transfer most of the operations of Harbert Corp. In order for Raymond to enact his plan, he needed the written approval of the family shareholders, according to the lawsuit. Those shareholders consisted of Margie and Jay.

What happened next was either an act of deception or an example of the naïveté that develops when someone has spent her entire life having everything taken care of by someone else. The original complaint says that Raymond visited Margie at her home one morning in 1994 “with an air of urgency” and asked her to sign a document that he said was the authorization of a loan for him to start his own real estate venture. The suit alleges that “in tendering the two-page document to Margie, Raymond turned the first page behind the second page so that essentially only signature lines were showing.” Margie was in her garden with a newborn baby in her arms; she signed the document without reading it, according to the suit. Jay’s consent was also obtained. (Margie sought to include Jay in the suit, which describes him as an “incapacitated person.” In John’s biography, Jay is described as suffering “developmental problems” in childhood.) By 2006, when Margie sued, H.M.C. had grown into a giant, managing more than $20 billion in investments for pension funds, endowments, and individual investors outside the family.

In a filing in response to his sister’s claims, Raymond argues that their father supported Raymond’s plan and that Margie knowingly agreed to the creation of the new company. The response further states that Margie was the recipient of $15 million in distributions over the past 13 years as a result of the arrangement. Margie declines to discuss the litigation or address her relationship with her brother.

“I’m sorry,” Wita says, when asked about the strife between Margie and Raymond. “It is too bad. But things like that happen, particularly in families that have...a good amount of wealth.” Raymond declined to comment on the lawsuit, but Har­bert Management’s executive vice president—a strapping Alabamian named Bill Lucas—made himself available.

During a conversation in his office overlooking downtown Birmingham, Lucas describes the lawsuit as “a minor nuisance” and says the company thinks it is “absolutely without merit.” Then, as I’m getting ready to leave, he asks, “Ever read the Bible?” He suggests I check out the first chapter of James in the New Testament. Later, I do. It’s about perseverance in the face of trying times.

In 2000, in the midst of reinventing his family’s firm, Raymond Harbert decided to start a hedge fund and began sniffing around Wall Street for potential managers. He found Philip Falcone, a 46-year-old former professional hockey player who looks vaguely like John Lennon in an expensive suit. A Harvard graduate and one of nine siblings who grew up in Chisholm, Minnesota, Falcone is in many ways Harbert’s opposite: an aggressive financial rabble-rouser to Harbert’s reclusive operator. Falcone is an activist investor who takes big stakes in companies and then demands that their managements sell off assets or make changes in business strategy. Before he joined Harbert Management, he was head of high-yield trading at Barclays Capital.

In 2001, Harbert gave Falcone his shot, offering him a $25 million fund to manage. Harbinger now has $20 billion in assets. In 2007, Falcone earned some of his reported $1.7 billion paycheck by anticipating the credit crisis and betting against the housing market and the now-defunct investment bank Bear Stearns. As a reward, he then spent $49 million on the Manhattan townhouse of Penthouse founder Bob Guccione for himself, his wife, Lisa, and their twin daughters.

According to Lucas, Falcone is the ultimate decisionmaker when it comes to the investments Harbinger makes. But Falcone and Harbert are “good friends” and are in frequent communication. Falcone runs his fund from the midtown Manhattan office of Harbert Management, which provides legal-compliance and administrative support in exchange for a share of Harbinger’s profits. Recently, Harbinger bought a chunk of stock in Cablevision Systems, saying that it “hopes to meet with the company in the very near future to discuss our thoughts.”

Falcone came up with the plan to buy stock in the Times Co., although he discussed it with Harbert ahead of time. “There were no surprises,” Lucas says. For the Times Co. investment, Falcone and Harbert teamed up with a New York University marketing professor named Scott Galloway, who is best known as the co-founder of the internet retailer Red Envelope. Galloway, 43, is a natural showboat. He and his company, Firebrand Partners, served as the public face of the transaction in exchange for 10 percent of the profits. It is not the first deal Galloway and Falcone have worked on together, but it certainly is the splashiest. Harbinger and Firebrand began accumulating Times Co. stock in January and currently hold more than 20 percent of the publicly traded class-A shares, worth around $360 million. Galloway says the purchase was based on his theory that the New York Times brand is undervalued. The idea behind the investment seems to be that the Times Co. should sell everything it owns except the New York Times and the International Herald Tribune and focus primarily on its website. He and Falcone expect a turnaround could take two to three years.

“Let me be clear: I think the newspaper business is a shitty business,” Galloway tells me, in his spartan little office at Harbert Management during an interview that took place before he became actively involved with the company. “The Sacramento Bee, the Chicago Tribune—I think a lot of those newspapers are fucked.” Not the Times, however: “The New York Times is like Yahoo with content,” Galloway says.

Preparing for a proxy fight with the Times Co., Galloway and Falcone nominated four people for its board of directors this past winter. But then the company unexpectedly capitulated, expanded its board by two seats, and invited Galloway and a cohort, James Kohlberg, the founder of a small private equity firm, to take them.

“I’m sure they were motivated by what happened to the Bancroft family,” says newspaper analyst John Morton. “Rupert Murdoch successfully divided the family to the point where he was able to take control of Dow Jones.” The Sulzbergers’ trust agreement is seen as likely to prevent the clan from being partitioned as easily as the Bancrofts were. But it’s unclear whether Sulzberger and his ally Janet Robinson, the C.E.O. of the Times Co., really know whom they’re getting into bed with.

“Scott Galloway and James Kohlberg have been good additions to our board,” Robinson says. She acknowledges speaking to Falcone on the phone but seems only vaguely aware that her new board members are the tip of a spear that extends all the way to Birmingham. “Harbert…” she says. “I know that they certainly are part of this hedge fund, but I don’t know a great deal.”

This winter, a transaction took place involving a notable building on Birmingham’s skyline. On February 29, a downtown office tower called the Regions/Harbert Plaza sold for $126 million. The tower had been built in 1989 by John Harbert, and according to his biography, he saw it as his own special mark on the city’s architectural landscape.

After John’s death, the building passed on to Margie, Raymond, and a trust set up in Jay’s name. Raymond had recommended selling it earlier this year to take advantage of the then-booming commercial real-estate market; after the sale, according to the lawsuit case file, Margie was expecting her share of the proceeds immediately, as is clear from a string of emails between her financial adviser and a Harbert Management executive. Raymond, however, is arguing that he can’t give his sister her money until her suit against him is resolved.

When describing this state of affairs, acquaintances of the family most often use one word: sad. I ask Margie how her father would feel about the direction in which Raymond has taken the company. Her eyes get misty. “You could probably figure that one out,” she says.

When I ask Wita about her son’s stake in the future of the New York Times, she says, “I didn’t know about that. I usually see him about once a week, and I usually know where he’s made his investments.” But, she says, she thinks the country’s newspaper of record is just peachy: “I have read it. I like it. It’s good, indeed. I think a lot of people down here read the Times.”