Brian Tierney occupies the power suite that goes with being the publisher of a major legacy newspaper. Tall windows on three sides. Conference table for those who are summoned. Good view of downtown Philadelphia real estate. From this 12th-floor aerie, Walter Annenberg, an old-style press lord who chummed with royals and the Reagans, watched over his two cash cows, the Philadelphia Inquirer and the wildly profitable TV Guide.

Ambassador Annenberg, as he liked to be called after Nixon appointed him to the Court of St. James’s, was in the newspaper business back when business was good. Tierney, a voluble, self-made millionaire from the Philly suburbs, is an ambassador of a different sort. He is the on-site manager representing the group of prominent Philadelphia investors who put up $515 million to buy the struggling Inquirer and the smaller Philadelphia Daily News when they fell from the grip of the collapsing Knight-Ridder chain in 2006.

Legacy newspaper is the industry term for traditional papers that represent old-fashioned journalistic values but face digital-age financial agonies. Tierney, tieless and in shirt sleeves, seems a lot more relaxed than I would be in his chair, exposed to the Inquirer’s recession-ravaged balance sheet and the negative vibes from a pared-down news staff that mistrusts him for taking the financial steps needed to save their jobs. Originally, Tierney says, he thought his biggest challenge would be placating his journalists and that he and his investors would whip the financial side into shape in quick order.

“It’s been just the opposite,” he says, in a tone of genuine surprise. He bought goodwill with reporters and editors with a signed pledge of noninterference in news decisions. But he was amazed by the lethargy he found elsewhere. “The worst part of this experience has been the culture of the business side, particularly in advertising sales,” he says. “I’ve got some salesmen who make $100,000 a year and have no interest in making $120,000.”

Visiting other newspapers and various newspaper conventions has been an eye-opener too. “There is a dearth of talent on the business side of this industry that is shocking to me,” he says. “No one goes to Wharton and says, ‘I want to run circulation at Knight-Ridder.’ ” In general, he adds, “the business side has let down the journalistic side of newspapers.”

Tierney made his fortune founding and selling advertising and public-relations agencies that represented Philly’s business elite and national companies like Verizon. As a political activist, he was known as a combative defender of rich and powerful Republicans, a fast-talker despised by some reporters for his habit of complaining directly to their editors. Newsroom cynics may regard his current criticism of their business-side colleagues as disinformation. As a relative beginner, Tierney has had an impressive ability to analyze newspaper-revenue patterns, discerning, for example, the trip-wire role of the humble HELP WANTED ad.

Up until 2007, big-city broadsheets had done a decent job of managing the gradual decline in display advertising. In fact, Tierney’s newspapers were No. 2 nationally in retention of ad revenue, losing only 6 percent in 2007. But newspapers everywhere have been slammed by catastrophic declines in classified employment advertising. At the Inquirer, Tierney says, “that category went down from $135 million in 2000 to $35 million in 2007.”

Those figures fit into the big picture nationwide, according to John Morton, who, at 74, is the dean of newspaper financial analysts. For me, hearing that analysis of the classified market amounted to déjà vu all over again. It’s been 15 years since my generation of newspaper editors and business managers ignored warnings from our strategic planners that classifieds would move en masse to dedicated websites like Craigslist. According to Morton, the loss of that critical slice of the revenue pie has left owners with only one choice: “Plunder their own pockets or plunder their newspapers.”

The advertising whammy has squeezed the cadre of prominent newspaper buyers in the past few years: William Dean Singleton and his privately held Media News Group, with 57 daily papers; the McClatchy family group, with 31 dailies; and most flamboyant, the eccentric Chicago real estate tycoon Sam Zell. In December, he paid $8.2 billion for Tribune Co., which owns the Baltimore Sun, the Chicago Tribune, the Los Angeles Times, Newsday, and some smaller papers. Of course, Rupert Murdoch, who shook the temples of journalism by taking over the Wall Street Journal, is no newcomer. Neither is Mort Zuckerman, who bought the ailing New York Daily News in 1992 and earned a profit quickly thereafter, as well as a measure of journalistic credibility, a rare thing in this group.

Zuckerman rattled the industry newbies last year by saying that their business models for newspaper websites seem to be “substituting pennies for dollars” in replacing lost advertising revenue. During our meeting, Tierney outlines one of the more plausible-sounding plans for wringing real dollars from underachieving newspaper sites. “A year from now, I hope Philly.com will be the largest producer of short-form video in Philadelphia,” he says. This means that instead of asking print reporters to blog around the clock, producing repetitious versions of the same story, Tierney wants to “monetize” the most common surplus commodity in any newsroom: the reporters’ nonstop gabbing about local politics, hometown sports, business, movies, wine, car prices, undiscovered restaurants, and so on.

Letting reporters sit at their desks and share inside dope with a video camera in three-to-five-minute bites is way more cost-efficient than printing news on paper or producing it for television and radio. How so? “Because of low studio-production costs,” Tierney says. “No legacy costs from printing and distribution, and I’ve already paid the talent.” Therefore, a huge chunk of any revenue goes directly to the bottom line. “Five years from now, online revenue should be over $75 million, and that should account for 25 to 30 percent of the profit for the company,” Tierney adds.

The pie-in-the-sky sound of that scenario is a common feature of digital-revenue plans in the newspaper industry. This one, at least, offers a chance of turning a large, expertise-heavy news staff into an asset. Its revenue projections don’t sound entirely unreasonable. The Inquirer hopes to gross $25 million from Philly.com this year, a respectable start toward the estimated $100 million that the Washington Post, which began its digital push earlier, hopes to top. Still, the Philly numbers are modest compared with the $40 million in annual debt service on the $365 million that Tierney and his backers borrowed to buy the Inquirer and Daily News.

Speaking of debt, a lot of people think that Zell, a diminutive motorcycle buff, was crazy to pay so much for Tribune Co.  The company’s stunning $78.8 million loss in the fourth quarter reinforced that impression, and this was before Zell showcased his habit of striding into newsroom meetings to a recording of “Born to Be Wild.” But Zell’s track record in real estate proves that being a motormouth who tells employees to fornicate with themselves may not be the same thing as being crazy.

Sun’s printing plant. “That land on the bay is worth a lot,” Zell told shaken Sun employees in March. The implication is that he could sell some of this real estate or use it to lure the publisher wannabes among the hemi-, demi-, semi-, and multibillionaires who yearn to own a glamour newspaper title. Despite its troubles, the Los Angeles Times could go for a huge price if Zell can entice Eli Broad, Ron Burkle, and David Geffen into a bidding war, and Zell is also dangling Newsday in front of Murdoch, Zuckerman, and Cablevision. Newspaper analysts everywhere are in suspense over whether Zell can break up his new company fast enough to come out ahead. Don’t bet against him yet.

Newspaper wars must be deeply puzzling to people from “normal” businesses, whether the battle is outside or inside the building. Is it ego or civic pride that makes rich guys, including Jack Welch, fantasize about being press barons? One clue: Citizen Kane was not about the C.E.O. of a plastics conglomerate.

It must seem strange too that newsroom employees get so angry at owners who risk buying into an ailing industry and try to salvage, say, 75 percent of their jobs. Well, reporters and editors—not excluding yours truly—are nostalgic idealists. We revere a largely imagined past, glorifying a few publishers with stainless-steel spines and forgetting the number crunchers at Hearst or Gannett who set profit margins of 25 or even 30 percent as the industry standard, quality be damned. Plus, as Zuckerman notes, people who want to run happy newspapers are expected to understand that “not all values are financial values.” American journalists believe that a guy like Sam Zell wouldn’t know a journalistic value if it hit the headlight of his Ducati.

I have a sense that this might not be the case with a guy like Brian Tierney, who is at least partly motivated by hometown pride. Business journalists have consistently described him as smart and funny, a persuasive talker and a creative entrepreneur. Based on two lengthy conversations with him, I can see why. His top editor, Bill Marimow, says Tierney is keeping his noninterference pledge so far. Tierney’s budget cuts—$35 million initially, with another $23 million planned for 2008—indirectly imposed some journalistic decisions, like using wire services for foreign news, but such moves are routine these days for any publisher outside of Washington or New York. To my eye, Tierney seems too busy furrowing his brow over ad sales to make sure that Main Line socialites get flattering obituaries.

In general, I believe that some of the folks who are willing to buy distressed newspaper properties are being demonized too hastily by their newsrooms. Journalists need to remember that before push can come to shove on high ethical issues, the newspaper has to survive as a business. New publisher Tierney and veteran publisher Donald Graham, of the Washington Post, have the same problem. They have to find more revenue at a time when little, if any, elasticity is left in the old business model, even though newspaper profit margins still average a deceptively healthy-­looking 17 percent. But those margins have been maintained by one-off fixes like radical slashes in payroll, trimming news holes and circulation, and a self-defeating stinginess in regard to innovation.

At some point, addition has to replace subtraction at newspaper websites. “Attaining scale” and “monetizing the internet” have been industry buzzwords for years, and so far no one has done it to Wall Street’s satisfaction. Now private equity buyers are getting their chance. At first, the revenue “is going to be in small bites,” Tierney says. “But Philly.com already has 3 million unique visits per month and 40 million pageviews per month, so let’s step on the gas there.”

There may be gaps in Tierney’s plan, especially as recession sets in, but at least he has a plan. If you’ve got a better one, now would be a good time to hire yourself out as a consultant or, better still, get the gang together and buy your local newspaper.