Is the New York Times in play? Since an investment unit of Morgan Stanley made public its dissatisfaction with the newspaper’s management, sources familiar with the situation suggest the paper could sell off peripheral assets, do a stock buyback, or both to appease shareholders.

Several people close to the situation said that while disgruntled investors are unlikely to disrupt the Sulzberger family’s control of the newspaper company, they are pushing management hard to boost the stock price. The stock, currently selling at about $25, is down more than 50% from its 2002 high, and off 26% over the past year, while the S&P 500 has climbed 13%.

Morgan Stanley Investment Management announced last week that it withheld votes for the company’s class A director nominees at the April 18 annual meeting, prompting much speculation. In all, 31% of class A shareholders – a hefty percentage – declined to vote for management’s nominees.

Suggesting confidence in the status quo, a New York Times spokeswoman said the company has not hired an adviser to consider a response to the shareholder revolt. There is security in the company’s two-tier stock structure. The family owns 19% of the 144.3 million shares outstanding, and 91% of 834,242 class B shares, or 20% overall. Class B shares are convertible into class A shares on a one-for-one basis, but are entitled to select nine of 13 directors, thus giving control to class B holders.

Nonetheless, management will likely be prodded into making some changes. While analysts and stockholders are mostly sympathetic to the company’s vulnerability to Internet advertising, two moves by management in recent years appear to have especially angered investors. First, the decision to build a monumental headquarters building strikes some as having been a misuse of the company’s capital. Second, management’s expenditure of $2.9 billion in stock repurchase programs from 1997 to 2004, at considerably higher prices, has come under fire.

Recent scandals at the paper have further eroded confidence in current management, which has unquestionably squandered some of the Times’ once-pristine reputation. These shortfalls have also prompted criticism, and the withholding of shares. Since MSIM only owns about 5% of the company, it is assumed that other large shareholders also participated. A few of the largest are Private Capital Management, which was in the forefront of engineering last year’s sale of Knight Ridder and which owns 15% of the Times, T. Rowe Price (13%), and Fidelity Management (6%).

The move has been described as a “wake-up call” to management. What is less clear is what even an insomniac management can do to turn things around. Suggestions from several people close to the situation, none of whom wished to be quoted for this article (the Grey Lady certainly inspires discretion), were to sell off various peripheral businesses. Assets mentioned for possible sale include the broadcasting stations, which might fetch close to $400 million, the company’s 17% interest in the Boston Red Sox, or the Boston Globe – and buying in stock at today’s deflated price.

If this scenario sounds familiar, it may be because of similarities between the New York Times situation and that of Time Warner (TWX $16.68). Both companies control some of the country’s best publishing and broadcast properties, but neither has yet emerged from the quicksands of changing technology. Both companies are wrestling with the impact of the Internet, which is changing the delivery medium for all manner of entertainment and news content. Both companies are struggling to ensure their place at the Internet table, and both have been attacked by disappointed investors. And … both are haunted by large new headquarters buildings that have been decried as monuments to management.

There are differences, however. Time Warner, a stock widely held by the public, recently escaped pretty much unscathed from its skirmish with shareholder activist Carl Icahn. At the end, the chief executive of Time Warner, Richard Parsons, adroitly cut off the attack by making some pre-emptive moves to accelerate a stock buy-in, which was one of Mr. Icahn’s objectives, and other cosmetic measures. Mr. Parsons enjoys the confidence of many shareholders and that helped him maintain control.

The Sulzberger family is not threatened by loss of control, but rather by embarrassment. The only reason the ownership picture might change is if the interests of progressive generations diverge. That is, only the family can cause a change in the share structure.

Consequently, they are likely to try to appease shareholders by resurrecting their share repurchase program. While the company has traditionally paid out a hefty dividend, no doubt a priority of the owning family, shareholders we spoke to prefer an emphasis on buying in stock. The dividend, which was recently raised to $1.75 a share, gives the stock a significantly above-average yield of more than 7%, likely putting a floor under the share price.

Though some shareholders don’t seem pleased about the new headquarters building being erected on Eighth Avenue, conversations with real estate experts suggest that, ironically, this may have been one of the best transactions in the history of the company. The company will soon take title to 825,000 square feet of highly desirable space in Midtown that was built for less than $500 a square foot. Since the company sold its prior headquarters, the new space is costing less than $300 a square foot net. This figure reflects the fact that building costs were held down by pre-purchasing steel and other materials before the great run-up in commodities prices in the past three years. The venture was also given significant tax breaks by New York City, which limits taxes over the next 29 years to less than $12 a square foot (compared to another large building going up, which will immediately be paying $14 a square foot.).

Though it is possible that the Times could sell the building today for a hefty profit, it is unlikely for many reasons. The family came close to losing the newspaper during the Depression when it took a mortgage on the headquarters buildings; it is an article of faith to own their space outright. Management could consider relocating to less expensive digs, but the low cost of the new building argues against such a move.

The management of the Times is being encouraged to shape up, to focus on its core businesses and, in the words of one shareholder, “be a strong participant in the Internet revolution rather than a casualty.”