For the past year or so, Stanton’s been the paper’s Innovations editor, charged with overseeing the paper’s Web site and more generally, bringing it into the digital age. For Sam Zell, the paper’s new owner, and the David Hiller, the current publisher, to tap a Web guy for the top job over the other finalist, a veteran Times editor whose rise through the ranks was took a more traditional trajectory, says a lot about the direction they want the paper to take. If they use this opportunity to continue beefing up their online news presence – and make money and save newsroom jobs doing it – they could create a template for newsroom innovation other papers would eagerly follow.

But none of this is happening in a vacuum. In the past three years, the Times has seen three editors come and go, all of them quitting to protest budget cuts that lowered newsroom headcount and morale. Revenue from advertising continues to drop at the Times and throughout the newspaper industry. On Feb. 14, the New York Times said it was cutting 100 newsroom jobs due to declining ad revenue. Nice Valentine.

Stanton will have his work cut out for him. For starters, he has to deal with the 100 news job cuts across the entire Los Angeles Times Media Group announced Feb. 13. In addition to the daily paper, the group includes community papers, a Spanish-language paper and an entertainment guide. But he appears up to the challenge. In a newsroom speech after his promotion, Stanton said: “”I have grown tired and am now hopping mad over this seemingly endless ‘Groundhog Day’ nightmare.” He also said The Times would have “to figure out how to break this self-defeating cycle before it does indeed result in our defeat.”

It’s the worst of times at the Los Angeles Times. James O’Shea, the paper’s editor in chief resigned last week after a budget dispute with publisher David Hiller. This comes a month after real estate mogul Sam Zell took control of the paper and the rest of the Tribune Co. It’s the latest skirmish in a long and losing battle to keep the paper’s newsroom in tact in the face of changing ownership, economic woes and the evolution of the news business.

One possible bright spot: a report out this week that one of the two top candidates to replace O’Shea is Russ Stanton, a long-time business editor and reporter who’s been the paper’s Innovations editor for the past year. This is exciting for a couple reasons. First, Stanton is great. I worked with him in the early 1990s at the Orange County Register. He’s a smart, stand up guy. Second, the very fact that the powers that be would consider the editor of LATimes.com as a candidate for the paper’s top job means they get how important the online news biz is to the long-term health of the paper.

On the other hand, the LA Times has had four editors – and three publishers – since Tribune Co. acquired it from the Chandler family in 2000. With another new owner, declining revenues and abysmal staff morale, who’d want to be in charge?

Whatever happens, it’s putting Stanton and the paper’s Internet business in the spotlight, and that’s a good thing.