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.