When the California-based McClatchy newspaper chain took control of the Anchorage Daily News in March, the four editorial employes who were then half of the paper's staff held a celebration.

They opened four bottles of champagne, Alaska being a place where celebrations are taken seriously, and wagered on what the circulation would be in a year. The winner, who guessed "more than 20,500," collected just three months later. Circulation still is soaring, from 11,000 in April to a presently-claimed figure of 28,000 and the Daily News is giving the entrenched, ad-fat Anchorage Times the fight of its life.

Ordinarily, a circulation battle between two small newspapers in such a remote place wouldn't be of much interest elsewhere. But the rise of the Daily News has attracted outside attention because it represents a rude challenge to a man whose name is synonymous with Alaska's development -- Times publisher Robert B. Atwood.

When he and his wife, Evangeline, bought the Times in 1935, it was an insignificant paper with a circulation of 600 in a town just 20 years old. Now, 44 years and 45,000 additional readers later, it would be a safe bet that more Alaskans swear by or at Big Bob Atwood than any other man or woman alive.

Led by the multi-millionaire publisher, Anchorage has become Alaska's business and industrial center, and home for nearly half of the state's population of 400,000. Local businessmen, even those who don't like him, give Atwood much credit for the growth.

"He kept talking to us about how great we could be until we believed it," said a prosperous Anchorage merchant who finds Atwood a bit overbearing. "His big coup was in convincing the military to locate here in World War II when everything was up for grabs. We've been taking things from Fairbanks ever since."

Atwood campaigned for statehood, for industrial development and for relocation of the capital to Anchorage from out-of-the-way Juneau, in the southeastern panhandle. When a state legislator from Anchorage questioned the move, he was identified in the Times as "Bill Parker of Juneau" and defeated in the next election. Atwood also loudly supported development of the state's oil industry, in which he invested luckily in the mid-1950s. He was a partisan of the TransAlaska Pipeline and saw to it that the project got friendly treatment in his newspaper.

But in recent years, as some of Alaska's boomer spirit has waned, Atwood has been fighting defensive battles. He sees menaces to his beloved state in the Native Claims Act, the "lockup mentality" of the federal government on Alaskan lands, and the "wishy-washy" administration of Republican Gov. Jay Hammond, who won his party's gubernatorial nomination over two Atwood favorites -- developer Walter Hickel and Conservative Times columnist and businessman Tom Fink.

"You can't dream or hope anymore," complained Atwood, 72. "What can you dream or hope about? Everything is tied in a knot. The only thing you can accomplish in Alaska these days is a pay raise for state employes or the building of a native high school someplace."

Adding to Atwood's irritation is the Daily News, a rags-to-riches -to-rags -- and maybe now to riches again -- newspaper that won the Pulitzer Prize in 1976 for its investigation of Teamster corruption and influence in Alaska. One of the reporters who worked on that investigation called 1976 a "champagne and tears" year, however, for the prize was followed by editorial layoffs at the Daily News.

The layoffs were forced on publisher Katherine Fanning, who, with her late husband, Lawrence Fanning, had purchased the struggling Daily News in 1967. Over the next decade, Frederidk Field, Mrs. Fanning's son by her first marriage to Chicago publishing magnate Marshall Field IV, put $5 million into the paper to cover operating losses, according to court records. He cut off the subsidy in 1976, leaving the News in a precarious position.

By that time, the News and Times had merged printing, advertising and circulation operations. But the two-year-old arrangement was proving unsatisfactory to both publishers. Fanning believed that the dominant Times was undercutting the News and not delivering it. Atwood thought that the News wasn't a salable product.

The issue wound up in court in 1977, and in a subsequent settlement the merger was dissolved. Into the breach came C.K. McClatchy, publisher of successful newspapers in Sacramento, Fresno and Modesto. McClatchy' bought the News, the only morning daily in Alaska. He kept Katherine Fanning on as publisher.

"McClatchy has done the only thing we couldn't do under the joint agreement," said Anchorage Times General Manager William J. Tobin. "He's changed the paper. And he's had some degree of success because of it."

In an interview, McClatchy emphasized that Mrs. Fanning still is running the newspaper, and said "We wouldn't try to do it from Sacramento." Neus policy is determined locally, and the editor, Stan Abbott, is a veteran of the ups and downs of the Daily News. The editorial writer, Howard Weaver, was half of the reporting team that won the Pulitzer.

McClatchy has made the difference. He bought a new plant and installed modern cold-type editing and computer printing processes. He beefed up the editorial staff. He also bought every available news and feature service, including those sold by The New York Times and The Los Angeles Times and The Washington Post. He also signed up some comic strips the Anchorage Times had wanted.

Committed to publishing a "complete paper," the News has maintained a 30-page minimum daily -- the paper often is much bigger -- no matter how much advertising it carries. However, the News still is often only half the size of the Times.

Atwood and Tobin of the Times are skeptical of their rival's circulation claims. But they acknowledge that the News has made big strides in public acceptance since McClatchy took over. The Times' daily circulation is 45,500, down 1,200 from a year ago, a drop which Tobin attributes partially to declining population and partially to the changes at the News.

Most of the town's big advertisers, a number of them personal friends of Atwood, have remained loyal to the Times. However, both Tobin and Daily News General Manager Gerald Grilly predict that the News will get its share of advertising if it can hold its circulation.

The growth trend in U.S. journalism in recent years has been away from afternoon dailies such as the Times and toward morning papers such as the Daily News. This isn't so in Alaska, however, where the five-hour time lag with newsmaking centers of the East Coast allows an afternoon paper to carry stories that will appear in next morning's papers in New York and Washington.

There are other advantages for afternoon newspapers here. Easterners often read their newspapers en route to work on public transportation, which is next-to-non-existent in Alaska. And much of Anchorage, where many people are employed at nearby Elmendorf Air Force Base, has adopted the early-to-work, early-to-leave regimen of the military.

"What we have to do to succeed is get that paper on the door at 6 in the morning," said Grilly.

This has been easy enough in the mild Anchorage summer but it will be a more difficult task when the cold, dark Alaskan winter closes in for half the year.

"Ue just never could get the paper to people in the winter, either before or during the merger," said a former Daily News staffer. "That was our biggest hurdle and our biggest failure."

Recognizing this, McClatchy has reorganized the circulation department under the supervision of Grilly, a hard-charging, 32-year-old Floridian facing his first Anchorage winter.

"We're going to get the paper to people this winter," Grilly said with confidence. "Frankly, I don't think it's that much of a challenge."

If he proves right, the Daily News is likely to give Bob Atwood all the competition he can stand.