The Los Angeles Times was in turmoil yesterday after a member of its founding family, Otis Chandler, denounced the paper's decision to split profits with one of its news subjects as "unbelievably stupid and unprofessional."

In a letter to the staff, Chandler, who served as publisher for two decades, said: "I consider what has happened to be the most serious single threat to the future survival and growth of this great newspaper during my more than 50 years of being associated with the Times." The newsroom applauded when the letter was read late Wednesday.

"I've been here 31 years and I've never seen anything remotely approaching this level of anger on the part of the staff," said media critic David Shaw. "I've never seen the troops as disillusioned, angry, embarrassed and confrontational."

In an indication of the crisis atmosphere, Editor Michael Parks told the staff in an e-mail yesterday that he has asked Shaw to investigate the controversy and that his story will be edited by retired managing editor George Cotliar.

"We entered into a business relationship, including revenue-sharing, with an institution we were covering," Parks said yesterday. "That's a major problem. It suggests to a reader that we can be bought. We cannot be bought. But there's an appearance of an ethical breach."

He added: "I fully share the concerns of my colleagues. I think we're taking the right steps to reassure our readers that our integrity is intact."

The missive by Chandler, 71, was all the more remarkable because it singled out for criticism Mark Willes, the CEO of Times Mirror, and Kathryn Downing, who succeeded Willes as publisher earlier this year. Chandler, whose family still controls a majority of Times Mirror stock, also said people were leaving the Times because it "was going nowhere." An assistant in Chandler's office said yesterday he has been flooded with letters and faxes of support.

On one level, the controversy involves Downing's decision to devote a special issue of the Oct. 10 Sunday magazine to the new Staples Center and share nearly $2 million in advertising revenue with the basketball and hockey arena. Downing apologized at a staff meeting, saying she is "truly, truly sorry" for putting the paper under a "horrific cloud." She said she'd had a "fundamental misunderstanding" of the principles of editorial independence.

In a larger sense, the paper is feeling the aftershocks of Willes' declared intention to blow up the wall, with a "bazooka" if necessary, that separated the newsroom from the business side of the paper. Willes was a former General Mills executive before joining the paper, while Downing ran a legal publishing company.

"One cannot successfully run a great newspaper like the Los Angeles Times with executives in the two top positions, both of whom have no newspaper experience at any level," Chandler wrote. ". . . I have reluctantly decided that I can no longer sit idly by and watch a very serious decline in the morale of people throughout the Times."

Chandler, who was publisher from 1960 to 1980, resigned as a director last year after reaching the retirement age of 70.

"I've found people extremely supportive of his letter, really supportive," said City Editor Bill Boyarsky, who was asked by Chandler to read the letter to the newsroom.

Times staffers said there is considerable resentment toward Downing, who dismissed Chandler in a statement as "angry and bitter" and doing a "disservice" to the newspaper.

Parks, insisting he did not know about the profit-sharing deal with Staples Center, said: "Why wasn't I told? Why wasn't I more alert? This is a cause for much self-reflection on my part." He said he has had "candid" discussions with Downing during the "painful passage."

While Chandler's letter raised some good concerns, Parks said, "I fundamentally disagree with his assessment of the Los Angeles Times today. I think we do great journalism."

Some 300 staffers signed a protest petition demanding that Shaw be recruited to investigate the Staples Center matter. "That's what we wanted," Boyarsky said.