(Adds background on A.G. Sulzberger)
NEW YORK, Dec 14 (Reuters) - The New York Times on Thursday named a new publisher in 37-year-old A.G. Sulzberger, a fifth-generation descendant of Times leaders whose internal report on innovation has guided a newspaper known as "The Gray Lady" into the digital era.
His father, Arthur Sulzberger Jr., 66, will retire as publisher on Dec. 31 but remain chairman of the board, the New York Times Co said.
The younger Sulzberger will also join the board at a time of disruption in the media business, when the newspaper faces frequent criticism from U.S. President Donald Trump against the "failing znytimes" on Twitter.
The company's 2016 revenue of $1.5 billion was less than half of what it had been a decade before, largely due to the decline in print, but its rapidly growing digital revenue has become an industry model.
Into that crucible steps Sulzberger, who has long been groomed for a major role at a business his family has owned since 1896.
"I am an unapologetic champion for this institution and its journalistic mission," Sulzberger said in the Times' news report on his ascension. "And I'll continue to be that as publisher."
He also pledged stability in the early stages of the transition, saying, "I don't expect there to be some flurry of change."
The elder Sulzberger joined The Times in 1978 as a correspondent, and his son, too, was assigned to the newsroom.
A.G. Sulzberger worked as a reporter at The Providence Journal and The Oregonian before joining The Times' metro desk in 2009.
He compiled more than 160 bylines on the Metro desk and another 170 as a national correspondent based in Kansas City, according a 2016 New York Times profile when he had been named deputy publisher.
"But perhaps the most important piece of writing that A.G. Sulzberger did for The New York Times before Wednesday when he was named deputy publisher was not an article and was not published in The Times, but was all about The Times," the paper wrote, citing a so-called innovation report released in May 2014.
Sulzberger led a committee to produce the in-depth analysis that said The Times risked losing its stature as a media leader unless it made sweeping changes.
"It's fair to say that of all the legacy publishing companies, the digital efforts of The New York Times have been far and way the most successful," said Doug Arthur, an analyst at Huber Research Partners who covers The New York Times Co. "Digital subscription revenues will overtake print advertising as a percentage of revenues this quarter."
In the third quarter, the company added about 154,000 subscribers to various websites, boosting its online subscribers base to 2.5 million.
Digital advertising revenue rose 11 percent to $49.2 million in the third quarter, accounting for about 43 percent of its total advertising revenue. Times said its executives were expecting at least $800 million in digital revenue by 2020, which would double what the company earned in 2014.
Sulzberger Jr. has been publisher of The Times since 1992 and chairman of the board since 1997. He led the transition into a digital media company, taking the newspaper online in 1996. The print addition has about 600,000 subscribers during the week and 1.1 million on Sunday. (Reporting by Daniel Trotta in New York; Additional reporting by Laharee Chatterjee in Bengaluru and Sheila Dang in New York; Editing by Richard Chang)