L.A. Community Newspaper Chain Files for Protection from Creditors

The largest chain of community newspapers serving African American and Latino readers in Los Angeles County is seeking Bankruptcy Court protection from creditors.

Wave Community Newspapers Inc., which publishes seven weeklies with readers in nearly 40 cities and communities across the county, filed last week to reorganize its finances under Chapter 11 of federal bankruptcy laws. Court records list more than 17 creditors owed a total of as much as $10 million.

Pluria Marshall Jr., the publisher and chief executive of the company, downplayed the filing, stressing that it wouldn’t affect the newspapers’ day-to-day operations or their commitment to the primarily Central and South Los Angeles communities they serve. Wave, some of whose newspapers date to the late 1800s, has 40 employees and a combined circulation of 150,000.

“This is simply a business filing,” said Marshall, who characterized the action as an unfortunate outgrowth of a dispute with Wave’s primary creditor, the Los Angeles Community Development Bank, which is itself being liquidated. “We are in no way going to close our doors.”

But community leaders expressed dismay.

“As their name implies, they were on the leading wave of media within the underserved community,” said the Rev. Cecil “Chip” Murray, retired pastor of the First African Methodist Episcopal Church. “They would be greatly missed if they go out of business. They’re needed.”

The newspaper chain’s bankruptcy filing underscored the economic and demographic challenges faced by black-oriented community newspapers in Los Angeles, said Clint Wilson II, a professor of journalism at Howard University in Washington and the author of “A History of the Black Press.”

As the Latino population in the L.A. area has grown, so has competition from Spanish-only newspapers. Meanwhile, African Americans, once concentrated in Central Los Angeles, have dispersed to all parts of the region. Beyond that, Wave papers circulate mainly in low-income areas that often struggle to attract big advertisers.

“Is there enough advertising and economic base?” Wilson said. “It’s a challenging market.”

It’s also a competitive one. The Wave group’s main rival is the Los Angeles Sentinel. The largest black-owned weekly in the West, it has moved aggressively to boost its circulation this year.

A spokesman for Danny Bakewell, the Sentinel’s publisher, said he wished Marshall well. “Mr. Marshall is a good publisher,” he said. “Our community needs us all.”

Marshall said the Wave group’s financial problems grew more urgent after a receiver was appointed to collect on loans issued by the Los Angeles Community Development Bank. The federally funded bank, created in the wake of the 1992 riots to spur economic development in low-income areas, began the process of liquidating this year after many high-risk loans were not repaid.

Among them was about $4 million the bank lent to the Wave group in 1999 and 2000. Marshall’s company, formerly based in Houston, inherited that debt when it acquired the Wave newspapers in 2000. Marshall said the loans were used to hire a few dozen employees, but that the Wave group failed to build revenue sufficient to repay the debt.

The company spent a year trying to work out a deal with the bank before the bank went into receivership, Marshall said. “We had a plan worked out with them and something went sideways,” he said.

Roberto Barragan, president of the Valley Economic Development Center, which is in charge of collecting the bank’s debts, disputed Marshall’s account, saying Wave had ignored a request for repayment.

“The loan hasn’t been paid in three years,” Barragan said.

Marshall said that despite the Chapter 11 filing, finances have improved.

“We’ve been able to stop the red ink,” he said.