New players nibbling around the edges of growing LA Weekly.

Alternative newspapers, like nature, abhor a vacuum. It's been a year since New Times Los Angeles shut down under an arrangement between NT Media and LA Weekly-owner Village Voice Media LLC. Since then, several new papers have debuted in Los Angeles--each making its pitch for readers and trying to grab a slice of the advertising pie left behind by New Times.

But it's little surprise that the biggest benefactor of New Times' demise--notwithstanding its multimillion-dollar payout to NT Media and hundreds of thousands of dollars in civil penalties--appears to be the 25-year-old Weekly itself. Witness its recent "Best of L.A." issue, which checked in at a bulky 352 pages.

Eager to peck away at the Weekly are papers like CityBeat and ValleyBeat, both started by Southland Publishing Inc., which also owns the Pasadena Weekly and Ventura County Recorder. There's also the biweekly LA Alternative Press, which was the Silver Lake Press until March when its owners decided to expand circulation throughout the eastern portion of the city.

"The LA Weekly is a Goliath, they're huge. But there is still a way to make money, even by picking up their crumbs," said Jim Kaplan, a former classified advertising manager at both the Weekly and New Times who last December launched the Studio City Sun.

Ample opportunity

New Times hired known writers and invested millions of dollars during its six-year run in Los Angeles, but it was never able to turn a profit. The deal with Village Voice was precipitated by the deep advertising slump that followed the Sept. 11, 2001 terrorist attacks.

Nevertheless, publishers of the new alternative papers say there is ample opportunity in vast Los Angeles for independent publications. "It's not our intention to be as big as the LA Weekly," said Charles Gerencser, vice president and group sales director for Southland Publishing.

Gerencser, who acquired discounted street racks, computers, office furniture and other items from NT Media in a government-mandated auction, credited the Weekly for its success, but he added that it was becoming "publishing's version of urban sprawl."

By contrast, low overhead is the common theme among the new alternative papers. Southland Publishing, which produces CityBeat and ValleyBeat with 20 full-time employees out of a single office in the Miracle Mile area, is by far the largest of the newcomers. The Weekly has 145 employees, although some are not full time.

"The amount of cash we need on a weekly basis to be self-sustaining is very small," Gerencser said. "Are we making money? Not right now. But the point at which we will break even is sooner than a lot of people think."

Finding advertisers among nightclubs, record stores and movie theaters is crucial, as is building a classified section. The strategy is to lure advertisers by offering rates that are 50 percent lower, or less, than the Weekly charges.

The Weekly charges $439 per week for the smallest ad it sells on a 52-week contract.

"Probably 80 percent of the ads I sell are less than that," said Rick Haelig, publisher of CityBeat and ValleyBeat and, like Gerencser, a former employee of New Times.

Antitrust scrutiny

Richard Karpel, executive director of the Association of Alternative Newsweeklies, said he has not been surprised to see new papers emerge in Los Angeles in the aftermath of New Times' closure.

"Most of the Top 10 cities have two papers," he said. "Obviously not all of them are going to be as big (as the Weekly), but when a market reaches a certain size it can support a variety of papers."

Village Voice paid NT Media $9 million to close New Times Los Angeles. In turn it received $2 million to close the Cleveland Free Times in the only other city where the companies went head to head.

The deal drew the scrutiny of the U.S. Department of Justice, which accused the companies of violating the Sherman Antitrust Act by conspiring to eliminate local competition. In a settlement reached in January, neither Village Voice nor NT Media admitted wrongdoing but both agreed to pay civil penalties. They were also ordered to sell the assets of the closed papers within 30 days.

Closer to home, readers of both papers chafed at what appeared to be an example of cutthroat behavior by two entities that often espoused principle over profit in their frequent criticism of the mainstream media.

"Reaction ranged from people who looked at it as an elegant business solution--New Times was not making money--to others who felt that the owners ought to be put in jail for doing it," said Karpel.

Village Voice officials did not return calls seeking comment.

Meantime, the Weekly had been undergoing a series of internal changes. Publisher Beth Sestanovich said more than a dozen managers have exited the paper since she took over in June of last year. "I don't know if I'd call it a housecleaning. But we needed fresh eyes, flesh blood, so we did make some changes and what we've seen is a better managed paper," she said.

When the Weekly put out its "Best of" issue earlier this month, its bound cover gave it the look and feel of a phone book. It was the biggest issue of the year, although the paper produced bigger issues a couple of years ago.

In 2002, the Weekly's revenues were estimated at $25 million, a figure Sestanovich calls "in the ballpark." Circulation has remained steady over the past couple of years at about 180,000 copies. Sestanovich declined to reveal revenues for 2003, but she said that the paper's overall page count is up 5 percent this year.

"Our editorial content remains consistent, so you have to assume that most of that growth is in advertising," she said. "We've grown in both volume and revenue in both classified and display advertising year over year."

Fresh looks

Part of the revenue growth, Sestanovich acknowledged, has come from former New trees customers the Weekly has aggressively courted. The Weekly got the jump on those advertisers when it took over New Times' accounts receivable list. Easing those customers into its higher rate structure has enabled the paper to increase its ad base in the past year.

John Morrison, sales director for the Alternative Weekly Network, a Sacramento agency that focuses on national advertising, said those sales, typically about 20 percent of ad revenues for weeklies in large markets, have been up about 6 percent in 2003 after double-digit drops in each of the two previous years.

But for the upstart weeklies, local advertising remains the name of the game. Gerencser said it's critical for independent papers to establish a solid base of retail and restaurant advertisers to be successful.

CityBeat circulates 60,000 papers and ValleyBeat 40,000. Gerencser's rates, between $411 and $563 for a quarter-page ad (depending on frequency), are about half those at the Weekly.

Since July, CityBeat's average size has increased by about 20 percent, to 50 pages, with hopes of reaching 80 pages or more by next year. Gerencser said that to be profitable, it would have to average between 60 and 80 pages. "Our (display) ad count is now about 100," he said. "To make money, on a consistent basis, we don't need many more than 115 to 120 ads, so we are very close to being self-sustaining."

Both Gerencser and Kaplan, publisher of the smaller, home delivered Studio City Sun, said the Weekly's decision to cut its San Fernando Valley edition this summer offers an opening. Some Valley advertisers are still paying the lower rate.

"When their contracts expire, those advertisers will have to buy both sides of the hill and pay a lot more for their ads," said Kaplan who plans to start a second paper, the Sherman Oaks Sun, in January.

Martin Albornoz, publisher of the LA Alternative Press, said staking a claim to the eastern portion of the city was key to the paper's identity, as well as its business prospects. Albornoz said the paper, which is looking for investors in order to go weekly, has been eking out a small profit since changing its name in March and expanding circulation from Silver Lake and Hollywood west to Fairfax Avenue. Circulation has increased to 50,000 from 15,000 last year.

"Our goal is not be a citywide paper. We don't warn to go head to head against the LA Weekly. It's impossible, it's like taking on the Los Angeles Times," he said. "We're trying to to a lot of those (advertisers) that can't afford the LA Weekly."