Text wrapping is square around a png image

Hi I have a png as a file below.

Sisters-of-St-John-of-God-Logo.png

I know how to make a wrap text around an image, but the text surrounds the image as a rectangle

Screen Shot 2016-06-04 at 7.14.15 PM.png

and I want to wrap around the image, not the rectangle.  I tried to add a white background for the png and cutting the edges, see screenshot below.  I used red to display purposes.

Sisters-of-St-John-of-God-Logo-cut-out.png

But she always wraps as a rectangle.

Appreciate your help.

Screen Shot 2016-06-04 at 7.23.20 PM.png

This works! When the PNG is incorporated.

Tags: Illustrator

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