AOL Shifts Patch Local News Service To Joint Venture With Hale Global

Turnaround company Hale Global will operate and own a majority stake of Patch, or at least what’s left of AOL chief Tim Armstrong’s dream to create a powerful network of local news Web sites. The companies say that they are “committed to re-launching Patch.” But instead of depending on journalists for news it will become “an efficient platform that allows citizens and businesses to create and share locally-themed news and content.” Patch consists of more than 900 sites and serves more than 16M people a month. Hale CEO Charles Hale says that the partners will take “the necessary steps to ensure Patch remains a vibrant part of the community.” What does that mean? Here comes the AOL jargon: It says strategies include “Technology solutions to make community participation seamless; Mobile-first experience with social integration; National, regional, and local advertising self-service tools; [and] Geo-targeted advertising products.” The companies wouldn’t disclose the financial terms for their partnership deal, which they expect to close by the end of March. Armstrong says that AOL makes “bold bets” and local advertising “will be a growth space during the next decade of the Internet.” But Patch didn’t pay off the way he hoped. AOL took a $25.0M impairment charge and a $19M restructuring charge on the operation in Q3 after laying off 40% of its workforce — about 480 people — in August.  Armstrong helped to found Patch in 2007. Shortly after he became AOL’s chief executive in 2009, the company paid about $7M to acquire it. He also invested heavily in the operation, calling community-level advertising “one of the largest commercial opportunities online that have yet to be won.” Armstrong told analysts last summer that AOL’s “No. 1 North Star goal is to get Patch to profitability and to make the tough decisions around Patch to get there.”

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