effectively done with Patch -- but that doesn’t mean the local news network is going away. Rather, AOL has agreed to sell a majority stake in the struggling service to the turnaround specialists
at Hale Global.
Financial terms of the deal were not disclosed on Wednesday, but it is no secret that AOL was eager to part ways with Patch. In the third quarter, Patch cost AOL $44
million in restricting costs and asset impairments, the company revealed in November.
Officially, Hale Global and AOL have created a joint venture to run Patch. Under Hale Global, Patch is
expected to see improvements in its mobile infrastructure, as well as its automated and geotargeted ad offerings.
For its part, Hale Global is getting a network of roughly 900 sites
with a combined audience of around 16 million month visitors, according to AOL, citing comScore data.
Previously, on its second-quarter earnings call this summer, AOL announced plans
to significantly cut Patch’s national network. Steven Kalin, Patch’s CEO at the time, was promptly replaced by AOL executive Bud Rosenthal. Soon after, about 350 editors got the axe, while
AOL said it would try to find other work for another 150.
In a letter to employees on Wednesday, AOL head Tim Armstrong described the move as delivering “on our commitment to our
investors.” Yet, Armstrong -- who actually co-created Patch before taking over at AOL in 2009 -- continued to defend the service’s underlying value on Wednesday.
“The local digital space will reach $152 billion by 2017, driven by a $21 billion growth in local digital revenue over the next three years,” Armstrong noted in his
letter to AOL employees.
“While Patch pivots, it is important to remember that it serves millions of consumers throughout hundreds of towns in America and partners with some of
the largest and smallest businesses that serve those communities,” Armstrong added.