AOL unravels its stake in Patch, a local news site that never flourished

Majority control will go to turnaround firm Hale Global

AOL is relinquishing its control of Patch, an online site for local news that has struggled to turn a profit.

Under an agreement announced Wednesday, Patch will become a new company operated and majority-owned by Hale Global, which is known for investing in firms and turning them around. AOL will retain a minority interest, AOL CEO Tim Armstrong said.

Patch was founded in 2007 as a way to deliver news about school board meetings, local crime and other goings-on at the local level, at a time when many other news outlets were shutting down or focusing their energies elsewhere.

With a network of more than 900 sites, Patch serves more than 16 million people monthly, according to AOL, citing data from comScore. Patch will be re-launched with a number of new goals, including a mobile-first strategy, geo-targeted ads and easier ways for local people to contribute.

The companies expect their new joint venture to be formed by the end of March. Terms were not disclosed.

Whether Patch can be reinvigorated is hard to predict. AOL had encountered problems making the site profitable. This past August, layoffs expected to reach 500 of the unit's more than 1,100 employees were reported. The site, with a sea of other digital news outlets now occupying the Internet, never really caught on in a major way.

"Patch was an interesting idea; AOL just could never make a solid go of it," said Al Tompkins, a senior faculty member at the Poynter Institute, a nonprofit journalism training organization. Part of Patch's problem was that the site rarely, if ever, broke any big, interesting stories, he said.

AOL could have struck more partnerships with outside groups and media companies to help subsidize the venture and distribute its content, Tompkins said.

Trends in the larger journalism market suggest AOL may have been grappling with other issues beyond its implementation of Patch. One question is how much of an appetite there is these days for local news, and who will provide it.

Tompkins thinks there will always be an appetite for local news, but that the content may not come from paid journalists. "We're losing local news at a time when we have the ability to transmit information instantly," he said. That means instead of Patch employees, everyday citizens might be reporting on Twitter what happened at the local school board meeting.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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