AOL has given up controlling interest in Patch through a joint venture with a private equity company, relieving the Internet portal of its high-profile but low-return local news platform property.
Patch will become a limited liability company operated and majority owned by Hale Global, a company that specializes in turning around troubled technology businesses. AOL will keep a minority position in Patch.
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“Hale Global has a strong track record of operational excellence and platform experience, and we are looking forward to working closely with them on Patch,” said AOL CEO Tim Armstrong in a press release.
The divestiture of Patch is the next logical step for AOL, as Armstrong seeks to turn the company's focus to online video. AOL overtook Google in October for most video ads watched in a month, boosted by its acquisition> of Adap.tv.
Armstrong founded Patch in 2007, and the site became one of his first acquisitions when he took the role of chief executive at AOL in 2009.
Patch struggled to turn a profit, which weighed heavily on AOL, leading to incremental moves to strip Patch down to its more profitable pieces.
In August 2013, 400 of the worst-performing of Patch's 900 sites were closed or spun off into partnerships. That included a large round of layoffs, including one very public firing that drew even more attention to the site's highly publicized struggles.
Patch's website appeared to remain operating as normal.
Hale Global and AOL laid out in the press release a series of concepts planned for Patch including self-service and geo-targeted advertising.
"We are committed to bringing users, local businesses, writers and advertisers together into a Patch experience full of innovation and growth,” Charles Hale, CEO of Hale Global, said in the release. “Along with AOL, we are committed to taking the necessary steps to ensure Patch remains a vibrant part of the community.”
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