AOL Inc. effectively abandoned its ambitious strategy of reinventing hyper-local news when it agreed Wednesday to sell a majority stake in the Patch website network to technology investment firm Hale Global.
Financial terms weren't disclosed. The companies anticipate closing the deal in the first quarter.
The deal is touted as a joint venture between AOL and Hale Global, which says it specializes in turning around underperforming businesses. But the control of the Patch network – which currently consists of 900 websites that run local news – will be handed over by AOL to Hale Global in a newly formed company. Hale Global will own an unspecified but majority stake in the new company, while AOL will be a passive minority investor.
Patch, which was co-founded by AOL CEO Tim Armstrong in 2007 before he joined AOL, has been struggling for years as many of the sites failed to live up to internal expectations for web traffic and ad sales. The sites, staffed with local writers and salespeople, are designed to capture readers and advertisers by including neighborhood news and developments that may be ignored by local newspapers.
Signs that AOL was looking to unload Patch began to emerge last year when AOL eliminated about 300 of 1,200 Patch sites and laid off more than half of the unit's workforce, or about 500 employees.
Hale Global and AOL say Patch will be relaunched as a place for contributors and businesses to create "locally-themed news and content." Patch sites also will be redesigned for mobile and social media users, and advertisers will have "self-service" tools for creating their ads.
"We are committed to bringing users, local businesses, writers and advertisers together into a Patch experience full of innovation and growth," said Charles Hale, CEO of Hale Global, in a statement.