AOL, the one-time Internet service provider now focused on digital services and publishing, is restructuring its network of local news sites.
Hyperlocal news fills a void in many neighborhoods by focusing almost exclusively on individual municipalities, towns, or even neighborhoods and often provide content not covered by publications with broader scopes. It also provides a strong local advertising opportunity for consumer-facing small and medium-sized businesses.
However, recent developments at AOL's Patch.com call the format's business viability into question.
Darrell Etherington reported today at technology news site TechCrunch that AOL plans to shutter 400 websites in the hyperlocal news network. Etherington also reports that AOL will replace Patch's chief executive Steve Kalin, who held the position only for a few months, with executive Bud Rosenthal. AOL is apparently reducing Patch's independence by asserting more direct control over the trouble division.
According to the TechCrunch report, the company has spent more than $300 million building out the massive network of 900 local news sites. Patch nabbed AOL $35 million last year, double what it brought in during 2011, but still only represented about one fourth of the annual cost of maintaining the network. Bloomberg's Edmond Lee reported in June that Patch's 900 sites were costing AOL more than $100 million annually.
Those struggles prompted Armstrong to announce today the need to close or "find partners" for 400 of Patch's 900 sites. New Jersey is home to 89 Patch.com sites, or more than 20 percent of the network. It is unknown at the time of publication how many of Patch's N.J. sites will be affected by the changes.
Patch.com was founded by Tim Armstrong in 2007. Two years later, it was sold to AOL for $7 million, shortly after AOL had hired Armstrong as its chief executive and shortly before AOL left Time Warner.
Digital content editor Joe Ross is @joeross on Twitter.
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