Patch Expected to Lay Off 500 Employees Tomorrow

Patch logoHard times are hitting Patch, AOL’s network of hyperlocal news sites. In an earnings call yesterday, AOL CEO Tim Armstrong said that he expects to shut, sell or find partners for nearly 300 of the 900 sites, Newsday reported this morning. Additionally, Mr. Armstrong said that layoffs will eliminate up to 500 positions, reported Jim Romenesko. Details of the layoffs will be announced on Friday.

Giving employees two days to speculate about upcoming layoffs understandably rankled staffers.

“Late last night, LEs [local editors] and mid-level field leadership were in a panic,” an editor told Mr. Romenesko. “Why tell people on Wednesday that cuts will happen on Friday? My email was burning up.”

Mr. Armstrong launched Patch in 2007 and sold it to AOL when he took over as CEO in 2009. Patch earned a reputation for poaching and scooping up journalists in 2010 and 2011, back when “hyperlocal” was heralded as the next big thing in journalism. But despite rapid expansion, profitability remained elusive. In 2011, The New York Times wrote that eliminating Patch “would free $160 million and lift AOL into profitability.”

Still, AOL chief financial officer Karen Dykstra said yesterday that the company remains “fully committed” to Patch. According to Mr. Armstrong, AOL has already cut Patch’s costs by 25 percent this year and he said that he expects the network to be profitable by the fourth quarter.

Eliminating the cost of 300 sites and up to 500 positions is one way to help the bottom line.