Thursday, January 30, 2014

Patch lays off hundreds of employees

Patch, a hyperlocal news website that had pages devoted to 900 cities nationally, yesterday laid off hundreds of its employees after an ownership change. A source told Jim Romenesko that 80% to 90% of Patch employees were fired.

In the Bay Area, The Alamedan website reported that one editor, Autumn Johnson, is now overseeing 20 local Patches in the East Bay. The names of other local editors on Patch sites have been removed, presumably because they have been laid off.

AOL sold a majority interest in the money-losing website to Hale Global, an investment firm that specializes in turning around troubled companies.

Hale plans to keep all 900 Patch sites open, but instead of providing local reporting the website will become a content aggregator, presumably using stories generated by newspaper and TV station websites.

The fired employees will receive their yearly AOL bonuses, a payout for accrued vacation time and two months’ severance, according to TechCrunch, an AOL property.

"Patch had long been a sore spot on AOL’s balance sheet," TechCrunch's Matt Burns wrote. "The outlet failed to become profitable after Aol acquired it in 2009. Patch is estimated to have cost Aol between $200 million and $300 million to run. In 2012 Aol CEO Tim Armstrong made a commitment to turn Patch around. In 2013, sites were consolidated or closed and staffing was cut. Still, nothing seemed to help."

Patch was the latest attempt by a company to crack the local news niche online. Before Patch, there was Microsoft's Sidewalk/Digital Cites/RealCities (late 1990s) and Backfence.com (2005-2007).

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