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New Owner of Patch Lays Off Hundreds

Just two weeks ago, AOL announced that it was handing over the majority stake in Patch, its troubled local news enterprise, to Hale Global, an investment company that specializes in turning around troubled companies through technological innovation. Hale said at the time that its intention was to keep operating all of Patch’s 900 sites and that no staffing decision had been made.

On Wednesday morning, the decision became evident when hundreds of Patch employees were laid off in a reorganization.

Neither Hale Global nor AOL would comment on the layoffs.

The media blogger Jim Romenesko provided a link to what is purported to be an audio copy of a conference call Patch’s chief operating officer, Leigh Zarelli Lewis, had with selected employees at 10 a.m.

“Patch is being restructured in connection with the creation of the joint venture with Hale Global,” Ms. Lewis said, according to an excerpt printed on the blog. “Hale Global has decided which Patch employees will receive an offer of employment to move forward in accordance with their vision for Patch and which will not. Unfortunately, your role has been eliminated and you will no longer have a role at Patch and today will be your last day of employment with the company... Thank you again and best of luck.”

Later in the morning, there was a conference call for employees who were staying on. Patch had roughly 450 employees before the layoffs Wednesday. In the call, remaining employees, including journalists as well as advertising sales employees and engineers, were told that all 900 Patch sites would remain open.

AOL’s chief executive, Tim Armstrong, helped create the Patch network while at Google in 2007 and championed AOL’s decision to buy it in 2009. But although Patch expanded quickly, it ultimately lost $200 million to $300 million over the years, and Mr. Armstrong was under pressure from investors to dump it.

In an effort to make it profitable, he laid off hundreds of employees last year. When that did not work, AOL sold the majority stake to Hale on Jan. 15 in a deal whose terms were not disclosed.

When AOL announced the sale, it said that it had turned to Hale instead of other potential partners because the company shared Mr. Armstrong’s belief that local online news had a bright future.