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AOL plans to reduce its ownership stake in Patch

Tim Armstrong, CEO and Chairman of AOL Inc.

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Tim Armstrong, CEO and Chairman of AOL Inc. AOL said under a new joint venture, investment holiding company Hale Global will have the majority stake ownership in Patch.

AOL plans to shift the majority ownership of Patch to an investment holding company.

The plans are part of a joint venture between AOL and investment holding company, Hale Global, both companies announced Wednesday. Patch will be placed in a separate company, which will be majority owned and operated by Hale Global. The financial terms of the deal were not disclosed.

"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 press release. "Along with AOL, we are committed to taking the necessary steps to ensure Patch remains a vibrant part of the community." 

Hale and AOL did not immediately return KPCC's calls for comment. 

Patch, which has more than 900 hyperlocal news websites nationwide, has been a struggle for AOL. Last year, AOL reduced the number of Patch employees and AOL's CEO fired an employee during a conference call. 

"I think one of the big problems with Patch is that it essentially tried to apply a McDonald's restaurant style approach to a business that is really more about your corner coffee shop," said Gabriel Kahn, a professor at USC Annenberg School for Communication and Journalism. "They rolled out a cookie cutter approach to try to fit everywhere and I think that good, hyperlocal journalism, really happens organically."

Last  year, media industry blogger Jim Romenesko wrote about the push back some Patch sites got when they published posts on "Where the Divorced Women Live in Town" and "Where the Divorced Men Live in Town." 

There are also other theories for why Patch didn't take off. One former Patch editor said AOL expanded Patch too fast before it had a solid business model. 

In November, AOL said it was committed to Patch ending the year in profitability through a partnership or transaction.

Hale and AOL said in a press release that moving forward, they plan to make community participation "seamless" with technology solutions, have a mobile-first experience, have self-service tools for national, regional and local ads and tools that will make ad products more geography-targeted.

The companies said they expect the joint venture to close in the first quarter.

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