AOL to announce cuts to Patch

AOL Inc. is expected to announce major cuts to Patch beginning this week, an effort to make the struggling series of hyperlocal news sites profitable.

AOL will close, sell or find local partners for as many as 400 of its 900 patch sites and will lay off as many as 500 employees from its Patch staff of more than 1,100, according to multiple reports.

Several news sites are reporting that AOL will let go of Patch”™s CEO, Steve Kalin, and Rachel Feddersen, the chief content officer. Patch creative director Abel Lenz was apparently fired by AOL CEO Tim Armstrong during a conference call discussing the coming changes, according to journalism and media blogger Jim Romenesko. Lenz was said to have tried to snap a photo of Armstrong during the call.

Armstrong founded Patch in 2007 when he said he noticed a vacuum of local coverage concerning his hometown of Riverside, Conn. In 2009, Patch was purchased by AOL and Armstrong was named the company”™s CEO.

With the backing of AOL, Patch grew to having 750 sites by 2010, but it cost AOL $160 million a year by 2011, according to The Wall Street Journal. Advertising revenues to sustain the business model were difficult to come by, and Armstrong said the goal of AOL was to make Patch profitable by the end of 2013.

It is unclear which local Patch sites, if any, will be affected. Patch operates 17 sites covering Westchester County and an additional 18 covering Fairfield County.

AOL”™s second-quarter earnings report, released last week, noted $541.3 million in revenue, up 2 percent over the same period in 2012. The slight increase translates into 35 cents earnings per share, according to analysts. The company announced in its earnings report that it would acquire Adap.tv, a video advertising company, for $405 million.