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Patch gets hit with another big round of layoffs

Patch was sold to Hale Global earlier this month, number of jobs lost said to be in the hundreds

Financial trends and news by Steven Loeb
January 29, 2014 | Comments
Short URL: http://vator.tv/n/34ac

Despite all protests to the contrary, the writing has been on the wall for Patch for a while now. On Wednesday, the hammer finally came down.

Hale Global, the company that bought a majority stake in Patch from AOL earlier this month, laid off a big chunk of its staff members.

While no exact number has been given, several media outlets including reporter Jim Romenesk, who first reported this news, have the number in the hundreds. Meanwhile, a source told Business Insider that the number of Patch sites has been downgraded from 1,000 to just 250.

In Connecticut alone Patch's staff has reportedly been cut from 100 to a mere five employees.

VatorNews has reached out to Hale Global to confirm these numbers, and we will update this story accordingly.

The news of the cuts was delivered to Patch staff members in a conference call with Leigh Zarelli Lewis, Patch’s COO. Romenesk was able to capture the audio of the call, which lasted only one minute and 39 seconds.

"Patch is being restructured in connection with the creation of the joint venture with Hale Global. 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," Lewis said in the call.

"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."

Employees will lose their access to their Patch e-mail at 5 P.M. on Wednesday, but will have use of company-owned technology will be allowed until Friday, so that they have time to remove their personal files from the devices. 

"Hale and AOL appreciate everyone's hard work and commitment to this point, in building Patch into the business that it is today," said Lewis. "Thank you again, and best of luck."

Patch was acquired by AOL in June 2009; the company paid $7 million for the service, and poured in hundreds of millions of dollars over the next few years to try to get it to work.

Patch was CEO Tim Armstrong's baby; the purchase was made only two months after he became CEO. While Armstrong spent years saying that it would eventually become a profitable investment, but the hyperlocal news sites never caught on.

More recently he seemed to have become more aware of the problems it had been causing him and began to let go of the investment.

In August of last year 400 Patch sites were closed down and hundreds of employees let go. Then came the news earlier this month that AOL was selling off its majority stake in the company. 

So why didn't Patch ever work out? Frankly, it never became profitable, perhaps because of its limited ad revenue potential. AOL was speculated to have lost $100 million on the site in 2011, with the company only selling $7.8 million worth of ad space.

It's likely that Patch will continue on in some capacity going forward; Hale Global would not have bought it simply to shut it down. However, it will never be the force of local news coverage that Armstrong envisioned.

(Image source: http://imgfave.com)


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