Hundreds of employees of the hyper-local Patch sites were being laid off on Wednesday as part of AOL’s previously announced plan to spin off the money-losing operation to a new joint venture controlled by Hale Global.
The move is a black eye for AOL CEO Tim Armstrong, who had co-founded the site as a side venture when he was still a Google executive and then acquired the site for AOL for a reported $7 million in 2009 shortly after he became its CEO.
Despite drastic cuts over the past year, the sites have never made any money for AOL and were the source of considerable shareholder unrest.
In August, the company said it was planning to drastically scale back the 900 sites it was operating with about 1,000 employees.
In October, AOL said only 14 sites in big cities would be fully staffed, then on Jan. 15 announced the deal with Hale. AOL is thought to have a 20 percent stake in the joint venture, which specializes in buying distressed assets.
It is difficult to say how the cost-cutting had gone in the final months at AOL.
In announcing the deal with Hale Global, the companies said Patch still had 900 sites.
The website JimRomenesko.com said that a tipster on Wednesday had told him that hundreds were being pink-slipped.
“Technically, we were laid off by AOL,” said one e-mailer to Romenesko’s site. “I presume that was a condition set by Hale. Second, I have it on good authority the layoffs were 80 to 90 percent of Patchers.”
Calls to Patch and AOL were not immediately returned.