Wednesday, May 23, 2012

Report: AOL's costly Patch gamble 'draws trouble'

As the ad-supported local news network has expanded to more than 850 towns from 30 in the past two years, its annual loss has widened sharply to more than $100 million in 2011, according to analysts who spoke to The Wall Street Journal for this just-published story.

"The main problem: It is tough to sell enough online ads to cover the cost of producing local news, especially while maintaining a local reporting staff and a local advertising sales force," the WSJ says.

Meanwhile, Patch's high operating costs -- it employs nearly 1,000 journalists -- has fueled a campaign by dissident AOL investor Starboard Value, which says the network should be closed, sold or put into a joint venture, with a partner sharing the cost.

Earlier: An eye-opening inside account of work life at Patch.


  1. Bad biz model held up by Tim Armtstrong's ego. Once Arianna Huffington knocks him off, she will absorb what she can into her borg or kill them.

    Another to add to the ash heap of hyper local failures.

  2. AOL never did any advertising to launch Patch. Many people still don't know they exist. They also paid their writers very little expecting their editors to do most of the writing and editing. Keeping up with the local political meetings alone takes a great deal of time which meant editors work 7 days a week for very little money. Management was never open to suggestions by their more experienced writers and they also demanded more turnover of the news than was necessary. Overall, they were not tuned in to their readers. It almost felt they were not taking the project seriously.


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