AOL will close or sell unprofitable Patch sites

Forbes | Street Fight

In AOL’s earnings call, CEO Tim Armstrong talked about Patch, revealing “how he plans to keep his promise to make the network of local news websites profitable by the end of 2013: by closing, selling or finding partners for the 300 or so Patch sites that, in the company’s estimation, aren’t on a course to break even anytime soon,” Jeff Bercovici reports.

Newspaper sites may be potential suitors, Armstrong said in Bercovici’s account.

Armstrong didn’t say exactly what Patch’s revenues or costs would look like after disposing of the bottom third, but, in response to an analyst’s question, he did say that the average cost of a Patch site is “much, much lower” than the $150,000 it peaked at two years ago.

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Revenues rise at AOL, 21st Century Fox

AOL | The Wall Street Journal | 21st Century Fox | The New York Times

AOL is buying the video advertising platform, it announced in its second-quarter earnings report Wednesday. The acquisition “will make AOL a clear global leader in the most important growth segment in our industry — online video,” AOL CEO Tim Armstrong said in a statement. Advertising revenue at AOL was up 7 percent over the second quarter of 2012.

Revenue at AOL’s Brand Group, which includes content properties like The Huffington Post and Patch, was up 10 percent over the second quarter. The report does not break out financial information on individual properties. Unique visitors were up 3 percent at AOL properties, the company says:

21st Century Fox, which includes the cable-TV and television businesses once part of News Corp., reported a 16 percent increase in revenue over the fourth quarter of 2012. Read more

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Patch gets new CEO, lays off staffers

All Things D

Steve Kalin is Patch’s new CEO, AOL CEO Tim Armstrong told Patch employees in an email Friday. Patch will also make several motions that Armstrong writes will “move Patch meaningfully toward profitability.” Among them: layoffs.

The changes we are making at Patch, however, come with the difficult decision to eliminate some positions. These employees have contributed greatly to Patch’s business with passion and dedication. We sincerely thank them for all they have done to make Patch what it is today. Their impact will always be felt here. We wish all affected employees continued success. They are truly Patchers for life.

Via email, Patch spokesperson Joe Wiggins replied affirmatively when Poynter asked whether editorial jobs would be among those going. He sent along this statement:

Patch is streamlining its regional editorial structure across the country by moving from 20 to nine teams.

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Ad revenue, traffic up at AOL in third quarter

AOL | All Things Digital
Total revenue was flat over 2011, “representing AOL’s best year-over-year revenue performance in 7 years,” the company says in an earnings release. Advertising revenue was up at AOL during the third quarter of 2012, rising 7 percent from the same period in 2011 to $340 million. Read more


AOL says Patch continues to double its revenue from last year

AOL | All Things D | paidContent | Ad Age
In its second-quarter earnings report, AOL says Patch “grew traffic and engagement at double digit rates year-over-year and quarter-over-quarter” and that revenue more than doubled in the second quarter compared to a year earlier. Patch is on track to make $40 million to $50 million this year, though it has invested more than $200 million so far, according to paidContent’s Staci Kramer.

The company reported in May that its first-quarter revenue was double that of last year’s, too, and that its traffic was up 55 percent from March 2011 to March 2012.

In an interview with Ad Age’s Jason Del Rey, AOL CEO Tim Armstrong described an upcoming shift in Patch’s strategy, expanding from its current focus on hyperlocal news to listings and commerce. Read more


Starboard loses bid to place members on AOL board

Starboard, the activist investment group that expressed great skepticism about AOL’s content-based strategy, lost its bid to place three members on the company’s board at today’s annual meeting. AOL’s entire present board was re-elected, a company news release says.

This may mean some more breathing space for Patch, AOL’s local-news initiative, which would have been in the crosshairs of any Starboard-affiliated directors. Starboard prepared an investor presentation for the SEC saying it did not believe Patch was a “viable business,” estimating it was losing “approximately $79 million to $133 million per year.”

Related: Patch reports record audience as AOL faces proxy fight Read more


AOL doubles down on Web-to-magazine model with launch of ‘Huffington’ for iPad

New York Times | Mashable | Capital New York

This free preview issue of Huffington magazine will come out Thursday.

The Huffington Post launches an iPad magazine on Thursday called “Huffington,” building on a Web-to-magazine publishing model AOL pioneered with Distro.

The weekly publication will offer a slower pace than the website, anchored by a few long-form journalism pieces (4,000-8,000 words), plus commentary, photo essays and data visualizations. It will largely resemble a Newsweek-style print magazine, Lauren Indvik reports. But it also will have digital enhancements like article commenting, sharing, and (gasp!) outbound links. Read more


Patch reports record audience as AOL faces proxy fight

Patch | The Wall Street Journal
Patch reports today its audience is up 14 percent over last month, with 11.7 million users in May, and that its revenue is up 17 percent over the same period. This news comes at a propitious time for AOL’s ambitious local-news initiative: Thursday’s annual AOL shareholder meeting will be a showdown between CEO Tim Armstrong and Starboard Value, the activist investment group that’s been calling for the corporation to change its content-focused strategy. “We do not believe Patch is a viable business,” Starboard wrote in an investor presentation it’s filed with the SEC. It estimated the local-news initiative is on track to lose “approximately $79 million to $133 million per year.” Starboard is hoping to elect three directors to the company’s board at the meeting. Read more


AOL reports Q1 earnings with progress for Patch as rumors swirl it’s selling tech sites

MarketWatch | All Things D | Pando Daily | The Hook | GigaOm
AOL released its first-quarter earnings today, posting a 5 percent rise in advertising revenue and a 14 percent drop in subscribers to its Internet access business compared to the first quarter of last year. Domestic display ad sales declined by 1 percent, which Peter Kafka says will be “fresh meat for AOL critics” like investment firm Starboard Value, which believes content is “a high cost strategy,” that requires “substantial in-house editorial and sales personnel.” It also says it thinks AOL’s Patch has a “structurally flawed business model.”

AOL’s first-quarter report says “Patch grew traffic and advertisers over 40% year-over-year and revenue over 100% year-over-year.”

During a conference call Wednesday morning, AOL CEO Tim Armstrong said that “there’s a lot of noise about Patch” but it remains “a very long value proposition for us.” Patch has already booked revenue for 2012 that exceeds revenue booked in 2011 and will be profitable by the end of 2013, in part by lowering expenses, he said. Read more


AOL websites give best stories a second life in weekly iPad magazines

The mobile team at AOL is finding success with a new publishing model that plucks the best longform and enterprise writing from an otherwise fast-paced website and republishes it in a design-rich tablet magazine.

Distro is a free weekly tablet magazine that refreshes Engadget’s best original reporting in a premium design package.

Their first venture is Distro. The iPad and Android magazine app pulls feature content from the tech blog Engadget.

Most of the 40+ daily Engadget posts are short breaking news, but a couple a day might go deeper: analysis, product reviews, trend stories or interviews. That’s the stuff that finds a second life each week in Distro.

There are several positive signs, AOL vice president of mobile David Temkin told me. Readers spend an average of more than 10 minutes with Distro each session, while the average visit lasts less than one minute. Read more

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