The New York Times
May 18, 2014

In January, when AOL announced that it was handing over the majority stake in Patch, its troubled hyperlocal news division, to an investment firm, it seemed like the end of a long, tragic story.

But its new owner says that Patch is on the mend, pared down and profitable under a fresh leadership team that includes its new editor in chief, Warren St. John, a former reporter at The New York Times.

"We've eliminated a great deal of corporate bureaucracy from the AOL model," said Charles C. Hale, the owner and founder of Hale Global, which acquired control of Patch. "We're back in start-up mode."

Under AOL, Patch grew into a network of hundreds of sites serving local communities, but it hemorrhaged cash. From the time AOL, a media and ad technology company, acquired it in 2009 to the time it was sold, it lost at least $200 million, according to the company. Hale took over in January, and soon after, only 15 percent of the news staff at Patch was left.

However, the charred remains were not the end of the story, says Hale Global, but the birth of a new, nimble company. In numbers released to The New York Times, the company said it was on track for $21 million in revenue in its first year, and was actually profitable in February, March and April.

The biggest change has come on the advertising side. The hyperlocal concept cannot really live off thousands of ads from pizza parlors and flower shops, as was initially anticipated; such sites need to be a place where national companies can advertise locally. Toward this end, Patch raised the minimum commitment for an ad campaign to $5,000, to weed out mom-and-pop businesses, and won business from Sony Pictures and Wells Fargo Bank.

Attracting impressive advertisers has been possible because despite having cut its staff to 65 journalists and social media people, the company says it has kept 85 percent of its traffic with 17 million unique views in April. The company also says the sites have 2.2 million followers on social media (each of the 906 separate Patch sites has a Facebook site and Twitter account), and two million subscribers to their daily newsletters.

Hale has brought on as editor in chief Mr. St. John, the author of two books. It has also added as advisers Lockhart Steele, the founder of the successful local real estate site Curbed, and Jacob Weisberg, the editor in chief of the Slate Group.

Among other changes, Mr. St. John has ditched Patch's policy of keeping all articles on their local sites and has built a national desk. The desk's aim is to pull the juiciest, funniest stories from the 906 sites and tailor them for a national audience.

While only about 5 percent of articles on Patch sites go to the national desk, these have be the ones to attract the biggest and most viral audiences.

"We've made mistakes and we are still learning," Mr. St. John said, "but we are now already a sustainable business meeting our mission of serving local communities, and you are going to see a lot more hiring and innovation in the future."