(Reuters) - AOL Inc said on Friday that it would cut a substantial number of jobs at its money-losing Patch local news site business, and a source close to the company said about half of the staff of 1,000 was being laid off.
Job cuts will reduce 10 percent of AOL's workforce, the company said in a regulatory filing late on Friday. (r.reuters.com/bez42v)
AOL had 5,600 employees at the end of 2012, according to a February regulatory filing.
The company said on Friday that it expects to incur charges of $14 million-$18 million this year related to the job cuts.
The company said it would consolidate or close some Patch sites to cut costs and partner with other media companies in some locations. It did not say which media companies it was speaking to or reveal which sites it would be shutting down. It expects to keep most of the traffic to the network of websites.
AOL has been trying to build the company into a media and entertainment destination dependent on advertising since Chief Executive Tim Armstrong took charge in 2009.
One of his biggest bets includes Patch, a group of local websites dotted throughout the United States that has cost the company roughly $150 million.
Armstrong has met with the AOL board to discuss cost reductions at Patch to reach the goal of turning the unit profitable this year.
Patch has 3.5 million newsletter subscribers and 4.7 million registered users and is growing quickly, the company said.
Earlier this week, Armstrong said he made a mistake in publicly firing an employee on Aug 9.
A recording had been leaked to the media in which Armstrong is heard firing Abel Lenz, a creative director at AOL’s Patch unit, after he tells Lenz to put down his camera. Lenz remains fired, the company has said.
Additional reporting by Neha Alawadhi and Lehar Maan in Bangalore; Editing by Leslie Adler and Joyjeet Das