AOL is eliminating about 500 positions at its struggling Patch local-news business, or close to half of the division's more than 1,000 employees, according to a person with knowledge of the decision.

About 350 people lost their jobs Friday, and roughly 150 will be asked to stay for 60 more days as the company seeks partners for some of the 900 Patch sites, said the person, who asked not to be identified because the matter is confidential. Chief Executive Officer Tim Armstrong, who apologized this week for firing a staff member in front of colleagues, announced the job cuts this morning to Patch workers.

Image from AOL.
Image from AOL.

Armstrong, who has said he aims to make Patch profitable by the end of the year, told the staff last week that 400 sites would close down or look for partners, such as other local-news publishers. Today, Armstrong told employees the company may shutter as many as 20 percent of the Patch sites, with another 20 percent destined for partnerships or consolidation, the person said.

Patch, which covers school-board meetings, local businesses and other neighborhood stories, has been a costly part of AOL's strategy to transform the dial-up provider into an advertising- driven content publisher. The company has spent more than $300 million developing the sites, which serve communities and neighborhoods across the country.

"Patch's strategy will be to focus resources against core sites and partner in sites that need additional resources," AOL said today in an e-mailed statement. "The Patch team across the country has served and will continue to serve communities with journalism and technology platforms."

Armstrong apologized to AOL employees last week for the way he fired Abel Lenz, a creative director at Patch, in front of a room full of employees, as well as a thousand others who were listening in on a conference call. Lenz's ouster became public fodder after an audio recording of the meeting leaked out and appeared on the website of Jim Romenesko, a media blogger.

Earlier in the week, Armstrong replaced Patch's top executive, Steven Kalin, with Bud Rosenthal.

While the division more than doubled its sales last year to just under $35 million, Patch's annual costs range from $126 million to $162 million. The job eliminations will cost AOL $14 million to $18 million, the company said today in a filing.