AOL Expands Local News Network in U.S.

AOL Inc is expanding its local news network, Patch, with the launch of 33 sites in targeted states as the United States gears up for a national election.

The Patch sites are rolling out in communities in New Hampshire, Iowa and South Carolina -- key states that play an early role in the U.S. presidential election.

AOL plans to hire approximately 50 employees to staff up the new hyperlocal sites as part of a broad expansion of its editorial operations following the $315 million purchase of the Huffington Post in February.

Hyperlocal sites focus on specialized topics, including issues of interest only to people in a well-defined community-sized area.

The additional Patches bring the total number in the network to 837 located in more than 20 states and Washington D.C.

"(It is) a way for us to leverage this great network to bring in real-time news," said Arianna Huffington, president and editor-in-chief of the Huffington Post Media Group. "All voices will be welcomed and encouraged if they clear the quality bar -- it's not a free-for-all."

Huffington spoke ahead of the Reuters Global Technology Summit, where she and AOL's CEO, Tim Armstrong, were expected to speak later on Monday.

AOL is making a significant bet on Patch to help transform the company into a media and entertainment powerhouse.

Patch was founded by AOL's Armstrong in 2007 when he was serving as president of the Americas at Google Inc. In a story that Armstrong repeats at industry conferences, the idea of Patch came to him when he could not find local volunteer opportunities for his family one weekend.

Armstrong was appointed chief executive of AOL in April 2009 and under his watch the company bought Patch in June 2009.

The hyperlocal network is one of the key components that AOL is depending on to boost revenue. In the first quarter, AOL reported that total revenue fell 17 percent on an 11 percent decline in advertising revenue.

Though for the first time in three years, display advertising revenue -- big splashy units that appear on Web pages -- increased 4 percent.

AOL spent $70 million in 2010 expanding Patch and plans to spend $160 million, or $40 million per quarter, in 2011.

So far, Patch has been unprofitable but AOL expects to see some Patch in the black by the end of this year.