NEW YORK (AP) — AOL is handing over operations of its troubled local-news business, Patch.
The Internet company has created a joint venture with investment firm Hale Global, which specializes in turning companies around, to run Patch.
Under the agreement announced Wednesday, Patch will be operated and majority owned by Hale Global. AOL will keep a minority interest in Patch.
AOL Inc. CEO Tim Armstrong co-founded Patch, an ambitious experiment in community news meant to compete with newspapers, in 2007. AOL bought it in 2009 after Armstrong came on board.
But the division ran into problems, and was a financial drag on AOL. The New York-based company said last year that it would lay off half of Patch's staff to cut the division's losses. It closed down about a third of Patch's community websites, leaving it with 900.
In its most recent quarter, AOL took a $25 million charge on Patch.
AOL and Hale Global said they are committed to re-launching Patch as a platform for users to share local news and content. Hale Global intends to keep the remaining 900 sites running.
The companies anticipate closing the joint venture deal early in the first quarter. Financial terms of the transaction were not disclosed.
Shares of AOL added 2.1 percent to $48.25 in after-hours trading. Its stock fell 60 cents to close regular trading at $47.25.