In fairness to our local Patch brethren, it has to be said that they did perform a valuable service during the recent City Council elections here. By providing a platform for the candidates to explain their positions on the key issues facing Sierra Madre, and in their own words, they did help people to understand where those running were coming from. And a couple of these "blog posts" did connect. The best example being John Capoccia's posts in opposition to the two UUT Measures, a perspective that he introduced to the campaign first. A message that not only led to the most significant power shift on the Sierra Madre Council since 2006, it also helped contribute to the overwhelming defeat of the two Measures themselves.
However, Patch's reporting of our election was hardly perfect, with their remaining coverage focusing on little more than a series of three on-line polls accompanied by acerbic and anonymous reader comments. This apparently was chosen as a way to involve their audience in lieu of offering any actual editorial exploration of the issues or personalities involved in the race. It was almost as if they were attempting to maintain a sanitary distance from the ruck and roil of actual politics, done out of a concern over possibly offending their core audience. Readers who don't know very much and find politics to be confusing, intimidating, and therefore off-putting. People who can't handle anything in the way of actual ideas.
But I digress. Lately the world of AOL Patch has been roiled by a number of contentious things, and I thought we would point a few of them out to you. AOL's current CEO, Tim Armstrong, is today facing a significant challenge from an activist hedge fund calling itself Starboard Value. And one of the key issues involved is the continued existence of AOL's major loss leader, Patch. Armstrong's continued support of these 800 cookie cutter sites being one of the major reasons why Starboard Value passionately desires to boot him out of his corner office.
The consistent impression in the business media has been that should Armstrong lose in his struggle with investors and stockholders to survive there, Patch would quickly join him as being a thing of the past.
So here are 3 articles from various places around the internet that highlight all the excitement surrounding the woe at AOL, and Patch.
Top AOL Patch Editor Jumps Ship (TR Online.com - click here): In business, you will find the captain never goes down with the ship. Nor do the first mates, deck crew or engine room workers. In fact, in business, it's quite the opposite. Nobody wants their career tied to a titanic of a disaster, because it hurts you down the line when applying for a new job or seeking venture capital funding for your next start up. It's usually the passengers who go down with the sinking ships in business, and a good sign of a sinking ship is counting how many officers and crew are jumping off the boat and how fast they are following each other.
The AOL Patch exodus continued this week as Brian Farnham, employee #4 and Patch Chief Editor, became the latest in a long line of Patch execs jumping from the prow of the sinking AOL media initiative. Farnham's departure comes in the midst of a potential AOL board of directors take over attempt by a major shareholder, Starboard Value, who said recently that the company's sale of patents was not enough to stave off their inevitable grab for power. Starboard has recently expressed frustration over the company's roughly $160 million loss in Patch in 2011.
Patch has been met with wide criticism in the media, both local and national, because of its bland blend of free bloggers and freelance writers featuring a mediocre brand of hyperlocal news blogging.
You've Got Patents, AOL's Desperate Move (The New Yorker - click here): This morning AOL announced that it would sell or license about eleven hundred patents to Microsoft, in return for a billion dollars and change. Much of that money, AOL proclaims, will be passed to shareholders. The move is roughly akin to Warren Sapp selling off his massive collection of Air Jordans, or Jean Dujardin auctioning off his furniture in "The Artist." Times are tough for AOL, and cranky collectors are banging at the door.
As Ken Auletta explained last year in a terrific profile of Tim Armstrong, the CEO of AOL, the company has long been buoyed by the incredible fact that there are still lots of people who send in monthly checks, unaware that they no longer need AOL to connect to the Internet. Gradually, these people are dying off, or, with the help of their grandkids, figuring things out. AOL has known for a long time that it needs to find new revenue streams, but has done so slowly. Activist shareholders have started complaining, and now, it seems, Armstrong has bought them off.
AOL Patent Deal Does Not Appease Starboard (New York Times/Deal Book - click here): AOL will need more than a billion-dollar patent sale to quell the ire of one of its largest stockholders.
Starboard Value, a money manager that owns a 5.3 stake in AOL's stock, sent a letter to the Internet company's board on Tuesday, to congratulate the directors on the patent sale - and to warn them of a coming proxy fight.
In the letter, Starboard described AOL's nearly $1.1 billion sale of 800 patents to Microsoft as a "big first step towards realizing the full value of AOL," but said the transaction did little to address AOL's real problems, like its ailing display business and its poor track record with acquisitions and investments.
In its long list of concerns, Starboard reserved special venom for Patch, the local news service AOL bought in 2009. Although the acquisition itself was small (about $7 million), AOL has since sunk millions into the project. According to Starboard estimates, the company is losing about $150 million per year on Patch. "We remain concerned that shareholder capital will continue to be used for poorly conceived acquisitions and investments into money-losing initiatives like Patch and other display properties," Starboard said in the letter.
Things just aren't getting any easier for AOL Patch, it seems.