AOL To Pour $50 Million Into Patch This Year

Yesterday brought the news that AOL sold, the affiliate marketing network it bought in early 2008, to UK network Digital Window. AOL acquired for a rumored $125 million two years ago. Today, AOL filed a 10-K report that revealed that AOL only sold for $17 million, taking a hit of a whopping $108 million.

Another fascinating tidbit in the filing is related to hyperlocal news site Patch. Patch, which currently offers hyperlocal news for 37 small towns and communities in New York, New Jersey, Massachusetts, Connecticut and California, was acquired by AOL in June of last year. According the the 10-K, AOL plans to invest up to $50 million in hyperlocal news site Patch during the remainder of 2010. And it’s been reported that Patch will roll out to “hundreds” of communities in the future.

According to the filing, Patch was bought by AOL for $7.0 million in cash. AOL’s CEO Tim Armstrong, had previously invested $4.5 million in Patch back in his Google days via his private investment firm Polar Capital. Armstrong waived his right to receive any money beyond his initial investment back from the investment, accepting the return of his capital in AOL common stock. Armstrong then returned the $4.5 million back to Polar Capital in the form of AOL shares.

We know that Armstrong is not only bullish on niche content but is also looking for AOL to become a content powerhouse. The company has even developed its own CMS, Seed, which is a content machine that aims to redefine journalism. And AOL just bought internet video company StudioNow, which was integrated into Seed, to boost its video content on editorial sites.