About 500 of the more than 1,100 employees of Patch's local news operation could be terminated before the process is completed, the newspaper said.
Patch staff learned the ax was about to fall last week at an employee meeting where AOL Chief Executive Officer Tim Armstrong publicly fired one worker who was video recording the session.
AOL said in a written statement Friday 150 of the 900 individual Patch sites would be closed and partnerships were being sought for 150 others.
"Patch's strategy will be to focus resources against core sites and partner in sites that need additional resources," the statement said. "Additionally, there are sites that we will be consolidating or closing."
Patch had 11 million unique visits in July, which is about the same number as July 2012. While operating costs have been dramatically reduced in the past year, Armstrong informed analysts last week the unit had missed its 2012 revenue target of $40 million, the Journal said.