Ozy Media shuts down after allegations of misleading business practises
US digital media company Ozy Media has announced that it was shutting down following allegations of misleading business practices.
Earlier this week, an explosive New York Times story provoked cancelled shows, an internal investigation, investor concerns and high-level departures at the company.
The report set out allegations that a top executive at Ozy had impersonated a YouTube executive during a Zoom conference call with Goldman Sachs bankers in February while the company was trying to raise a further $40m.
The company was also accused of inflating its monthly unique visitors by buying traffic to build its email lists.
The decision to shut down the operations was taken on Friday, five days after the publication of the initial report.
In a statement, the company’s board of directors said: “We have been blessed with a remarkable team of dedicated staff. Many of them are world-class journalists and experienced professionals to whom we owe tremendous gratitude, and who are wonderful colleagues.
“It is therefore with the heaviest of hearts that we must announce today that we are closing Ozy’s doors.”
Ozy’s founder, Carlos Watson, had a stint in 2009 as a host on MSNBC and had sought to build a media company in his own image. Mr Watson said he wanted to create a media company that would reach out to a diverse generation of younger readers, looking for the kind of content not provided by established news organisations.
He had dismissed the New York Times piece as a “ridiculous hitjob” and attempted to refute some of its claims. However, the business had been stung by the allegations.
The light shed on the business practices saw former British broadcaster anchor Katty Kay, who had joined Ozy this year after nearly three decades at the BBC, hand in her resignation.
She wrote on Twitter: “The allegations in The New York Times, which caught me by surprise, are serious and deeply troubling and I had no choice but to end my relationship with the company.”
Executive producer Brad Bessey and TV writer Heidi Clements also spoke out, alleging Ozy executives had misled them by suggesting YouTube show The Carlos Watson Show would appear on the cable network A&E.
On Thursday, amid the fallout, Marc Lasry, resigned as chair of the Ozy board. Mr Lasry said: “I believe that going forward Ozy requires experience in areas like crisis management and investigations, where I do not have particular expertise.”
Mr Watson, as well as Goldman alumnus and partner Samir Rao, raised more than $80m from some of the biggest names in finance, according to The New York Times. They were backed by investors including Emerson Collective and Marc Lasry.
Ron Conway, a Silicon Valley investor and backed the media company very early on, said he had returned his shares to the company.
The company accounted for around 75 employees, mostly journalists. They have produced articles, videos, podcasts and newsletters on a range of topics. Ozy’s founder starred in most of the videos and television shows, appearing in conversation with politicians and pop culture celebrities.
This week, the media company witnessed a line of advertisers backing out including Chevrolet, Walmart, Facebook, Target and Goldman Sachs itself, as questions were raised about the company’s claimed audience size for its online videos and website.
Pooja Bhatia, a writer who worked at Ozy from 2013 until 2017, said in an interview after hearing the news: “It’s heartbreaking for all the people who poured their hearts and souls into this company and produced journalism often under gruelling, sometimes hostile conditions that deserved a much wider audience.”
Another reporter who left in June, Nick Fouriezos said: “We were all devastated by the amount of deception that was going on by leadership, but I would stand 100 per cent by the journalism that was done there, and the people that were working there were some of the most passionate hardworking journalists anywhere.”
He added that reporters were archiving their work in fear of the website being taken offline.