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Ozy shuts down after accusations of deceit, as high-profile backers peel away

Ozy CEO Carlos Watson records a TV debate on Oct. 29, 2018, in San Francisco. The digital media company he co-founded and led has shut down following accusations of deceit.
Ozy CEO Carlos Watson records a TV debate on Oct. 29, 2018, in San Francisco. The digital media company he co-founded and led has shut down following accusations of deceit.

The digital media company Ozy has shut down after being buffeted by accusations that it deceptively promoted both itself and its charismatic CEO and co-founder, Carlos Watson.

The Ozy board — no longer led by billionaire Marc Lasry, who resigned as chairman earlier in the week — issued a statement late Friday marking the move.

"At Ozy, we have been blessed with a remarkable team of dedicated staff," the statement from the company's board of directors read. "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."

By that time, the board was constituted simply of Watson and Silicon Valley investor Michael Moe, according to a person with knowledge of the situation. In the days of scrutiny sparked by an expose by The New York Times's Ben Smith earlier this week, the company had refused to confirm who served on its board.

Ozy's closure has the effect of shutting down a thorough review of the company's business practices, commissioned by the board, in the wake of withering journalistic scrutiny.

Among other incidents, someone impersonated a YouTube executive in a conference call meeting with investors from Goldman Sachs. Watson said this week that it was Ozy co-founder and Chief Operating Officer Samir Rao and attributed it to a mental breakdown. Rao has not commented about the events revealed. Google, YouTube's corporate parent, referred the incident to the FBI for investigation of a possible crime related to misleading potential investors.

In a tweet on Monday, Watson called the Times story a "ridiculous hitjob."

Ozy tried to cater to millennials, covering news for a more demographically diverse and politically engaged audience. But it failed to gain traction, even as it made questionable assertions to investors and other news outlets.

This week, the Times and other news outlets vied to find other telling instances of deceit, including wildly inflated digital traffic numbers, and fabricated claims of critical praise for Watson's talk show. This week, A&E dropped Ozy as a partner for a limited-run series when it turned out Ozy executives had lied to television producers it had hired for another show by falsely claiming they were working for an ongoing prime-time series for the network.

Other TV partners backed away. So did investors, including Lasry and the German media giant Axel Springer, an early financial backer. CNBC reported that Watson's boast of getting Ozzy and Sharon Osbourne as investors after a legal dispute was denied by the Osbournes.

Watson sat on NPR's corporate board, beginning in 2016, after a nearly yearlong collaboration between his media outlet and the public broadcaster that included his regular appearances on Weekend All Things Considered. He was elected to start a second, three-year term on the board to begin next month. Instead, Watson resigned on Friday shortly before a meeting called by the governance committee of NPR's board to determine Watson's status.

Disclosure: Because of Carlos Watson's past roles at NPR, no corporate official or news executive reviewed this story before publication. It was reported by NPR media correspondent David Folkenflik and edited by NPR Deputy Managing Editor Jim Kane.

Google is a financial supporter of NPR.

Copyright 2021 NPR. To see more, visit https://www.npr.org.