Ozy Media to shut down after advertisers flee

A billionaire investor has fled startup media company Ozy Media, which has now been forced to shut up shop amid a slew of zany scandals.

Startup media company Ozy Media has confirmed it will shut down after big advertisers put their campaigns on hold.

The move came after Marc Lasry, the digital media startup’s billionaire chairman, resigned amid a slew of bizarre scandals — including surprise allegations from reality star Sharon Osbourne.

“At Ozy, 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,” a statement from its board said, according to the New York Times.

As of Friday evening, the site was still online. There was no immediate indication of when or how it would turn out the lights.

Earlier this week, a New York Times report uncovered that Ozy’s co-founder and COO Samir Rao impersonated a YouTube executive on a call with potential investor Goldman Sachs.

That article and several follow-ups have also claimed that Ozy frequently inflated key business metrics to other investors and even lied to its own employees about business operations.

Ford, Airbnb, Goldman Sachs and Target are among the firms that had earlier pressed pause on their campaigns with the media company, costing Ozy as much as US$5 million ($6.89 million) in revenue, The Wall Street Journal reported on Friday, citing unnamed sources.

Data service PitchBook reports that Ozy had raised more than $83 million (AU$114m) by April 2020 and valued itself at $159 million (AU$218m).

Ford confirmed the news, saying: “We are pausing our advertising while Ozy Media addresses their current business challenges.”

Airbnb, Goldman Sachs and Target did not immediately return requests for comment.

Mr Lasry, who is owner of the Milwaukee Bucks NBA team and CEO of the buyout firm Avenue Capital, resigned on Thursday as Ozy’s chairman after just three weeks on the job.

“I believe that going forward Ozy requires experience in areas like crisis management and investigations, where I do not have particular expertise,” Mr Lasry said.

“For that reason, I have stepped down from the company’s board. I remain an investor in the company and wish it the best going forward.”

Separately on Thursday, reality star Sharon Osbourne said the company’s disgraced co-founder and CEO Carlos Watson falsely claimed that she and her husband, heavy-metal legend Ozzy Osbourne, were investors in the company.

Sharon Osbourne, wife of Ozzy, blasted the company for falsely bringing them into the mix.

Earlier this week, a New York Times report uncovered that Ozy’s co-founder and COO Samir Rao impersonated a YouTube executive on a call with potential investor Goldman Sachs.

That article and several follow-ups have also claimed that Ozy frequently inflated key business metrics to other investors and even lied to its own employees about business operations.

Since then, the FBI has reportedly begun looking into the phone call that alleged Rao pretended to be a YouTube exec in order to drum up investor dollars.

Although Ozy has not publicly released a statement, Watson tweeted on Monday that the Times article was a “hitjob.” He hasn’t tweeted since.

The dust-up with the Osbournes started in 2017 when the couple filed a trademark lawsuit over Ozy Media’s annual concert and festival, which is called Ozy Fest.

For years, The Osbournes had produced the Ozzfest music festival, which featured acts such as Black Sabbath, Tool and Slayer.

“Fun fact: our friend Ozzy and Sharon sued us briefly, and then we decided to be friends and now they’re investors in Ozy,” Mr Watson said on CNBC two years ago.

That was a flat-out lie, according to Osbourne, who spoke to CNBC on Thursday.

“This guy is the biggest shyster I have ever seen in my life,” she said, adding that Mr Watson tried to intimidate her while the lawsuit was being filed, saying that Ozy Media has a slew of resources and could draw out the legal battle so much that the family would be saddled with exorbitant legal fees for years to come.

Ozy Media co-founder and CEO Carlos Watson called an unflattering report by the New York Times a “hitjob” in a tweet earlier this week but has not tweeted since.

The two sides settled after the Osbournes shelled out US$300,000 ($413,363) in legal fees.

The settlement required that Ozy Media submit musical acts and advertisers to Osbourne for approval, so as to make sure there was no overlap.

SV Angel, an early investor in Ozy led by legendary Silicon Valley venture capitalist Ron Conway, surrendered the shares it acquired in the company in 2012, Axios reported.

Separately, veteran journalist Katty Kay, who joined Ozy in May, announced her resignation from the media company after writing on Twitter that she found the allegations to be “deeply troubling.”

Ozy’s board earlier this week announced that it hired a law firm to launch an external investigation “following reports of conduct that is not in keeping with our standards of values”.

The board also said it asked Mr Rao, the COO at the centre of some of the allegations, “to take a leave of absence pending the results of the investigation.”

Yesterday morning I handed in my resignation to Ozy Media. I was looking forward to working with the talented young reporters but I did not expect this! pic.twitter.com/fc5Ii6ifav

— Katty Kay (@KattyKay_) September 29, 2021

However, in the original Times story that sparked the flurry of activity at the media upstart darling, Mr Lasry — then the chairman of the board — said the board was aware of the incident and supported how it was handled.

“The board was made aware of the incident, and we fully support the way it was handled,” he was quoted as saying.

“The incident was an unfortunate one-time event, and Carlos and his team showed the kind of compassion we would all want if any of us faced a difficult situation in our own lives.

-- with Will Feuer and Alexandra Steigrad, New York Post