Ozy Media Scandal Proves Strong Enough to Shutter Company for Now

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Oct. 4 2021, Published 11:33 a.m. ET

This time last year, Ozy Media was killing it. However, much like the Theranos scandal that's coming full circle in the Elizabeth Holmes trial, Ozy was faking it in order to make it.

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And make it Ozy Media did, but when it was on a call with investment bank Goldman Sachs, everything fell to pieces. Now, the Ozy Media scandal has proven strong enough to close the company—for now.

What set the fire for Ozy Media?

During a call with Goldman Sachs, a then-potential investor in Ozy Media, co-founder and COO Samir Rao impersonated a YouTube executive to sweet talk investors into injecting $30 million in funding.

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The meeting was supposed to be a video call. However, at the time of the meeting, the disguised Rao insisted on a conference call so he could cover up his facade.

Rao was pretending to be Alex Piper, the head of unscripted programming for YouTube Originals. Piper reports never being a part of the meeting.

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The Ozy Media scandal from a wider lens

Since 2013, Ozy Media has been taking the online and broadcast journalism world by storm. Co-founder Carlos Watson positioned himself as the face of the company. Connections to strong names like Oprah Winfrey and Katty Kay helped propel the brand.

Ever since the phone call incident, disturbing details about Ozy's business practices have come to light. The company has been inflating metrics like website traffic, newsletter subscribers, and TV show distribution in order to garner attention. In 2019, the company was planning to launch Ozy Fest in Central Park, but the event was reportedly overhyped and poised to be a disaster. Fortunately for Ozy Media, a heat wave canceled the event and the company received insurance money.

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Since then, numerous Ozy executives and employees have resigned, including broadcast journalist Katty Kay, who left the BBC for a job with Ozy. Ozy chairman and hedge fund billionaire Marc Lasry stepped down. Co-founder and CEO Watson was on the NPR corporate board, but has since resigned.

Following the multi-faceted scandal, Ozy is closed

Currently, Ozy is under an FBI investigation. The law firm of Paul, Weiss, Rifkin, Wharton, and Garrison will represent Ozy moving forward. Ozy closed its operations on Oct. 1 after the board voted to shutter operations for the time being. No details have emerged about the state of the entity moving forward.

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Will Ozy Media reopen?

Watson, still CEO of Ozy, says that the company will reopen. However, that reality isn't entirely up to the team itself. With an FBI investigation and a smeared reputation, it would take a total overhaul for Ozy to gain the trust of investors and audiences across the world—if it's even possible at all.

Many companies blur the line between fact and fiction, as evidenced by the mere existence of adjusted EBITDAs in public companies' financial reports. As the world watches Ozy crumble, potentially once and for all, it becomes clear that some companies take that blurring too far.

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