US media firm Ozy Media has announced that it is to close down amid a growing row over its business practices.
“It is with heavy hearts that we must announce today that Ozy’s doors are closing,” the company said in a statement.
It comes after reports that Ozy’s COO deceived potential investors during a conference call and is now being investigated by the FBI.
Following that, some major advertisers severed ties with the company.
Marc Lasry, the chairman of Ozy, and ex-BBC journalist Katty Kay have also resigned.
In another twist, Sharon Osborne, the wife of rock star Ozzy Osbourne, claimed that the firm’s CEO, Carlos Watson, falsely claimed the couple had invested in the company.
Mr Watson made the claims in a TV interview with broadcaster CNBC in 2019 after settling a trademark dispute with the couple.
Ms Osbourne told CNBC on Thursday: “This guy is the biggest shyster I have ever seen in my life.”
Neither Mr Watson nor Ozy Media has commented publicly on the claims.
These allegations are outrageous, almost unbelievable, and are part of a toxic corporate culture that exists in parts of Silicon Valley.
It is common in this industry to exaggerate your company’s size, innovation, success, and connectivity. It is regarded as “hustle” or “hype.”
However, “fake it till you make it,” as it’s sometimes referred to, has resulted in some of Silicon Valley’s biggest scandals.
Theranos’ CEO and founder is currently on trial in San Jose, accused of a spectacular blood-testing fraud.
Most businesses sell a dream that will be realised one day. It is the reason we have computers and smartphones. However, there are numerous examples of businesses going too far.
Some of the allegations levelled against Ozy Media are fairly common in Silicon Valley.
Overstating the popularity of your content is a genre staple, and many businesses have been accused of it.
But there are some allegations here that are simply unbelievable, and if true, could lead to legal action.
It’s the type of storey that will frighten investors, who are constantly fighting to separate the frauds from the visionaries.
‘Mental health crisis’
Ozy Media, which was founded in California in 2013, produces left-wing podcasts, television shows, and events and has won an Emmy for its efforts.
The New York Times reported last weekend that its co-founder and chief operating officer, Samir Rao, impersonated a senior YouTube executive during a conference call with Goldman Sachs in February. The investment bank was considering a $40 million investment in the media company at the time.
Mr Rao allegedly stated that Ozy’s videos were extremely popular on YouTube.
According to the New York Times, the investors realised something was wrong and decided not to proceed with the transaction. Mr Watson has since apologised, claiming that Mr Rao was in the midst of a “mental health crisis” at the time.
Nonetheless, in the face of mounting scrutiny, Ozy announced this week that it had launched an internal investigation and that Mr Rao had taken a leave of absence.
Mr. Lasry, who owns the NBA basketball team the Milwaukee Bucks, stepped down as chairman on Thursday after only three weeks in the position.
“I believe that going forward, Ozy requires experience in areas such as crisis management and investigations, where I do not have particular expertise,” he said in a statement.
He also stated that he is still an investor in Ozy Media.
On the same day, major advertisers were reported to be cancelling their Ozy ad campaigns.
Target, Goldman Sachs, and AirBnB did not respond immediately to requests for comment. However, Ford stated, “We are pausing our advertising while Ozy Media addresses their current business challenges,” and Ally Financial, a US banking services firm, stated that its relationship with Ozy was on hold “in light of recent developments.”
Ms Kay announced on Wednesday that she had “no choice” but to sever ties, calling the New York Times’ allegations “deeply troubling.” After more than three decades at the BBC, the veteran broadcaster joined Ozy in June.
On Friday, the Times published fresh claims about Ozy made by a former producer, Brad Bessey.
Mr Bessey, who was hired this summer to produce a talk show hosted by Carlos Watson, was reportedly told from the start that it would air on the US cable network A&E in a prime time slot.
However, he later discovered that A&E had rejected the show before it began filming, according to the New York Times. Mr Bessey is said to have left the firm, accusing Mr Watson and Mr Rao of playing “a dangerous game with the truth.”
Finally, “The Carlos Watson Show” aired on Ozy’s website and on YouTube.
The BBC has contacted Ozy Media for comment.