New York Times media columnist Ben Smith dropped a bomb Sunday night by revealing how “disruptive” news start-up Ozy Media—one that bills itself as “the New and the Next”—looked more like a digital Potemkin village sold to Silicon Valley investors. In February, according to Smith’s column, Ozy’s cofounder Samir Rao altered his voice and created a fake email address to apparently impersonate a YouTube executive during a call with Ozy CEO Carlos Watson and the asset-management division of Goldman Sachs, which was looking to pump $40 million into the company. While the meeting was arranged as a Zoom videoconference, Rao, who claimed to be YouTube Originals’ head of unscripted programming, asked attendees to switch to a non-video call. Once everyone had switched over to audio-only, according to the Times, Rao made claims about the impressive traffic numbers that Ozy’s content was enjoying on YouTube.
Watson blamed his partner’s apparent attempt to defraud investors on “a very personal mental health issue.” Rao, he told Smith, “is a valued colleague and a close friend” and “I’m proud that we stood by him while he struggled, and we’re all glad to see him now thriving again.” On Tuesday, Ozy’s board of directors announced the hiring of an outside firm, Paul, Weiss, Rifkind, Wharton and Garrison, to review its “business activities,” while also noting that Rao will “take a leave of absence pending the results of the investigation. We will continue to review the company’s leadership in the coming months.”
Even in an industry where digital metrics are seized upon for maximum hype, Ozy seems to have taken self-promotion to another level. The company is now facing serious scrutiny over claims about its audience and influence, with the Daily Beast reporting that the deception reported Sunday “is just one of several times the outlet has appeared to engage in misleading or exaggerating tactics.” (Ozy and Watson did not respond to the Daily Beast’s request for comment.) Watson, the public face of Ozy, is facing a swift fallout since the Times column dropped. On Monday, A&E cable network canceled the broadcast of Watson’s program, Voices Magnified: Youth Digital Crisis, and organizers of the Emmy Awards for news and documentaries announced Wednesday that the Ozy chief would no longer host. “Carlos Watson has graciously reached out to us and asked to be removed from his hosting duties…so as not to distract the focus from the talented nominees,” an Emmys spokesperson said in a statement. And NPR, where Watson has sat on the board since 2016, is looking into the matter. “Our board is aware of the NYT story,” the network said Wednesday, “and consistent with our corporate governance, the governance committee will be considering these developments.”
Marc Lasry, a member of Ozy’s board, hedge fund manager, and a co-owner of the Milwaukee Bucks, responded to the Times report by saying, “The board was made aware of the incident, and we fully support the way it was handled. 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.” And while Goldman Sachs is the seeming victim of what could be possibly construed as attempted securities fraud, the investment firm has yet to take legal action against Ozy. Though, Google’s security division did look into the incident further and the YouTube parent company eventually alerted the FBI, according to two sources who spoke to the Times. (The FBI will not confirm or deny the existence of any investigation.) Goldman Sachs has since been contacted by federal law enforcement officials, but investigators have not reached out to Ozy, per Watson.
Meanwhile, former BBC anchor Katty Kay, one of Ozy’s most high-profile stars, announced her decision to leave the company on Wednesday. “I had recently joined the company after my long career at the BBC, excited to explore opportunities in the digital space,” Kay wrote in a Twitter statement. “I support the mission to bring diverse stories and voices to the public conversation. But 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.”
— An Exeter Teacher Was Punished for Sexual Misconduct. The Student Says It Never Happened
— Surprise: Ivanka, Eric, and Donald Trump Jr. Are Still Mooching Off U.S. Taxpayers
— Florida Governor Celebrates Ban on School Mask Mandates as More Kids Die From COVID
— Billionaire Leon Black Allegedly Raped a Woman in Epstein’s New York Mansion
— Trump Is Reportedly “Laying the Groundwork” for a 2024 Run
— A Photographer Reckons With Her Family’s Trump Adoration
— Biden’s COVID Vaccination Strategy Triggers Full-Scale Republican Meltdown
— The Right’s War on COVID Vaccine Mandates Is About to Get Scary
— From the Archive: Martin Shkreli’s Poison Pill
— Not a subscriber? Join Vanity Fair to receive full access to VF.com and the complete online archive now.