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Ozy Media CEO Carlos Watson says company will not shut down after all

The chief executive of Ozy Media on Monday called the company's announcement last week that it was shutting down "premature." The CEO, Carlos Watson, said the company would continue to operate following meetings with advertisers and investors.

"We have something special here," Watson told CNBC on Monday morning.

On Friday, the board of directors of Ozy emailed a statement saying the company was ceasing operations less than a week after a New York Times column raised questions about the media organization's claims of millions of viewers and readers, while also pointing out a potential case of securities fraud. The company had 75 employees, according to Axios.

Ozy, which launched in 2013, had touted "being ahead of the curve" and "never [telling] a story that another national or international publication has already covered." But with Ozy at the center of the New York Times' reporting, the story triggered canceled shows, an internal investigation, investor concern and high-level departures. 

Watson on Monday described the events as "our Lazarus moment."

"We have lots of things we have to do to improve, but I very genuinely feel like we have a meaningful, transformational voice," he added.

Impersonating a YouTube executive?

The Times story said Ozy's chief operating officer and co-founder, Samir Rao, impersonated a YouTube executive on a call with Goldman Sachs while attempting to raise money from the investment bank. Regarding that call, Watson said: "I don't know. I wasn't there." He then went on to say that they eventually "figured out what happened," but did not explain further.

"Look — it's heartbreaking, it's wrong, it's not good, it's not OK," said Watson, a former investment banker. "I love Goldman, I worked there, I've got a lot of friends there."

Mountain View, California-based Ozy has long been accused of inflating its audience size. Watson claimed last week that Ozy had 25 million subscribers to its newsletters and 30 million YouTube views. The New York Times, with a much bigger brand presence, says it has 15 million newsletter readers, and it reported that fewer than 500,000 people went to Ozy's website in June and July, citing Comscore data.

Marc Lasry's resignation

On Thursday, Marc Lasry, the hedge fund billionaire and Milwaukee Bucks co-owner who had been named Ozy's chairman in September, resigned, citing Ozy's need for someone experienced in crisis management and investigations. He said he remained an investor.

A high-profile employee, former BBC anchor Katty Kay, resigned earlier in the week, and an early investor, a venture capital firm, gave up its Ozy shares. The board had reportedly hired a law firm to review Ozy's business activities.

Cable network A&E pulled a special on mental health hosted by Watson that was scheduled for Monday night, and Watson stepped down from hosting a documentary Emmys awards show Wednesday night.

Even with all that took place last week, Watson said Monday the company would move forward with the confidence of investors and advertisers.

"I very genuinely feel like we have a meaningful, important voice in what is maybe the most transformative decade in a half century," Watson said. "And I want Ozy to be around and be a part of it."

The website Crunchbase, which tracks corporate fund-raising, said Ozy had raised more than $70 million from investors as of late 2019.

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