Ozy Media, the embattled digital news media outlet, is not shutting down after all, CEO Carlos Watson said on Monday (Oct. 4).
Just three days before, Watson reportedly told employees the board had voted to cease company operations, after revelations that an Ozy co-founder allegedly impersonated a YouTube executive on an investor call with Goldman Sachs, prompting an FBI investigation, and that leadership had been dishonest about readership numbers as well as projects with partners such as A&E.
But on Oct. 4, Watson made the rounds on several morning news shows, saying he had been misled by crisis communications counselors who recommended he stay silent on the matter.
“We were premature,” he told CNBC’s Squawk Box. “This is our Lazarus moment, if you will, this is our Tylenol moment,” he said in another interview with the NBC morning news show TODAY.
He didn’t, however, offer any specific details as to how Ozy would climb back from last week’s news. He cited the digital media company’s newsletter, television, and podcast offerings as evidence that it remained healthy. Ozy launched in 2013 as a general interest news site and has attracted high-profile speakers over the years through events like Ozy Fest.
Ozy faces a major PR crisis
Watson’s Lazarus analogy indicates he remains hopeful—Lazarus of Bethany did rise from the dead after four days, after all. But the executive also recognized the company is facing a major PR crisis, akin to what Tylenol had to deal with after its brand was linked to the deaths of seven people.
The so-called “Tylenol murders” occurred when Chicago-area residents took capsules laced with cyanide in 1982. Tylenol’s parent company, Johnson & Johnson, spent more than $100 million to recall and relaunch the product and was lauded for its management of the crisis. The company’s stock did not suffer in the long term.
As NPR media critic David Folkenflik pointed out, Ozy faces a different set of challenges than J&J did. Whereas the Tylenol deaths were an “externally inflicted” crisis, Ozy’s issues stem from within the company.
Can Ozy survive?
The future of Ozy is not looking good even as Watson tries to save face. One of the company’s most visible journalists, Katty Kay, resigned from Ozy on Sept. 29. Marc Lasry, who had been chairman of Ozy Media for just three weeks, resigned the following day. (He now faces a separate PR crisis, as he’s a major investor in an energy firm responsible for an oil spill off California’s Orange County beaches).
In addition to losing investors and talent, Ozy is likely to rack up serious legal charges in the coming months. It’s being investigated by the FBI over the fake Goldman Sachs call, which was first reported by the New York Times. That report also triggered a board-mandated review by an outside law firm, which is looking into the outlet’s business practices. Additionally, it’s unclear whether the company has enough cash to hang on much longer—Watson has been mum about a Series D funding round that reportedly took place earlier this year.