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OZY Media CEO says he will not shut down the company

RACHEL MARTIN, HOST:

Ozy Media's chief executive, Carlos Watson, said Monday he would not shut down his company, which is a total 180 from a few days ago, when Ozy said it would close its doors because of a fraud scandal. Ozy's CEO was also a member of NPR's board of directors until recently. NPR's David Folkenflik spoke to Watson, and he brings us the story.

DAVID FOLKENFLIK, BYLINE: Carlos Watson made the rounds yesterday on NBC's "Today" show...

(SOUNDBITE OF TV SHOW, "TODAY")

CARLOS WATSON: So we're making news today. This is our Lazarus moment, if you will.

FOLKENFLIK: ...On CNBC...

(SOUNDBITE OF ARCHIVED RECORDING)

WATSON: This is going to be hard, but at our best, this will be our Lazarus moment.

FOLKENFLIK: ...And in an interview with me.

WATSON: I hope this will be our Lazarus moment.

FOLKENFLIK: The New Testament figure of Lazarus, of course, was brought back from the dead. Ozy was born in 2013, promising an antidote to the cynical and the dour, promising advertisers a younger and more diverse demographic, built to a significant degree around Watson.

WATSON: How different might the world be if, instead of Rupert Murdoch helping set the agenda or - and I mean this respectfully - or Mark Zuckerberg or Jack Dorsey - how different would it be if someone who grew up, you know, Black and working class in Miami was a part of that?

FOLKENFLIK: After Miami, Watson's resume includes Harvard, Stanford Law, Goldman Sachs and MSNBC. His vision drew billionaire investors, yet no major audience ever materialized, at least not in a quantifiable way. And Ozy was left for dead last week after The New York Times reported its business model was based on deception - deception about size of its digital traffic, its newsletter subscribers, most notably the impersonation of a YouTube executive touting Ozy to potential Goldman Sachs investors. On Sunday, The Times's Ben Smith told CNN viewers that Ozy's leaders...

(SOUNDBITE OF ARCHIVED RECORDING)

BEN SMITH: ...Lied to their employees, lied to advertisers, and is certainly an order of magnitude beyond the kind of puffery that, you know, is totally common in media.

WATSON: What happened with Goldman Sachs was wrong and, you know, heartbreaking on so many different levels.

FOLKENFLIK: Watson says the company's chief operating officer, Samir Rao, had an emotional breakdown and pretended to be the YouTube executive. That sparked a complaint to the FBI, though Watson in evidence Monday was contrite, reflective and despite everything optimistic.

WATSON: I think Ozy was having its best year ever. I think Ozy was on the edge of breaking out, and what began last Sunday was incredibly tumultuous and difficult and nearly brought Ozy down.

FOLKENFLIK: Some deceptions were blatant. There were claims of lavish praise from The Los Angeles Times and others that came from Ozy's own paid promotional materials.

WATSON: Our zeal to get that and not just be subject to the vagaries of, you know, clickbait and crazy algorithms caused us to be too aggressive on the marketing side, and I really regret that. It's embarrassing now when I look at it.

FOLKENFLIK: On Friday, Watson resigned from NPR's board of directors, and Ozy's board commissioned a law firm to review Ozy's business practices. Watson says he's not sure now that that review will still happen. Investors and editors peeled away. Who replaced them? Who's investing in Ozy now? Who still works for Ozy? Watson says he's figuring all that out.

WATSON: I'm hopeful that Ozy is about to learn from some of our mistakes and get better and maybe even get more innovative and continue to be the kind of media group that tells really forward-looking stories, maybe from people you don't always hear from.

FOLKENFLIK: Watson says Ozy will build back stronger. David Folkenflik, NPR News.

(SOUNDBITE OF YPPAH'S "SHOT INTO THE SUN") Transcript provided by NPR, Copyright NPR.

David Folkenflik was described by Geraldo Rivera of Fox News as "a really weak-kneed, backstabbing, sweaty-palmed reporter." Others have been kinder. The Columbia Journalism Review, for example, once gave him a "laurel" for reporting that immediately led the U.S. military to institute safety measures for journalists in Baghdad.

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