Ozy Media, Once a Darling of Investors, Shuts Down in a Swift Unraveling

Ozy Media, the digital media company that came under intense scrutiny for its business practices in recent days, announced on Friday that it was shutting down, following a sudden flight of investors and advertisers and bringing to a close a strange chapter in the annals of online journalism.

It was a precipitous fall for a company that was once a darling of Silicon Valley investors who believed in the vision of its leader, the former MSNBC anchor Carlos Watson. Mr. Watson had aimed to create a sparkling multiplatform media company that would appeal to a diverse generation of younger readers looking for the kind of content not provided by establishment news organizations.

When the end came, it came swiftly, five days after The New York Times published an article that raised questions about the company and its leadership team. The report detailed an episode in which a top executive at Ozy appeared to have impersonated a YouTube executive during a conference call with Goldman Sachs bankers in February while the company was trying to raise $40 million.

In a statement on Friday, the company’s board of directors praised the “dedicated staff” of “world-class journalists,” adding, “It is therefore with the heaviest of hearts that we must announce today that we are closing Ozy’s doors.”

The abrupt collapse riveted media observers not because Ozy had a large number of loyal readers — that, in the end, was the problem — but because many had wondered how the company had managed to survive. The answer had to do with a charismatic and relentless founder, a great story and a slick brand that was perfectly tuned to appeal to noted Silicon Valley investors and powerful advertising executives.

Its founder, Mr. Watson, was an investment banker who dreamed of having his own talk show. When that eluded him, after a brief stint in 2009 as a host on MSNBC, he built a media company in his own image as a politically moderate, upwardly mobile son of teachers, one who had gotten degrees at Harvard and Stanford and worked at Goldman Sachs.