Allen Media Files $10B Racial Discrimination Suit Against McDonald’s

Allen Media Group divisions Entertainment Studios Networks and Weather Group filed a lawsuit on Thursday, May 20, against McDonald’s Corp. seeking $10 billion in damages for racial discrimination in contracting in violation of federal and state law. According to the lawsuit, McDonald’s intentionally discriminated against Entertainment Studios and Weather Group through a pattern of racial stereotyping and refusals to contract.

Entertainment Studios owns and operates 12 high-definition television networks that are carried by more than  60 multi-channel video programming distributors, including Comcast, AT&T U-Verse, Charter/Spectrum, Dish Network, DirecTV, AT&T Now and Verizon Fios. In 2018, Allen acquired Weather Group, which owns and operates The Weather Channel and the streaming service Local Now.

The lawsuit alleges that McDonald’s refusal to contract “is the result of racial stereotyping through McDonald’s tiered advertising structure that differentiates on the basis of race. The primary advertising tier for McDonald’s is referred to as ‘general market’ and it constitutes the vast majority of McDonald’s advertising budget. McDonald’s, however, created a separate ‘African American’ tier with a much smaller budget and less-favorable pricing and other terms. McDonald’s contracts with a separate ad agency (Burrell Communications) for this African American tier, thereby creating separate and unequal tracks for Black-owned media companies to earn advertising revenue. McDonald’s has created a discriminatory environment that is separate but not equal.”

According to the lawsuit, “McDonald’s relegated Entertainment Studios to the less-favorable African American tier even though the companies own and operate television networks that have general market appeal and do not specifically target African American audiences. McDonald’s does so because the companies are owned by Allen, an African American.

“Through this stereotyping, McDonald’s prevented Entertainment Studios and Weather Group from accessing McDonald’s general market advertising budget and deprived the companies of advertising revenue that otherwise would have been paid if McDonald’s treated the companies the same as similarly situated, white-owned companies.”

“This is about economic inclusion of African American-owned businesses in the U.S. economy,” said Byron Allen, founder-chairman-CEO of Allen Media Group. “McDonald’s takes billions from African American consumers and gives almost nothing back. The biggest trade deficit in America is the trade deficit between White corporate America and Black America, and McDonald’s is guilty of perpetuating this disparity. The economic exclusion must stop immediately.”

“As alleged in the complaint, McDonald’s has engaged in pernicious racial discrimination in violation of federal and state law,” said counsel for  Allen and his companies, Skip Miller, partner in Miller Barondess LLP. “I am confident the jury will recognize the injustice that has occurred here and award significant damages. We are looking forward to our day in court.”

Also on Thursday, McDonald’s announced “new investments to further reflect its diverse customers, crew members and communities in its marketing.

“Over the next four years, the company and owner/operators are accelerating the allocation of advertising dollars to diverse-owned media companies, production houses and content creators. McDonald’s total investment in diverse-owned partners — including Black, Hispanic, Asian Pacific American, Women and LGBTQ-owned platforms — will more than double, moving from 4% to 10% of national advertising spend between 2021 and 2024. Spend with Black-owned properties, specifically, will increase from 2% to 5% of national advertising spend over this time period.”

Morgan Flatley, McDonald’s chief marketing and digital customer experience officer, said: “We’ve been making serious commitments that are guided by our values, and with this latest move, we’re taking action to advance diverse-owned companies across the marketing supply chain. We’re using our resources to support these platforms and businesses, which keep the brand at the center of culture while creating deeper relationships with our diverse customers, crew and employees.”