A $10 billion lawsuit has been filed against McDonald’s on behalf of two networks owned by media mogul Byron Allen. The lawsuit filed Thursday in Los Angeles Superior Court accuses the fast-food chain of refusing to advertise on Black-owned networks—particularly, the 12 networks that operate under Entertainment Studios and Weather Group, which are both owned by Allen.
From USA Today:
The complaint alleges that while most of McDonald’s advertising budget is allocated for the “general market,” it maintains a “separate ‘African American’ tier, run by a different advertising company, “with a much smaller budget and less-favorable pricing and other terms.”
How much smaller? “McDonald’s President and CEO Chris Kempczinski makes approximately $11 million per year, which is more than double what McDonald’s spends per year on all of Black-owned media combined,” Allen’s networks say.
In its complaint, Entertainment Studios says it was never asked to respond for requests for proposals from the white-owned ad agency that allocates the general market budget, shutting them out of the opportunity to win its business. “Instead, Entertainment Studios was forced to compete with African American media companies in the less-favorable African American tier.”
“This is about economic inclusion of African American-owned businesses in the U.S. economy,” Allen said in a statement. “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.”
The lawsuit raises similar complaints to that of the alleged racial discrimination Allen accused Comcast of in a suit that was settled last year. The $20 billion lawsuit filed against Comcast in 2015 accused the media giant of violating an 1866 federal civil rights law that ensures that “Black people had the same right to make and enforce contracts as white people.” Allen alleged that racism factored into Comcast’s decision not to offer his TV channels in its cable bundles.
As for the McDonald’s lawsuit, the press release noted that “African Americans represent approximately 40% of McDonald’s U.S. sales, with McDonald’s taking billions of dollars each year from African American consumers.” It also alleges that McDonald’s spends “approximately $1.6 billion” in advertising annually, but less than $5 million of that money is spent advertising on Black-owned media.
In a statement to Deadline, McDonald’s didn’t outright deny the allegations in the suit but said that the company plans to increase its advertising on Black-owned networks in the future. The company also indicated that after its representatives have had a chance to look at the complaints in the suit, it will address the accusations that Allen and his networks have made.
“Together with our Owner/Operators, we have doubled down on our relationships with diverse-owned partners,” the statement said. “This includes increasing our spending with diverse-owned media from 4% to 10% and with Black-owned media from 2% to 5% of total national advertising over the next four years. Once we receive the complaint, we will review and respond accordingly.”
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