On Thursday, media mogul Byron Allen filed an explosive $10 billion lawsuit against McDonald’s, claiming that the fast-food giant engaged in discrimination by refusing to advertise on his networks, and alleging that it has a “tiered advertising structure that differentiates on the basis of race,” the Allen Media Group announced.
“This is about economic inclusion of African American-owned businesses in the U.S. economy,” said Allen, chairman and 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.”
Allen’s attorney, Skip Miller of Miller Barondess added, “As alleged in the complaint, McDonald’s has engaged in pernicious racial discrimination in violation of federal and state law. 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.”
In a Thursday press release, McDonald’s responded by saying it has a plan to “increase the allocation of advertising dollars to diverse-owned media companies, production houses, and content creators” between now and 2024. The company statement said, “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 percent to 10 precent of national advertising spend between 2021 and 2024. Spend with Black-owned properties, specifically, will increase from 2 percent to 5 percent of national advertising spend over this time period.”
According to Bloomberg, McDonald’s has a $1.6 billion annual advertising budget.
In March, Allen issued letters of intent to both McDonald’s and General Motors, demanding that the companies’ ad agencies “shift a minimum of 2 percent of their budgets to Black-owned media or face legal action.”
While agencies and brands have been talking about working with more minority-owned and targeted media companies, Allen says this doesn’t necessarily mean they are striking deals with Black businesses. When the industry refers to minority-owned, Allen says, many times they are talking about female-led. “We are only talking about what you do with Black-owned media, and unfortunately it is nearly extinct because of the racism on Madison Avenue,” Allen said.
On March 28, Allen took out a full-page ad aimed at GM CEO Mary Barra in both the Detroit Free Press and Wall Street Journal demanding the automaker increase its allocation of ad spending to Black-owned platforms. After first calling the ads “character assault,” GM soon pledged to increase its spending with Black-owned companies to 4 percent of its advertising by 2022 and 8 percent by 2025.
“General Motors aspires to be the most inclusive company in the world, and that includes how we allocate media spend,” the company said in a statement.
Allen has also called out Coca-Cola and others for the lack of ad spending in Black-owned media platforms.
This wasn’t Allen’s first time turning to the courts for relief. In 2020, he settled with Comcast, after suing for racial discrimination for not carrying his company’s cable channels. He withdrew the suit not long after being dealt a blow by the Supreme Court, but got agreements to carry several channels on Xfinity X1, expanded digital distribution, lucrative re-trans deals for 14 network-affiliated TV stations and expanded carriage of the Weather Channel, soon to result in the launch of a second channel, in Spanish.
In February 2021, Allen successfully settled a similar legal battle with Charter Communications (Spectrum), after the Ninth Circuit upheld Judge George H. Wu’s decision allowing the case to proceed. Allen’s retort: “Charter has now been told by Judge Wu twice, and the Ninth Circuit, that the First Amendment does not give anyone the right to discriminate against 100 million minorities in this country.”
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