McDonald’s has been hit with a $10 billion racial discrimination lawsuit from media companies owned by Byron Allen.
The lawsuit alleges the Chicago-based burger chain pays higher prices to advertise with general market media companies than it does Black-owned companies, which submit pitches through a separate tier for content targeting African American audiences.
The suit was filed Thursday in Los Angeles Superior Court by Entertainment Studios Networks, which owns a series of lifestyle television networks, and Weather Group, which runs The Weather Channel. Allen, a comedian, actor and media mogul, started Entertainment Studios in 1993 and purchased the Weather Group in 2018 for $300 million, according to the complaint.
In addition to calling out McDonald’s two-tier advertising structure, the suit alleges the company has falsely labeled Entertainment Studios as an African American media company even though its content is directed to a general audience with networks like Pets.TV and Comedy.TV.
McDonald’s assumes that “because Allen is African American, his content must target that audience,” the complaint alleges. “That is a false assumption and is blatant racism.”
The company has refused to advertise on ESN Lifestyle Networks, which reach more than 180 million subscribers across the U.S., or The Weather Channel despite taking out ads with similar white-owned networks such as Animal Planet, Food Network or Travel Channel, the complaint alleges.
Being excluded from McDonald’s general market budget has caused Allen’s companies to lose out on critical advertising dollars, the suit alleges. In 2019, McDonald’s spent $1.6 billion on television advertising in the U.S., with $5 million, or less than 1%, going toward Black-owned media, according to the lawsuit.
“This is about economic inclusion of African American-owned businesses in the U.S. economy,” Allen, CEO of Allen Media Group, said in a statement Thursday announcing the lawsuit. “McDonald’s takes billions from African American consumers and gives almost nothing back.”
The same day the lawsuit was filed, McDonald’s announced an initiative pledging to increase its advertising spending over the next four years with companies owned by people from diverse backgrounds, a group that includes Blacks, Hispanics, Asian Americans, Pacific Islanders, women and LGTBQ individuals.
The company pointed to that initiative when asked to comment on the lawsuit Friday, saying it has “doubled down” on those relationships.
“This includes increasing our spend 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,” the company said in a statement. “We will review the complaint and respond accordingly.”
The suit alleges McDonald’s has violated federal and California state law prohibiting racial discrimination in contracting and seeks actual and triple damages, along with attorney’s fees and costs, with the total estimated at more than $10 billion.
jallison@chicagotribune.com
