Byron Allen Sues McDonald’s for Racial Discrimination

By Adam Jacobson / Editor – Radio TV Business Report

If timing is everything, then Byron Allen — the media mogul behind Local Now, Allen Media Group and Entertainment Studios — just made the biggest statement yet that the Golden Arches have been nothing more than a rusty bucket with respect to the level of advertising commitment it’s given to his broadcast and cable properties.

With McDonald’s getting much attention for moving forward with “bold new investments to further reflect its diverse customers” and putting 2%-5% more dollars into Black-owned properties over the next five years, Allen Media Group has filed a whopping $10 billion lawsuit against the quick-service restaurant giant for racial discrimination.

The lawsuit, which involves AMG divisions Entertainment Studios Networks, Inc. and The Weather Channel’s Weather Group, was filed on Thursday (5/20).

According to the lawsuit, McDonald’s intentionally discriminated against Entertainment Studios and Weather Group through a pattern of racial stereotyping and refusals to contract.
Allen’s holdings include 12 broadcast TV stations, including KITV-4 in Honolulu, the ABC affiliate serving Hawaii. Streaming service Local Now is also owned by Allen.

As AMG explains, McDonald’s with more than $100 billion in annual revenue, is highly dependent on African American consumers: Blacks represent approximately 40% of McDonald’s U.S. sales.

But, AMG claims that of its approximately $1.6 billion annual television advertising budget, McDonald’s spends less than approximately $5 million each year on African American-owned media.

Worse, “it has refused to advertise on Entertainment Studios networks or The Weather Channel since Allen acquired the network in 2018.” The lawsuit also takes aim at McDonald’s President/CEO Chris Kempczinski’s $11 million annual salary. This, AMG points out, “is more than double what McDonald’s spends per year on ALL of Black-owned media combined.”

In the lawsuit, AMG also 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.”

It further claims that McDonald’s created a separate African American tier “with a much smaller budget and less-favorable pricing and other terms,” compared to its total market budget.

McDonald’s African American shop is Burrell Communications, and has had a relationship with the multicultural agency since 1971.  However, this arrangement is, in AMG’s view, considered an example of “separate and unequal tracks for Black-owned media companies to earn advertising revenue.”

RBR+TVBR‘s request for comment was answered late Thursday by McDonald’s corporate offices in Chicago.

Together with our Owner/Operators, we have doubled down on our relationships with diverse-owned partners. This includes increasing our spend with diverse-owned media from 4% to 10% and with Blackowned 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.

“This is about economic inclusion of African American-owned businesses in the U.S. economy,” said Allen. “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.”

AMG’s legal counsel in the lawsuit is Miller Barondess LLP partner Skip Miller.

“As alleged in the complaint, McDonald’s has engaged in pernicious racial discrimination in violation of federal and state law,” Miller said. “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.”