McDonald's is facing a $10 billion racial discrimination lawsuit from media mogul Byron Allen's Entertainment Studios Networks and Weather Group, accusing the fast-food giant of discriminating about the companies. The lawsuit, filed in Los Angeles Superior Court Thursday, accuses McDonald's of having a separate "African American tier" for its advertising, run by a different ad agency with a much smaller budget. Allen is the CEO of Allen Media Group, the parent company of Entertainment Studios and the owner of The Weather Channel and regional sports networks.
In the lawsuit, Entertainment Studios claims McDonald's spends less than $5 million of its $1.6 billion annual television advertising budget on African American-owned media and has refused to advertise on Allen's networks, according to a press release. McDonald's has stopped advertising on The Weather Channel since Allen acquired it in 2018, the lawsuit alleges. "Per the lawsuit, the 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," the press release reads.
McDonald's allegedly has a "tiered advertising structure," with most of its budget going to the "general market," according to the lawsuit. The plaintiff accuses McDonald's of having a "separate 'African American' tier with a much smaller budget and less-favorable pricing and other terms" that is overseen by a different ad agency. Entertainment Studios is "relegated" to this tier, even though the company owns networks that are not specifically targeted to African American audiences. The lawsuit alleges McDonald's of doing this only because Allen is Black.
"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." Allen Media Group is seeking $10 billion in damages and is asking the case to go before a jury.
While McDonald's has not directly responded to Allen's lawsuit, it was filed the same day the company announced plans to increase ad spending with diverse-owned media brands and sign multi-year deals with them over the next four years. "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," the company said in a statement on Thursday. "Spend with Black-owned properties, specifically, will increase from 2% to 5% of national advertising spend over this time period."