Byron Allen’s Allen Media Group filed a $10 billion discrimination lawsuit against McDonald’s Corp. claiming that the race-based way the burger chain buys advertising hurts Black-owned media companies.
According to the lawsuit, McDonald’s intentionally discriminated against Allen’s Entertainment Studios and Weather Group through a pattern of racial stereotyping and refusals to contract.
Allen claims that of the $1.6 billion in television advertising McDonald’s buys each year, less than $5 million goes to Black-owned media. Allen also says McDonald's has refused to advertise on Allen’s Entertainment Studios properties or The Weather Channel since it was acquired by Allen in 2018.
On Thursday, McDonald’s announced that it plans to increase the ad dollars it spends with diverse-owned media companies from 4% currently to 10% by 2024. Spending with Black-owned properties will increase from 2% to 5%.
“We've been making serious commitments that are guided by our values, and with this latest move, we're taking action to advance diverse-owned companies across the marketing supply chain," said Morgan Flatley, chief marketing and digital customer experience officer at McDonald's USA. "We're using our resources to support these platforms and businesses, which keep the brand at the center of culture while creating deeper relationships with our diverse customers, crew and employees."
Allen’s lawsuit says that McDonald’s buys most of its advertising as part of a general market group and has a separate tier for African American businesses with a smaller budget and less favorable pricing.
Allen charges that his general market networks and TV stations have been relegated to the African American tier even though they don’t specifically target African American audiences.
“This is about economic inclusion of African American-owned businesses in the U.S. economy,” said Byron Allen, CEO 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.”
Here is an open letter to McDonald’s CEO Chris Kempczinski from Allen and other Black media executives:
Chris Kempczinski, President & CEO, please stop the racism against Black Owned Media companies by McDonald’s
McDonald’s is the largest restaurant chain and one of the best-known brands around the world. McDonald’s has more than 39,000 locations in 100 countries and wields a marketing machine that reaches every household in America. All this marketing prowess and success, yet McDonald’s has categorically discriminated against Black-owned media companies in its advertising spend. Chris, the very definition of systemic racism is when you are ignored, excluded and you do not have true economic inclusion. Black-owned media companies have become extinct from the lack of ad support from companies like McDonald’s.
Over these last 20 years, McDonald’s has spent approximately $17 billion in advertising/promotion and very little went to Black-owned media (NOT to be confused with Black-targeted media). Simultaneously, as this is occurring, your own personal compensation package for 2020 totaled just under $11 million—more than double the approximate $5 million that McDonald’s spent with all of Black-owned media combined last year!!! This is indefensible!!! This is horrendous and unacceptable!!! To make matters worse, back in 2015, Black-owned media communicated this issue of economic exclusion and systemic racism to McDonald’s’s then Chief Marketing Officer, and the issue was ignored and not corrected.
We are not surprised that both Black employees/executives as well as the Black franchisees are suing McDonald’s for racial discrimination and unfair treatment. And now you are being sued for $10 billion by Black-owned media. Why?? Because we all firmly believe the culture at McDonald’s is racist and very toxic.
To be clear, this concerns Black-owned media and not minority-owned media, because “minority” includes White women and large corporations like McDonald’s often hide behind and tout their minority/diversity records while continuing not to do business with Black-owned media companies.
Chris, as the President & CEO of McDonald’s, it is time for you to provide real economic inclusion for Black-owned media companies. We are publicly asking you to stop the systemic racism by McDonald’s against Black-owned media companies. Like other advertisers and large ad agencies have already done, McDonald’s should commit 5-15% of their advertising/marketing spend to Black-owned media. We are requesting a one-hour Zoom meeting with you and several of your key board members and us, the largest Black-owned media companies in America, so we can resolve this very important issue and have a long-term partnership that is mutually beneficial for McDonald’s and the African American consumers. Chris, we and others firmly believe that if you continue to hold the position that Black-owned media does not deserve meaningful economic inclusion and we are not worth meeting with, then you and your board should resign, effective immediately.
Founder, Chairman & CEO
Allen Media Group, LLC
Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.
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