Black-Owned Media Companies Accuse McDonald’s of Shutting Them Out of Ad Buys in New Lawsuit

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Two media companies owned by Byron Allen, the media mogul behind a movie studio and more than a dozen television stations, are suing McDonald’s for $10 billion, accusing the fast-food chain of discriminating against Black-owned media companies, the Wall Street Journal reported on Friday.

Entertainment Studios Networks Inc. and Weather Group LLC filed the lawsuit in California, targeting what the companies say are McDonald’s “discriminatory contracting process and refusals to advertise on Plaintiffs’ networks on the basis of race.”

“The suit marks the latest move by Mr. Allen, who is Black, to pressure large U.S. corporations to spend more ad dollars on Black-owned media companies,” the Journal reported.

“The lawsuit alleges that McDonald’s spent approximately $1.6 billion on US TV ads in 2019 and estimates that less than $5 million, or 0.31%, of that budget was spent on Black-owned media,” the report said. “The complaint also alleges that McDonald’s hasn’t advertised on Entertainment Studios’ lifestyle networks since they were launched in 2009 but has purchased significant advertising on similarly situated, white-owned networks.”

According to the Journal, McDonald’s has already planned changes to its ad strategy, including a “commitment to more than double the advertising dollars McDonald’s devotes to media companies with diverse ownerships in the next four years,” reportedly increasing the portion of its national advertising budget going to groups owned by Black, Hispanic, women and other underrepresented groups to 10%, up from the current 4% today.

In 2020, after the death of George Floyd and subsequent movement for racial justice, many companies promised to direct more money to Black-owned businesses, the Journal report said, adding that recently, some agencies have also promised to direct more ad dollars to Black-owned media companies.

Allen has previously accused General Motors and Coca-Cola, as well as some major advertising agencies, of “inadequately supporting Black-owned media companies,” the Journal report said, and his past efforts have gotten results.

“After Mr. Allen and other Black media executives publicly criticized GM in newspaper ads, the auto giant pledged to increase the amount it spends on advertising with Black-owned media companies,” the Journal said.

The Allen Media Group/Entertainment Studios produces movies and owns more than a dozen TV stations, as well as the Weather Channel and 10 digital-TV networks, according to the Journal.