Byron Allen’s $10B Discrimination Lawsuit Against McDonald’s Over Ad Spend to Go to Trial

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As a long-time supporter of diversity and equality in the media industry, I find myself deeply concerned about the ongoing trial between McDonald’s and Byron Allen’s networks. The allegations of racial discrimination against Black-owned media companies are troubling and, if proven true, would be a stark reminder that we still have much work to do in terms of ensuring fairness and equal opportunities for all.

As a gamer, I’d put it this way: “I’m just a guy who loves gaming, but even I know about the ongoing legal dispute McDonald’s is facing. The fast-food giant is accused of unfairly treating Black-owned media companies. It’s a serious allegation, and I hope for fairness and transparency throughout the trial.

In his ruling, U.S. District Judge Fernando Olguin suggested that McDonald’s might have infringed upon civil rights laws by limiting Byron Allen’s networks to less prominent advertising slots, which are typically reserved for companies producing content aimed at Black audiences. Although it was a tight decision, the judge determined that there is sufficient evidence to suggest that Entertainment Studios and The Weather Channel were excluded from McDonald’s larger general market budget, making the case worthy of further consideration by a jury.

In a statement, McDonald’s explained that the ruling does not allow for either party to be dismissed from the case. Instead, it must proceed to a jury trial. The fast-food giant stated they are ready to prove that this case is entirely without merit. They clarified that their investments in media properties were strategic decisions, and like any sensible business, they chose not to invest in those with poor ratings or audiences that did not match their target demographic.

Allen declared in a public statement that there’s a significant amount of proof indicating discrimination by McDonald’s. He urged the McDonald’s Board of Directors, shareholders, and national civil rights groups to demand the resignation of CEO Chris Kempczinski, who was exposed for sending offensive text messages about Black and Hispanic individuals.

In a lawsuit aiming for over $10 billion, Allen cited messages from Kempczinski to Mayor Lightfoot of Chicago in 2021, where he erroneously placed blame on the parents for the deaths of two children – one being Jaslyn Adams who was tragically killed while sitting with her father in a McDonald’s parking lot. In his correspondence, Kempczinski stated, “The parents failed those kids, which I know you can’t openly admit. It’s even harder to rectify.

A month after the revelations emerged, I filed a lawsuit against McDonald’s, claiming they breached federal and state civil rights laws by engaging in racial discrimination during contract negotiations and enforcement. The crux of the case revolves around accusations that the company employs a multi-layered strategy for purchasing advertising. From 2006 to 2021, it appears McDonald’s allocated its budget among white-owned media companies through an advertising agency, OMD Worldwide, according to the lawsuit. On another, much smaller budget tier, allegedly managed by a different ad agency, Burrell, is where companies producing content for Black audiences are said to reside, as per the complaint. The lawsuit also suggests that my company, Entertainment Studios, was unfairly grouped into this tier since I am the owner.

On November 30th, the decision was made that Allen’s businesses might be excluded from thorough consideration by OMD, their primary advertising agency, along with several other factors, according to the decree.

Allen Media Group provided testimony from their chief revenue officer, Darren Galatt, stating that despite repeated requests to be moved out of a lower-tier contracting group, Entertainment Studios and The Weather Channel were still bound to work with a specific agency, even though their content is not exclusively aimed at a black audience. Galatt mentioned that they were repeatedly informed by the agency (OMD) to handle matters with Burrell.

Essentially, it appears that Allen’s companies were not given fair consideration for an advertising deal with OMD. Emails from within the company suggest that executives advised representatives of Entertainment Studios and The Weather Channel to approach Burrell exclusively when seeking advertising from McDonald’s. For example, Chris Geraci, OMD’s chief investment officer, wrote in one email, “I have been trying to help you get more business beyond Hershey, and I know that PepsiCo is considering. McDonald’s will consider, but not through OMD.” This was supported by Deborah Innes, an OMD group director, who wrote to Galatt, “just a reminder that Burrell is the agency of record for McDonald’s and Entertainment Studios.

As a dedicated fan, I too found the court’s examination intriguing, particularly the testimony from Lynnwood Bibbens of ReachTV. Much like me, he asserted that he was compelled to collaborate through Burrell, despite his network catering to a diverse range of content. When he aimed to secure McDonald’s advertising in 2022, he initially liaised with OMD; however, it was later Burrell who stepped in to guide the decision-making process, as stated in a court declaration.

McDonald’s argues that its partnership decisions are based on unbiased standards, specifically citing low viewership as the reason behind not partnering with Allen’s companies. They mentioned that these companies typically fall short of their standard 60 million viewer threshold. Additionally, they have a policy against advertising with news channels like The Weather Channel.

The question of whether Allen’s networks offer the same reach as McDonald’s other media partners continues to be debated, with the media tycoon arguing that his properties meet the necessary viewer requirements, among other points. In a statement from TV and network programming expert Tom Nunan, he asserted that “news networks like CNN, MSNBC, Fox News, HLN, and The Weather Channel are comparable to advertisers because their content and programming are similar.” He further explained, “a courtroom drama-focused network like JusticeCentral.TV is analogous to true crime networks like Oxygen and HLN as they both air courtroom shows that cater to the same audience.” Additionally, he mentioned that ESN’s “Recipe.TV is comparable to Food Network and Cooking Channel.

The jury will decide if McDonald’s had valid, non-discriminatory motives for assigning Burrell only to The Weather Channel and Entertainment Studios, or if this was a cover-up for discrimination. This point is emphasized by McDonald’s because they claim that Allen’s networks didn’t have broad appeal across all races for advertising investments in the general market, and they weren’t Nielsen-rated until 2017.

In simpler terms, Olguin stated in his summary judgment that the evidence is uncertain or contested about whether the advertising agency routinely assessed proposals, including those from the plaintiffs, concerning content that was generally aimed at. However, since the plaintiffs have presented enough evidence to support their argument that the agency may have overlooked these proposals, this remains a valid claim.

In February, McDonald’s successfully defended itself against a lawsuit by Allen Media Group, who claimed the fast-food chain was dishonest in promising to increase national ad spending with Black-owned media outlets to boost sales and avoid legal action related to alleged racial discrimination during the peak of the Black Lives Matter movement. In this instance, a judge in Los Angeles decided that McDonald’s still has some time left to fulfill its commitment.

In 2021, McDonald’s agreed to a $33.5 million settlement with Herb Washington, a Black franchisee who claimed that the company had discriminatory practices in place, which he alleged prevented Black store owners from operating in prime locations. This came after another lawsuit accused McDonald’s of providing preferential treatment to white operators.

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2024-12-04 03:25