2nd UPDATE, 2:45 p.m.: A federal judge in Los Angeles today denied a motion to dismiss Byron Allen’s $10 billion lawsuit against McDonald’s Corp alleging racial discrimination.
In his ruling (read it here), US District Judge Fernando Olguin said the founder and chairman/CEO of Allen Media Group can keep trying to prove the fast-food giant hasn’t backed down Black-owned media companies rocked after paying out massive advertising budgets
“This is about the economic incorporation of African-American owned companies into the US economy,” Allen said of the ruling. “McDonald’s takes billions of African American consumers and gives back almost nothing. The largest trade deficit in America is the trade deficit between white America and black America, and McDonald’s is guilty of perpetuating that disparity. Economic exclusion must end immediately.”
Read the details of the case below.
UPDATED 5 November: Allen Media Group CEO Byron Allen said he sent a letter to McDonald’s board of directors urging them to fire CEO Chris Kempczinski after a controversial text message from the board related to the deaths of two black children found by shooting.
Kempcziniski’s message to Chicago Mayor Lori Lightfoot last spring said the parents of 7-year-old Jaslyn Adams and 13-year-old Adam Toledo “abandoned those kids” before they died. Adams was shot dead in a gang-related homicide while she was in a car with her father in a McDonald’s drive-through in Chicago, where the company is based. Toledo was shot by a Chicago police officer.
The salvo comes after Allen sued McDonald’s in May, accusing the fast-food giant of racial stereotyping and refusing to enter into deals with AMG Entertainment Studios and the Weather Group in violation of federal and state laws.
Kempczinski apologized for the text, including in a letter to staff this week, saying, “As a parent, writing this, I was thinking through my lens and reacting viscerally. But I didn’t follow in the footsteps of Adams or Jaslyn’s family and so many others who face a very different reality.”
Allen’s letter accused the company of continuing to “perpetuate and support racism.” The board “needs to make sweeping changes immediately and remove Chris Kempczinski from his role as President and CEO now or resign himself because you are on the wrong side of history,” it said.
Allen has been active in demanding that major corporations, including GM, give black-owned media a fair share of advertising dollars.
A $20 billion racial discrimination lawsuit he filed with Comcast in 2015 went all the way to the Supreme Court. Allen and Comcast reached an agreement last year, with Comcast agreeing to acquire three of Allen Media Group’s cable channels.
SO FAR, May 20th: Byron Allens All media group has McDonald’s Corp. is being sued for $10 billion in damages and accused of racial discrimination as the high-profile businessman continues to slam big companies for not shaking black-owned media fairly when they spend massive advertising budgets.
The lawsuit, filed in the Superior Court of California in Los Angeles, alleges the fast-food giant of racial stereotyping and refusing to contract with AMG’s Entertainment Studios and Weather Group in violation of federal and state law.
In a statement to Deadline, McDonald’s said: “Together with our owner/operators, we have doubled down on our relationships with multi-owned partners. This includes increasing our spending on Diverse-owned media from 4% to 10% and Black-owned media from 2% to 5% of total national advertising over the next four years. Once we receive the complaint, we will review it and respond accordingly.”
The company held its annual general meeting on Thursday.
Allen and other black media owners joined forces last month to pressure automaker GM for the same reason. Allen has been pushing the issue publicly for over a year with some success. Most recently, advertising giants GroupM and Interpublic have agreed to invest in black-owned media.
entertainment studios owns 12 television networks supported by major multi-channel video programming distributors. The Weather Group owns The Weather Channel.
According to the lawsuit, African Americans make up about 40% of McDonald’s US sales, but African American media receives less than $5 million of its approximately $1.6 billion in annual television advertising.
The lawsuit alleges that McDonald’s refusal to contract was a result of racial stereotypes reflected in a tiered advertising structure with a separate “African American” tier offering a smaller budget and less favorable pricing and different terms than the larger “general market” -level has. The structure creates “disconnected and unequal pathways for black-owned media companies to generate ad revenue,” Allen says, noting The television stations he owns and operates have a general market appeal and do not specifically target African American viewers. But the lawsuit alleges McDonald’s has refused to advertise on The Weather Channel below its “general tier” since Allen took over the network in 2018.
In a letter to McDonald’s CEO Chris Kempczinski, Allen and a handful of other black media owners called on the company to allocate 5% to 15% of its advertising and marketing spend to black media.