2ND UPDATE, 2:45 p.m.: A Los Angeles federal judge today denied a motion to dismiss Byron Allen’s $10 billion lawsuit against McDonald’s Corp that alleges racial discrimination.
In his ruling (read it here), U.S. District Judge Fernando Olguin said the founder and CEO of Allen Media Group can keep trying to prove the fast-food giant didn’t give up. Black-owned media have been reeling as they shelled out massive advertising budgets.
“It’s about the economic inclusion of African-American-owned businesses in the American economy,” Allen said of the decision. “McDonald’s takes billions from African American consumers and gives them next to nothing in return. 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. Economic exclusion must end immediately.
Read the details of the case below.
UPDATE, November 5: Allen Media Group CEO Byron Allen says he sent a letter to the McDonald’s board asking them to fire CEO Chris Kempczinski after a controversial text message from the executive surfaced regarding the shooting death of two black children.
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 “let these kids down” before they died. Adams was shot in a gang-related murder while sitting in a car with her father at a McDonald’s drive-thru 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 contract with AMG’s Entertainment Studios and Weather Group in violation of federal and state law.
Kempczinski apologized for the text, including in a letter to employees this week, saying, “When I wrote this I was thinking through my lens as a parent and reacting viscerally. But I didn’t walk in the place of Adam’s family or Jaslyn 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 CEO now or resign you because you’re on the wrong side of history,” he said.
Allen has been active in asking big corporations, including GM, to give black-owned media a fair share of advertising dollars.
A $20 billion racial discrimination lawsuit he filed against Comcast in 2015 went all the way to the Supreme Court. Allen and Comcast settled last year, with Comcast agreeing to take over three of Allen Media Group’s cable channels.
PREVIOUSLY, May 20: Byron Allen Allen Media Group sued McDonald’s Corp. for $10 billion in damages, alleging racial discrimination as the high-profile businessman continues to hammer big business for not giving black-owned media a fair jolt as they shell out massive advertising budgets.
The lawsuit, filed in California Superior Court in Los Angeles, accuses 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 laws.
In a statement to Deadline, McDonald’s said, “With our owner/operators, we have doubled down on our relationships with partners across multiple owners. This includes increasing our spending with diversely owned media from 4% to 10% and with 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 shareholders meeting earlier on Thursday.
Allen and other black media owners joined forces last month to lobby automaker GM for the same reason. Allen pushed the issue publicly for over a year with some success. More recently, advertising giants GroupM and Interpublic agreed to invest in black-owned media.
entertainment studios owns 12 television networks which are carried by the main distributors of multi-channel video programming. The Weather Group owns The Weather Channel.
According to the lawsuit, African Americans account for about 40% of McDonald’s sales in the United States, but African-American-owned 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 is the result of racial stereotyping reflected in a tiered advertising structure with a separate “African American” tier that has a smaller budget and less favorable pricing and other terms than its broader level of “general market”. The structure creates “separate and unequal avenues for black-owned media companies to earn ad revenue,” Allen says, noting that the television networks it owns and operates have general market appeal and do not specifically target African American audiences. But, according to the lawsuit, McDonald’s has refused to advertise on The Weather Channel below its “general level” since Allen acquired the network in 2018.
In a letter to McDonald’s CEO Chris Kempczinski, Allen and a handful of other black media owners urged the company to allocate 5-15% of its advertising and marketing spend to black-owned media.