McDonald's sued for $10 billion by Byron Allen-owned networks, alleging racial discrimination in ad spending

A $10 billion lawsuit accuses McDonald's of engaging in racial discrimination by refusing to advertise on the networks of Entertainment Studios and Weather Group, which are owned by Black media entrepreneur Byron Allen and includes networks such as the Weather Channel.

The lawsuit, filed Thursday in Los Angeles Superior Court, says the fast-food chain has a "tiered advertising structure that differentiates on the basis of race," according to a press release that accompanied the complaint. The company seeks $10 billion in damages and wants the case tried in front of a jury.

The complaint alleges that while most of McDonald's advertising budget is allocated for the "general market," it maintains a "separate 'African American' tier, run by a different advertising company, "with a much smaller budget and less-favorable pricing and other terms." 

How much smaller? "McDonald's President and CEO Chris Kempczinski makes approximately $11 million per year, which is more than double what McDonald's spends per year on all of Black-owned media combined," Allen's networks say.

USA TODAY has reached out to both McDonald's and Allen's companies for comment.

In its complaint, Entertainment Studios says it was never asked to respond for requests for proposals from the white-owned ad agency that allocates the general market budget, which shut it it out of the opportunity to win the business. "Instead, Entertainment Studios was forced to compete with African American media companies in the less-favorable African American tier."

In addition, it alleges McDonald's has refused to advertise on the 12 networks of Entertainment Studios or even the Weather Channel, which Allen bought in 2018 and does not target any ethnic group.

The complaint notes that Allen personally took the question of McDonald's ad practices up with its chief marketing officer – to no avail.

"This is about economic inclusion of African American-owned businesses in the U.S. economy," Allen said in a statement that accompanied the lawsuit. "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." 

On Thursday, the same day the lawsuit was filed, McDonald's announced it was allocating more ad dollars to diverse-owned media and embarking on multi-year partnerships with them.

"McDonald’s total investment in diverse-owned partners – including Black, Hispanic, Asian Pacific American, Women and LGBTQ-owned platforms – will more than double, moving from 4% to 10% of national advertising spend between 2021 and 2024," it said in a press release. "Spend with Black-owned properties, specifically, will increase from 2% to 5% of national advertising spend over this time period."