Allen Media Group’s Weather Group and Entertainment Studios units have sued McDonalds, claiming that the fast-food giant failed to follow through on a pledge to spend more of its advertising dollars with Black-owned media.
The suit, filed Thursday in Superior Court of the State of California, accuses McDonald’s of fraud and false promise and seeks $100 million in compensation.
Entertainment Studios previously sued McDonald’s for $10 billion in 2021, charging that McDonald’s discriminated by not allocating ad dollars toward Black-owned media companies. That suit is working its way through the courts.
"While McDonald’s continues to invest in diverse initiatives to create real change in communities, Byron Allen files baseless lawsuits as part of a public smear campaign against our company to try to line his pockets," McDonald's said in a statement.
"This latest action is straight from his standard litigation playbook, cherry picking allegations to create a false and misleading narrative that is inconsistent with the facts and calculated to distract from the markedly low ratings and reach of his media properties. McDonald’s has a long history of investment in diverse communities and partners, and we are proud of our record. We will not be coerced by these in terrorem tactics and will defend ourselves vigorously," McDonald's said.
In its new suit, AMG charged that earlier legal action prompted McDonald’s to announce a four-year plan to increase its spending with Black-owned media from 2% to 5% by 2024. According to the suit, McDonald’s spends more than $1 billion a year on advertising.
AMG said it put together a proposal to have McDonald’s advertise across its media portfolio. That proposal was rebuffed, according to AMG, and McDonald’s proposed “to spend only a tiny fraction of its advertising budget on plaintiff’s properties,” court papers said.
“McDonald’s rushed out its ‘four-year plan’ in a self-serving ploy to cast itself as racially sensitive and sympathetic — but really to intentionally mislead the public and with reckless disregard for the truth,“ the suit charges. “McDonald’s had no intent to fulfill its commitment. Its ‘plan’ was and is a fraud.
“By and through this action, Plaintiffs demand compensation for McDonald’s fraudulent and false promises, which is estimated to be in excess of $100 million,” the suit continues. “Plaintiffs also seek a permanent injunction requiring McDonald’s to comply with its pledge to all Black Owned Media.”
Skip Miller, a partner at Miller Barondess, which represents Allen Media Group, said the action is based on a California law that holds corporations to their public promises.
“Per the lawsuit, McDonald’s said one thing and did another. It promised to spend 5% of its billion-dollar-a-year ad budget on African-American-owned media — of which Allen Media is over 90% — and has not come close. Per our lawsuit, this is a fraud on our client and on the public," Miller said. “The lawsuit seeks to hold one of the largest corporations in the world responsible for its lies.”
McDonald's said that over the last two years, it has invested millions of dollars with Black-owned media properties as part of its commitment to increase spend with these vendors and suppliers from more than 2% as of the end of 2021 to 5% by the end of 2024.
The fast-food chain said it has also established a Diverse Marketing Advisory Council and made investments in multi-year partnerships with diverse-owned media companies, which it said has helped to bolster individual businesses, strengthen the broader marketing supply chain, and support inclusive, authentic storytelling between McDonald’s brand and diverse customers.
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.