Byron Allen Thinks McDonald’s Is Racist And Wants To Prove It In Court

It’s getting nastier between Black media mogul Byron Allen and the world’s biggest fast-food chain.

It was already plenty contentious. Last year, in a $10 billion federal lawsuit, Allen alleged that when it comes to allocating advertising dollars, McDonald’s runs a racist operation that echoes the “whites only” system of the Jim Crow era. He said McDonald’s had a “two-tiered” spending operation that disadvantages Black-owned businesses like his Allen Media Group. McDonald’s denied the charges and said Allen’s gripes about its ad spending stem from his media properties’ “low ratings and reach” and are “about revenue, not race.” The company said it looked forward to “taking this case to trial to publicly expose these allegations as baseless.” The dispute is headed for trial in September.

If that weren’t quarrelsome enough, Allen has kicked it up a notch or two. He’s been buying newspaper ads imploring others to join the fight “against McDonald’s blatant racism against Black America.” Last month, he filed a $100 million complaint in California state court alleging that McDonald’s failed to live up to a promise it made after the murder of George Floyd to spend 2% of its ad budget with Black-owned media in 2021, escalating to 5% by 2024. The suit claims Allen’s media properties represent 90% of the Black-owned media market, so such a pledge would have McDonald’s spend at least $50 million a year with them. Allen says that hasn’t happened. McDonald’s denies Allen’s claims and says it plans to file a motion to dismiss the California complaint.

“Byron Allen could lose a little face and a lot of money,” Harold Krent, a professor at Chicago-Kent College of Law, told Forbes, referring to the stakes for each side. “And McDonald’s could lose a whole lot more.”

In the federal suit, which last fall survived a McDonald’s motion to dismiss, Allen says the fast-food chain forces his companies to do business with McDonald’s Black-focused ad agency, Burrell Group, even though Allen’s media target a general audience. Burrell has a smaller ad budget than its general-audience counterpart, the suit alleges, depriving Allen’s companies of tens of millions of dollars annually.

“McDonald’s sends Black-owned media to its Black ad agency and white-owned media to the white agency,” Allen told Forbes. “The white ad agency has nearly all the money and the Black ad agency has very little to spend with Black-owned media. This is the epitome of racism when you have a white water fountain and a Black water fountain, and these two systems are separate and not equal.”

The federal lawsuit estimates that McDonald’s generates billions of dollars in annual revenue from Black customers, who represent about 40% of the overall fast-food market customer base. Meanwhile, the suit alleges, McDonald’s spent about $5 million with Black-owned media in 2019, or about 0.31% of its $1.6 billion TV advertising budget that year.

McDonald’s, in an email to Forbes, said its U.S. national marketing budget is about $500 million, which includes media companies, production houses and content creators. More than 3% of its U.S. marketing spend in 2022 was with Black-owned marketing companies, McDonald’s said, and the company is on track to reach 5% of total Black-owned marketing investments by the end of 2024.

In a court filing earlier this month, McDonald’s said that its use of Burrell, the Black-focused ad agency, has nothing to do with a separate and unequal process for media companies. “The undisputed evidence is that plaintiffs did pitch their networks to all of McDonald’s advertising agencies, including those that focused on the general consumer market, and after evaluation, those properties were deemed to be inadequate to meet McDonald’s media strategy, due to their low viewership ratings and older audiences,” the Chicago-based company said.

McDonald’s went further in a statement to Forbes: “Byron’s core arguments rest on an inflated and self-absorbed view that simply because he owns a large conglomerate, he deserves an outsized media spend without any consideration for the markedly low ratings and reach of his media properties. McDonald’s is proud of our long history of investment in diverse partners whose organizations can deliver on our business goals and share our values. We will not be coerced by these in terrorem tactics and will defend ourselves vigorously.” (“In terrorem” is legalese for “fear.”)

Attorneys for Allen Media Group told Forbes in a statement that they disagree with McDonald’s assertions “and the facts do not support them.”

Teri McMurtry-Chubb, a law professor at the University of Illinois Chicago, said the federal lawsuit sheds light on McDonald’s ad spending practices, and the state lawsuit attempts to “hold its feet to the fire” for its pledge to increase Black media spending. But she said McDonald’s is in a superior position, at least in the court of public opinion, because public sentiment for diversity, equity and inclusion has largely regressed, and McDonald’s spending with Black media likely exceeds that of its competitors.

“I think this is a tougher climate than it was even in 2020 for this type of lawsuit,” McMurtry-Chubb said. “But I think the benefit of this type of lawsuit is that it lays bare these corporate practices that the average person wouldn’t have any idea about and makes the case for systemic racism.”

In his legal complaints, Allen said McDonald’s has a history of racial discrimination. He cites lawsuits brought by Black former employees and franchisees; protests by civil rights groups; and a text message sent by McDonald’s CEO Chris Kempsinski in 2021 to Chicago’s mayor “that appears to blame the parents of a young African American girl who was shot in a McDonald’s parking lot.” Kempsinski later apologized for those messages.

“The greatest trade deficit in America is the trade deficit between white corporate America and Black America,” Allen told Forbes. “All I’m doing is closing that trade deficit.”

Allen, 62, a former comedian and TV host, built his media empire over the past two decades through thousands of hours of low-cost TV programming, such as 24-hour channels Pets.TV and Recipe.TV. Over the past few years, however, Allen has been acquisitive. He bought the Weather Channel’s parent company in 2018 for $300 million. In 2019, Allen was an equity partner in Sinclair Broadcast Group’s deal to purchase 21 regional sports networks from Walt Disney Co. for just shy of $10 billion. Allen also spent about $1 billion acquiring local TV stations between 2019 and 2021, funded by at least $500 million in debt. Lately, he’s been public about his interest in acquiring BET and TV stations owned by TEGNA, the broadcasting unit of Gannett Co.

Part of his goal, Allen said, is to use his media platform to force corporate America to be more fair in its dealings with Black America. “Black America is not a charity,” he said. “Black America doesn’t need to be bailed out. We just need to be given a fair hand in an equity partnership.”

Krent, the law professor, said it’ll be challenging for Allen to prove McDonald’s intent was racist. There isn’t much precedent for winning cases that allege racially biased ad spending, Krent said.

“You can file a lawsuit to win. You can file a lawsuit for publicity. You can file a lawsuit to inflict harm on another party,” Krent told Forbes. “But also you can file a lawsuit in hope of incremental social change. And so I think this underlying lawsuit really is both about getting more money to Byron Allen’s companies but also trying to pave the way for some kind of beneficial social change.”