• by Tanya Gazdik , 4 hours ago

McDonald's has settled a $10-billion lawsuit challenging the fast-food chain's alleged refusal to advertise with Black-owned media.

The settlement between McDonald's and two of media entrepreneur Byron Allen’s companies, Entertainment Studios Networks and the Weather Group, averts a scheduled July 15 trial in Los Angeles federal court.

“Settlement terms are confidential. McDonald's, based in Chicago, denied wrongdoing in agreeing to settle,” according to Reuters. “Allen had accused McDonald's of ‘racial stereotyping' by not advertising with Black-owned media, and lying when it pledged in 2021 to boost national ad spending with those media to 5% from 2% by 2024.”

Allen said he relied on that pledge when seeking business from McDonald’s, only to be rebuffed, and that his Allen Media Group represented more than 90% of black-owned media, according to the New York Post. “Allen accused McDonald’s of falsely labeling Entertainment Studios as a media company that produces content solely for black viewers, consigning it to its ‘de minimis’ ad budget for those viewers instead of its general ad budget. Allen’s networks include The Weather Channel, Cars.TV, Comedy.TV, ES.TV, Justice Central, MyDestination.TV, Pets.TV and Recipe.TV.”

The settlement also resolves Allen's related $100 million lawsuit against McDonald's in Los Angeles Superior Court. Allen lost an earlier lawsuit against the QSR, according to Marketing Daily. 

“Allen’s suit hinged on his assertion that McDonald’s habit of buying ad time on media outlets that target Black viewers was discriminatory because those purchases were made from a budget set aside for what the complaint described as ‘the African American tier’ of outlets,” according to Variety. “Allen’s suit argued that the practice was damaging to Black media owners because that tier had more limited dollars available than the general tier that the company used for reaching broad-based audiences on the largest networks and platforms.”

It’s unclear if the settlement incorporates any larger changes to McDonald’s media buying practices, notes Variety. 

McDonald’s said it will buy ads “at market value” from Allen’s companies “in a manner that aligns with its advertising strategy and commercial objectives.”