McDonald’s settles Byron Allen’s $10 billion lawsuit over ads for Black-owned media

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By Jonathan Stempel

(Reuters) -McDonald’s has settled a $10 billion lawsuit by the media entrepreneur Byron Allen accusing the fast-food chain of “racial stereotyping” by excluding Black-owned media from much of its advertising budget.

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

It also resolves claims raised in Allen’s related $100 million lawsuit against McDonald’s in Los Angeles Superior Court.

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.”

Settlement terms are confidential. McDonald’s, based in Chicago, denied wrongdoing in agreeing to settle.

In a statement, Allen’s companies said “we acknowledge McDonald’s commitment to investing in Black-owned media properties and increasing access to opportunity. Our differences are behind us.”

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.

He also accused McDonald’s of 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.

Allen’s networks include The Weather Channel, Cars.TV, Comedy.TV, ES.TV, Justice Central, MyDestination.TV, Pets.TV and Recipe.TV.

(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot and Marguerita Choy)