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This story might take need more than sales through the dollar menu. McDonald’s is being sued for $10 billion, over claims that the fast food behemoth has engaged in illegal advertising practices, with a “discriminatory contracting process and refusals to advertise on … networks on the basis of race.”

The factual thrust of this lawsuit is that less than $5 million—of the some $1.6 billion that the plaintiffs estimate McDonald’s spent on television ads in the United States in 2019—went to Black-owned media companies. The plaintiffs in this case are Entertainment Studios Networks Inc. and Weather Group LLC, two companies owned by the media mogul Byron Allen. According to The Wall Street Journal, the lawsuit is part of Allen’s campaign to “pressure large U.S. corporations to spend more ad dollars on Black-owned media companies.”

Allen, whose media interests include over a dozen television stations, digital television networks, the Weather Channel, and movie production studios, specifically alleges in the lawsuit that McDonald’s has not advertised on his networks, even as it was actively purchasing advertising on similarly situated networks with white ownership.

On the very same day the lawsuit was filed, May 20, 2021, McDonald’s committed publicly to more than double its advertising spending with “dollars to diverse-owned media companies, production houses and content creators,” as the company put it in a press release. McDonald’s said it would, among other things, increase the share of advertising dollars going to companies with Black, Hispanic, Asian Pacific American, women, and LGBTQ ownership, rising from 4 to 10 percent by 2024.

It would be a good start, if the company lives up to its promise. But in the meantime, Allen also has set his powerful sights on the broader market. He told Variety he’s spent “12 hours a day on Zoom calls since March of last year” pressuring corporate America to increase marketing spending with non-white owned media companies. Target, Verizon, and Procter & Gamble are among the companies already taking steps in that direction. When General Motors declined though, Allen and allied others published an open letter to the company’s CEO in The Detroit Free Press and The Wall Street Journal. A few days later, the automotive company promised that by 2022, 4 percent of its U.S. advertising budget would be devoted to Black-owned media companies, then doubling that commitment, to 8 percent, by 2025.

Discussion Questions:

  1. Has McDonald’s advertising has been discriminatory?
  2. Is it important for companies to give thought to who owns the media outlets from which they buy advertising? Why or why not?
  3. How can lawsuits and open letters get companies to alter their discriminatory policies or practices?

Source: Suzanne Vranica and Heather Haddon, “Lawsuit Accuses McDonald’s of Racially Discriminatory Ad Spending,” The Wall Street Journal, May 20, 2021; Brian Steinberg, “Black-Owned Media Outlets See Chance to Capture Ad Dollars Long Denied,” Variety, May 13, 2021; Ann-Christine Diaz and Jessica Wohl, “McDonald’s Will More than Double Ad Spend with Diverse-Owned Companies,” AdAge, May 20, 2021; McDonald’s USA, “McDonald’s Increasing Spend with Diverse-Owned Media, Content and Production Partners,” PR Newswire, May 20, 2021