Last night, McDonalds and the parent company behind the Weather Channel announced they settled a lawsuit filed in 2021 by the Weather Channel’s parent over claims of racism.
The parties reached a confidential commercial agreement whereby McDonald’s will continue to purchase advertising from the Weather Channel and its sister channels “in a manner that aligns with its advertising strategy and commercial objectives” while the Weather Channel parent dismissed its lawsuit against McDonald’s in the United States District Court for the Central District of California. Under the terms of the agreement, which are confidential, McDonald’s is not admitting any wrongdoing, and the ads sold will be priced at market value.
In a lawsuit filed back in 2021 in Los Angeles County Superior Court, Byron Allen’s media companies filed a complaint alleging that “McDonald’s intentionally discriminated against (his) Entertainment Studios and Weather Group through a pattern of racial stereotyping and refusals to contract” in violation of federal and state law. The lawsuit claimed McDonalds violated federal and California state law prohibiting racial discrimination in contracting and sought actual and triple damages along with attorney fees and legal costs, estimating that the total sum exceeded $10 billion.
Byron Allen acquired the Weather Channel in 2018 through his Entertainment Studios Network (ESN), paying previous owners The Blackstone Group, Bain Capital, and Comcast/NBCUniversal an estimated $300 million. Just 10 years earlier, the Weather Channel was acquired by Bain Capital, Blackstone Group, and NBCUniversal for $3.5 billion.
Allen, an African-American, got his start in television as the teenage co-host of the early 1980’s reality show, “Real People” on NBC. Since then, he’s developed a media empire owning other properties such as Cars.tv, Pets.tv, and Recipe.tv along with 23 ABC/NBC/CBS/FOX network affiliate broadcast stations in 19 U.S. markets. At the time of the Weather Channel purchase, Allen praised the Weather Channel’s role of keeping America safe.
“The Weather Channel is one of the most trusted and extremely important cable networks, with information vitally important to the safety and protection of our lives,” said Allen in a statement when he acquired the cable network. “We welcome The Weather Channel, which has been seen in American households for nearly four decades, to our cable television networks division.”
However, since Allen’s purchase of the network, the lawsuit alleges that McDonalds has refused to advertise even though they have “purchased significant advertising on similarly situated, white-owned networks.”
“This is about economic inclusion of African American-owned businesses in the U.S. economy,” said Allen at the time the lawsuit was filed in 2021. “McDonald’s takes billions from African American consumers and gives almost nothing back. The biggest trade deficit in America is the trade deficit between White corporate America and Black America, and McDonald’s is guilty of perpetuating this disparity. The economic exclusion must stop immediately.”
On the same day the lawsuit was filed, McDonalds announced they were increasing spend with “diverse-owned media, content, and production partners.” “We’ve been making serious commitments that are guided by our values, and with this latest move, we’re taking action to advance diverse-owned companies across the marketing supply chain,” said Morgan Flatley, Chief Marketing and Digital Customer Experience Officer, McDonald’s USA. “We’re using our resources to support these platforms and businesses, which keep the brand at the center of culture while creating deeper relationships with our diverse customers, crew and employees.”
“As a Black female entrepreneur, I am proud to be a part of McDonald’s continued effort to meet Women and diverse-owned businesses where they are by providing much-needed resources to do business in an ever-evolving marketplace,” said Vicki Chancellor, Chair, McDonald’s USA Franchisee Marketing Committee. “It’s who we are as a leading brand that is doing our part to help underserved communities thrive.”
According to a statement released by McDonalds in 2021, they plan to increase national investments in diverse-owned companies from 4% to 10%; specifically, spend with black-owned media and production properties will increase from 2 to 5%, with additional investments going to other segments including Hispanic, Asian Pacific American, Women, and LGBTQ-owned properties.
But now, it appears the parties have agreed to work together and settle their differences.
McDonalds released this statement: “We are pleased that Mr. Allen has come to appreciate McDonald’s unwavering commitment to inclusion, and has agreed to refocus his energies on a mutually beneficial commercial arrangement that is consistent with other McDonald’s supplier relationships. Our company’s unique three-legged stool model relies on mutual respect, and we look forward to ESN’s contributions to the betterment of our system.”
Entertainment Studios Network and the Weather Group, the Weather Channel’s parent, released a similar statement: “We are pleased to find a resolution that maintains our business relationship. During the course of this litigation, many of our preconceptions have been clarified, and we acknowledge McDonald’s commitment to investing in Black-owned media properties and increasing access to opportunity. Our differences are behind us, and we look forward to working together.”
