Byron Allen goes to court again to battle for Black-owned media
Byron Allen, the onetime stand-up comic turned all-around media mogul, is a man on a mission.
The TV producer sued McDonald's Corp. for $10 billion on Thursday, alleging the fast-food giant is discriminating against Black-owned media companies like his.
The suit is part of a bigger push by the 60-year-old entrepreneur to correct what he says has been decades of bias against Black-owned businesses. Allen says he'll publicly shame, organize boycotts against and sue companies that don't commit to supporting African-American-owned media outlets. Executives who stand in his way will see their careers end, he promises, left behind by the march of racial progress.
"Don't minimize it — this is history," Allen said during a series of presentations he organized for Black-owned media firms in mid-May. "There are advertisers out there who will say, 'Oh, we've got a Negro problem. How little can we give them to shut up and go away so I can get back to my White-privileged life?' This isn't that conversation. We want to effectuate change and eradicate the economic exclusion."
Allen claims McDonald's spent just $5 million — 0.3% of its $1.6 billion ad budget — with Black-owned media companies in 2019, and won't buy spots on his channels. He says the restaurant chain relegates Black media outlets to a lesser tier budget-wise, and pays them less.
Early Thursday morning, before Allen filed his suit, McDonald's released a four-year plan to increase U.S. investments in companies owned by women and minorities to 10% from 4%. The company said it would "forge new multiyear partnerships with diverse-owned media companies" and would form an advisory board of external marketing and advertising subject-matter experts.
"Together with our owner/operators, we have doubled down on our relationships with diverse-owned partners," McDonald's said in a statement responding to the suit, noting the commitments from its Thursday release. "Once we receive the complaint, we will review and respond accordingly."
George Floyd Jr.'s videotaped murder last year sparked a national reckoning on race, which spread from street protests to corporate America's C-suites and boardrooms. Even as companies' commitments to improve diversity and inclusion swelled, COVID-19 exacted a disproportionate economic toll: The pandemic shuttered 41% of Black-owned businesses, nearly twice the national average, according to a study released in August by the Federal Reserve Bank of New York.
Allen's in-your-face approach is meant to meet the moment. In March, he and six other Black media executives, including rapper-actor Ice Cube, took out a full-page ad in the Detroit Free Press accusing General Motors Chief Executive Officer Mary Barra of racial bias for not taking a meeting with them.
"Mary, the very definition of systemic racism is when you are ignored, excluded and you don't have true economic inclusion," the letter read. General Motors responded that it would significantly increase its spending on Black-owned media, with the company ultimately committing 8% of its budget to such outlets by 2025, an increase from 1% last year. Barra also said she would meet with the media executives.
Another company pledging to get onboard is Verizon Communications Inc. The wireless giant is planning a "Black-Owned Media Summit" on May 24 in partnership with Allen's company, Allen Media Group. In a "responsible marketing" plan announced last month after discussions with Allen, Verizon pledged to spend more than 30% of its 2021 ad-production budget with companies owned by women and minorities. The plan also calls for 2% of the company's overall ad spending to go to Black-owned media companies like Allen's.
Earlier this month, GroupM, the media-buying arm of advertising giant WPP, said it would "invite" the companies it represents to spend at least 2% of their budgets on Black-owned media. GroupM's clients include Ford, Colgate-Palmolive and Nestle.
Allen was only partly pleased with that pledge. "Get it to a better ZIP code," he said at the Black-owned media event, specifically naming Kirk McDonald, a Black executive at GroupM who was part of the announcement. He also called out executives by name at the media-buying arms of Omnicom Group, Publicis Groupe and Horizon Media, saying he was talking to them about similar commitments.
"We're going to have the whole industry come together," he said. "This is bigger than ad dollars. Like, you actually think we're going to go away? There's no amount of money I won't spend. Trust me. I'm trained to go a thousand rounds."
Allen, who got his first big break in show business as a comic on "The Tonight Show" at 18, has built a fortune producing TV programs such as "America's Court With Judge Ross" and the game show "Funny You Should Ask." He expanded into TV networks, such as Cars.tv and Pets.tv, and in 2018 bought the Weather Channel for $300 million.
"I wanted to have that Jackie Robinson moment," he said during an April panel discussion on Black-owned media. "I wanted young Black kids to see us play in the global leagues and not just the Negro leagues."
His closely held, Los Angeles-based Allen Media Group now owns a dozen networks, including theGrio, aimed at African-Americans, as well as Local Now, a streaming service for news, entertainment and weather. In April, he agreed to buy seven network-affiliated TV stations for $380 million, bringing his total number of those, in markets such as Honolulu and Terre Haute, Indiana, to 23.
Allen's company was projected to earn as much as $180 million on sales of around $500 million over the next 12 months, according to a September report from Moody's Investors Service. He has relied on debt to build the business, with almost $1 billion in borrowings before the most recent station transaction. He's also an active buyer and remodeler of luxury homes, taking out an $83 million loan against his Beverly Hills mansion.
"Management's financial policy allows for high leverage that is currently above our tolerance," Moody's analysts wrote about Allen Media. "We also believe there is high event risk, as management has an appetite for further debt-financed M&A."
Where discussions about advertising and minorities historically focused on how often they appeared in ads, or on advertiser spending on media viewed by them, Allen has shifted the debate to Black-owned media. That's a category in which his company may now be the largest. Many of his properties, such as his biggest, the Weather Channel, don't feature programming specifically for Black viewers.
In 2014, Allen incorporated the National Association of African American Owned Media in California. Three months later, he sued Comcast Corp., the largest U.S. cable company, for $20 billion for refusing to carry for his channels, such as Justice.tv and Recipe.tv.
"His lawsuit, that puts this in the public domain for people to talk about, is not something that normally happens," said Sonya Grier, a professor of marketing at American University in Washington.
The case made it to the U.S. Supreme Court, which ruled in March 2020 that Allen had to prove racial discrimination was the reason Comcast wouldn't pay for those networks. It was a big setback for his case. But three months later, in the wake of the Floyd killing, Comcast settled for undisclosed terms. Allen had also sued Charter Communications Inc., the second-largest cable TV provider, and settled with that company as well in March of this year.
Allen's detractors wonder if the executive's quest is genuinely altruistic or ultimately self-aggrandizing. Among them is John Hope Bryant, chief executive officer of the financial-literacy nonprofit Operation Hope Inc. "This is not about all of us, this is about his wallet," Bryant said in a Facebook Live video after the Comcast settlement, adding that he's fine with that aside from the perceived hypocrisy.
"I want to see this largess that has just been cut, shared with all the folks that backed him," Bryant said of the settlement. "If he does that then I'm more than happy, but I doubt he's going to do what I'm going to suggest."
Allen said he can remember clearly the day Martin Luther King Jr. was shot, in April 1968. He was playing baseball outside his home in Detroit when his mother called him inside. Soon there were soldiers on the streets.
Many years later, he said, he met King's widow, Coretta Scott King, after buying the screen rights to her 1993 memoir "My Life With Martin Luther King Jr." King told him that her husband hadn't been assassinated because of his famous 1963 "I have a dream" speech but because of a later one, in which he said the struggle for civil rights must include economic equality.
"The hair went up on my arms," Allen recalled at a March event sponsored by the Los Angeles Business Journal, "and I've changed my life forever."
Bloomberg's Scott Moritz, David Welch and Leslie Patton contributed to this report.