McDonald’s, Entertainment Studios Network settle US$10B advertising lawsuit in landmark agreement

USA – McDonald’s USA has reached a confidential settlement with Entertainment Studios Network (ESN) and The Weather Group, owned by media entrepreneur Byron Allen, resolving a US$10 billion lawsuit that had brought national attention to issues of diversity and inclusion in corporate advertising.

The agreement, finalized in June 2025, comes just weeks before a federal trial was set to begin on July 15 in Los Angeles, averting what could have been a lengthy and highly publicized legal battle.

The lawsuit, originally filed by Allen in 2021, accused McDonald’s of “racial stereotyping” by systematically excluding Black-owned media companies from a significant portion of its advertising budget.

Allen alleged that McDonald’s maintained a separate “African American tier” for media buys, which received disproportionately less funding compared to the general market advertising budget.

He further claimed that the fast-food giant failed to fulfill a 2021 pledge to increase its national advertising spend with Black-owned media from 2% to 5% by 2024, a commitment that Allen said influenced his pursuit of business with the company.

While the specific terms of the settlement remain undisclosed, both parties confirmed that McDonald’s will continue to purchase advertising from ESN at market value, reflecting its broader commercial strategy.

As part of the agreement, McDonald’s has not admitted any wrongdoing, and ESN will dismiss its lawsuit in the United States District Court for the Central District of California.

The deal also resolves related litigation, including a US$100 million lawsuit Allen filed in Los Angeles Superior Court, effectively closing all outstanding legal disputes between the parties.

In statements following the settlement, McDonald’s emphasized its ongoing commitment to inclusion, expressing satisfaction that Byron Allen now recognizes the company’s efforts to foster diversity within its supplier relationships.

For its part, Entertainment Studios Network and The Weather Group acknowledged McDonald’s commitment to investing in Black-owned media and increasing access to opportunity, noting that the differences between the parties are now resolved and expressing optimism about future collaboration.

The resolution of this high-profile case is widely viewed as a significant moment in the broader movement for diversity and equity in corporate advertising.

Although McDonald’s is not required to admit fault or publicly change its advertising strategy as a result of the settlement, the agreement is expected to reinforce the company’s stated commitment to inclusion and may influence industry standards for equitable media investment moving forward.

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