The lawsuit, seeking $20 billion, was filed in Los Angeles federal court Friday by Entertainment Studios, a television company founded by black producer and comedian Byron Allen and the National Association of African-American Owned Media (NAAAOM). The complaint, which comes as regulators mull a $45-billion merger between Comcast and TWC, alleges that Comcast has refused to do business with Allen and other black media executives.
“Comcast has engaged in, and is engaging in, pernicious, intentional racial discrimination in contracting,” it reads. Whether or not it gets anywhere is another question. Anyone can file a lawsuit alleging anything and claiming any amount of money.
Both Sharpton and Comcast dismissed the allegations Monday. In an interview with Variety, Sharpton called the lawsuit a “bogus statement from a person who has no credibility” and he told the Hollywood Reporter that he will be bringing counterclaims for defamation.
The National Action Network also questioned Allen’s credibility in its statement to the Hollywood Reporter.
“We would gladly defend our relationship with any company as well as to state on the record why we found these discriminatory accusations made by said party to be less than credible and beneath the standards that we engage in.”
The lawsuit also accuses Sharpton, the National Action Network (the non-profit civil rights organization he founded in 1991), the NAACP and the National Urban League, claiming that the groups signed “sham diversity agreements” with Comcast in exchange for donations, knowing that the cable company would leverage the agreements to mask its discriminatory practices.
The complaint particularly calls out Sharpton and his non-profit, which it says “has a business model and track record of obtaining payments from corporate entities in exchange for his support.” This critique has been leveled at him before, in the Daily Beast and the New York Post, though neither accusation came of anything.
This is the second complaint from Entertainment Studios and NAAAOM, whose president Mark DeVitre is also an executive at Allen’s company. In December the group filed a $10 billion lawsuit against AT&T and DirectTV, accusing the groups of similar discrimination. No other black-owned companies joined the accusations against Comcast.
In sweeping language, this latest complaint accuses Comcast of instituting a “Jim Crow” process for licensing programs, claiming that black-owned channels are only granted “carriage agreements” (contracts allowing companies like Comcast and Time Warner to distribute a programmer’s content) if they agree to terms inferior to those given to white-owned companies. According to the complaint, black-owned businesses receive just $3 million of the $15 billion Comcast spends on channel carriage and advertising.
Comcast communications director John Demmings wrote in an email that the lawsuit was “frivolous” and that company’s negotiations with the plaintiff have been in good faith.
But Allen, who says he first approached the distributor seven years ago, said in a phone interview that he’d been put off by Comcast executives year after year. One executive allegedly told him that the company was “not trying to create any more Bob Johnsons,” referring to the millionaire founder of Black Entertainment Television, which was sold to Viacom in 2001 for $3 billion.
“This is why black-owned media is becoming extinct,” Allen said. “It’s economic genocide.”
In 2010, Comcast signed a “memorandum of understanding” with civil rights groups as part of an effort to win approval for its merger with NBC Universal. In the agreement, the cable company committed to adding 10 new minority owned and operated networks, at least four of which would be run by African Americans. Sharpton, who lobbied for the merger in a letter to the Federal Communications Commission and signed on to the memorandum, said that the company’s 2010 meeting with minority leaders was the most important factor in his decision to support Comcast’s bid.
He was given a job as host for MSNBC’s PoliticsNation in August 2011, six months after the merger was approved — a move that raised questions about a potential conflict of interest. The complaint alleges that the position was part of a quid-pro-quo deal for Sharpton’s approval of the merger, as was $140,000 in donations to his National Action Network. (A Comcast spokesperson confirmed that number to the Daily Beast in 2011.)
“They pay him a little bit of money instead of spending the tens of millions and billions they should be paying to the black community,” Allen said.
Despite the goals laid out in the memorandum, the lawsuit says that Comcast now distributes only one black-owned channel, the Africa Network, which is run by a former Comcast executive, and that the company’s other purportedly black-owned channels are actually controlled by white-owned businesses.
“Defendants NAACP, National Urban League, and Al Sharpton’s National Action Network signed onto the MOUs with Comcast knowing — and agreeing — that Comcast would use the MOUs to perpetuate civil rights violations against 100% African American–owned media companies, including Entertainment Studios,” the complaint reads.
According to a New York Times and Center for Public Integrity investigation published last year, the NAACP received $30,000 in donations from Comcast between 2004 and 2012. The National Urban League, another defendant listed in the complaint, received $835,000. Both organizations expressed support for a merger between Comcast and Time Warner Cable. (For the record, lots of companies routinely and regularly donate money to such groups.)
Speaking with Variety, Sharpton said that Allen had approached various civil rights groups for support in getting his channels carried, but had been turned down because Entertainment Studios’ networks were “below the standards of what we wanted to support.”
Allen’s network operates eight channels and distributes 36 shows including Cars.TV, which won an Emmy for “Outstanding Lifestyle Program” in 2012. According to Allen’s attorney, Skip Miller, Entertainment Studios is the only black-owned multi-channel producer in the U.S. and its content is carried by Verizon, AT&T, RCN and a number of other distributors.
A Federal Communications Commission official, who asked not to be named because of the ongoing FCC review of the Comcast-TWC merger, said that Allen is a “legitimate” producer and that the commission should take his complaint seriously.
“The allegations are serious allegations and they go to the very heart of the Comcast commitment made under their first merger with NBCU,” he said, referring to the 2010 memoranda.
“The FCC should look at the impact these allegations in light of what a new proposed Comcast-Time Warner Cable entity would look like,” the official said. “These allegations themselves are based on the core of what they’re talking about as relevant in the review of the merger.”
The commission is expected to complete its review of the merger sometime this quarter.