AT&T, DirecTV Hit With $10 Billion Race Discrimination Lawsuit

National Association of African-American Owned Media alleges the merging media giants refuse to carry channels by and advertise with 100% African American-owned media

Last Updated: December 4, 2014 @ 11:14 AM

The National Association of African-American Owned Media (NAAAOM) has filed a $10 billion lawsuit against AT&T and DirecTV for race discrimination in violation of the Civil Rights Act of 1866. The suit, filed Dec. 2 in a California federal court, names AT&T, Inc., AT&T Services, Inc., and AT&T Mobility LLC as defendants alongside DirecTV.

NAAAOM is representing “at least one” television production and distribution company that is 100% African American-Owned. While the suit does not identify the company by name, it states that it is “the only 100% African American-owned video programming producer and multi-channel operator/owner in the United States.”

The lawsuit states that the unnamed company owns seven original content, high definition networks, and owns and distributes over 32 television series, several of which have been nominated for and won Emmy awards.

The suit alleges that despite the fact that 13% of the American population is African-American, neither AT&T or DirecTV license programming from 100% African American-owned media, and that they spend only a tiny fraction of their advertising costs on 100% African America-owned media.

According to the legal document, 100% African American-owned media receives less than $1.5 million of the approximately $4 billion AT&T spends annually on advertising. Likewise, DirecTV allegedly spends less than $1.5 million of its $2 billion in advertising costs each year on 100% African American-owned business.

“It is appalling, deeply upsetting and totally unacceptable now and moving forward that economic exclusion of 100 percent African American-owned media continues to be perpetuated by these behemoth media conglomerates and their persistent, rigid refusal to contract with 100% African American owned media,” Mark DeVitre, president of NAAAOM, said in a statement.

DeVitre went on to say that should the companies not quickly resolve the issues for which they are being sued,  NAAAOM would be calling for the resignations of several executives from both companies, including AT&T CEO and chairman Randall Stephenson, AT&T VP media services and sponsorship Mark Wright, AT&T president, content and advertising sales Aaron Slater, DirecTV CEO and chairman Michael D. White,  and DirecTV CCO Daniel York, along with organizing nationwide boycotts of both companies.

“100% African American-owned television networks are reliant upon multichannel video programming distributors like AT&T and DirecTV not only to realize subscriber and advertising revenue, but also to reach television consumers providing them with a wide range of diversity of viewpoints in programming as required of these companies by the First Amendment to the United States Constitution,” the NAAAOM said in a statement.

In response to the lawsuit, AT&T told TheWrap, “These outlandish allegations are completely baseless. Diversity is a top priority for AT&T as demonstrated by the national recognition we received for our programs and performance, including DiversityInc naming AT&T No.1 on its 2014 Top 10 Companies for Supplier Diversity. In all AT&T U-verse markets, customers can watch numerous African-American-oriented networks, including BET, BET Gospel, Encore Black, OWN, Starz in Black, TV One, and VH1 Soul. Also, we make Justice Central, a 100 percent African-American-owned television network, available to more than 95 percent of our subscriber base. And it’s important to note we spent $15.5 billion with diverse suppliers in 2013.”

The lawsuit claims that “white-owned media has deceptively worked hand-in-hand with governmental regulators to perpetrate the exclusion of 100% African American-owned media from being paid for channel carriage.” According to the lawsuit, this was accomplished through the use of “tokens” and “window dressing,” defined as “African American celebrities posing as ‘fronts’ or ‘owners’ of channels, which are truly owned by white-owned media.”

The suit further accuses AT&T of making “cash donations to non-media civil rights groups to ‘buy’ their support, effectively paying them off for their approval of AT&T’s acquisition of DirecTV.” The proposed merger between AT&T and DirecTV has been approved by the boards of both companies, but is still awaiting regulatory approval from the U.S. Department of Justice and the FCC.

As for the discrimination in particular to the company NAAAOM is representing, the lawsuit claims, “AT&T executives have admitted that AT&T and DirecTV have excluded this African American-owned network provider. AT&T has stated that it will not consider paying for the company’s suite of television channels for any AT&T/DirecTV video platforms unless the government forces AT&T to do business with 100% African American-owned media in connection with its acquisition of DirecTV.”

The plaintiffs allege that this purported refusal to carry the company’s channels unless forced to do so by the government is an “admission of racial discrimination in contracting and represents a deep form of institutionalized racism” in violation of the Civil Rights Act.

“This lawsuit presents a unique and important opportunity for our justice system to address and eradicate racial discrimination against 100% African American-owned media companies,” said Louis “Skip” Miller of Miller Barondess LLP, lead trial counsel for the plaintiff. “I look forward to presenting our case in court, explaining it to the jury and obtaining an appropriate remedy for the wrongful way AT&T and DirecTV have operated their businesses. 100% African American-owned media companies have been egregiously harmed and we look forward to obtaining justice for them.”

According to the legal document, the unidentified 100% African American-owned company has been attempting to establish a carriage agreements with AT&T and DirecTV since 2007. The company launched six networks in 2009, with a seventh following in 2012.

The document does state that AT&T carries one of its channels, but rather than pay to carry it, the suit says, “AT&T requires the company to pay it … hundreds of thousands of dollars per year for this programming.” Meanwhile, the suit claims that DirecTV has stated that it would charge the company $20 million annually to carry just one of its channels.

Further, the suit claims that while AT&T has refused to do business with the unnamed company, it gave Peter Chernin, “a prominent white businessman,” half-a-billion dollars to created programming similar to the programming already available on the company’s existing networks.

In coming up with its $10 billion figure, the plaintiff alleges that this would be the approximate value of the company if AT&T and DirecTV licensed its networks, leading to higher visibility and growth as well as national advertising revenue.

The NAAAOM is represented by Louis R. Miller, Amnon Z. Siegel and Lauren R. Wright of Miller Barondess LLP.

(Updated Dec. 4 at 11:09 a.m. to include response from AT&T)