AT&T Faces $10 Billion Race Discrimination Suit

A man uses a cell phone as he walks past an AT&T store in New York, July 11, 2013. (Mark Lennihan/AP)

WASHINGTON (NNPA) – A group that advocates for economic inclusion and fair contracting for Black-owned media recently filed a $10 billion lawsuit alleging racial discrimination against AT&T and DirecTV.

The National Association of African American Owned Media (NAAAOM) filed the lawsuit for an unnamed company that “owns seven original content, high definition television networks (channels), six of which were launched to public in 2009 and one in 2012” and according to the complaint “is the only 100 percent African American-owned video programming producer and multi-channel operator/owner in the United States.”

The suit alleges that AT&T and DirecTV violated a federal statute (Title 42 U.S. Code 1981) found in the Civil Rights Act of 1866, a law that was originally designed to protect freed slaves from discrimination as they joined the labor market and entered business contracts.

Marty Richter, a spokesman for AT&T, called the allegations ‘outlandish’ and ‘completely baseless,’ and said that the company spent $15.5 billion with diverse suppliers last year.”

Skip Miller, the lead trial counsel for the plaintiff and partner with the Miller Barondess, LLP law firm in Los Angeles, said his firm is going up against one of the largest corporations in the United States with vast resources, but it’s a lawsuit like any other lawsuit.

“The real deal is the money, that’s what this is about,” said Mark DeVitre, president of NAAAOM. “It’s about economic inclusion in mainstream America. The First Amendment requires diversity.”

According to the lawsuit, AT&T and DirecTV, collectively pay White-owned media companies approximately $16 billion combined, every year for channel carriage license fees, but don’t pay anything to 100 percent African American-owned media companies.

Even though AT&T executives admitted that they have a “black problem” to the company, according to the lawsuit, they have largely adopted a “wait and see” approach, refusing to increase the amount of business they do with the Black media company, unless it has a negative impact on their merger with DirecTV.

“They [AT&T], just said, ‘No,’” said Miller.  “‘We know you have good programming, but we don’t want to deal with you.’”

AT&T carries one of the unnamed company’s seven channels, but instead of paying carriage fees to the company, the telephone and media conglomerate requires that the company pay AT&T hundreds of thousands of dollars per year for the programming.

“Ultimately, AT&T stated that it would consider entering into a carriage agreement with the Company only if AT&T’s and DirecTV’s lack of 100 percent African-American owned channels interferes with approval of the acquisition,” states the complaint filed on December 3. “Otherwise, AT&T would continue to refuse to contract with the Company for its suite of channels, and would shut out the Company from its billions in channel carriage license fees and advertising and expenditures.”

The suit also alleges that AT&T and other White-owned media companies donate money to nationally-recognized civil rights groups in an effort to “buy” their support, actions the complaint calls “window dressing and a deceptive practice.”

“They can get up there say, ‘We support the Urban League.’ Those are all good organizations,” said Miller. “But what does that have to do with the media business?”

DeVitre said those contributions don’t have anything to do with getting African American voices and viewpoints on television.

According to the legal document, 100 percent African American-owned media receive less than $1.5 million of the approximately $4 billion that AT&T spends on advertising, every year.

“Likewise, DirecTV allegedly spends less than $1.5 million of its $2 billion in advertising costs each year on 100% African American-owned business,” according to the suit.

That amounts to fourteen thousandths of 1 percent spent annually with 100 percent African American-owned media.

The NAAAOM complaint stated: “This is an economic atrocity, illustrating the scope and magnitude of the racial discrimination in contracting by AT & T and DirecTV.”The suit alleges that AT&T’s racial discrimination in contracting will continue to perpetuate the economic exclusion of 100 percent African American-owned media from American television.

“But for AT&T’s and DirecTV’s refusal to contract with the Company, the Company would receive approximately $328 million in annual license fees for its seven channels – calculated using a conservative license fee of fifteen center per subscriber per month for each channel for AT & T’s and DirecTV’s combined 26 million subscribers. If Defendants contracted in good faith, the Company would also receive an estimated $100 million per year, per network, in national advertising sales revenue, or a total of $700 million per year,” according to the complaint.

Miller said it would be hard for his client to survive without doing business with AT&T and access to their roughly 26 million subscribers after the DirecTV deal, which would account for nearly 30 percent of the pay TV market. The proposed AT&T/DirecTV deal and the Comcast/NBC Universal deal have received lukewarm receptions from industry watchers.

DeVitre said that AT&T’s refusal to increase the business they do with 100 percent Black-owned companies is a form of economic genocide for African American-owned media, a sector that continues to shrink instead of grow.

DeVitre continued: “These companies either have to give away a tremendous amount of equity or make exorbitant ‘ransom’ payments in order to get carried and you can end up bankrupting yourself with this stuff or losing control of your own company and the system is designed to keep perpetuating it.”