Byron Allen v. Comcast, Diddy's Statement on REVOLT, and Future Implications

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Today's update is a bit different. I'll be covering one topic in three parts: The Allen v. Comcast class-action lawsuit and Diddy's experience with REVOLT, the Supreme Court's expected ruling, and future implications.

Byron Allen, Diddy, and REVOLT take on Comcast

Media mogul Byron Allen has spent the past few years battling Comcast over racial discrimination. After getting his case dismissed by three lower courts, he's gotten his day in front of the Supreme Court for an important ruling related to his underlying lawsuit.

Here's context on the initial lawsuit from a 2015 Washington Post article:

"A lawsuit against Comcast, Time Warner Cable Inc., Rev. Al Sharpton and the NAACP alleges that the media companies discriminated against black-owned businesses and paid activists like Sharpton to “whitewash” its practices. The complaint alleges that Comcast gave large donations to Sharpton, the NAACP and other civil rights groups to make it appear that the cable company was promoting diversity, even while it was failing to follow through on a promise to do so.

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."

Allen has since dropped the suit against Sharpton and has honed in on Comcast. During initial proceedings, Comcast referenced its carriage of Diddy's REVOLT cable company as proof of its support of black-owned media. But the 50-year-old hip-hop mogul wasn't having it.

From Diddy:

"The start we received from Comcast, which was a condition of the United States government approval for Comcast to acquire NBCUniversal, was important, but it is not the level of support needed to build a successful African American owned network. Not even close. Since that launch our relationship has not grown, and REVOLT is still not carried by Comcast in the most affordable packages nor is REVOLT available in all of the markets that would enable us to serve our target audience.

Comcast spends billions of dollars on content networks every year, but just a few million go to African American owned networks like REVOLT. That is unacceptable. Supporting diversity and economic inclusion requires a real partnership. The only way Black owned networks grow and thrive is with meaningful and consistent economic support. Otherwise they are set up to fail. REVOLT has never been in a position to truly compete on a fair playing field because it has not received the economic and distribution support necessary for real economic inclusion. Our relationship with Comcast is the illusion of economic inclusion."

Diddy once boldly said that REVOLT would be on one billion devices by 2019, but the company has struggled to get there. It laid off one-third of its staff last year. It has a syndication deal with Power 105.1 for The Breakfast Club, a partnership with Joe Budden, and others, but it has yet to achieved its intended goal. I covered the company's challenges and opportunities in How Revolt Can Bounce Back, but I should have also acknowledged Comcast's role in the company's performance.

This case highlights the critical distinction between diversity and inclusion. Diversity is hiring (or partnering with) those from underrepresented backgrounds. It's easier than inclusion, which is keeping those partners in the door and supporting their success.

It reminds me of the ever-popular chief diversity officer roles at tech companies. While I personally know some of these folks and acknowledge their efforts, I am still critical of the concept. Instead of the company's existing leadership doing the hard D&I work and incorporating it into the company's key performance indicators, D&I executives are often paid several hundred thousands of dollars to do the work instead. It gives the company's leadership a fallback if their efforts are questioned.

Allen v. Comcast Specifically

The Supreme Court is not deciding the merits of this case. It is instead deciding on the burden of proof required for litigation. Comcast wants a "but-for" legal test, which means that race would need to be the only factor at play in Allen's denial of carriage. Meanwhile, Allen is pushing for the "motivating factor" legal test, which acknowledges race as one of several important factors in denial of carriage.

‍Variety broke down the implications of both:

"In civil rights cases hinging on a but-for test, there’s ample precedent for what is known as “burden-shifting” in trial procedure. In this scenario, the burden of proving that Allen faced racial discrimination would shift from a legal standpoint to Comcast to provide “race-neutral” explanations for its decision-making. If race is seen as a motivating factor but not the sole reason for the decision, the burden would be on Allen’s team to prove that he was denied the same right as a white person to make and enforce contracts, per the specifics of the law that Allen invoked in his suit. In effect, this means that while the “motivating factor” standard is the better way to get the case to go to trial, the “but-for” standard may be the better chance for Allen to prevail."

That last sentence is a silver lining for Allen. The Supreme Court will likely rule in Comcast's favor on the "but-for" ruling. If Allen's case gets to trial, Comcast may have a difficult time.

Comcast's best argument is that there is low audience demand for Allen's niche programming, such as Pets.tv, comedy.tv, recipe.tv, and Justice Central. (For some context, Allen's Entertainment Studios also owns The Weather Channel, which he bought in 2018 for $300 million).

Allen's best argument is that he had carriage from Verizon, AT&T U-verse, DirecTV, who covered about 500 of the same shows as Comcast, but not Allen's. Additionally, Comcast carried relatively lesser-known white-owned channels like Fit TV, Current TV, and Baby First America.

Can Comcast prove that Baby First America had larger demand than Pets.tv? That ultimately what this will come down to.

Future Implications

While Allen's case has tons of institutional merit, the TV viewership landscape has evolved considerably since he first launched this lawsuit in 2015. Streaming has taken over for a certain group of customers. Nearly 20% more households will have cut the cord by the end of the year.

But Allen's deal still matters because cable is a tremendous cash cow. Despite the cord-cutting, more than half of U.S. households will still have cable by 2022. Allen's case is about access and viewership--especially for those who still have cable (and are more likely in a lower socioeconomic status). For this group, Disney+ is the last thing on their minds.

This is a challenge that REVOLT also faces:

"REVOLT isn’t even carried by Comcast in many key African American markets like Philadelphia, Indianapolis, parts of Florida, and the entire states of New Jersey, Alabama, & South Carolina, to name a few places."

It's safe to say that Allen is also fighting this based on the principle. But even if Allen took his content to Hulu or Netflix, it doesn't solve the problem of access. Cable companies have localized monopolies, and Comcast is the largest one in the country.

Unfortunately, if Allen loses the forthcoming lawsuit (not the Supreme Court one, but the one that may follow), it will be tougher for other class-action lawsuits focused on race. Attorneys will also be less willing to fight them. It's a treacherous slope.

So while it's great that Netflix is all about Strong Black Leads, and HBO has a strong partnership with Issa Rae, the streaming companies operate in a different world. They don't operate in a media landscape that still connects more than half of households in the U.S., many of them in the target demographics of black-owned networks. The Allen ruling will have broader implications than most Americans realize.