Trinity Broadcasting Network, former business partner of Dr. Phil‘s now-bankrupt Merit Street Media, filed a counterclaim against the TV personality — alleging he engaged in a scheme to “fleece” the Christian broadcasting company and “enrich” himself and “his associates and affiliates.”
Merit Street Media, formed as a joint venture between TBN and Phil McGraw‘s Peteski Productions, filed for Chapter 11 bankruptcy protection on July 2, 2025. Concurrently, Merit Street sued TBN, alleging breach of contract and claiming it “abused its position as the controlling shareholder.”
TBN, in its countersuit filed Tuesday (Aug. 19) in U.S. Bankruptcy Court in the Northern District of Texas, names as defendants McGraw and Peteski, McGraw’s production company that is the proposed debtor-in-possession lender of Merit. Trinity Broadcasting accuses McGraw and Peteski of fraudulent inducement and breach of contract. A copy of the complaint is at this link.
“The response to TBN legitimately and lawfully defending itself from Peteski and McGraw’s bad-faith attacks is to cry foul because they do not like the true facts that they themselves now regretfully put at issue before this Court, revealing McGraw’s true illicit intent and wrongful conduct which he self-described as a ‘gangster move’ and as ’11th-hour poker,’” Trinity said in the complaint.
TBN said Peteski and McGraw engaged in a “years-long fraudulent scheme that they developed and executed to fleece TBN, a not-for-profit corporation, to enrich McGraw, his associates and affiliates. TBN is confident that the truth will set it free, and result in Peteski and McGraw being held accountable for their reprehensible conduct.”
A rep for McGraw did not immediately respond to a request for comment on TBN’s lawsuit.
According to TBN, in 2022, McGraw sought to strike a deal with Trinity as a potential network to replace CBS as a producing and distribution partner the “Dr. Phil Show.”
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“McGraw specifically represented to TBN that he wanted to change networks because of what he perceived to be CBS’s censorship of the content aired on the ‘Dr. Phil Show,’” TBN’s complaint said. “As McGraw put it, ‘I don’t want snot-nose lawyers telling me what I can and can’t say on TV.’”
However, according to TBN, Peteski misrepresented to Trinity that “CBS was selling out the advertising inventories for the ‘Dr. Phil Show’” and that the new programming McGraw would create for TBN would be 90-minute shows, rather than the then-current 60-minute shows, in order to increase overall ad revenue created by additional available advertising spots on longer show format. Moreover, Peteski told TBN that the then-current $68 million annual production costs for the “Dr. Phil Show” would be reduced by at least 40% by moving all related production activities from California to Texas and not bringing any current personnel associated with show to Texas, as well as “eliminating unionized employees and benefits and reducing overall headcount,” among other cost-saving measures.
On Jan. 10, 2023, TBN entered into a binding letter of intent with Peteski to create Merit Street Media and paid McGraw’s company $20 million on Jan. 12. Under the agreement, Merit Street was owned 70% by TBN and 30% by Peteski.
Per the contract, TBN would provide production and distribution services to Merit Street and Peteski was obligated to provide “new content,” including “160 (90 minute) new, topical episodes of the show ‘Dr. Phil’ (the ‘Show’) delivered over 24-27 production weeks, as needed,” according to the TBN complaint. “For that, McGraw (through Peteski) would receive a whopping $50 million per year for ten years — a total of $500 million, if (and only if) Peteski and McGraw performed.”
By June 2024, however, Peteski and McGraw “had not produced a single 90-minute episode, let alone the 160 episodes required by the [contract], and based on its production schedules, apparently had no intent to produce the ‘new content’ required under the [contract] in the remaining weeks on the production calendar,” the TBN lawsuit alleged. “In an effort to shift blame for their failures to TBN, Peteski and McGraw accused TBN of breaching its obligations under the BLI and not providing Peteski and McGraw with the resources they needed to produce content for Merit Street.”
Peteski, in filing last week opposing motions made by TBN and Professional Bull Riders — Merit Street’s largest creditor with a $181 million debt claim — disputed TBN’s claim that McGraw failed to produce any episodes of the promised 90-minute episodes of “Dr. Phil Primetime” under the JV agreement. “The evidence will show that TBN and Peteski decided to fit ‘Dr. Phil Primetime’ into a 60-minute time slot despite there being enough footage shot to accommodate the longer time period and, indeed, ‘Dr. Phil Primetime’ did stream after the initial hour was over,” Peteski said in the filing.
On Aug. 1, 2024, TBN informed McGraw that it would be amenable to increasing Peteski’s ownership share in Merit Street from 30% to 70% (thereby decreasing TBN’s ownership share from 70% to 30%) subject to the parties addressing “a multitude of outstanding deal points to be finalized,” per TBN’s lawsuit. But “McGraw never intended to perform any steps beyond the initial stock swap,” according to the complaint. “Indeed — unbeknownst to TBN — McGraw described his plan on August 3, 2024, as a ‘gangster move’ to reduce TBN to nothing more than ‘a passive minority investor role’ in Merit Street,” according to the TBN suit.
Merit Street’s Chapter 11 bankruptcy filing last month “came as a surprise to TBN because it still controlled two of the three directors on Merit Street’s board” and had not approved the bankruptcy petition, the broadcaster said in the complaint.
Peteski and McGraw formed a new company, Envoy Media Co., which was incorporated in Delaware one day before Merit Street filed for bankruptcy, according to TBN’s suit. [D]uring the same time they were allegedly negotiating with TBN to restructure Merit Street, McGraw and Peteski were making plans to create a new company, Envoy, to replace Merit Street,” the Trinity lawsuit said. The day after Merit Street filed the Chapter 11 case, all but six of the remaining Merit Street employees were laid off; meanwhile, “TBN has reason to believe that former Merit Street employees and contractors are performing services for Envoy,” the lawsuit alleged.
In its complaint, TBN seeks unspecified monetary damages, as well as a rescission of its deal with McGraw’s Peteski and the stock amendment. In addition, the company asks for declarations that Matthew Crouch and Samuel Smadja were “properly appointed to Merit Street’s board of directors” and that “McGraw and/or Peteski lacked the authority to remove” them from the board and that, as such, the court issue a permanent injunction ordering Crouch and Smadja be restored to their positions on Merit Street’s board.