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TBN Countersues Dr. Phil, Accusing Him of ‘Years-Long Fraudulent Scheme’ to ‘Fleece’ Christian Broadcaster Under $500 Million Pact




Dr Phil McGraw
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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.”
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TBN, in its countersuit filed Tuesday (Aug. 19) in U.S. Bankruptcy Court in
the Northern District of Texas, named as defendants McGraw and Peteski,
which is the proposed debtor-in-possession lender of Merit. Trinity Broadcasting accused 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.
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SEE ALSO: Dr. Phil Fires Back at His Bankrupt Company’s Legal Foes,
Accusing TBN and PBR of ‘Inflammatory and Damaging’ Attacks Aimed at
Depressing Value of Merit Street

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’s Peteski Productions said in a statement to Variety,
“TBN’s latest lawsuit is riddled with provable lies, and is part of a
lawfare litigation strategy designed to distract people so no one notices
when TBN ultimately is held accountable for walking away from its
commitments here. Among other things, they claim we didn’t create any
episodes. A simple check of IMDb tells the real story — we created more
than 200 episodes. People lost their jobs and Peteski Productions has
incurred millions of dollars of losses because of TBN’s bad behavior. We
will continue to fight for justice in this case.”

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
for the “Dr. Phil Show.”

“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.’”

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.
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However, according to TBN, Peteski had 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 through the 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.

According to TBN’s suit, “even though McGraw had previously represented
that he would substantially reduce production costs by eliminating all the
high union salaries of the then-existing ‘Dr. Phil Show’ personnel and
would use TBN personnel or hire local Texans, McGraw instead caused Merit Street to hire dozens of existing employees from the ‘Dr. Phil Show’ whom
he claimed were ‘essential.'” By May 2023, McGraw’s “essential” employees numbered at least 30 individuals, “many of whom were pre-existing union-
based employees who were paid California union-based compensation and
expected comparable union-type hours and benefits,” the Trinity lawsuit
said.

Per the agreement forming the joint venture, TBN would provide production
and distribution services to Merit Street. In return, 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 [contract] and not providing Peteski and McGraw with
the resources they needed to produce content for Merit Street.” In
addition, McGraw refused to allow Merit Street to air old episodes of the
“Dr. Phil Show,” which TBN said it had asked him to do in an effort to
“keep programming costs down and capture McGraw’s previous viewer base.”

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 of the
promised 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.

Following the launch of Merit TV in April 2024, “it became clear that
McGraw and Peteski could not deliver the viewership numbers, product integrations, or advertising revenues they previously promised to TBN. TBN expressed its disappointment with the lack of viewership, product
integrations, and advertising to Peteski and McGraw,” TBN said in the
lawsuit. “In fact, McGraw apparently never made any introductions to the advertisers and product integrators that he had claimed would follow him wherever he went. When confronted about the lack of viewership, product integration, and advertising issues, McGraw admitted that his team had
failed to live up to what was represented and expected and assured TBN that
his team would make a better effort going forward.”

Meanwhile, despite TBN “making its full library of content available” to be used to fill Merit Street’s 24-hour broadcast schedule as needed, “McGraw and/or the management team hired at McGraw’s direction rejected most of the
TBN programming,” Trinity’s suit alleged. McGraw and Peteski “instead
insisted that Merit Street enter into expensive distribution deals with McGraw’s friends,” including Steve Harvey, Nancy Grace, Chris Harrison and Lauren Zima, “to TBN’s (and Merit Street’s) detriment,” per the complaint.

By the end of June 2024, TBN had spent more than $100 million on Merit
Street, which included building out and expanding studio facilities and
office space — and a helipad — in Fort Worth, Texas, for McGraw’s use, according to the lawsuit. The TBN expenses “had to be recorded as loans” to
the company because “neither Peteski nor McGraw had contributed anything of value for Peteski’s 30% ownership interest,” per the Trinity lawsuit. TBN continued funding Merit Street’s operations at the rate of $9 million to
$13 million per month (recorded as additional loans) “under Peteski’s and McGraw’s direction and management (or lack thereof),” the suit said.

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. (In Peteski’s
Aug. 12 filing with the bankruptcy court, McGraw’s lawyers said the
“gangster move” statement “was made by misrepresenting an email [from Dr.
Phil] which TBN improperly and illegally accessed off its server which it
was hosting for the Debtor as part of its contractually obligated services” under the JV agreement; the lawyers did not provide context for the
“gangster move” comment.)

With its cash reserves “depleted” by its funding of Merit Street, TBN
listed its company airplane for sale in November 2024 for $17 million to
raise money to fund its own business needs and reduce its own overhead. TBN
had not yet sold the plane as of February 2025; according to Trinity’s
lawsuit, McGraw claimed he could take the plane, sell it and provide funds
to fund Merit Street. “In yet another artificially rush ‘deal,’ McGraw convinced TBN to ‘sell’ the airplane to Peteski,” the suit alleged. “As
soon as McGraw thought the deal was in hand, rather than converting the airplane to cash, he filed a flight plan to use the airplane to travel to
New Orleans that week, presumably to attend the Super Bowl.” To TBN’s knowledge, “the aircraft has never been sold and is still in a McGraw- controlled company in Europe,” according to the broadcasting company’s
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 TBN’s designated Merit
Street board members, Matthew Crouch and Samuel Smadja, were “properly appointed to Merit Street’s board of directors”; 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 the board.


https://variety.com/2025/tv/news/tbn-sues-dr-phil-fraudulent-scheme-fleece- christian-broadcaster-merit-street-1236493095/

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