Merit Street Media, the cable TV network created by Dr. Phil McGraw, filed for Chapter 11 bankruptcy this week. The company also filed a lawsuit against its former partner Trinity Broadcasting Network (TBN), alleging breach of contract, fiduciary duty and breach of the duty of good faith and fair dealing.
“TBN formed Merit Street as a joint venture and contractually committed to provide valuable services to the joint venture,” the suit alleges. “But TBN then reneged on its obligations and abused its position as the controlling shareholder of Merit Street to improperly and unilaterally burden Merit Street with unsustainable debt, doing so either without notice or in direct violation of promises not to do so.”
As a result, per the documents obtained by TheWrap, Merit Street was forced to “pay or incur obligations to third parties in excess of $100 million” and as a result, is now bankrupt. And, according to McGraw’s network, TBN’s actions were taken purposefully.
“They were a conscious, intentional pattern of choices made with full awareness that the consequence of which was to sabotage and seal the fate of a new but already nationally acclaimed network,” the lawsuit further states.
McGraw’s media venture was founded just last year, after his “Dr. Phil” TV show ended with the 2022-23 season.
“Trinity Broadcasting Network (TBN) is being sued by Merit Street Media (MSM) for failing to provide clearly agreed-upon national distribution and other significant foundational commitments critical to the network’s continuing success and viability,” a Merit spokesperson told TheWrap. “The suit is part of a restructuring proceeding also initiated by MSM.”
While the suit alleges “shoddy production services” from TBN, the “most egregious” issue, it says, is that Merit Street programs could not be seen nationwide due to “withholding distribution payments despite repeatedly
acknowledging those distribution payments were 100% TBN’s sole responsibility.”
“Simply put, as a result of TBN’s conduct, Merit Street has nowhere to send its broadcast signal and nowhere to air its programming,” the suit alleges.
The lawsuit requests Merit Street be awarded damages on all counts, legal fees, and “such other and further relief as the Court may deem just and proper,” though no specific amount for such was listed.
TheWrap has reached out to Merit Street and Trinity for further comment.
