Trinity Broadcasting is countersuing Dr. Phil McGraw’s Merit Street Media in bankruptcy court for fraud and breach of contract.
In a complaint filed Tuesday in U.S. Bankruptcy Court for the Northern District of Texas and obtained by TheWrap, Trinity Broadcasting, McGraw’s distribution parter, alleges that he defrauded the Christian television network through a $500 million, 10-year distribution agreement—claiming he failed to deliver even a single episode of his new talk show.
On the other hand, Merit Street (which is currently in bankruptcy court) argues that Trinity Broadcasting failed to uphold its end of their joint venture, primarily by not securing national distribution. Instead, the network abused “its power as a controlling shareholder,” the company claims, by pressuring Merit Street into costly third-party distribution deals rather than using Trinity’s existing network of local TV stations.
While Merit’s 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,” Merit’s suit alleges.
Trinity tells a different story. In its countersuit, the broadcaster says McGraw himself approached the company in 2022 after seeking a replacement for CBS as both production and distribution partner for his talk show. Trinity contends McGraw made key assurances about the show’s financial health and continued popularity that ultimately proved misleading.
The lawsuit alleges these assurances included McGraw’s proposed cost-cutting measures: a 40 percent reduction in the show’s $68 million annual production budget by relocating all operations to Texas from California and eliminating unionized staff. He also asserted ownership of the series, claiming CBS had already sold out its advertising inventory, and promised to deliver new, expanded 90-minute episodes.
Through his production company, Peteski, McGraw allegedly told Trinity Broadcasting that it had to sign a deal with Peteski and pay him $20 million upfront as a show of good faith—or he would instead accept CBS’ competing offer of $75 million per year. Anything less, he warned, would be a “deal killer,” according to the lawsuit.
According to the complaint, under a purported $500 million, ten-year agreement, Trinity Broadcasting was to provide production and distribution services to Merit Street, while Peteski would supply new content, including 160 episodes.
“TBN is confident that the truth will set it free, and result in Peteski and McGraw being held accountable for their reprehensible conduct,” the lawsuit reads.
“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,” a spokesperson for Peteski told TheWrap. “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.”
The partnership reportedly deteriorated last year when McGraw allegedly failed to deliver the promised viewership, product integrations, and advertising revenue to Trinity Broadcasting. The network claims it had spent over $100 million by the end of June (some of which was recorded as loans to Merit Street). The lawsuit states that amount continued to climb as Trinity Broadcasting funneled up to $13 million per month into production, even though McGraw had yet to produce a single episode.
When Trinity Broadcasting stopped its payments, McGraw accused the network of breaching the contract and subsequently filed for bankruptcy. Trinity Broadcasting asserts multiple claims of fraud and breach of contract, seeking a court determination of both companies’ rights and obligations under the agreement. It also asks the court to rule that McGraw had agreed to transfer his library of Dr. Phil episodes.
McGraw’s 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.
McGraw’s media venture was founded just last year, after his “Dr. Phil” TV show ended with the 2022-23 season.
