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TBN Countersues Dr. Phil, Accusing Him of aYears-Long Fraudulent SchemeA to aFleeceA Christian Broadcaster Under $500 Million Pact




Dr Phil McGraw
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Trinity Broadcasting Network, former business partner of Dr. PhilAs now- bankrupt Merit Street Media, filed a counterclaim against the TV
personality u alleging he engaged in a scheme to ofleeceo the Christian broadcasting company and oenricho himself and ohis associates and
affiliates.o

Merit Street Media, formed as a joint venture between TBN and Phil McGrawAs Peteski Productions, filed for Chapter 11 bankruptcy protection on July 2, 2025. Concurrently, Merit Street sued TBN, alleging breach of contract and claiming it oabused its position as the controlling shareholder.o
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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.

oThe response to TBN legitimately and lawfully defending itself from
Peteski and McGrawAs 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 McGrawAs true illicit intent and wrongful
conduct which he self-described as a agangster moveA and as a11th-hour poker,Ao Trinity said in the complaint.
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SEE ALSO: Dr. Phil Fires Back at His Bankrupt CompanyAs Legal Foes,
Accusing TBN and PBR of aInflammatory and DamagingA Attacks Aimed at Depressing Value of Merit Street

TBN said Peteski and McGraw engaged in a oyears-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.o

A rep for McGrawAs Peteski Productions said in a statement to Variety,
oTBNAs 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 didnAt create any episodes. A simple check of IMDb tells the real story u we created more
than 200 episodes. People lost their jobs and Peteski Productions has
incurred millions of dollars of losses because of TBNAs bad behavior. We
will continue to fight for justice in this case.o

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 oDr. Phil Show.o

oMcGraw specifically represented to TBN that he wanted to change networks because of what he perceived to be CBSAs censorship of the content aired on the aDr. Phil Show,'o TBNAs complaint said. oAs McGraw put it, aI donAt
want snot-nose lawyers telling me what I can and canAt say on TV.Ao

On Jan. 10, 2023, TBN entered into a binding letter of intent with Peteski
to create Merit Street Media and paid McGrawAs 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 oCBS
was selling out the advertising inventories for the aDr. Phil Show'o 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 oDr. Phil Showo 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 oeliminating unionized employees and benefits and reducing overall headcount,o among other cost- saving measures.

According to TBNAs suit, oeven though McGraw had previously represented
that he would substantially reduce production costs by eliminating all the high union salaries of the then-existing aDr. Phil ShowA personnel and
would use TBN personnel or hire local Texans, McGraw instead caused Merit Street to hire dozens of existing employees from the aDr. Phil ShowA whom
he claimed were aessential.'o By May 2023, McGrawAs oessentialo employees numbered at least 30 individuals, omany of whom were pre-existing union-
based employees who were paid California union-based compensation and
expected comparable union-type hours and benefits,o 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 onew content,o including o160 (90 minute) new, topical episodes
of the show aDr. PhilA (the aShowA) delivered over 24-27 production weeks,
as needed,o according to the TBN complaint. oFor that, McGraw (through Peteski) would receive a whopping $50 million per year for ten years u a
total of $500 million, if (and only if) Peteski and McGraw performed.o

By June 2024, however, Peteski and McGraw ohad 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 anew contentA required under the [contract] in the remaining weeks on the production calendar,o the TBN lawsuit alleged. oIn 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.o In
addition, McGraw refused to allow Merit Street to air old episodes of the
oDr. Phil Show,o which TBN said it had asked him to do in an effort to
okeep programming costs down and capture McGrawAs previous viewer base.o

Peteski, in filing last week opposing motions made by TBN and Professional Bull Riders u Merit StreetAs largest creditor with a $181 million debt
claim u disputed TBNAs claim that McGraw failed to produce any of the
promised episodes of oDr. Phil Primetimeo under the JV agreement. oThe evidence will show that TBN and Peteski decided to fit aDr. Phil
PrimetimeA into a 60-minute time slot despite there being enough footage
shot to accommodate the longer time period and, indeed, aDr. Phil
PrimetimeA did stream after the initial hour was over,o Peteski said in the filing.

Following the launch of Merit TV in April 2024, oit 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,o TBN said in the
lawsuit. oIn 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.o

Meanwhile, despite TBN omaking its full library of content availableo to be used to fill Merit StreetAs 24-hour broadcast schedule as needed, oMcGraw and/or the management team hired at McGrawAs direction rejected most of the TBN programming,o TrinityAs suit alleged. McGraw and Peteski oinstead
insisted that Merit Street enter into expensive distribution deals with McGrawAs friends,o including Steve Harvey, Nancy Grace, Chris Harrison and Lauren Zima, oto TBNAs (and Merit StreetAs) detriment,o 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 u and a helipad u in Fort Worth, Texas, for McGrawAs use, according to the lawsuit. The TBN expenses ohad to be recorded as loanso to the company because oneither Peteski nor McGraw had contributed anything of value for PeteskiAs 30% ownership interest,o per the Trinity lawsuit. TBN continued funding Merit StreetAs operations at the rate of $9 million to
$13 million per month (recorded as additional loans) ounder PeteskiAs and McGrawAs direction and management (or lack thereof),o the suit said.

On Aug. 1, 2024, TBN informed McGraw that it would be amenable to
increasing PeteskiAs ownership share in Merit Street from 30% to 70%
(thereby decreasing TBNAs ownership share from 70% to 30%) subject to the parties addressing oa multitude of outstanding deal points to be
finalized,o per TBNAs lawsuit. But oMcGraw never intended to perform any
steps beyond the initial stock swap,o according to the complaint. oIndeed u unbeknownst to TBN u McGraw described his plan on August 3, 2024, as a agangster moveA to reduce TBN to nothing more than aa passive minority investor roleA in Merit Street,o according to the TBN suit. (In PeteskiAs
Aug. 12 filing with the bankruptcy court, McGrawAs lawyers said the
ogangster moveo statement owas 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 serviceso under the JV agreement; the lawyers did not provide context for the
ogangster moveo comment.)

With its cash reserves odepletedo 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 TrinityAs lawsuit, McGraw claimed he could take the plane, sell it and provide funds
to fund Merit Street. oIn yet another artificially rush adeal,A McGraw convinced TBN to asellA the airplane to Peteski,o the suit alleged. oAs
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.o To TBNAs knowledge, othe aircraft has never been sold and is still in a McGraw- controlled company in Europe,o according to the broadcasting companyAs
suit.

Merit StreetAs Chapter 11 bankruptcy filing last month ocame as a surprise
to TBN because it still controlled two of the three directors on Merit StreetAs boardo 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 TBNAs suit. o[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,o 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, oTBN has reason to believe that former Merit Street employees
and contractors are performing services for Envoy,o the lawsuit alleged.

In its complaint, TBN seeks unspecified monetary damages, as well as a rescission of its deal with McGrawAs Peteski and the stock amendment. In addition, the company asks for declarations that TBNAs designated Merit
Street board members, Matthew Crouch and Samuel Smadja, were oproperly appointed to Merit StreetAs board of directorso; that oMcGraw and/or
Peteski lacked the authority to removeo 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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