A federal judge ordered that a bankruptcy proceeding for Dr. Phil McGraw’s Merit Street Media, the TV personality’s failed television network venture, be converted to a Chapter 7 liquidation — saying that was in the best interests of creditors including Trinity Broadcasting Network and Professional Bull Riders.
Merit Street was formed as a joint venture between TBN, a not-for-profit Christian broadcaster, and McGraw’s Peteski Productions. Merit filed for Chapter 11 bankruptcy protection on July 2, 2025, after running into financial straits. At the same time, Merit Street sued TBN, alleging breach of contract and claiming it “abused its position as the controlling shareholder”; subsequently, TBN countersued McGraw, alleging fraud.
Through a Chapter 7 liquidation, creditors can “have faith” that a trustee will be fair and impartial in the sale of the Merit Street assets, Judge Scott W. Everett of the U.S. Bankruptcy Court for the Northern District of Texas said at a hearing Tuesday in which he announced his ruling. That’s preferable to a dismissal of the Chapter 11 case, Everett said, which would let McGraw pay his “favored creditors” instead of his “unfavored creditors,” including TBN and PBR. He also said Chapter 7 would result in a better outcome for creditors than the appointment of a Chapter 11 examiner or the appointment of a Chapter 11 trustee.
Everett said “I’ve never seen a case” like that of Merit Street Media, in which a bankrupt entity was controlled by a party (i.e. McGraw) that hired the former company’s few remaining employees and launched a new firm (Envoy Media) that planned to acquire what was left of the debtor’s assets. “Mr. McGraw believed he was calling the shots,” Everett said. McGraw’s Peteski Productions was the proposed debtor-in-possession lender in the Merit Street bankruptcy filing; McGraw had been named as the sole director of Merit.
In his opening comments discussing the case, Everett said that “this Chapter 11 case is an anomaly” and said that in his opinion “there never has been a pretense of a rehabilitation or a reorganization” of Merit Street’s business, which he said was “dead as a doornail” when it filed for bankruptcy. In a Chapter 7 bankruptcy, a business is dissolved and its assets are sold to pay off creditors.
According to court documents, McGraw had said he was working on “getting rid of TBN” as a partner in Merit Street and was executing a “gangster move” to make TBN a noncontrolling shareholder in the company. McGraw formed a new company, Envoy Media, after filing for Chapter 11 bankruptcy protection for Merit Street; the bankruptcy, he said, would “wipe out” the claims against Merit by TBN and former content licensor PBR, according to evidence presented in court.
In addition, TBN also filed a motion to impose sanctions on Peteski, alleging Peteski failed to produce requested documents — and Everett, in his ruling, found that McGraw had deleted an “unflattering” text message in which McGraw described his strategy to “wipe out” TBN and PBR’s claims via the Merit Street bankruptcy. McGraw evidently did so to avoid having it produced in the court proceeding, Everett said, in violation of the judge’s orders.
In a statement to Variety, a spokesperson for McGraw’s Peteski Productions said, “We respectfully disagree with the court’s ruling and take issue with its comments concerning Dr. Phil McGraw. Dr. Phil is a leader of the highest integrity whose actions reflect honesty, ethics, and a lifelong commitment to helping people. We are reviewing all of our options regarding an appeal, which is likely.”
Everett was ruling on a motion filed by TBN and related party TCT Ministries seeking an emergency order to: dismiss Merit’s Chapter 11 case; convert it to a Chapter 7 liquidation; or appoint a Chapter 11 trustee to oversee Merit’s reorganization. In addition, PBR, which has a $181 million claim against Merit Street, filed a partial joinder in support of the TBN and TCT motion. PBR is owned by TKO Group, parent of WWE and UFC; it had entered into an agreement with Merit in mid-2024 to license bull-riding programming to Merit TV. PBR terminated its agreement with Merit in November 2024 after it was not paid by Merit.
PBR said in a statement Tuesday, “Dr. Phil’s Merit Street Media reneged on its agreement with PBR after just five months for no valid reason, and then Dr. Phil attempted to skirt obligations a second time through a bankruptcy scheme the court called an ‘anomaly.’ We’re grateful they did not allow it. We look forward to continuing this process, which thanks to today’s ruling, will be overseen by an impartial trustee, to recover what we’re owed by Dr. Phil and his company.”
Everett noted that Peteski had agreed to having the Chapter 11 bankruptcy case of Merit Street dismissed. That, in the judge’s estimation, was because Peteski and McGraw wanted to refile for bankruptcy in another jurisdiction.
TBN also filed a counterclaim against Dr. Phil, alleging he engaged in a scheme to “fleece” the Christian broadcasting company and “enrich” himself and “his associates and affiliates.” That suit seeks unspecified monetary damages.
Dr. Phil rose to fame as a guest on Oprah Winfrey’s talk show before launching his own daytime show with the backing of Winfrey’s Harpo Productions. He officially launched Merit Street Media in April 2024, which at launch claimed to reach more than 80 million homes with a programming lineup anchored by the “Dr. Phil Primetime” talk show.
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.” On Jan. 10, 2023, TBN entered into a binding letter of intent with Peteski to create Merit Street Media. Under the agreement, Merit Street was owned 70% by TBN and 30% by Peteski.
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.
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. 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.
Peteski, in a court filing, disputed TBN’s claim that McGraw failed to produce any of the promised episodes of “Dr. Phil Primetime” under the JV agreement. Lawyers for Peteski lawyers had claimed that, “From the outset of this Bankruptcy Case, both [TBN and PBR] entered into a ‘press strategy’ fueled in large part by incendiary pleadings they knew would be picked up by the media which, predictably, did occur. The effect of this is to not only insult and denigrate Peteski and Dr. McGraw but also to depress the value of the Debtor.”
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.)
Merit Street’s Chapter 11 bankruptcy filing this summer “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 its complaint.
One day before Merit Street filed for bankruptcy, Peteski and McGraw formed a new company, Envoy Media Co., as outlined in Trinity’s complaint. “[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 TBN 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.
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