Trinity Broadcasting has filed a federal lawsuit accusing Dr. Phil McGraw and his former media venture, Merit Street Media, of fraud and breach of contract.
The complaint, filed Tuesday in U.S. District Court in Texas, alleges McGraw misled the Christian broadcaster under the terms of a $500 million, ten-year agreement in which he failed to deliver on a promise that he would reboot his daytime talk show and create hundreds of new episodes each year.
The litigation comes as Merit Street is also pursuing its own breach of contract claim against Trinity Broadcasting in bankruptcy court. The case has drawn heightened scrutiny because McGraw conditioned a loan to his company on Merit Street winning its lawsuit against the broadcaster, which the court described as anything but “routine.”
In its bankruptcy filings, Merit Street claimed Trinity Broadcasting failed to honor the terms of their joint venture. The company said Trinity did not secure national distribution, abused its authority as a controlling shareholder by forcing costly third-party carriage deals instead of leveraging its own station group, and engaged in self-dealing by leasing studio space to produce McGraw’s programs. Merit Street also accused Trinity of providing “shoddy production services.”
Trinity Broadcasting, which at one point held a 70 percent stake in Merit Street, paints a different picture. The broadcaster says McGraw approached it in 2022 after ending his long-running relationship with CBS, seeking a new partner to produce and distribute his daytime series.
According to the complaint, McGraw made several representations to secure the deal, including a plan to reduce annual production costs by 40 percent by moving operations to Texas and terminating unionized employees. He also allegedly claimed to own the rights to the program, that CBS had consistently sold out its advertising inventory, and that he would extend the show to 90 minutes.
Trinity Broadcasting says McGraw demanded it sign a contract with his production company Peteski and pay him $20 million upfront as a show of good faith, threatening to accept a competing $75 million annual offer from CBS if it refused. The two sides ultimately signed a purported $500 million agreement under which Trinity Broadcasting would provide production and distribution support while Merit Street and Peteski supplied 160 new episodes.
Despite the agreement, Trinity Broadcasting claims McGraw and his production company failed to deliver on the promised shows, something that a spokesperson characterized as “absolutely false.”
“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, McGraw’s media production company, told The Desk via e-mail. “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.”
McGraw has, in fact, produced several episodes of a talk show bearing his name, the format of which closely resembled the style of the show once syndicated by CBS, according to recordings of Merit Street TV created by The Desk over the past several months. McGraw has also conducted interviews with key political and social figures, including disgraced Congressman George Santos, President Donald Trump and former New York City Mayor Rudolph Giuliani, in addition to a multipart TV special that examined the jury assigned to a civil case involving Trump last year.
“People lost their jobs, and Peteski Productions has incurred millions of dollars of losses, because of TBN’s bad behavior.,” the spokesperson continued. “We will continue to fight for justice in this case.”
By mid-2024, the relationship began to unravel. Trinity alleges McGraw failed to deliver on promised ratings, ad revenue and product integration, while the broadcaster shouldered more than $100 million in expenses. It claims those costs ballooned as it continued to provide up to $13 million a month despite McGraw’s alleged failure to deliver a single episode.
The complaint further accuses McGraw of rehiring dozens of staffers from “Dr. Phil” after pledging to cut labor costs, refusing to hand over old episodes to Merit Street, and declining to make a $9 million payment tied to Peteski’s 30 percent equity stake.
“Instead, McGraw brazenly demanded that TBN pay him $100 million to obtain a 50% interest in the media library,” the lawsuit states. Trinity Broadcasting also alleges he insisted on striking distribution deals with personalities including Steve Harvey, Nancy Grace and Chris Harrison.
When Trinity moved to cut off funding, McGraw allegedly urged it to relinquish ownership control so he could pursue new investments valuing Merit Street at $425 million. Trinity says it relied on that representation, only to see its own stake diluted from 70 percent to 30 percent while Peteski’s share increased. After the transaction closed, McGraw allegedly called the maneuver a “gangster move” to sideline Trinity into a “passive minority investor.”
Trinity Broadcasting says it was not informed when Merit Street filed for Chapter 11 bankruptcy protection in July. The company claims McGraw siphoned assets from Merit Street and intends to shift the “Dr. Phil” license to a new venture called Envoy.
The lawsuit seeks damages for fraud and breach of contract, along with a ruling that McGraw agreed to transfer his library of past “Dr. Phil” episodes to Merit Street in exchange for Peteski’s original stake in the company.
