The Fort Worth-based startup founded by celebrity psychologist Dr. Phil McGraw on Wednesday filed for Chapter 11 bankruptcy protection, while simultaneously suing Trinity Broadcasting Network for breach of contract.
Merit Street Media’s legal move comes just over a year after the two companies celebrated a partnership launch – with Dr. Phil’s name – and a new eponymous nightly show forming the core of the new venture.
“This lawsuit arises out of a sad but oft told story,” read Merit Street’s lawsuit against business partner TBN. The filing argues that Trinity was obliged to fully cover services associated with the fledgling platform’s production and distribution.
However, according to Merit Street, “one side lived up to its commitments but the other … did not."
Merit Street and TBN did not immediately respond to requests for comment from The Dallas Morning News late Wednesday.
The Chapter 11 filing comes just days after Merit Street Media announced a fresh round of layoffs, and sheds new light on financial troubles that have plagued the North Texas company, affiliated with one of America’s most recognizable television personalities.
According to the bankruptcy filing, Merit Street has between $100 million and $500 million in assets, but also has liabilities in the same range.
It also counts over 200 creditors, including DirectTV, which it owes $1.7 million and Dish Network, which it owes $900,000. Merit Street also owes $700,000 to Peteski Productions — the Wichita Falls-based production company owned by McGraw that provides Merit Street with content — according to the filing.
Peteski Productions and TBN formed the joint venture, which was later named Merit Street Media, in 2023, with a plan for Peteski to produce episodes and TBN to distribute them to a nationwide audience, according to the complaint.
But soon after TBN, the majority owner, “reneged” on its obligations, the suit alleges. Merit Street argued it was part of an effort to “abuse its power as a controlling shareholder to advance its own interests and those of its CEO.”
Among other breach of contract claims, Merit Street argues that TBN caused it to enter into various distribution agreements, wrongly costing the company $96 million and providing inadequate support for the show.
The suit described TBN’s production services as “comically dysfunctional,” citing instances where the network “provided screens and teleprompters that blacked out during live shows, an incomplete control room operating out of a truck, an unusable cell phone app for viewers, and amateur video editing software.”
By July 2024, just months after the two parties had publicly celebrated the launch, TBN failed to pay millions it owed to Peteski, the suit alleges.
Merit Street is seeking a financial judgement for damages, including punitive damages, although it doesn’t specify an amount.
Trinity is a global Christian media giant that operates 30 networks around the world. In recent years it’s also ramped up its presence in North Texas, with studios in Irving, Dallas and Fort Worth.