Celebrity television psychologist Dr. Phil McGraw began testifying Tuesday in the weekslong hearing over whether he filed for bankruptcy for his Fort Worth-based Merit Street Media in “bad faith.”
The hearing started last week on Trinity Broadcasting Network’s motion to dismiss. Professional Bull Riders, whose contest was broadcast on the network, claims Merit Street owes it $181 million for breach of contract. PBR has asked the court to convert the bankruptcy to a Chapter 7 rather than a Chapter 11.
McGraw launched Merit Street Media television network in April 2024, a year after he ended his two-decade run of Dr. Phil on CBS. Merit Street filed for bankruptcy in July.
Merit has accused Trinity and its affiliate TCT Ministries of failing to fulfill their obligations under the 2023 agreement that established Merit Street. Merit alleges Trinity violated the agreement by charging for production services, not covering distribution costs and delivering a “shoddy” production work.
According to its bankruptcy filing, Merit has between $100 million and $500 million in assets but has liabilities in the same range.
The past several days featured testimony from the chairman of TBN and employees of Merit Street over when the decision to file for bankruptcy was made, who made the decision and about the transition from Merit Street Media to ENVOY.
Shortly after filing for bankruptcy, McGraw launched Dallas-based ENVOY Media Co., a new media venture that delivers live news, original entertainment and interactive content across traditional and digital platforms.
McGraw’s wife Robin and dozens of attorneys sat in Judge Scott Everett’s courtroom Tuesday to hear McGraw testify. Judge Everett had to ask both opposing counsel and McGraw to stop talking over each other, slow down and calm down during the sometimes heated and tense testimony.
Foley & Lardner partner Robert Slovak, representing TBN, asked McGraw about a phrase he used in a text message saying he was going to make a “gangster move” by changing the ownership of Merit Street.
McGraw did not deny using the phrase.
He has been accused of filing for bankruptcy for Merit Street in “bad faith” in July and then, just weeks later, announcing ENVOY as a relaunch of Merit Street.
McGraw told the court he did not want Merit Street to go into bankruptcy.
“I fought it. I fought it. I fought it,” McGraw said. “It was not a victory for me. It was not a winning strategy for me.”
In response to questioning, McGraw denied he was responsible for filing the bankruptcy petition and claimed that Gary Broadbent, Merit’s chief reconstructing officer, made that call. When Broadbent testified, he confirmed it was his decision.
McGraw claimed that working with TBN was “toxic” and “absolutely unworkable.” He further testified that Merit Street and ENVOY are different because ENVOY is produced on digital platforms.
Nicholas Secco, Benesch’s Chicago-based trial practice group chair, represented the Professional Bull Riders. Secco is expected to continue questioning McGraw Thursday. Jackson Walker partner Charles Babcock, who is representing Peteski Productions, is also expected to question McGraw. Peteski, which is owned by McGraw, formed Merit Street in 2023 and produced episodes for the network.
The hearing is currently scheduled to end on Monday.
Sidley Austin partners James Ducayet, Stephen Hessler and Steven Sexton, and senior managing associates Jeri Leigh Miller, Weiru Fang, Andrew Rodheim and Patrick Venter are representing Merit Street Media.
Foley & Lardner partners Rajiv Dharnidharka, Steven Lockhart, Mark Moore, Holland O’Neil and Robert Slovak, associates Nora McGuffey and Stephanie McPhail, and senior counsel Davis Mosmeyer III are representing Trinity Broadcasting and TCT Ministries.
The case is Merit Street Media Inc. v. Trinity Broadcasting of Texas Inc. and TCT Ministries Inc., 25-08006.