Text messages revealed during the ongoing legal fight over Merit Street Media suggest that top executives, led by Dr. Phil McGraw, tried to hide a bankruptcy “scheme” to shift assets and staff into a brand-new media company, according to recent court filings.
This comes just a week after Trinity Broadcasting sued Merit Street and Dr. Phil, accusing them of carrying out a “years-long fraudulent scheme” in an effort to cheat TBN out of a failed $500 million deal. Following that lawsuit, TBN filed an emergency motion against Dr. Phil’s production company, Peteski Productions, for failing to turn over key documents in Merit’s bankruptcy case.
Professional Bull Riders (PBR), a TKO-owned sports league, joined TBN in the motion. PBR says Merit Street still owes it $181 million after backing out of a four-year deal and included text messages from Merit’s Chief Operating Officer Joel Cheatwood. According to PBR, the texts prove that Dr. Phil and Merit Street used bankruptcy as a way to secretly launch a new media venture.
“The documents produced to date demonstrate that this bankruptcy was conceived as a scheme to divert the Debtor’s employees and intellectual property to Envoy, a competing business Dr. Phil founded the day before this case was filed, and leave the Debtor’s business as a shell with nothing more than a repeated loop of re-runs,” PBR’s attorneys said in their filing.
This dispute comes less than two months after Merit Street declared bankruptcy, just over a year after the “anti-woke” cable network launched. At the same time, Merit accused TBN of trying to sabotage the channel’s future.
TBN, however, argues that Dr. Phil left the company more than $100 million in debt and engaged in “reprehensible conduct.” They claim he created a “false sense of urgency” to pressure the Christian broadcaster into paying him and his company tens of millions of dollars, all while offering little return.
Earlier this month, PBR filed its own emergency motion accusing Dr. Phil of a “bad faith” bankruptcy filing. They argued that Dr. Phil used the move to avoid lawsuits over unpaid bills and to “jumpstart” a new business. The filing pointed out that Dr. Phil announced his new venture, Envoy Media, less than two weeks after Merit declared bankruptcy — and that Envoy was incorporated just one day before the Chapter 11 filing.
This week, TBN said Peteski’s refusal to hand over documents left them unprepared to question Dr. Phil in his deposition, which was scheduled for Thursday. While the court had not yet ruled on the motions by Thursday morning, McGraw did sit for questioning.
According to TBN, Peteski admitted it had not produced all of Dr. Phil’s emails and text messages, nor provided documents related to Envoy, despite repeated requests. TBN accused McGraw of deliberately delaying the process in hopes of postponing his testimony.
Both TBN and PBR are now asking the court to reschedule the September 2 bankruptcy hearing, delay McGraw’s deposition, and order him to pay their legal fees.
In the meantime, text messages shared by PBR shed light on the alleged scheme. Days before filing for bankruptcy, Cheatwood told staff that lawyers had approved a plan to shut down Merit’s live news and original productions, leaving only a loop of old programming. He wrote that Dr. Phil preferred a system where “somebody can just push play and be done with it.”
Cheatwood also explained that while some staff would remain at Merit temporarily, the “chosen” employees would move to Envoy right after the bankruptcy filing. He further said staff would be given “consulting agreements” with Envoy and that Envoy would later bid to buy Merit’s program library.
PBR claims these texts show executives knew the plan was “problematic” and tried to hide it by switching to personal emails and texts instead of using company systems. Cheatwood even warned staff to be cautious about appearing too focused on Envoy while still working at Merit.
A spokesperson for Peteski denied the accusations, telling The Independent that the claims were “salacious falsehoods” meant to damage Merit Street Media. The spokesperson argued that Peteski has complied with the discovery process, but that TBN and PBR keep demanding more irrelevant material to drive up costs. They added that the company looks forward to presenting evidence at the September 2–3 hearing.
