A federal bankruptcy judge has converted Dr. Phil McGraw’s Merit Street Media from Chapter 11 restructuring to Chapter 7 liquidation, declaring the company “dead as a doornail.”
The decision follows a highly publicized and contentious trial that concluded with the court siding against the media company.
The ruling signals the collapse of a major player in the entertainment industry, leaving the future of the empire that once defined daytime TV in question. What led to this unexpected turn of events, and what happens next for Dr. Phil’s empire?
Judge’s Harsh Assessment
Judge Everett cited unprecedented circumstances: McGraw formed replacement company Envoy Media the day before Merit Street’s bankruptcy filing.
The judge emphasized that there was “no hope for rehabilitation” and warned that noncompliance with the liquidation order and continued financial gamesmanship could result in contempt charges.
The court found McGraw deleted “unflattering” text messages during discovery, violating court orders and prompting judicial criticism of his conduct.
Professional Bull Riders Association Claims $181 Million Debt
The Professional Bull Riders Association filed a $181 million claim against Merit Street Media for unpaid broadcasting obligations from a deal that lasted only five months (mid-2024 to November 2024).
This massive creditor claim triggered the acceleration of the bankruptcy. It contributed significantly to Judge Everett’s decision to convert the case to liquidation, where a trustee now controls the asset sales.
Evidence Destruction and “Gangster Move” Allegations
Court filings documented McGraw’s admission of a “gangster move” to eliminate Trinity Broadcasting Network as majority partner, with judicial records revealing deleted text messages about plans to “wipe out” claims.
Judge Everett found that the destruction of this evidence violated court discovery orders and demonstrated a pattern of concealment.
Trinity Broadcasting Network countersued, alleging that McGraw’s scheme was intended to “fleece” the Christian broadcaster and seize majority control.
Mass Layoffs and Hush Money Payments
Merit Street fired nearly all employees on the first day of bankruptcy filing (July 2, 2025). One month later, McGraw’s Peteski Productions paid approximately $925,000 to former Merit Street employees, reportedly to cover severance obligations.
Questions remain regarding the timing of this payment relative to the bankruptcy filing and Envoy Media’s formation.
The layoffs devastated Fort Worth, Texas, where Merit Street’s five-acre production campus employed over 70 workers.
Envoy Media Launched Day Before Bankruptcy Filing
Documents reveal McGraw formed Envoy Media with a 70%/30% ownership split between Peteski Productions (McGraw’s company) and Trinity Broadcasting Network, the day before Merit Street declared bankruptcy.
Judge Everett questioned how a bankrupt company’s controlling shareholder could launch an identical venture with the same partner, suggesting potential fraudulent conveyance and creditor avoidance strategies.
Trinity Broadcasting Network Partnership Collapses
Merit Street Media initially launched as a 70% Trinity Broadcasting Network and 30% Peteski Productions joint venture, promising to reach 80 million U.S. homes.
Throughout its 15-month operational period, the partnership deteriorated amid accusations of mismanagement, failed capital raises, and McGraw’s attempt to flip ownership percentages through emergency loans totaling $32.4 million by bankruptcy filing.
TBN’s lawsuit alleges breach of contract and fraud, claiming it was deceived about Merit Street’s viability and McGraw’s intentions to eliminate it as the majority shareholder.
Trustees Take Control of $100–$500 Million Asset Sale
Judge Everett appointed a bankruptcy trustee to oversee the liquidation of Merit Street’s remaining assets, including media libraries, intellectual property, broadcast rights, and equipment.
The estimated range of $100–$500 million puts substantial creditor recoveries at stake. Mandatory asset sales began immediately, with initial bids due in September 2025, as the trustee scrambles to maximize recoveries for claimants.
The Collapse
Merit Street Media’s 15-month lifespan from April 2024 launch to July 2025 bankruptcy filing represents a significant business failure for a high-profile celebrity venture.
McGraw, whose original Dr. Phil Show ran for 20 years on CBS before ending in 2023, failed to replicate that success.
The company burned through substantial capital, produced limited content, and imploded faster than most celebrity marriages.
McGraw’s Appeal Bid: Battle for Liquidation Control Begins
Dr. Phil McGraw’s legal team has filed a notice of appeal, publicly disputing the liquidation order and allegations of evidence destruction, while emphasizing its efforts to protect employees. However, the Chapter 7 conversion remains in effect pending the outcome of the appeal.
Judge Everett warned that continued resistance to the liquidation mandate could result in civil contempt sanctions, including potential jail time, if McGraw’s team fails to comply with court directives.
Promised Programming Never Materialized
Merit Street contracted to produce 160 episodes of 90-minute content—approximately 240 hours of programming—but failed to deliver the promised shows.
The incomplete fulfillment of broadcast commitments contributed to creditor claims and demonstrated operational breakdown.
Industry observers noted McGraw’s inability to execute content production despite decades of television experience.
Original Dr. Phil Show Cost Estimates Suggest Financial Mismanagement
The original Dr. Phil Show cost approximately $68 million annually to produce. Merit Street projected production cost savings through technological and operational efficiencies, yet failed to achieve the proposed economics. The failure to reduce costs while scaling operations contributed to mounting losses and creditor claims.
Advertising Revenue Projections Collapse
With an estimated 80 million household reach promised at launch in April 2024, Merit Street Media failed to convert distribution promises into actual viewership or advertising revenue during its 15-month operational period.
Based on typical cable network advertising rates, potential annual advertising revenue opportunities were estimated at $40–$80 million—all unrealized due to the company’s inability to produce promised content, retain major partners, and maintain operational stability.
Liquidation Mandate with Prison Threat
Judge Everett issued an extraordinary ruling converting Merit Street Media to Chapter 7 liquidation, stating the company arrived in court “dead as a doornail.”
The judge criticized McGraw for deleting unfavorable text messages and warned of potential civil contempt sanctions for noncompliance with liquidation orders.
While suggesting possible jail sanctions for future court order violations, the judge focused on appointing a trustee to oversee the mandatory liquidation of assets and the recovery of creditors.
Christian Broadcaster Sues TV Psychologist
Trinity Broadcasting Network’s pending lawsuit against McGraw alleges that Merit Street’s failure was intentional—designed to eliminate TBN as the majority shareholder while concentrating control in McGraw’s hands.
The religious broadcaster claims it was “fleeced” by a trusted television personality through deceptive business practices, creating a David-versus-Goliath narrative in the entertainment litigation sphere.
What the PBR Deal Failure Reveals
The PBR’s $181 million claim exposes Merit Street’s fundamental operational failure—the company accepted major broadcasting commitments while lacking production capacity and financial stability to fulfill them.
Industry analysts highlight this as a red flag for other potential partners considering celebrity-backed media ventures.
The collapse of such high-value agreements signals that McGraw’s production infrastructure and financial reserves proved inadequate for Merit Street’s ambitions, a cautionary lesson for investors evaluating similar ventures moving forward.
Competitive Networks Position for Asset Acquisitions
As the bankruptcy trustee auctions Merit Street’s media library, broadcast rights, and intellectual property, competing networks and streaming platforms position themselves to acquire valuable assets at liquidation prices.
The forced sale may depress equipment and real estate values across Fort Worth’s media sector while offering buyers discounted opportunities to enter family-friendly content markets.
International Content Distribution Disrupted by TBN Partnership Collapse
Merit Street’s international syndication agreements and distribution partnerships, facilitated through Trinity Broadcasting Network’s global reach, are facing immediate termination or renegotiation.
International viewers lose access to promised content, while broadcast partners scramble to replace programming. The disruption highlights dependencies between U.S.-based media ventures and international distribution networks.
Envoy Media Faces Creditor Skepticism and Regulatory Scrutiny
McGraw’s newly launched Envoy Media—formed the day before Merit Street’s bankruptcy—faces skepticism from creditors and potential regulatory scrutiny regarding asset transfers and financial flows between entities.
Bankruptcy trustees have the authority to investigate and potentially recover assets transferred to related entities, a risk factor that undercuts Envoy Media’s claimed independence from the Merit Street liquidation.
Celebrity Media Ventures Face Survival Questions
Merit Street Media’s collapse raises urgent questions about the viability of celebrity-backed media ventures in fragmented streaming markets.
The case demonstrates that even established television personalities cannot guarantee profitability when operational execution fails.
Investors, platforms, and creditors will scrutinize future celebrity media partnerships with unprecedented rigor.
