"Dr. Phil" McGraw testified Tuesday in Texas bankruptcy court that he sought control of his joint venture with Trinity Broadcasting last year because his partner had "abandoned" the venture's mission and failed to support it during its startup phase.

During the fourth day of a trial over motions to dismiss the Chapter 11 case of Merit Street Media, McGraw said he was moved to take control of the joint venture from Trinity because it was struggling to earn revenue and McGraw believed he could raise millions of dollars in a short time if he was in charge of the operation.

McGraw alleged that following an August 2024 deal in which McGraw's Peteski Productions Inc. assumed 70% ownership of Merit Street — switching equity positions with Trinity, which then held the remaining 30% — Trinity financially ditched their partnership.

If Trinity "had not abandoned this mission prematurely, I think it would have been the best investment they had ever made," he said on examination by counsel for Trinity.

McGraw said the network he and Trinity had launched had a long runway to profitability, testifying that it was a four-to-five-year journey, and that Trinity, the Christian broadcaster, was informed of this forecast when it joined forces with Peteski to form Merit Street and launch the new network, carried on Trinity's airwaves.

The swapping of equity positions would have resulted in a much better financial performance for Trinity than if it had retained its original 70% stake in Merit Street because having McGraw in charge would allow Trinity to focus on its strengths in television distribution, while McGraw could have complete control over the production of the programming, he told the court.

McGraw challenged the testimony given Monday in the U.S. Bankruptcy Court for the Northern District of Texas by Matt Crouch, president of Trinity, who said there was no money coming into Merit Street and no one was watching the channel's programming. He also said he contributed $50 million to the operation after Trinity stopped financing it.

Trinity's brief in support of its motion to dismiss the Chapter 11 case categorized McGraw as a "thief in the night," trying to abscond with Merit Street's assets and hand them off to a new media entity controlled by McGraw that would continue producing "The Dr. Phil Show."

Crouch testified Monday that the language used in the brief included a biblical reference that discusses the second coming of Jesus Christ, and McGraw charged Tuesday that Crouch's comments on that matter were "blasphemy."

McGraw said he began exploring ways to keep Merit Street out of bankruptcy and made moves to strip the company down to keep costs under control, including laying off dozens of employees. At the same time, he was starting up a new entity called Envoy Media Co. Trinity alleged the bankruptcy was filed in bad faith to escape obligations to Trinity and others while at the same time transferring Merit Street's assets and employees to Envoy.

Professional Bull Riders Inc., a creditor of Merit Street that signed a deal for the channel to broadcast bull-riding events, is also seeking dismissal of the Chapter 11, accusing Merit Street of trying to cancel the creditor's claims against the debtor.

"I 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, and I sure did not do it to escape PBR's claim."

Texas-based Merit Street filed for bankruptcy in July with plans to sell its assets in Chapter 11. The broadcasting group was formed in 2023 as a joint venture between Peteski and Trinity to continue producing and airing his eponymous show, which had just ended a 21-year run on CBS.

Merit Street sued Trinity in an adversary proceeding, alleging that the network didn't uphold its end of the joint venture, with the debtor seeking to cancel $25 million of liens asserted by Trinity tied to their prepetition agreement.

The trial over the dismissal request is scheduled to resume Thursday with additional cross-examination of McGraw.

Merit Street is represented by Jeri Leigh Miller, Stephen Hessler, Patrick Venter and James W. Ducayet of Sidley Austin LLP.

Peteski is represented by Carl C. Butzer, Charles L. Babcock, Vienna F. Anaya, Bruce J. Ruzinsky, William T. Farmer, Matthew D. Cavenaugh and Emily Meraia of Jackson Walker LLP.

Professional Bull Riders is represented by Jason M. Rudd and Scott D. Lawrence of Wick Phillips Gould & Martin LLP and Jennifer R. Hoover, Andrew D. Kinsey, Nicholas J. Secco, Alyssa A. Moscarino and Abbey Walsh of Benesch Friedlander Coplan & Aronoff LLP.

Trinity is represented by Holland N. O'Neil, Robert Slovak, Steven C. Lockhart, Mark C. Moore, Stephanie L. McPhail, Rajiv Dharnidharka and Nora J. McGuffey of Foley & Lardner LLP.

The unsecured creditors committee is represented by Louis R. Strubeck Jr., Gregory M. Wilkes, Laura Smith and Julian Gurule of O'Melveny & Myers LLP.

The bankruptcy case is In re: Merit Street Media Inc., case number 8:25-bk-80156, in the U.S. Bankruptcy Court for the Northern District of Texas.

The adversary action is Merit Street Media Inc. v. Trinity Broadcasting of Texas Inc., case number 8:25-ap-8006, in the U.S. Bankruptcy Court for the Northern District of Texas.