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Comcast Won't Engage in Astros' PR Campaign over CSN Houston

Crane: Club Nixed Proposed, Undervalued Carriage Deals 10/09/2013 4:31 PM Eastern

 

While Houston Astros owner Jim Crane has been quite vocal in airing his side of the story of the Comcast SportsNet Houston management contretemps and bankruptcy tale, Comcast is going to take a different tack.

A day after Crane said that the Astros rejected informal, proposed carriage deals from Comcast/NBCUniversal management that undervalued the RSN’s license fee and would have led to it being insolvent, the company said it won’t engage in a public war of words with the MLB squad.

“Comcast remains strongly committed to the Houston market and its affiliates look forward to presenting their case on October 28," the company said in a statement. "In advance of the scheduled hearing, there will be no engagement with the Astros’ public relations campaign.”

On Monday Oct. 7, the Astros filed a motion with U.S. Bankruptcy Court Judge Marvin Isgur in the Southern District of Texas to dismiss the petition brought by four Comcast-related creditors on Sept. 27 for an involuntary Chapter 11 bankruptcy against the parent company of Comcast SportsNet Houston.

They contend that CSN Houston has exhausted the $100 million loan from Houston SportsNet Finance that was used to build studios and for start-up/operational costs with the RSN, which can’t meet its financial obligations because of ‘total gridlock’ among the partners when it comes to key operational decisions.

The Astros own 46% of the network, while the Houston Rockets, which have yet to comment on the legal proceedings hold 32%, and Comcast/NBCUniversal controls 22%. However, the RSN’s governance structure  -- one vote each for the ballclubs, two for Comcast -- requires unanimity of opinion on key operations decisions, including carriage contracts.

The RSN only has 40% penetration in the Houston DMA, mostly through Comcast, and has yet to reach deals in Texas and the four other states in its territory with DirecTV, Dish, Time Warner Cable, AT&T U-verse, Verizon and Suddenlink. CSN Houston has reportedly been seeking a monthly subscriber fee of $3.40.

Crane in an interview with the Houston Chronicle on Oct. 8 said the Astros were opposed to informal distribution pacts proposed by Comcast/NBCUniversal because “there would never be enough money in the business to pay all the obligations. They weren’t off by 5 or 10 cents. They were off by 50 cents on the dollar or 40 cents on the dollar. It was so bad that it didn’t make any sense.”

He said that Comcast/NBCU at one stage offered to pick up the losses if the Rockets and Astros would accept lower carriage fees, but ultimately those allocations would have been funded through decreases in the clubs’ equity positions. Crane has also charged that the bankruptcy proceedings are a gambit by Comcast/NBCU to gain control of the Astros TV rights.

Crane said he has heard from “other interested parties” that would be willing to carry Astros games should the CSN Houston partnership collapse. Those parties, though, would stand “on the sidelines” while the bankruptcy case unfurls.

 

September