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Rockets Owner Expresses Interest in Buying CSN Houston

Leslie Alexander Tells Bankruptcy Judge That Club Would Purchase All of RSN 11/21/2013 3:56 PM Eastern

 

Now, there are two parties who want to buy Comcast SportsNet Houston.

Appearing at a status conference hearing in the Comcast SportNet Houston bankruptcy proceedings, Houston Rockets owner Leslie Alexander said he has interest in purchasing all of the embattled regional sports network.

Alexander, whose team had remained largely silent during the early days of the bankruptcy petition filed by four Comcast-affiliated entities on Sept. 27, declared his intention before U.S. Bankruptcy Judge Marvin Isgur, as well as officials from the other partners in the RSN, including Comcast/NBCUniversal and Houston Astros owner Jim Crane, according to sources.

During the Sept. 27 filing, Houston SportsNet Finance, which loaned the RSN $100 million for start-up costs and to build a studio, said it "would be prepared to make a bid to acquire either the network (under a plan of reorganization) or substantially all of its assets.”

Sources said there have not yet been any formal discussions about a joint bid from the Rockets and Comcast/NBCU for the RSN.

The Astros, Rockets and Comcast NBC Sports Group own 46%, 32% and 22%, respectively, of the network, which has encountered financial difficulties stemming from its lack of distribution. Only Comcast and a handful of smaller providers are carrying the service, which bowed on Oct. 1, 2012, resulting in its inability to meet rights payments to the clubs.

Alexander’s remarks were the highlight of the conference hearing that lasted little over a half hour. According to the Houston Chronicle, Crane’s lawyer, Harry Perrin, told Isgur that “some traction has been made” in the Astros owner’s attempt to develop a new business plan. The parties, which engage in weekly conference calls to update matters, were scheduled to meet on Nov. 13, but Crane had to reschedule because of Major League Baseball’s ownership meetings in Orlando.

CSN Houston, which has 40% penetration in the Houston DMA through Comcast and the other smaller MPVDs, has not been able to ink affiliate pacts with the other major providers in the RSN’s five-state territory of Texas, Arkansas, Louisiana, Oklahoma and New Mexico.

On Oct. 29, after two days of hearings, Isgur issued a three-page order authorizing the Astros to negotiate with third parties on a new business plan.

The Astros had filed to dismiss the action on technical grounds regarding the validity and number of petitioners and threatened to pull their rights from the partnership, requests that Isgur denied with the ruling. The Rockets had sided with the Comcast affiliated companies on the bankruptcy petition, but averred that a responsible officer, not an interim trustee should be appointed to oversee the network.

Instead, Isgur decided to let Crane, who said he could do a better job in negotiating carriage deals than Comcast/NBCU, take his shot at talking to distributors and put his dismissal request on hold until after a Dec. 12 deadline.

With unanimity of vote required on key operating decisions – the teams have one apiece, while Comcast/NBCU has a pair – the RSN has been deadlocked in its negotiating attempts to gain more homes.

To that end, Comcast witnesses said during the October hearings that Crane blocked a proposed carriage agreement with DirecTV last spring that they said would have had a “cascading” effect in the RSN reaching pacts with other distributors. Internal reports, though, indicated that even with DirecTV in the fold, CSN Houston, which reportedly had been seeking monthly subscriber license fees of $3.40, wouldn’t become profitable for a number of years.

The Astros filed to dismiss the action on technical grounds regarding the validity and number of petitioners and threatened to pull their rights from the partnership, requests that Isgur denied with the ruling. The Rockets sided with the Comcast affiliated companies on the bankruptcy petition, but averred that a responsible officer, not an interim trustee should be appointed to oversee the network.

In addition to DirecTV, Dish Network, Suddenlink, Charter, AT&T U-verse and Verizon FiOS have all remained on the distribution sideline. At the Rockets’ request, the RSN recently extended a 45-day freeview period for the service during which the team -- now featuring Dwight Howard would play nearly two-dozen games -- but found no takers and the offer was withdrawn.

 

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