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SBJ/May 26-June 1, 2014/Media
Three show interest in Houston rights
Published May 26, 2014, Page 3
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According to several sources, NBC Sports Group, AT&T and Fox Sports have talked with network executives about obtaining the teams’ local rights as a way to fix the problems with the RSN, which has not been able to get meaningful carriage since its launch in October 2012. The media companies’ initial offers place the value of the rights for both teams at $80 million per year, the sources said. That amount is considerably less than the $100 million the teams had been due to receive this year.
|Initial offers place the value for Astros and Rockets rights at $80M a year.
“It seems obvious that all the parties are going to have to accept less financially,” said media consultant Lee Berke, speaking of the bankruptcy process in general.
Sources said the process of figuring out what to do with the teams’ local rights is progressing, though it’s not clear when there will be a resolution. Privately, Comcast sources have expressed frustration with what they consider a slow pace of development.
Though the money pales in comparison to the promise of an equity stake in a new network on top of the rights fee, these types of straight rights deals are now being discussed as the easiest way to unwind a local sports partnership that has been wildly unsuccessful. Big Houston-area distributors such as DirecTV, Dish Network and AT&T have refused to carry CSN Houston and are not close to any kind of carriage deal. In fact, sources said, the distributors have not seen significant defections since the launch of the network, making a deal much less likely unless CSN Houston lowers its price considerably. On average, the RSN costs more than $3 per subscriber per month, according to figures from SNL Kagan.
The RSN has set up a board to develop a business plan for the network, but any plan would have to gain approval in bankruptcy court.
“The bankruptcy judge controls a lot of it and can theoretically impose whatever he wants, but the parties all have to be involved,” said Berke, who is president of LHB Sports, Entertainment & Media.
The easiest move would be to cut a deal with NBC Sports Group, which owns 23 percent of the channel. Sources said NBC has made an offer for both teams’ rights, essentially moving forward with the channel on its own. NBC also agreed to pay around $100 million owed to the teams for rights fees not paid this year.
With full control of the RSN, Comcast would have more flexibility to make distribution deals. Comcast’s pending Time Warner Cable acquisition enhances the idea that increased carriage could be around the corner.
AT&T offers another intriguing possibility. The telco has been trying to get more involved in sports media for years and even looked into bidding for the Astros’ and Rockets’ rights two years ago before Comcast picked them up.
AT&T executives had been talking with CSN Houston about granting carriage for an equity stake in the channel, but those talks did not progress. Now, AT&T is looking into picking up the teams’ rights and, potentially, launching its own RSN. AT&T’s pending acquisition of DirecTV would ensure carriage with two of Houston’s biggest distributors.
Fox Sports has not been aggressive in trying to obtain the rights. It held both teams’ rights before losing them to Comcast. Fox Sports’ pitch is that it is the only Houston sports network that can offer full carriage, as it would place the games on Fox Sports Southwest. But sources said the money Fox is talking about is much lower than both NBC Sports Group and AT&T are offering.