The Astros and Rockets in debuting their Space City Home Network last month will “once again reap the bright promises but also the thorny challenges" that come with ownership in the "rapidly changing world of regional sports network television,” according to David Barron of the HOUSTON CHRONICLE. The ownership change of the former AT&T Sportsnet Southwest came with a “significant change in economics” for the two teams. The teams have "lost their guaranteed rights fees" of about $120M per year ($73M for the Astros, $47M for the Rockets), and will take a “significant revenue cut” -- initially, as much as $30M -- as they “inherit what was a money-losing channel.” Despite that, the Rockets and Astros’ are “happy to oversee their own television destiny” as there is “so much in question for many of their NBA and MLB competitors.” Based on industry estimates, the new RSN will receive about $55M in “annual subscriber revenue from the immediate area” and about $80M total when 1.3 million subscribers elsewhere around the country are included. RSNs generally get about 30% of "income from advertising” which would place Space City Home Network’s projected revenue at about $110M. That is “already short” of the $120M that Warner Bros. Discovery was paying the Rockets and Astros, and it “doesn’t take network operating costs into account.” Operating expenses could total about $10M, which would put net revenues at around $90M, about $30M short of what the teams got from WBD. Streaming, which has been “trumpeted by some as the savior for sports networks,” is “not in the immediate plans for Space City Sports Network” (HOUSTON CHRONICLE, 11/18).
