Houston deal signals DirecTV is staying in RSN biz
Comcast has coveted Root Sports, the group of three RSNs located in some of the cable operator’s biggest markets, ever since DirecTV gained control of it in 2007.
Comcast executives long believed the satellite company wasn’t committed to the regional sports business and believed it would sell its RSNs in Denver, Pittsburgh and Seattle for the right price.
AT&T Teleholdings and DirecTV Sports Networks bought the Houston RSN out of bankruptcy for just $1,000. The channel is expected to continue losing money for the next several years.
But the move to pick up the rights marks the clearest signal yet that the DirecTV-owned company not only is in the regional sports business for the long haul, but also is open to expanding into new markets.
“We’re always open to exploring other opportunities that may present themselves,” said Dan York, DirecTV’s chief content officer. “But we are not interested in pointlessly bidding up our own costs.”
One of the most persistent questions in sports media is how the DirecTV and AT&T merger will affect the company’s involvement in sports.
Leagues and teams are hopeful that the merged company will become an aggressive bidder for local sports rights to better compete with Fox Sports Net and NBC Sports Group, which runs the group of eight Comcast SportsNet-branded RSNs. Unlike Comcast, which operates RSNs only in markets where it is the dominant cable operator, DirecTV is a national satellite service that has subscribers in every U.S. market and conceivably could operate an RSN in any of them. Company executives would not identify any new markets it may target for a new RSN.
Typically, new companies that enter a market have to pay well over market value for local rights. Time Warner Cable, for example, signed a 25-year, $8.35 billion deal to pick up the Dodgers rights from Fox Sports Net.
While DirecTV is committed to stay in the regional sports network business, its executives are quick to say that it does not plan to get into bidding wars for local rights.
“We are happy with our RSN business and feel that we approach it in a very distributor- and consumer-friendly manner,” York said. “There’s a benefit to having a more direct relationship with the ultimate rights holder than middlemen.”
Last week’s launch of Root Sports Southwest officially ends a two-year debacle, where Comcast Houston was unable to cut deals with any big non-Comcast distributors. NBC Sports Group owned 23 percent of the channel, with the Rockets and Astros splitting the rest.
CSN Houston managed a distribution footprint of around 1 million homes, unable to sign carriage deals with DirecTV or AT&T. Root Sports Southwest immediately launched to more than 4 million homes.
“Distribution is hugely important. It’s the reason why the prior network was not successful,” said Patrick Crumb, president of DirecTV Sports Networks. “We are over that hump of the critical mass of distribution we need to go forward.”