CSN Houston Is Gone and the Rockets Are Back on TV
The time has finally come. On Monday night, after two years, Houston Rockets games will once again be legally available to a majority of the Houston-area viewing public. Roots Sports Houston, an undoubtedly inferior product to CSN Houston, takes over as the rights holder for Rockets and Astros games, and the games will be available on DirecTV, U-verse and Comcast, as well as any other satellite/cable system that was distributing CSN Houston.
This is a short-term win for the Astros and Rockets, and for the fans who desperately wanted to watch the games. But in the long term it's going to be a huge loss for the teams, and in many ways, it might be an even bigger loss for fans of Houston and Texas sports who want to do more than just watch the Astros and Rockets.
What made the network so valuable, what helped to drive up the price of the Astros, wasn't the price it was paying for media rights. What made the network valuable was the money it would make off of the cable and satellite distribution of the network, coupled with the money the network would make off of advertising. And as owners of the network, this money would go to the Astros and Rockets, and since it was money being made off of the network, it was money that would not be part of revenue sharing with MLB and the NBA.
But a long-term view was needed for this work. The teams needed to realize and accept that the network would lose money from the start and that it would take several years for the network to break even, much less earn a profit. It took years for ESPN to make money, and Fox has taken a big hit with Fox Sports 1, giving the network away for cheap while hoping to become a part of the national conversation and become a must-have network, which would then allow it to raise the price to be paid by the likes of DirecTV and AT&T to carry the network. CSN Houston came into being reportedly hoping to have cable and satellite companies pay close to the same rate they pay for ESPN.
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Jim Crane alleges this price the network sought to have AT&T and DirecTV pay to place the network on their systems was fraudulently set by Drayton McLane and Comcast executives as a way to inflate the value of the network so that Crane would pay more for the network and the Astros. McLane says there was no fraud and that Crane was well aware of how the network price points were established. That's all something that will be settled by way of lawsuit over the months to come, but the basic result was that Crane, for financial reasons, needed the network to be immediately profitable and couldn't afford to take the long view. So now the Astros and Rockets no longer own the network. They're in the same position they were back in 2012 in that they're paid to air their games on the network just as they were when the games were on Fox Sports Houston. The long-term income stream is limited, and teams with network ownership interests should be able to make dollars the Astros and Rockets will never be able to sniff. The teams are also still out the money they were supposed to get from CSN Houston in media rights, and there has been a lot of damage to fan interest due to the games being virtually unavailable on television in Houston (the Astros especially have taken a big hit over this). But that's where the short-term gain comes in: The teams will once again be paid for media rights, and the fans will once again be able to watch the games.
The short-term gain for Houston sports fans is easy: For the most part, Houstonians will once again be able to watch Rockets and Astros games. But don't expect Root Sports Houston to do much else in terms of local programming. We discussed Root Sports Programming back in September and noted that it followed the Fox Sports Southwest model -- lots of programming shared across all Root Sports networks. That's where CSN Houston excelled, providing prime outlets for local colleges, the smaller NCAA conferences and high schools to get excellent coverage. But go ahead and forget about Houston-centric programming. Don't expect Root Sports Houston to air Sam Houston State games or devote tons of coverage to the Dynamo. Expect the simulcast of Dan Patrick and poker programming and lots and lots of late-night infomercials.
So go ahead and celebrate the return of the Rockets to your television on Monday night. But what should have been could have been something really special. Solid long-term planning and fortitude could have ensured big bucks for the Rockets and Astros, money they're now giving up, though the sudden influx of money from rights fees will be immediately good for cash flow for the teams. And when you're watching the World Poker Tour some late night, just remember that if things had worked, you'd be watching locally produced programming of immediate interest.
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