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CSN Houston Owners Actually Agreed on Something

Hey, the owners actually agreed on something.
Hey, the owners actually agreed on something.

The good news is that the Houston Astros, Houston Rockets, and Comcast finally found something on which to agree. The bad news is that the agreement's on how much the attorneys handling the bankruptcy of Comcast SportsNet Houston should be paid.

The parties are still battling things out in court, the Astros trying to get the ruling putting the network into bankruptcy overturned. The Rockets and Comcast are fighting the Astros, and except for the agreement about bankruptcy attorney fees, there appears to have been zero progress. Astros owner Jim Crane did say last week that he was expecting Comcast to make another offer to buy out the Astros share of the network, but as of this posting, there's been nothing further on that.

Reading the appellate briefs filed over the past several weeks, one thing is becoming apparent, the disagreement's not really between the Astros and Comcast/Rockets. The disagreement's between Jim Crane and Drayton McLane.

The Astros say the network isn't paying enough for the media rights, that the team needs the network to be profitable to make up for the bad media rights deal, and that the Rockets and Comcast do not care about the financial health of the Astros.

But the media rights the Astros are receiving (or were receiving before the network went broke) are the fees that were negotiated by the Astros. The Astros are getting paid what the Astros desired to be paid, and while the Astros might not now be happy with the deal, it is the deal the Astros agreed to, though it was Drayton McLane who agreed to the deal when he was still owner.

Jim Crane doesn't like the deal. The Astros state the fees being received by the network are well below that of the other teams in the division. The problem is that Crane should have been aware of this information before purchasing the team, and this information should have been used to get the cost of the team lowered. And the Astros are essentially telling all involved that the only network deals it will approve are ones that insure the network is profitable.

The Astros want this bankruptcy dismissed because it will return the media rights, which the Astros can then offer to the highest bidder. There's no assurance that any new deal would be as good as the one the Astros currently have -- it's really hard to see Fox Sports Southwest or Direct TV offering the Astros the same amount of money in media rights as that being paid to the Texas Rangers and Los Angeles Angels of Anaheim. And there's definitely no assurance that any entity would even offer the team the same amount that it's supposed to be receiving from CSN Houston, so it is really hard to figure out the endgame.

 

CSN Houston is never going to get the carriage fee amounts promised by Drayton McLane to Jim Crane. Can a deal better than the one offered by Comcast last April be achieved? The Astros say no and point to the lack of success it had when the bankruptcy court placed it in charge of negotiating carriage deals. But isn't it more likely that the problem from that time was the result of all of the other carriers smelling the blood in the water and waiting for everything to fall apart?

At some point the bankruptcy litigation process will end. The Astros will lose the appeal and that the bankruptcy will stand. The Astros will then be able to appeal to a higher court, or the Astros can choose to accept the bankruptcy and act like grownups. It's in the best interests of the Astros to get carriage deals for the network, even if the deals do not bring in the money promised by Drayton McLane, because the Astros do not have any money coming in at the moment, but at the moment, any money has to be better than no money.

The Astros keep pointing blame at Comcast. And Comcast should probably share some of that. But the real bad guy in all of the scenarios is Drayton McLane. It's McLane who negotiated the media rights deal that Jim Crane says doesn't bring enough money to the table. It's Drayton McLane who set up the network. It's Drayton McLane who convinced Crane that the network's carriage fees are worth more than what they are, and it's McLane who convinced Crane that the profits from the network would make up for the media rights shortfall.

Drayton McLane has been sued for fraud by Jim Crane. It's doubtful that Crane can win that suit, but the odds there are better than the odds of getting the bankruptcy overturned, of getting another entity to give them a better media rights deal than the current one with CSN Houston, and of getting an immediately profitable carriage deal for the network.

It's time for the Astros to let this bankruptcy run its course because its for the good of everybody that this network survives. The Rockets want it to live, and so does Comcast. Jim Crane might not get as much money as he thought, but something's better than nothing. Put the focus on that lawsuit against McLane. He might not be able to win, but maybe he can put enough pressure on McLane to force a settlement. And maybe then Crane can recover some of what he overpaid for CSN Houston.


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