CSN Houston: Are the Rockets Making Progress With AEG?

The Houston Astros, Houston Rockets, CSN Houston and hundreds of thousands of attorneys collecting tons in billable hours met before bankruptcy judge Marvin Isgur last Tuesday. There wasn't a lot of real news made during the hearing, which is why the hearing got buried in the news -- that and the whole Baseball Hall of Fame debacle the next day. But there were some useful items to emerge that might possibly give clues to the future of the network.

The basic takeaway is this: The Houston Rockets have been far, far more active in their term as lead network negotiator than the Houston Astros appear to have been. The Rockets have retained two advisory firms and met with multiple parties for assistance and/or possible media deals and for assistance and/or possible private equity investment deals. The Rockets are currently in negotiations with Comcast and an unspecified party, and have met with Fox Sports, DirecTV and AT&T.

The Rockets requested, and received, the right to remain as the network's lead negotiator until early next month. At that time, if there's no result, the parties will once again return to court. The court will then, maybe, rule on the various motions in front of it, including whether to return the Astros' fraud lawsuit to state court and whether or not to dismiss the bankruptcy case.

The big news, though, was the entrance of a new party into the discussions. During the hearing, the Rockets announced that they've been meeting with AEG regarding network matters. AEG is a huge player in both the sports and entertainment industries. The company's best known in Houston as the owner of the Houston Dynamo, but they also own, among others, the Los Angeles Galaxy of MLS and the Los Angeles Kings of the NHL along with numerous European sports franchises.

AEG also owns and/or operates arenas and stadiums such as BBVA Compass Stadium in Houston, Staples Center in Los Angeles, Barclays Center in Brooklyn, AT&T Center in San Antonio, American Airlines Arena in Miami, The O2 Arena in London, and arenas and stadiums in Sydney, Australia; Moscow; Amsterdam; Beijing; and Shanghai, and AEG is leading the charge to build a new football stadium in Los Angeles. Another AEG entity is heavily involved in the concert and live music industry, and it is also partnered with Mark Cuban in his AXS TV venture.

But what's not known is the nature of the talks between the Rockets and AEG. Are the talks about AEG purchasing the network? What's missing from the AEG portfolio is a regional sports network, and there is some logic to the entity purchasing such a network as the next step in its takeover of the sports industry. AEG might also be in such a strong overall financial position that it can take some massive short-term hits in deals with DirecTV and AT&T so as to get complete carriage in the area while also paying the Astros and Rockets what the Astros and Rockets believe they should be getting in rights fees.

That's probably the best that can be expected from the AEG discussions. It's possible that the discussions are merely regarding AEG providing some equity to the Rockets or to CSN so that one of those entities can purchase the portion owned by the Astros. Or maybe AEG is a stalking horse, something the Rockets can use to push merger/takeover discussions with Fox Sports, DirecTV or AT&T. But no matter the reason for the discussions, this is probably the best, biggest step to get Rockets and Astros on air for all to see since this whole bankruptcy process started.

It was also announced during the hearing that Comcast has provided the Rockets with a stalking horse bid for the network that will serve to set the floor for all bids. This info, along with the AEG news, makes me think that Les Alexander is making progress toward either getting the network total carriage or getting the network sold or partnered with another entity that will be able to get the carriage. And seeing the damage inflicted on the network by the Astros fraud allegations, that's quite an accomplishment. Not as big an accomplishment as actually getting the Rockets and Astros on air for all to see, but it's still something.

The saga continues on February 4, when all parties are due to return to Judge Isgur's courtroom for the latest progress updates. The judge has put off until then rulings on the Astros' motions to return the fraud case to state court and to dismiss the bankruptcy. But here's to hoping for continued progress that will make the Astros' requests moot points.

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