CSN Houston Has a New Owner...Maybe

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So it comes to pass that DirecTV and AT&T U-verse were the mystery parties attempting to purchase CSN Houston out of bankruptcy. It was revealed in court papers filed late on Wednesday night that, should the court accept the network's bankruptcy reorganization plan, DirecTV and U-verse will together own 100 percent of the failed network. Both companies will also add the network to their distribution lineup.

The Astros and Rockets will both sign new media rights deals with the new entity, and both will forget about collecting the amount they are due under the media rights deal with CSN Houston. Comcast will have neither an ownership nor a management stake in the network, but it does appear that Comcast will continue to carry the network on its system.

But all of the above is still a big if. Now that the joint DirecTV/U-verse bid has been made public, other parties can attempt to make bids on the network, including Comcast. And there are still a lot of unknowns. So while we're waiting for the final outcome, here are a few items to watch:


As part of the reorganization plan, a Litigation Trust will be created with the primary goal of liquidating the network's assets. Among the other issues to be handled by this trust will be the pursuit of certain causes of action against various Comcast entities arising from the bankruptcy. These causes of action would include such items as exerting undue influence or control on the network; attempting to obtain network ownership at a severely artificially depressed price, and imposing enforced losses upon creditors.

The Rockets and Astros stated in the Disclosure Statement that "they have since learned that, notwithstanding, its contractual obligation to do so, Comcast Services did not engage in any negotiations with any MVPD [cable/satellite distributors] to obtain additional carriage since the Commencement Date...and that Comcast Services was in possession of material adverse information with respect to the Network's inability to obtain additional carriage which it did not share with any representative of any of the Partners...other than with the Comcast Partner."

This is essentially the equivalent of a Truth Commission. The Astros, especially, have been on Comcast for undervaluing the network and for attempting to steal the network from the Astros and the Rockets. It will the trustees' job to find out what exactly Comcast was up to, if anything. The Litigation Trust is also empowered to pay damages arising out of the actions from the bankruptcy, which is big for the Rockets and Astros since both clubs stated they will not ask to be set whole by DirecTV and U-verse. And interestingly, under this plan, Comcast is not allowed the use of the services of the Litigation Trust.


DirecTV has been very loud that it did not pursue a deal for the network because of the excessive cost for network carriage that was requested. This cost, DirecTV claimed, would cause an increase in customer bills, and it wasn't fair that non-sports fans would also have to pay for the network in this fashion. But the network will be part of the DirecTV/U-verse basic cable packages, which means that everyone will be paying for the network.

But how much will they pay? The amount that the Rockets and Astros will be making under the new media rights deals was not stated (it might have been, but I didn't see it in the 100-plus pages of legal documents I read yesterday). But the money to pay the teams has to come from somewhere, so it's very likely customer bills will rise just a bit.


DirecTV operates several regional sports networks across the country, so the CSN Houston operation will probably resemble the Roots Sports networks. The look of the network -- graphics, sets, programming -- will probably change, and most Comcast-affiliated programming will probably disappear and Fox Sports Net programming will probably fill the time not used by original programming. This could possibly be bad news for the CSN Houston staff, both behind and in front of the camera. The good news is that the network should, once the plan is approved, be available through the five-state footprint served by Fox Sports Southwest, so that Astros fans across that FSN network should be able to see the team play again.

But don't expect the network to pop up on your TV until October, at the earliest. Bids can now be accepted by other parties, and the odds are that Comcast is going to object to this plan and attempt to stop it. The next hearing on the matter is September 4, on which day any possible appeal can be considered. And the judge also set October 2 as the day for a hearing on a confirmation of the plan, if there's no appeal or better bid made.

The clown show's almost over. It's now a question of just how much longer.

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