So it came to pass yesterday that the multitude assembled before the judge. The multitude being a mass of 23 attorneys representing Comcast and CSN Houston and the Astros and the Rockets and DirecTV and AT&T (many more listening by telephone) appearing before Judge Marvin Isgur, each hoping for yet another say in the never-ending round of hearings arising from the bankruptcy of CSN Houston.
The topic of the day was a plan that's been filed to bring the network out of bankruptcy with new owners, AT&T and DirecTV. Of more specific discussion was a Disclosure Statement, a document that is sent to all creditors disclosing details of the plan so that the creditors can vote to adopt or deny the plan. One current owner, Comcast, isn't happy with the plan or the disclosure statement. Another creditor complained that the disclosure statement really didn't disclose anything. So it came to pass that nothing is yet resolved. The network is no closer to exiting bankruptcy, or to appearing on televisions where it's not before been available.
But as the documents continue to pile up, as the billables continue to grow, as jobs and livelihoods hang in the balance, one thing has become crystal clear amid the chaos. CSN Houston may die, but Drayton McLane is the greatest salesman ever to have graced this planet.
Virtually nobody is making money off of CSN Houston. The Astros and Rockets have lost more than $100 million in unpaid rights fees. Comcast helped the network survive with a $100 million secured loan, and if the reorganization plan is passed as it now stands, it'll get back only about $23 million of that. It's possible AT&T and DirecTV will someday make money on the network, but that's far off in the future. There are tons of vendors and contractors who will be lucky to get just a part of what they're owed by the network.
Then there's Drayton McLane. McLane also happens to be a network creditor, and he's the creditor who filed an objection with the court stating that the so-called Disclosure Statement didn't actually disclose just how much of what he's owed he'd actually receive. But don't worry about McLane, because he just might be the only person (outside of the bankruptcy attorneys) to make any money off of CSN Houston. And that's because he sold his ownership stake in the network as part of the deal that included the Houston Astros. McLane sold the Astros, the lease on Minute Maid Park and the team's ownership stake in CSN Houston to Jim Crane for $680 million -- the price was later dropped to $615 million because of the move to the American League, but MLB is paying McLane that lost $65 million out over a 30-year period. A good portion of that price was based on the perceived value of the ownership stake in CSN Houston -- various reports valued the team as being worth around $470 million.
The value of the network was based on factors such as all cable and satellite providers in the Houston viewing area (and the former five-state network that formerly aired the Astros) adding CSN Houston to a basic cable tier with networks like ESPN, Fox Sports Net and TBS. The fan interest in the Astros would supposedly drive the demand for the network, forcing the cable and satellite providers to include the network and in the process justifying the network's request, a supposed per-household $3.40 carriage fee, i.e., every subscriber to a basic cable package would see an increase of $3.40 to his bill. This didn't happen, as DirecTV and AT&T immediately balked. With carriage essentially limited to Comcast, the network started to bleed money, the teams weren't paid and then Comcast forced the network into bankruptcy.
But Drayton McLane got his money, damn it. He sold Jim Crane and his advisers on the network and used the network to up the sale price of the team. He sold the Rockets on partnering in the network, then helped to rope Comcast in as another partner. He's not the only one to blame, of course. All the parties wanted to believe his projections for success, that a network with a slumping baseball team and declining ratings as the primary programming would be able to command the same fees, and the same carriage deals, as networks like ESPN, which in turn would guarantee the financial success of the network and all of the partners.
McLane may yet still have to suffer. There is that lawsuit over fraud in state court that was filed against him by Crane. There's always the odds that the case will go to a jury and that the jurors will pay attention to power points and spread sheets and emails and see evidence to say that McLane defrauded Crane and that he should pay back some of those millions he made from the sale of the team.
But let's face the truth: If there's ever a trial, McLane will just get in the witness box, smile at the jury and convince them all he's just some old small-town country grocer who got lucky and that he would never dream of defrauding some rich city slicker. And until that time, CSN Houston will just continue to wither away and die in bankruptcy court while Drayton McLane counts his cash and funds college football stadiums.
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