Comcast seeks to force bankruptcy on Houston channel

Posted: October 02, 2013

Last October, Comcast Corp. and two Houston professional sports franchises, the Astros and Rockets, launched a regional sports channel to ride the billion-dollar riches of the TV sports boom.

The channel has fizzled amid acrimony among the once-hopeful partners.

Comcast on Friday filed a petition seeking to force the troubled Comcast SportsNet Houston, which it lent $100 million, into bankruptcy and said it would bid on the network's TV rights if they are auctioned.

Astros owner Jim Crane told the Houston Chronicle on Monday that the baseball team would fight bankruptcy and, in a reference to Comcast/NBCUniversal, said that the Astros "are not going to let those folks bully us around."

The Comcast court document points to board-level gridlock as the source of the network's woes.

A more fundamental problem: the awful Astros. The baseball team, the main attraction for the sports network, collapsed on the field with a league-leading 111 losses and 51 wins this year.

The tale seems to be a cautionary one. Without a winning - or even respectable - season, the demand by Houston sports fans hasn't been there. Consequently, TV distributors have balked at the per-channel fees of $3.40 to carry the network.

According to the trade publication Multichannel News, CSN Houston is distributed to only about 40 percent of the pay-TV homes in the Houston area. Most, it's believed, are on the Comcast cable system.

Comcast, which owns 20 percent to 25 percent of the network, would like a trustee appointed to oversee the media property.

The Astros, meanwhile, say that the bankruptcy petition was "improperly filed" and that Comcast has not paid its sports rights fees to the network for July, August, or September. "We have invested additional money in order to keep the network viable through our season," the franchise said in a statement.

Crane purchased the team in November 2011. The partnership agreement for the sports network was negotiated with the prior Astros owner, Drayton McLane, in 2010.

The bankruptcy documents list Houston SportsNet Finance L.L.C., based at the Comcast Center in Philadelphia, as lending the venture $100 million.

"The network is powerless to continue to pay its debts," according to a court declaration by Jon Litner, who heads the regional sports network business for Comcast/NBCUniversal. "As described in greater detail below, the deadlock among the parties has thwarted all efforts to engage in any constructive exercise to salvage the network."

Litner noted in an Inquirer story on the new Houston sports network a year ago: "Comcast as a company likes the regional sports network business, and I think there is goodwill associated with a regional sports network where Comcast has a cable business, especially when the teams are winning."



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