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The Rockets Near Launch on Root Sports Houston - Multichannel

The Rockets Near Launch on Root Sports Houston

Court Clears RSN Sale; Comcast Looks To Recoup Secured Loan
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The air space is open, but the question remains when will there be lift-off for coverage of Houston Rockets games on the new regional sports network operated by DirecTV.

Attorneys for Comcast on the one side and DirecTV, AT&T, the NBA Rockets and MLB’s Houston Astros on the other reached an agreement on Nov. 6 allowing for CSN Houston, the team’s regional sports network home, to morph into Root Sports Houston.

After bankruptcy judge Marvin Isgur on Oct. 30 okayed a reorganization plan sanctioning the sale of the Comcast-Astros-Rockets-owned CSN Houston, which went into chapter 11 protection in September 2013, Comcast on Nov. 5. sought a stay with U.S. District Judge Lynn Hughes while it appealed the decision.

Barristers on both sides of the bench agreed that Comcast could continue its appeal on the financial aspects of Isgur's call as it tries to recoup more of a $100 million secured loan that was used for start-up costs in 2012 by the embattled CSN Houston, and that the MSO, whose NBC Sports Group operated the RSN, would not contest the launch of the new network. Hence, Hughes on Nov. 6 denied Comcast’s appeal of Isgur’s order while terminating the automatic 14-day stay acceded as part of the bankruptcy judge’s decision, opening the door to the sale of the network and transfer of the teams’ media rights to Root Sports Houston.

At this juncture, the time line for meting out a resolution for the money stemming from the secured loan – Isgur’s reorganization calls for Comcast to receive $26 million of the $100 million – could be ahead of the new RSN starting. Although the Houston Chronicle has reported the network could tip off on Nov. 14 with the Rockets' game against Philadelphia, DirecTV, which will operate the new service, declined to comment.

When it does launch, Root Sports Houston will be carried by the DBS company and the telco, which are awaiting federal approval of their merger, as well as Comcast.

CSN Houston never gained distribution traction—it only had carriage from Comcast and a handful of smaller provider in the Houston DMA, and not in the rest of its TV territory in Texas, Oklahoma, Arkansas, Louisiana and parts of New Mexico. As such, it never collected enough license fees  -- $4 per month per subscriber within its central area, and 70 cents elsewhere --  to pay the clubs their rights fees and meet its other obligations.

Under the reorganization plan, the Astros (46%), Rockets (31%) and Comcast (23%) will lose their network equity positons, and the teams agreed to forego immediate payment of more than $100 million in unpaid rights fees. DirecTV and AT&T are picking up the RSN for $5,000.

The transfer will result in 96 of 141 CSN Houston employees losing their jobs, as the new service won’t retain the service’s news and studio fare.

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