Feels like that's where we are. Judge tried to give the parties time to find solutions...there aren't any, according to the Rockets and Astros. And now Comcast is (between the lines) saying the same thing, and they're not putting another dollar in. For the first time, it's as if they actually all agree on something, even if they're too stubborn to recognize it. This seems like a liquidation to me at this point. I have no idea (just guesses) as to what that ultimately means for the Rockets and Astros media rights.
"shifted priorities". The stagnation of this whole thing goes beyond the local teams at this point, and Comcast has shown they have zero urgency to get this done any time soon.
I know that was the Astros initial concerns. I was under the impression that the judge rebuked Comcast's request for a trustee because the appointment of a trustee would allow the Astros to re-acquire their media rights. Comcast even changed their request from a "trustee" to an examiner with expanded powers (or something like that) because Comcast realized appointment of a "trustee" would give the Astros their media rights back if I recall correctly. I was also under the impression that the judge was forcing the Astros representative to work in best interest of CSNH instead of the Astros due to appointing a trustee would trigger a termination provision in Astros media rights agreement and end CSNH.
That's not my understanding. My understanding is both the Rockets and Astros don't want a trustee appointed. I haven't seen it said otherwise. As far as I know, Comcast remains the only party that has ever requested that a trustee be appointed. The judge didn't rebuke Comcast's request...they put it all on hold while allowing the parties time to work something out....the threat of a trustee has loomed in the background for the Astros, and ultimately, the Rockets.
I agree that based on Barron's comments, you may have a point on current priorities. The zero urgency applies to more than one party involved in this fiasco.
I presume that whoever "bids" on the rights (if they are allowed to be up for auction), would have to agree to not only continue to pay their negotiated rates, but pay them whatever was owed/has not been paid, in full. I don't see a lot of chances of that happening, as both teams are owed a significant portion of rights fees that haven't been paid.
Max, do you think appointing a trustee could be a possibility moving forward and might that be what Comcast is banking on now?
Maybe...seems like that and the trustee's potential power to assign away those rights are all that's left in play. I'd like CarlHerrera's opinion on that, frankly.
Competing interest is the fatal flaw. Once wholly owned, it is like any other network and those networks can be successful. Other problems can cause the network problems like not being able to negotiate a deal, but those aren't inherent fatal flaws. I have actually mentioned the DTV scenario before.
Fair enough - good point. I think CSN-H is flawed in that the providers are no longer willing to pay the rates required to make networks like that successful at the rights rates teams are expecting (same as will be the case with the Dodgers and many other networks), but those are more economic flaws than fatal structural flaws.
After much discussion with other parties about thier interest in acquiring CSN H , it could be that Comcast feels they could still participate in the auction and get full ownership of the Network at a lower price than their stalking bid.
Comcast is also shutting down CSS, based out of Atlanta, mostly because of the new SEC Network. CSS was much smaller than CSNH with just 25 employees.
http://www.law360.com/articles/506464/astros-rockets-blast-comcast-s-bid-for-bankruptcy-examiner The Astros note in their objection that when Comcast realized that a previous motion it was pursuing for the appointment of a Chapter 11 trustee would have led to the termination of the team's media rights agreement, it abandoned the request in favor of an examiner with “expanded powers” to try and work around the problem. “The court should not be distracted by Comcast’s story as to why it has abandoned pursuit of its trustee motion to pursue the relief it now requests,” the Astros’ objection said. “The trustee motion and the examiner motion differ in name alone. Almost four and a half months after orchestrating the involuntary bankruptcy, Comcast is still grasping to find a path to overcome the Astros’ bargained-for consent rights and replace the network’s general partner in order to facilitate a restructuring transaction.” I've tried to find reference with a quote from the judge, but I thought I saw one that he told Comcast to stop trying to get a trustee in one of the status updates (not an actual motion). I may try again later when I have more time. If this article is accurate, Astros are confident that appointment of Chapter 11 trustee will lead to them getting their rights back even though initially they did fear a precedent against them would be set. They may still fear judge appointing examiner with expanded powers that can do basically what a trustee does.
good stuff, Joe Joe! thanks for finding that. I missed that. If that's the case, I really have no idea what we're still doing in a Chapter 11, all things considered. Particularly if Court is concerned about "greater good" of public being able to see their teams, as the judge has communicated.
Maybe... still seems like a pretty shady business practice to purposely promote the continued devaluation/deconstruction of a network solely for the purpose of acquiring it at a reduced rate. In the mean time, the network likely won't have enough cash to pay its employees, and we know it already doesn't have enough cash to pay the rights fees... and who pays the operating costs to keep the network on the air, if comcast is no longer giving out loans? Can't see that practice/strategy being an approved reorganization in the BK proceedings. A liquidation likely lets the Astros/Rockets keep their media rights to be sold elsewhere (with their unpaid rights fees being lost), whereas reassigning them would require the new entity to continue to pay them (along with whatever they were previously owed). Again, more likely scenario is that Comcast has lessened its priority on this, and other regional networks still in dispute, in order to have no issues with the merger getting approved. The fans continued to get shafted with no quick resolution in sight.
1. If there needs to be an actual assignment of the media rights contracts to a third party as opposed to a "reorganization" done via a confirmed chapter 11 plan (which keeps the rights with the CSNH entity as reorganized), there is a bigger legal hurdle to be cleared. The judge will have to decide whether the media rights contracts, copy right licenses, are permitted to be assigned to a third party under the Bankruptcy Code and the answer may well be "no." The law in the area is rather murky from what I've read. Another question is how valuable these media rights contracts really are in the market if CSNH is going to sell them. Would somebody pay good money to CSNH for the right to broadcast, say, Astros games while also paying the contracted-for fees to the Astros? 2. The bottom line is that CSNH is currently losing money and will need an infusion of cash in some form to finance its operation at some point in the fairly near future. IIRC, there are deadlines as to when a debtor must decide whether to assume or reject each contract, and if the contracts are to be assumed, the debtor must promptly cure defaults and resume performance (I.e., pay all the media fees still owed and going forward). Somebody has to step up to lend CSNH money, buy the network via a plan of reorganization or a sale pretty soon or this thing falls apart-- and if it does, my guess is that we end up with the teams taking their media rights back.
I don't know that the spin from the Astros attorneys is gospel. Same could be said for the other side.
The bolded part is what Judge Isgur had concerns of with the Astros purposely acting in their own interests via their role as a partner in CSN H in an effort to take back their media rights. The difference is Comcast's role as a partner in CSN H does not require them to loan money to the Network or purchase the Network no more than it would the other 2 partners to do the same.
Sure... but they do oversee the company that is in charge of paying rights fees, something they had an obligation to do and stopped doing because there wasn't any money to do so. Once the money ran out, the parties "should" have been able to go their separate ways... now we've just prolonged that by 7 months only to have Comcast say they won't put any more money into the failing network. It will die... and the Astros/Rockets are going to go their separate ways once that happens.
