That's much like the Court asking the teams to let the Network keep their media rights fees to make the Network less of a loser when they haven't been paid in full for those media rights.
The Judge is trying reorganize CSN H so that the teams get paid. He's not taking action to reduce either teams baseball revenue. The judge may make rulings that negatively affect revenue expectations for one or more of the partners in the RSN.
There is a legal distinction between the two situations. The Bankruptcy Code allows a debtor to decide to do either one of two things with each of its existing contracts: 1) "assume" it or 2) reject it. When a debtor assumes a contract, it must pay any back payment that it owes and cure any existing defaults that it committed, and then it must perform the contract AS IS. The debtor must assume the contract as a whole and there is no power to modify the contract unless the other party agrees to it. So, with the Astros contract, the court can allow CSNH to assume it over the Astros' objection as long as CSNH makes the back payments and cures the defaults. However, with the Comcast carriage contract (including the MFN clause), the court cannot just allow CSNH to strip out the MFN clause from the contract when CSNH tries to assume it (any more than the court can modify the contract to raise the fees by, say, 50%). You either accept or reject the contract as a whole. Now, if CSNH finds that the Comcast carriage deal as a whole is unfavorable, then it can choose to "reject" it. This means that the carriage deal is then legally terminated while Comcast can make a damages claim in the bankruptcy court for breach-- but then like most creditors, Comcast is unlikely to recover 100% of its damages for this claim. In any case, I rather doubt that CSNH would be wise to reject the only carriage deal that it has right now. However, the threat of rejection and, more important, other economic considerations among the parties may result in the parties agreeing to modify the carriage deal somewhat.
So basically what you are saying is that the court can give the reorganized CSNH a chance to pay back payments to Astros (if they haven;t done so already) before allowing the Astros to exercise their right in a clause of that contract to reacquire their media rights for non-payment. Did I interpret that correctly? And when you say "can", I assume that means the court has the power, but does not necessarily have to let CSNH assume the media rights. Sounds like the Astros could lose big time legally in the bankruptcy part of this trial.
If the Court allows CSNH to assume the contract and cures the default, the Astros cannot unilaterally terminate the contract (unless CSNH commits a future default that gives rise to a right of termination). So, the Astros will not be able to "reacquire their media rights" in this scenario and just take their ball and go home. CSNH in essence can choose to continue the contract and enforce it despite the existing payment defaults (again, as long as CSNH cures these defaults at the time of assumption). The court court can deny an effort to assume a contract but only on some specific legal grounds. For example, some contracts are not legally capable of being assumed (and the Astros will argue that the media rights deal is one of them). CSNH will also have to show that it is capable of curing the defaults and performing in accordance with the contract in the future before assumption is approved. All these issues will be litigated, I think. And also I recall that they have already been raised somewhat in the "order for relief" litigation that is now being appealed (in the context of whether a successful reorganization is likely or even possible). But yes, the Astros could very well be put in a position that they don't want to be in-- the media rights contract being enforced, but their equity interest being essentially either taken away or bought off at a lower price than they want. So, they end up with only the media rights fees but no "dividends" from their equity interest and also no veto rights on carriage deals.
Truly the worst case scenario for the Astros as they would end up in a worse deal than they had with FSN (as they traded a lower media rights fee for equity). Sure, they still shouldn't be masquerading as a small market team in a top 10 market, but they would likely not be able to outspend other mid-to-large market teams with higher right fee deals (Texas, Seattle).
<p style=" margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;"> <a title="View Isgur Opinion on Scribd" href="http://www.scribd.com/doc/206806756" style="text-decoration: underline;" >Isgur Opinion</a></p><iframe class="scribd_iframe_embed" src="//www.scribd.com/embeds/206806756/content?start_page=1&view_mode=scroll&show_recommendations=true" data-auto-height="false" data-aspect-ratio="undefined" scrolling="no" id="doc_77610" width="100%" height="600" frameborder="0"></iframe>
Their media rights fees are higher now than what they "had" with FSSW. The may have been "offered" more during the last negotiations.
Right... which means they would have had a higher rights fee if they had stayed with FSN, rather than go to a channel where they could have equity. Its only natural that rights fees go up with each re-negotiation... they passed on more in the short term so they could have much more in the long term. Now they could get nothing in the short term and less in the long term.
Exactly... I feel like they've just wasted the past 3 months, and will continue to waste more time trying to make chicken **** into chicken salad.
I've always wondered, how often are all 3 talking? How often to they contact the carriers, what is said in those conversations. If there's any movement what so ever? Hopefully it's more often than not, but I doubt it considering the animosity between the 3 parties involved.
<blockquote class="twitter-tweet" lang="en"><p>U.S. District Judge Lynn Hughes has set Feb. 21 for an initial conference on the CSN Houston bankruptcy appeal by the Astros.</p>— David Barron (@dfbarron) <a href="https://twitter.com/dfbarron/statuses/433763693017305088">February 13, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p>Reading Judge Isgur's bankruptcy opinion. Says the Astros didn't even have standing to challenge the bankruptcy.</p>— John Royal (@John_Royal) <a href="https://twitter.com/John_Royal/statuses/433793238906855424">February 13, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script> <blockquote class="twitter-tweet" data-partner="tweetdeck"><p>The CSN Network agreement didn't require unanimous consent for CSN Houston to file a bankruptcy.</p>— John Royal (@John_Royal) <a href="https://twitter.com/John_Royal/statuses/433793512069267456">February 13, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script> <blockquote class="twitter-tweet" data-partner="tweetdeck"><p>Astros argued that the board was deadlocked and could't contest the involuntary petition. Judge makes a simple point: (next tweet)...</p>— John Royal (@John_Royal) <a href="https://twitter.com/John_Royal/statuses/433793694752202752">February 13, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script> <blockquote class="twitter-tweet" data-partner="tweetdeck"><p>A) Board didn't need unanimous consent: B) 3 of 4 board members supported b'ruptcy; C) Astros never asked for vote which would get deadlock.</p>— John Royal (@John_Royal) <a href="https://twitter.com/John_Royal/statuses/433794029667373056">February 13, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script> <blockquote class="twitter-tweet" data-partner="tweetdeck"><p>Since there was no deadlock on the board re answering bankruptcy, then Astros had no right to challenge under their shareholder theory.</p>— John Royal (@John_Royal) <a href="https://twitter.com/John_Royal/statuses/433794478810218496">February 13, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script> <blockquote class="twitter-tweet" data-partner="tweetdeck"><p>As to Astros bad faith allegation behind involuntary b'ruptcy filing: need 3 creditors to file in good faith. Judge found that three did.</p>— John Royal (@John_Royal) <a href="https://twitter.com/John_Royal/statuses/433795321366196224">February 13, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p>The joinder of the Rocket Ball, Clutch City, and HP Fannin (facility landlord) weren't filed in bad faith, thus b'rputcy proper.</p>— John Royal (@John_Royal) <a href="https://twitter.com/John_Royal/statuses/433795993151102976">February 13, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
<blockquote class="twitter-tweet"><p>BREAKING: Comcast to buy Time Warner Cable in all stock deal. <a href="http://t.co/QN9rbTpgyH" title="http://read.bi/1dJAp1O" org_href="http://read.bi/1dJAp1O">read.bi/1dJAp1O</a></p>— Business Insider (@businessinsider) <a href="https://twitter.com/businessinsider/status/433795917184262144" data-datetime="2014-02-12T20:53:00+00:00">February 12, 2014</a></blockquote> <script src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
And yet one of their subsidiary channels gets so mismanaged that it ends up in bankruptcy. The company itself could easily buyout any MLB team in its entirety.... you would think they could throw enough loans to this network to withstand losses.
