It was forced into bankruptcy court because the Astros were going to take back their media rights, as they weren't being paid for them. If the Astros do that, the channel goes out of business (as its pretty worthless without them), so CSN (Rockets/Comcast) elected to declare bankrupt which kept the Astros media rights from being taken back. Also, all three parties (Comcast, Astros, Rockets) agreed that the DTV deal was a "bad deal". And if they were "rightfully so" in vetoing, what's the issue? That DTV didn't counter with a better offer? That Comcast didn't lower the rate even more to make it a worse deal? Yes, Crane gets painted as the bad guy because he's been the most vocal, along with his overall slimy persona... but you inferring that's it all because of him is completely 100% wrong.
Not purposely... but carriers almost NEVER want to carry a new channel unless they absolutely have to (let alone a channel that carries the moniker of a direct competitor). Things that influence that are fears that they'll lose subscribers to a competitor, or that the product is simply too lucrative to pass up. Neither of the above exist right now in Houston. Again, they're part of a much larger war against RSN's that's being fought around the country. In some cities (Chicago, Philadephia), the sports teams are simply too popular and too woven into people's TV-watching decision making to not carry them. In Houston, while we may like to think the Rockets/Astros are on the same level of popularity as teams in other cities, they're just not. Only the Texans come close to that sort of devotion.
Actually I agree with you, in that one of the things I have been asking is, 'What exactly is that enormous loss figure based on?' And the article just posted yesterday seems to indicate that the rights fees are relatively small potatoes - so much so that if it had really been primarily a rights fee issue, then there was not really a need for a new channel at all, they could have stayed with Fox. But the Astros claim that the one offer the channel received would have resulted in, what was it, 100 million in losses, or 200 million, something really big like that. Where exactly do those losses come from, if not business costs of operating the channel? I mean, it's one thing to be just above 'break-even', to technically being profitable. But Crane wants large profits above and beyond that, to be able to compete with the Rangers and Angels, etc. Ok, I get that. But that still doesn't explain the gap between 'not profitable ENOUGH', and 'huge losses'. In order to have a loss after income, there have to be costs in excess of that income, and for the losses to be that large, there have to be extremely high costs. If, as you say, the actual day-to-day operating costs of operating CSNH are not really all that high, then where do those losses come from? If is IS a rights-fees issue, this is where I get even more confused. Isn't Comcast on the hook for the rights fees, regardless of what carrier deals are out there? If so, why would Crane reject one carrier deal, even if it was low? The losses would be Comcast's, not the Astros', and Crane would receive his rights fees regardless. What am I missing here? I know the Astros own @46% of the channel, so, does that technically mean he is paying himself 46% of his own rights fees? And the one deal (presupposing no other deals ever come onto play) would result in that much loss, just from covering the gap between asked-for price and actual price, and just on that 46% ? Ugh, that's insane, and I am sure it's much more complicated than that. I totally agree with you that the carriers are in a no-win situation as well, and they have to take a stand against the exploding number and cost of RSNs. And maybe that's all this is, and there's nothing more to it. Does that mean that the carriers will NEVER buy another new RSN? I sure hope not. I am really not trying to be an ass about any of this. I want to understand it all, and the only way I can do that is ask questions when something doesn't seem to make sense.
The rights fees are "small" in terms of overall profit potential... but as of right now, CSN-H can't even afford to pay the teams the rights fees as it is (see previous posts of how company owes the teams $27 million each). You extrapolate that over 20 years, and yes... you get 100-200 million's of losses based on rights fees alone. The current losses (and projected losses) were based on DTV + Comcast coverage alone.... but given that the other carriers are a smaller percentage of Houston's overall pay TV base, and along with the fact that dish network is notorious about refusing to add channels, even if the carriage rates are favorable, nothing is a given as far as every TV provider in Houston signing up with the channel. Some of it is the Astros taking money out of their left pocket and putting into their right... but prior to taking into account all losses shared by the "owners" in the group, the very minimal that this company needs to generate is enough to cover the rights fees (which they aren't doing). Those TV rights fees get shared by other teams in each league... so they better well have that money available to them, or else the other league owners are going to have issues to complain about as well. Think of it as individual owners of a company that have to draw a salary so that they can earn a living. Once the company stops being productive enough to get that salary, things eventually start to go south for the company overall. Once the Astros stopped getting paid, they wanted to end the relationship... the other parties prevented that, and this is where we are now.
<blockquote class="twitter-tweet" lang="en"><p>Good afternoon. Another day, another CSN Houston bankruptcy court hearing.</p>— David Barron (@dfbarron) <a href="https://twitter.com/dfbarron/statuses/435857079962570752">February 18, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script> <blockquote class="twitter-tweet" lang="en"><p>Today's proceedings should be relatively brief and routine. Here's a look at issues before the court: <a href="http://t.co/TLXstL6u2Z">http://t.co/TLXstL6u2Z</a></p>— David Barron (@dfbarron) <a href="https://twitter.com/dfbarron/statuses/435857576282955776">February 18, 2014</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
It opens the door to other stuff. If you can get a judge to keep the content of business negotiations confidential, you do it. That's what Comcast did.
What the hell? You said: This is why that 'first offer' from a carrier can't keep getting tossed out there as some sort of 'proof' that 'the deals are not out there'. It's ridiculous. It was never intended as a serious offer, it was just part of negotiations. And once the carriers understood that there actually WEREN'T going to BE any 'negotiations', then they didn't even bother any more, because it was a waste of time and money to even pursue it. You claimed the DTV offer was not a real offer. You completely made that up and it's not remotely supported by the facts at hand, while there's actual evidence that's the opposite of truth. Everything you believe about what happened and what should have happened is based on that made-up nonsense: that is the conspiracy. This is dumb. It could just be that CSN-H and DTV value the network differently. That doesn't suggest anything about negotiations - it just means they weren't able to agree on terms. Negotiations happen all the time without two parties ultimately agreeing. So you are just "asking questions", but then simultaneously making ridiculous claims about what really happened. Gotcha. Well of course not - other people aren't doing that.
The Dodgers' Network, in my opinion, is the straw that broke the camel's back. The numbers involved with it are ridiculous, and that's when the providers realized that the system was broken and they had to put up a stand - sadly, I believe CSN-H was the first new network to come online and negotiate with providers since that announcement was made. I suspect they are going to struggle as much as CSN-H with getting distribution. I bet Crane wishes he had this setup with Comcast.
Reading the comments from other carriers in LA from that article sounds exactly like what we read here.
Do the Dodgers own equity in the network, or are they simply getting a huge rights fee that escalates annually? That is the biggest difference between the LA situation and here. It seems that TWC owns the entire network outright (including getting all the profits from advertising/revenue), and will pay the Dodgers a very large %. They agreed to always cover the rights fees regardless of widespread subscribers or not. The Dodgers may not be involved in the negotiation, nor do they need to have veto power as their rights fees are basically guaranteed. In the Astros situation, as part owner, they took less rights fees in order to gain more potential profits... but that relies on them getting widespread distribution at a price that would guarantee said profits... and that's where they stall out at. A buyout from Comcast would put the Astros in a similar deal as the Dodgers... with a significantly less rights fee payment... but without having to worry about what the subscriber fee actually is.
According to the article, the Dodgers own equity too. But as you mentioned, their rights fees are guaranteed and TWC is required to subsidize it, so it takes some of the risk out of it for the Dodgers. Set to debut Feb. 25, SportsNet LA, which is owned by the Dodgers and run by Time Warner Cable, has yet to sign agreements that would make it available in the majority of Los Angeles pay-TV homes. (Wiki says its co-owned by the Dodgers and TWC, as opposed to the article which seems to imply Dodgers own the whole thing)
I don't really understand the animosity, but whatever. If you don't understand that I am SPECULATING that the offer Comcast took to the board was *part of a negotiation* rather than a final, take-it-or-leave-it offer, then I am a lot worse at communicating than I thought I was. Maybe I am wrong. I probably am. I just want to see SOME kind of evidence one way or the other. The problem is, we literally do not know the details of the negotiations which took place, and I think those details are probably important to the case - and my objection all along has simply been that it appears that those details are being swept under the rug and too many people are just blindly accepting it as a given that it was some sort of final, take-it-or-leave-it offer, and drawing important conclusions from that which maybe they shouldn't do. That's all. As for made-up nonsense, well, you're entitled to your opinion, I don't begrudge you that, but you speak as though you know for a fact that Crane and the board came down from their original asking price, and if that's really true, then I am curious to see it. Regardless, the FACT is, every single entity from CSNH which tried to strike carriage agreements FAILED to do so. What I want to know is, WHY? Value the network differently? What does that even mean? Are you implying that CSNH may just decide to NEVER try to reach an agreement with the carriers, if the carriers are not willing to meet their original asking price? It doesn't imply anything about the negotiations?? It implies the negotiations FAILED. They can't just blithely say 'Oh well, this is just one of those times when we couldn't agree on terms.' This is their life-blood, they can't AFFORD to fail in their negotiations.
Read the above article about the Dodgers situation. Providers don't want to have to pay (or raise their rates) for more sports networks. There's way too many of them. Between ESPN, Fox sports, SEC, NFL, NBA, MLB, Root, CSN, Big 10, Longhorn Network, CBS, NBC, and whatever other regional sports networks you can think of... there are more sports networks than ever right now. Providers strike long-term argreements with one network... only to have the pro sports team form a new network and seek another long-term agreement. There wasn't a "demand" for another sports network... its artificially created by pro sports teams' desire for more money. This is WORSE than the "hold the city hostage for new stadiums" craze that hit the late 90's/early 00's because unlike a brand new stadium with significant upgrades, these channels aren't appreciably "better" than their predecessors... they just happen to carry the local team now. Again, there is no "uproar" in Houston to force the providers to take a different stance. They're going to hard-line this thing as long as they can. They love the fact that the network is bankrupt because they didn't give in to fears that they'd lose subscribers.
I understand you are speculating. I'm saying it's based on no evidence and there is actually evidence to the contrary. If you were right, Comcast would have mentioned it during the bankruptcy to help discredit Crane. But instead, Comcast said nothing of the sort - they never even implied that Crane's stubbornness affected their ability to negotiate. That should tell you that your speculation is wrong. Yes, that's very possible. 6 years in, CSN-NW (the Portland version of this) still doesn't have coverage on DTV or Dish. The LA version is almost certainly going to struggle. Longhorn Network took 3 years to get any coverage in *Austin*, let alone anywhere else. I suspect the Philly one will struggle as well if it doesn't already have carriage agreements. These networks are all fundamentally flawed. What they think they can demand from providers is very different from what providers will pay, but they based their media rights fees on those ridiculous assumptions. They can negotiate all they want, but it doesn't mean they will come to terms on a price. For example, CSN-H might be willing to go as low as $2.75. DTV might be willing to go up as high as $2.50. That would be both parties negotiating, but it wouldn't mean they come to an agreement. This thing, in my opinion, has been destined to be a disaster since day 1 because the whole market is in a bubble. I said this long before we knew about the ridiculous governing structure they have or Crane's demands, and said the same about LHN and the LA Network as well. ESPN finally came off their ridiculous LHN demands after 3 years - but they can afford to eat whatever losses they want because it's pocket change to ESPN and they have the monster bargaining power of ESPN. CSN-H is its own entity, so it needs to be sustainable. That's a whole different problem. If they ultimately agree to anything, the price will be far closer to what the providers are offering than what Crane or CSN-H ideally wants - but that price doesn't make any economic sense to the latter. The core problem is that this thing should never have existed in the first place, and it's made more complicated by the corporate governance structure they put in place.
This is the CSN-NW version of this - the channel launched in 2007. http://en.wikipedia.org/wiki/Comcast_SportsNet_Northwest#Carriage_controversies Carriage controversies As of August 2013, the channel is unavailable on DirecTV and Dish Network. DirecTV and Dish Network maintain that Comcast is negotiating in bad faith. For example, on one hand Comcast argues that the channel must be on a lower tier with the most customers.[9] At the same time, Comcast argues that non-Comcast-owned sports channels should be shown only on a sports tier.[10] The Trail Blazers are said to be frustrated and disappointed by the conduct of Comcast over their contract with CSN.[11] The Consumer Protection Committee of the Oregon House of Representatives held a hearing on February 24, 2010 to help get the channel on DirecTV, Dish Network and Charter Communications. No one from DirecTV, Dish Network, or the Trail Blazers attended.[12] On June 21, 2010, the Trail Blazers asked the Federal Communications Commission to require Comcast to make Trail Blazers games available to competing multichannel programming distributors such as DirecTV and Dish Network.[13] One Oregon cable company, Canby Telcom, has objected to the additional annual charge in excess of $32 being required to be charged per customer in 2012 and has announced plans to stop carrying the channel.[14] Canby Telcom President Keith Galitz is quoted as saying "That's just too steep an increase for us, and it's not in line with inflation or normal escalation of prices in the industry."[14] Canby Telcom had announced plans to discontinue the channel as Comcast had offered a non-negotiable fee increase that would bring the annual per subscriber charge to over $32.[14] Canby Telcom has accused Comcast of raising rates way beyond the rate of inflation and industry-wide increases.[14] Clear Creek Television, which carried the Trail Blazers for 15 years, was rebuffed when even attempting to negotiate the above-market rate Comcast pushed at Clear Creek.[14] "Comcast clearly sees the public perception of its treatment of sports fans as a potential Achilles heel in efforts to acquire NBCU", said Sports Fan Coalition Executive Director Brian Frederick, discussing how Comcast sent senior staff members to Oregon when a member of the Sports Fan Coalition testified before the Oregon Legislature on Comcast's denial of access to hundreds of thousands of customers of DirecTV, Dish, and other cable operators.[15] In a November 7, 2010 article, Blazers CEO Larry Miller continued to express frustration about the lack of availability.[16]
Long and interesting thread. I'm in New Orleans. We have a group of fans here... or had. Most have moved to the Braves for the simple fact that the MLB blacks out the Astros. Oh, and we can't get them on cable, dish or whatever. I'll just soapbox my first post I guess. Sorry.
Interesting arrangement. I'd venture to say the Astros rights fees also were "guaranteed"... in terms of that if they stopped getting them, they'd be allowed to get out of the network. Funny how that turned out.
