So if I own a restaurant and you own a produce company. You provide produce for me and I come to you and say after a shipment "sorry buddy, I am not having the number of customers I expected. I can't pay you for the product you provided" you should be okay with it?? Basically for me it comes down to the fact that Comcast didn't pay Crane but they want him to agree to a deal because it is viable for them and the Rockets. And now they are b****ing because he vetoed a deal that he felt was bad for him, which was entirely in his right according to the negotiated contract. Now if you are on the side that thinks he can get by with a less than market value deal then that is your prerogative and we will just agree to disagree. But this article sounds like Comcast whining because they don't like how Crane played the game, even though it was by the rules they set out, and now they want to change the rules to suit them.
OK so I agree to a deal that loses me huge amounts of money just so I can get money I am owed whether I agree to the deal or not. The rights fees are owed no matter what the carriage is. That is contractually obligated to them. They don't have to agree to squat to be owed that. So you are saying it is okay for Comcast to hold that as leverage to get the Astros to agree to a deal. Go to Macy's and find a shirt you like. Put it on and walk to the register. Tell the cashier you want the shirt. they ring you up for $40. Give 'em $15 and tell them you will give them the rest if they will throw in a pair of pants too.
Please provide the link that where Comcast challenged that the Astros and Rocket's didn't request those rates and therefore in return they asked for a MFN clause. I believe that the Astros and Rockets did ask for the rates and I have explained why before. I do feel that Comcast had hesitation about the rates being accepted by their competitors and insisted on the MFN so they wouldn't be stuck paying them for 20 years. So I do believe that part to be true. What I don't believe is that Crane wasn't given a contract without a MFN clause in it. I do believe that was something that should have set off an alarm if he was so stuck on getting those high carriage rates. Part of a business plan is to work off best and worst case scenarios. By appearances Crane was only prepared to work off the best case scenario. For me, my worst case scenario would have been for the carriage rates to be in line with what Fox was getting before. If I could have lived with those rates and had the cash flow to run the Network, then I would have signed off on the deal. However, I would have insisted on a clause that allowed any party to leave the agreement if the rates came in at or below whatever number we all agreed wouldn't be profitable for any party. A breach of contract clause is not a business plan. It's a standard contractual clause. Crane excercised a clause in a contract that allowed the Astros to exit the agreement if they were not getting paid. A huge part of the reason that they were not getting paid was because Crane was stubbornly refusing to sign off on carriage agreements and that affected cash flow. If he was wronged behind the scenes and had this case against his partners because they allegedly promised him those rates, he could have sued them even if he signed off on lower carriage rates to keep the company afloat. So you will join me in reminding those who think that the Network is going to lose money over the length of the agreement that has never been stated as a fact by any of the 3 parties at this point in time. Can you provide a link to this fact? I haven't seen that has been proven or agreed upon by all parties as a fact. There's no sense in providing a response to a scenario founded on false facts. You even admit earlier that it hasn't been stated as fact that the Network would lose money. You gotta stay on one side of that fence.
This whole situation is a Crane Wreck. We have wasted 6 weeks waiting on Crane to likely come back with an answer he says he already knew....
Castor. They aren't just customer/supplier.. they are partners. and technically its set up as a loan.so it isn't as simple as a non payment. I'm sure it was set up as a loan because the partnership hadn't set up their full revenue stream ie signing with other carriers
Comcast makes a loan to the partnership which the Astros are a part of expecting to recoup some of the money. Crane doesn't sign the deals took the money fielded a payroll so low the Kansas city royals couldn't be envious of and now wants out and you want me to be sympathetic because of some missed projections. BTW the way I'm 38 and for the first time can't watch two of my home teams on TV the first time in my freak in life.
I worked at a bank in commercial lending, I saw missed projections all the time. People a lot less wealthy reacted a lot better.
Broadcast rights aren't setup as a loan. It is a product the Astros provide CSN-H and in return they pay for it. There is a contractual agreement for that. It is just paid in installments over a 6 month period (I believe that is the time frame) Rights fees are what the Astros didn't get paid. So in this sense they are customer/supplier. Not having carriage deals didn't stop them from paying out the rights fees to the Rockets. http://www.crawfishboxes.com/2013/9...ry-chapter-11-bankruptcy-petition-against-csn
One of the reasons I got so upset at major is I figured out and the 100mm "loan" the whole basis of the bankruptcy hearing were actually the media rights go and read the first thread. I'm not footing my horn I could have done it earlier. I caught flack for saying it.
Crane didnt say anything about not getting paid till after all info came out.so think about it. Comcast is pissed and now they are using this option. They set it up as a loan so they could bring it to court if they got scrrwed.
I really am sorry about the multiple posts I will donate. Remember the partnership is who pays the media rights. Not Comcast. The station pays the rights. The station pays that from carriage and advertising. They have not signed 60% of potential customers. So Comcast the cable provider fronts them the money. You have to separate the station from the provider in your head when discussing this.
I'm lost here. Are you saying the bankruptcy filing from Comcast is over rights fees? That they filed because they are owed 100M in rights fees? I'm confused how they can be owed rights fees what rights are they selling? I thought the bankruptcy was over several comcast affiliates having loaned money specifically to CSN-H and even though the company is current they think they will not be able to repay the loans at some future point. And they want a judge to install a conservator to make decisions for the company since all parties (namely from their standpoint tha Astros) can't agree. And even though Granville will deny it, I'm guessing they are pretty sure the appointee will start okaying deals at a much reduced rate. Which benefits them 2 fold. It brings in some semblance of cash flow and if the deals are low enough gets them a price cut on the channel.
Yes they still owe some smaller debts. No they aren't supposed to pay the $100mm back. However it is called a loan and it is mentioned in the filing. The purpose of the filing is to break up the partnership. They set up the rights fes as a loan to have that option. So what I'm saying is the more time not having the other carriage arrangements in place the more noney the entire partnership loses.
I didn't say that a trustee won't go the Comcast and the Rocket's way. In fact, I think they will because unlike Crane they will be looking out for what's best for the Network. I'm saying that isn't 100% a certainty that they will. Is your position that a trustee would side with Comcast and the Astros because they are evil too? And as far as a price cut on the channel, why would you expect Comcast to pay the current inflated rate if no one else does especially when they have it in writing that they don't have to once a deal is in place at a lower rate? Comcast loaned the Network money and has been supporting it with an artificial rate (even Crane admits that) for over a year now. And bringing in more cash benefits everyone including the Astros. Some of you can't seem to grasp that over the course of the contract, if Crane had the cash flow like the Comcast and Les Alexander do, he would make money off the Network deal. He doesn't because he is leveraged to the hilt and likely has investors screaming at him because they weren't aware that there was a possibility they'd have to infuse more cash for awhile to ultimately make money. I fault MLB for letting this chump buy a team knowing he has a shoestring operation. Think about how you would feel if you had invested with Crane on this team and he keeps asking you to contribute more cash because he got "duped". I'd like to hear your opinion on why Jim Crane keeps talking about losing equity to Comcast and we don't hear a peep out of Les Alexander on that subject. Why is that? Here's my take on my question to you. There are 2 streams of revenue for Crane in this TV deal. The media rights would be a constant if the Network remains solvent. So if Crane quit acting a fool and agreed to deals, then there is money to pay the bills. Crane makes money off that in the form of media rights fee payments if they get deals in place. The other revenue stream is the ownership of the Network. Comcast would pay the Astros for whatever losses the Network incurs in exchange for equity. Eventually the Astros would have no equity in the Network having given it back to Comcast for paying their bills in the Network. That doesn't mean that they lost money it means they lost a revenue stream. They would still make money off media rights which is all they would get if they jumped ship to back to Fox. Crane now wants more from Fox than the 80M yearly that he would make off Comcast for media rights because he doesn't have the money it takes to be an owner of a TV Network. The Rockets aren't b****ing because Les Alexander can pay the losses on the Network side until the ship rights itself and he doesn't lose his equity. This isn't a lemonade stand it's big business. Reading between the lines, Crane likely wants Comcast to keep paying an artificial rate and give him more equity in the deal. And to address some of the other things in your post. The CSN H partnership owes money to Comcast 100M (that is likely factored in to the 10 year debt projection) and to some other Comcast afilliates who provide services to the Network. CSN H also owes money to the Astros for missed media rights payments. I haven't heard anything on the subject to confirm but by now they likely owe the Rockets money for missed media rights payments as well. Jim Crane has fooled people in to thinking he would lose money on this deal. He won't make as much because he can't afford to be a partner in a TV station. If he doesn't make as much in media rights fees it's his own damn fault for holding out as long as he has.
Do you have proof that DirectTV's highest offer was greater than $2.33 per subscriber? If not, the offer would cost the partnership as a whole money, but save Comcast millions (probably tens or hundreds of millions). Astros have veto power. Astros have right to leave if not paid. Astros aren't going to agree to a deal that gives Comcast potentially hundreds of millions of dollars because projections made by Comcast were wrong and negotiations by Comcast only brought offers that did not benefit the Astros. Whether agreement would make a little money or none or a lot doesn't change that Astros have veto power or weren't paid. A partnership is only good if all members get what they want. All members were given veto power for this reason. There is a reason vetoes exist in a partnership. It is so an individual partner can protect his/her rights over what may be good for the partnership as a whole and/or other members. You can argue what's good for partnership, Comcast, Rockets, but Astros have sole authority over their veto power and they can use it at their discretion. The bankruptcy filing is the only way Comcast has potentially found around it. Yes, I fully expect Comcast to fight for hundreds of millions of dollars.
Just looking at the numbers, it may be possible that it would be beneficial for DirectTV to buyout Astros and Rockets and be partners with Comcast in CSN-H. If DirectTV matched what Comcast is paying, I suspect CSN-H would make money. Since Comcast has twice the viewers, DirectTV would be paying for 1/3 the carriage fee revenue (rough approximation) and getting 75% of the profits. It is just a question if 75% of profits would be greater than (3.40-DirectTV's offer) * # of DirectTV subscribers. Crane gets back 300+ million. Rockets get back 150+ million. CSN-H makes money. Comcast makes money (unless 3.40 per subscriber was never worth it and they counted on MFN status lowering that number) DirectTV makes money.
