Astros blocked CSNHouston deal?

I've not seen the exact amount of CSN-H, but from hearsay, it doesn't seem ridiculous versus other RSNs on a per subscriber level. It maybe high, but from what I've heard not ridiculous compared to other RSNs. It is only ridiculous if you consider Houston sports fans won't switch providers for CSN-H.

I would categorize ad price as "close to zero" on a per subscriber basis when discussing the cost for an RSN to operate. If I had to guess, I'd say it is less than a penny per subscriber. Even if it is 5 to 10 pennies per subscriber, I would count that as "close to zero" relative to any reasonable priced RSN.

Even if CSN-H was offered at what a low priced RSN's have cost, the ad money for providers isn't enough for them to add it. It boils down to customers. If providers can get away with not showing the Rockets and keep its customers, they won't add CSN-H.

The Astros and Rockets have severely hurt themselves by aligning themselves with Comcast. They have lost the PR battle with the providers. Houston Sports Fans have shown that they would rather stream online illegally than being willing to switch providers. All the signing petitions won't matter at this point.

 

To be fair, as far as cable/sat goes, comcast still has the majority share of all individual providers in Houston.

I know they shopped around and considered Direct TV to host the channel, but felt they would get more exposure with comcast.

And, I have a hard time believing either team is worse off financially under this deal as opposed to their old ones. If this is a battle that Comcast corporate will have to fight for them (and they have the $$$ to do so), they will.

 

The part everyone is missing is that this beats the pants off the deal with Fox Sports where Houston plays second fiddle to Dallas Mavs and Dallas Rangers at Arlington.

 

I think CSN-H has two problems. One, it's priced like RSNs for much more robust sports markets. While Houston is a big city, it's sports enthusiasm is not like that of Chicago or whatever else. Two, it launched at a point where these providers are fighting back. So just because they paid those ridiculous prices for previous networks doesn't mean they are willing to do it going forward.

Maybe I'm not understanding the economics here, but my understanding of why these RSNs think they are so valuable and why these sports programming deals are growing by so much is that ad rates for live sports programming is skyrocketing because it's the only place people still watch ads in a world of DVRs. Am I wrong here?

 

On a side note, I found this interesting:

http://online.wsj.com/article/SB10001424127887323823004578595571950242766.html


People with knowledge of the television negotiations say the Astros and Rockets turned down deals from longtime broadcaster Fox Sports Southwest valued at about $60 million per year for the Astros and $25 million per year for the Rockets.

By forming a partnership with Comcast, the biggest pay-TV operator in the U.S., the two teams hoped their network would become part of the basic programming offered by Texas' television providers. The network asked providers to pay a monthly fee of $3.40 for each of their subscribers, making it one of the most expensive cable sports networks in the country.

 

No doubt the $3.40 is ambitious... but I believe that's what is being paid in Pittsburgh and Washington, let alone the top 5 markets.

Houston is currently #10, and closing in on the top 8 fast in terms of media market size. Throughout the lifetime of the deal, they could easily surpass Atlanta and Washington DC.

The bubble for this market is in the process of bursting (if it already hasn't)... this is their only shot to get the most bang for the buck. If it falls through, they'll never see another deal as lucrative.

 

More Houstonians watched a women's basketball game between Chicago and Minnesota than watched the Houston Astros.

http://deadspin.com/an-astros-game-had-just-1-000-tv-viewers-1333179616/1335653071@barryap

 

But these are per-subscriber costs, so being a bigger market doesn't necessarily mean a higher rate. The problem is that I would guess Houston has a relatively low viewership rate compared to other markets. I'm making up numbers here, but if 8% of people in Washington watch their local teams vs 5% of people in Houston, then Washington providers would logically pay more per subscriber than Houston, regardless of their market size. The market size only affects the total valuation of the deal.

Agreed - however, I think they already missed that boat. That article mentioned a few other places like Kansas City having tried and overvalued their own networks and eventually selling out of them or whatever. That might be the end result here too. I'd be curious to hear Crane's thoughts on the network at the end of this season - he's been pretty open about this mess thus far.

 

No there weren't. Guarantee you more than 500 people were watching at bars/restaurants.

 

I would say ad money is rising, but it is close to zero compared to how much providers make from customer subscriptions and pay to include RSNs on their basic packages. Ad money alone won't get providers to add CSN-H.

 

I agree with the rational here, but don't know the specifics. I think it falls to how much they can make from subscribers and ad money (which I think is small compared to subscriber money) by having RSN vs. not having RSN. If they can charge the same price for no RSN than with an RSN, they pocket an extra 3.50 a month per subscriber. People actually watching the game don't matter. It depends on the percentage of people willing to make the RSN a deal breaker for their provider is the driving force.

Houston sports fans, not including areas not serviced by Comcast, have basically said it is okay for providers to not carry CSN-H and that they will find alternate means to watch games or not watch at all.

 

I'm surprised at the folks who still can't comprehend what a jackass Jim Crane is.

 

I'm not a Crane fan at all... mainly because of his demeanor, the stupid LF awful banners, and he tends to come off as somebody who is treating the team like his primary income source (instead of a play-thing/hobby... like other wealthy owners do).

However, you've been way off on all your comments regarding this process. Crane can be as big of a jackass as he wants... but he needs to get the best possible deal for the Astros.

 

I understand completely. I just think the guy put himself in a bad leverage position by putting a team on the field that no one cares about and still wants top dollar for it. He's not being a very good business partner to the Rockets and Comcast either by being unreasonable. He's not trying to compete now.

 

How's that working out for him? His 0 rating is fuel for the providers to not carry the channel. They have the numbers to prove no one cares about his team.

 

Crane is not worrying about competing in the future he's just trying to line his wallets. He seems like the kind of owner that is going to make empty promises, more worried about money than winning.

Also I would like to thank the astros for all the free tickets this season. You guys made me like $150 this year with all the tickets I sold online this year.

 

Wait - he's simultaneously only interested in lining his wallets and making money, but he's also giving away free tickets? Hmm.