By Dow Jones Business News, October 16, 2013, 12:51:00 PM EDT
By Katy Stech
Comcast Corp. ( CMCSA ) urged a Texas bankruptcy judge to allow CSN Houston, the television network that broadcasts
Houston Astros baseball games and Houston Rockets basketball games, to stay in bankruptcy, arguing the dismissal of its
case would empower the Astros owner to yank its media rights agreement with the network.
That deal termination would trigger the network's "unnecessary" collapse, Comcast lawyers argued Tuesday,
"All of its 130 employees will lose their jobs," Comcast lawyers said in papers filed in U.S. Bankruptcy Court in
Houston that pushed Judge Marvin Isgur to allow the network to be sold or reorganized through the bankruptcy process
Judge Isgur set an Oct. 28 hearing to hear arguments over whether the sports network, which is owned by both sports
teams and a Comcast affiliate, should move forward with Chapter 11 bankruptcy's reorganization process.
Houston Astros lawyers have argued that involuntary bankruptcy case -- filed on Sept. 27 by Comcast affiliates -- has
unfairly gotten in the way of their contractual rights.
Astros officials would have had the power to terminate that agreement several days later on Oct. 1, the first
anniversary of the network's creation. The Oct. 1 anniversary would have also given the Astros and the Rockets the power
to force Comcast to accept broadcast deals with competitors DirecTV ( DTV ) and Dish Network Corp. ( DISH ).
If Astros officials terminated the agreement, they could have resold the broadcast rights, perhaps for a higher price.
But in Tuesday's court papers, Comcast officials said there is no need to let the network collapse in the process of
reassigning those rights when a bankruptcy trustee could sell the network and the media-rights agreements together.
CSN Houston is one of 12 regional networks that are part of the sports division of Comcast 's NBCUniversal unit, and
it pays Comcast an annual fee for management oversight and other operational help, according to court papers. The sports
teams, as part owners of the network, are paid a rights fee and are also able to share in network profits.
Comcast said the network owes it more than $100 million, stemming from funding it provided under the deal to create
the network, which broadcasts sports programming out of a 32,000 square-foot space in downtown Houston, according to its
website. In addition to showing Astros and Rockets games, the network broadcasts Houston Dynamo soccer games, high-
school football games and sports talk shows.
The Houston network is available to Comcast subscribers but has run into trouble persuading Comcast competitors such
as DirecTV and Dish Networks to carry the network in exchange for subscriber fees, which some have said are too high.
Cable and satellite providers have faced pushback from customers when they have sought to pass on the cost of high
sports-rights fees in monthly bills.
Today, CSN Houston is available in less than half the region's households. For that, Astros owner Jim Crane blamed
Comcast for the lack of deals with major outside distributors.
"They're experts at this," he said in an earlier Dow Jones interview. "Their job was to bring those deals to the
Mr. Crane, a Texas businessman, bought the Astros for more than $600 million in 2011 and began a major rebuilding
program. After dumping high-priced talent, the team finished with the worst record in baseball this past season.
In Tuesday's court papers, however, Comcast lawyers said the Astros "refused to permit the network to enter into
carriage agreements at the market-clearing prices, and rejected various proposals that would have provided debt or
equity funding (or both) to the network."
"As a result, the network lacked the revenue it needed to pay its bills," Comcast said.
--Patrick Fitzgerald contributed to this article.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to
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