Off the Kuff Rotating Header Image

Comcast SportsNet Houston

Crane sues McLane

This ought to be fun.

Jim Crane’s Astros ownership group filed a state court lawsuit Thursday against former Astros owner Drayton McLane, Comcast and NBC Universal, accusing them of fraud and civil conspiracy and accusing McLane’s corporation that owned the Astros of breach of contract in conjunction with Crane’s 2011 purchase of a 46 percent interest in the parent company of Comcast SportsNet Houston.

The suit accuses McLane, who sold the Astros and his CSN Houston share to Crane in 2011 for $615 million, of selling “an asset (the network) they knew at the time to be overpriced and broken.” It also says Crane was “duped” when he bought McLane’s network interest based on what have been proved to be “knowing misrepresentations” and “falsely inflated subscription rates.”

“Ultimately, fans of the Houston Astros have been injured because defendants’ misrepresentations leave (Crane) with an impossible choice: accept the broken network as is and deprive thousands of fans the ability to watch Houston Astros games on their televisions, or distribute the game at market rates and take massive losses out of the Houston Astros player payroll – thereby dooming the franchise for years to come,” the suit adds.

[…]

Crane’s suit alleges McLane and Rockets owner Leslie Alexander demanded in 2010 that Comcast charge a base subscriber rate for CSN Houston in Zone 1 – the area around Houston where Astros and Rockets games can be seen – that Comcast said was too high. In fact, the suit said, the rate was so high Comcast feared it could not convince other distributors to carry the network.

Comcast eventually agreed to the inflated base rate, the suit said, in return for a most favored nation clause, which ensured Comcast it would always pay the lowest base rate of any distributor.

Faulty business plan

Crane, according to the suit, was not aware of these facts when he was negotiating to buy the team in 2011 and that Comcast, NBC Universal and McLane agreed to “conceal material information” about the network’s business plan.

The suit also accuses Jon Litner, group president of the NBC Sports Group, of making false and misleading claims the CSN Houston business plan was achievable, even though they were based on what the company knew were inflated subscriber rates.

Crane became aware of the 2010 demands by Alexander and McLane, according to the suit, during a December 2012 meeting in New York City, about a year after he bought the team and three months after the network launched.

The suit asks that McLane’s McLane Champions corporation be ordered to repay Crane’s group for losses that have resulted from alleged breaches of the group’s purchase agreement – including, presumably, more than $30 million in rights fees the Astros failed to receive in 2013 and what Crane says is the “artificially inflated price” he paid for McLane’s network share. Court testimony indicated CSN Houston was valued in 2010 at $700 million, with McLane’s share valued at $326 million.

I haven’t followed it here on the blog, but CSN Houston has been plagued with problems, mostly stemming from the fact that nobody other than Comcast carries it. That limits its reach to about 40% of Houston-area viewers, which also limits ratings and ad revenues. Mayor Parker has tried to facilitate talks between Comcast and other carriers to resolve this, but has had no luck. The infamous game nobody watched probably didn’t improve Crane’s mood about the station. The Astros have been trying to get out of this deal but aren’t on the same page as the Rockets, who are also stakeholders in CSN Houston. Four Comcast affiliates have filed for bankruptcy stemming from that action. It’s all a big mess, is what I’m saying. I have no idea what happens from here, but I’ll be watching. Sports Update and Hair Balls have more.

Here comes NBC Sports

Comcast SportsNet Houston, which is owned by NBC Sports, is coming to downtown.

Coming to Houston

Comcast SportsNet Houston, the new regional sports network that will air Rockets games this fall and Astros games in 2013, plans to begin broadcasting in early October from its new 32,000-square-foot studio complex in the downtown Houston Pavilions, the network’s general manager said Wednesday.

The network likely will launch with the beginning of the Rockets’ preseason schedule as it assumes the local cable rights for the Rockets and Astros from Fox Sports Houston, said Matt Hutchings, who will head up the new venture.

“We are going back to our roots as a regional sports network,” Hutchings said. “We are going to cover our teams and create programming that showcases not only our pro teams but the sports that are important to our region.”

[…]

The city provided about $1 million in tax abatements and other incentives for the network, which will employ about 125 people to staff the on-air network and its website.

See here for some background and here for the city’s press release. I hope this brings a little stability to Houston Pavilions going forward. Hair Balls and Culture Map have more.

Comcast SportsNet Houston

This would be cool.

Coming to Houston?

The NBC Sports Group is seeking about $2 million in state and local support to bring a major production studio and 135 jobs to downtown Houston.

The operation would be for Comcast SportsNet Houston, a new regional television network that will broadcast Astros and Rockets games beginning in the fall.

The media company has identified 40,000 square feet of space in the Houston Pavilions for the operation, which would include two production studios, two control rooms and other broadcast-related facilities, according to a document obtained by the Chronicle. Some $16 million would be spent on equipment, furniture and other interior improvements.

[…]

If Houston isn’t chosen, a smaller facility with 25 employees will operate the network here.

The smaller studio, however, would limit it to Rockets and Astros games, while the larger alternative would allow the network to cover local college and high school sports, as well as local and state charity events, sports-related fundraisers and originally developed and produced programming and talk shows, according to the application.

The additional 110 technical production and digital media jobs would amount to more than $7 million in annual payroll.

A hundred and ten good paying jobs in downtown Houston? Expanded coverage of local sports? A shot in the arm for the Pavilions? What’s not to like?

Last month, NBCUniversal Media LLC submitted an application to the Texas Enterprise Fund requesting $1.2 million for the operation.

Yeah, the Texas Enterprise Fund. That sound you hear is me grinding my teeth. The Enterprise Fund is a wasteful, crony-tastic slush fund for Governor Perry. And now I get to root for it to succeed in this endeavor. Ain’t karma a bitch? If the stupid thing is going to exist, the city of Houston may as well derive some benefit from it. On the plus side, if it fails at least I can go back to hating on it with a clear conscience. Got to find the bright side where you can.