The sale of troubled regional sports network CSN Houston to AT&T (NYSE: T) and DirecTV now appears likely, with a bankruptcy court judge ruling against Comcast (NASDAQ: CMCSA) on the key matter of the network's remaining value.
According to the Houston Chronicle, Bankruptcy Judge Marvin Isgur will decide as soon as Oct. 21 whether to approve a reorganization plan that would put the network in the hands of AT&T and DirecTV (NASDAQ: DTV). But Comcast still may appeal Isgur's decision Wednesday on the valuation of the channel to the 5th U.S. Circuit Court of Appeals.
Comcast jointly launched the RSN in 2012, along with Houston pro sports teams the Astros and Rockets, but the channel couldn't find distribution outside of Comcast and wound up in bankruptcy court 13 months ago.
Along with its pending corporate parent, DirecTV--the No. 2 operator in the region--has agreed to take over the channel and give the newly rechristened "Root Sports Houston" several hundred thousand new subscribers.
Despite the fact that they'd receive far less in the way of broadcast rights fees, the Astros and Rockets support the plan. Comcast, however, does not. The MSO wants to recoup a $100 million loan it put into the joint venture to get it off the ground. CSN Houston was used as the collateral for that loan. And whatever the court determines the value of that asset to be also determines how much the Astros and Rockets have to pay back to Comcast.
Comcast is arguing that the RSN is still worth a lot, based mainly on the carriage deal the channel still has with Comcast, the No. 1 pay-TV service in the region. But Isgur ruled that the carriage agreement is without value, given the bankruptcy filing and the lost rights fees endured by the teams.
Had the Astros and Rockets been forced to pay back the full $100 million--or close to that amount--based on Comcast's higher valuation of the collateral, the deal would have been scuttled.
But the teams would only be required to pay back a small fraction of the loan amount based on Isgur's ruling.
- read this Houston Chronicle blog post
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