Comcast SportsNet Houston value has dropped from $700M to $22M, consultant says

The fate of carriage-crippled regional sports network Comcast SportsNet Houston now hinges on what dilapidated value a bankruptcy court deems that it has left.

Houston pro sports teams the Astros and Rockets entered a joint venture with Comcast two years ago to launch the RSN, which never was able to carve a carriage agreement outside Comcast.

The teams want to sell the bankrupt network to AT&T (NYSE: T) and DirecTV (NASDAQ: DTV) at a value of around $22 million, down from an initial value of $700 million.

Comcast (NASDAQ: CMCSA), which loaned the Astros and Rockets $100 million based on the latter asset value, thinks CSN Houston is worth much more than that. And the conglomerate doesn't want to accept an offer of between $16 million-$23 million from the Rockets and Astros to settle the debt.

On Tuesday, Bankruptcy Judge Marvin Isgur heard second-day testimony as to whether the sale should be approved based on the $22 million valuation. If he signs off, CSN will be owned and operated by DirecTV and AT&T, and it will become Root Sports Houston. According to the Houston Chronicle, 96 of 141 current employees at the RSN would lose their jobs, and the Rockets and Astros would demand substantially lower rights fees for their games.

If Isgur rejects the plan, CSN Houston will likely be liquidated, and all its employees would lose their jobs.

Key to the testimony will be prospective affiliation agreements. Comcast attorney Craig Goldblatt has argued that based on the carriage of the No. 1 pay-TV provider in Houston alone (Comcast), the network should be valued at $470 million.

Conversely, Steve Zelin, senior managing director of the Blackstone Group, an investment and advisory firm retained by the network's attorneys, has testified that other carriers in the area, notably Dish Network (NASDAQ: DISH) and Suddenlink, have no interest in carrying the channel.

"Nothing has suggested that Dish and Suddenlink will give in to the pressure to carry the network," Zelin said.

For more:
- read this Houston Chronicle story

Related links:
Comcast rejects latest SportsNet Houston deal
DirecTV set to take over Houston RSN it refused to carry
Comcast cited 'total gridlock' at CSN Houston bankruptcy filing
Dish offers to distribute carriage-starved CSN Houston a la carte
Houston mayor pressures DirecTV, Suddenlink, AT&T to sign deal with Comcast SportsNet Houston

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