CSN Houston files for Chapter 11

danielcp0303 · Oct 7, 2013

Astros seek dismissal of CSN Houston’s bankruptcy filing

http://blog.chron.com/ultimateastro...-dismissal-of-csn-houstons-bankruptcy-filing/

The Astros asked a federal bankruptcy judge Monday to dismiss an involuntary Chapter 11 bankruptcy case filed Sept. 27 against the parent company of Comcast SportsNet Houston, describing the effort by Comcast and its affiliates to restructure the Astros-Rockets-Comcast partnership through bankruptcy as a “road to nowhere.”

The 35-page document was filed with U.S. Bankruptcy Court Judge Marvin Isgur, who has set an Oct. 28 hearing to determine whether he will dismiss the case, filed by four Comcast affiliates against Houston Regional Sports Network, the parent company of CSN Houston, and to determine if an interim trustee should be named to oversee the network if it remains in bankruptcy court.

Monday was the deadline for the Astros, who own 46 percent of the partnership, to file their response to the Chapter 11 petition. The Rockets, who own about 32 percent, have not commented on the case. Comcast owns the remaining 22 percent of the network.

Four creditors affiliated with Comcast – National Digital Television Center, CSN California, Comcast Sports Management Services and Houston SportsNet Finance – filed the Sept. 27 petition alleging that CSN Houston faces an “urgent financial and corporate government crisis” and cannot pay its bills because of “total gridlock” among the partners.

The Astros, however, describe the bankruptcy filing as an effort by Comcast to “gain control over the Astros’ most valuable asset, the media rights to televise their own Major League Baseball games.” They argue in Monday’s response that Comcast is trying through bankruptcy to force the Astros to accept undervalued carriage deals for CSN Houston that would damage both the network and the ballclub.

CSN Houston is available in only about 40 percent of the 2.2 million TV households in the 20-county Houston designated market area and has been unable to negotiate carriage agreements with such major companies as DirecTV, Dish Network and AT&T U-verse. Astros and Rockets games were not available to most local TV households in the 2012-13 Rockets season and 2013 Astros season, and the Rockets begin their 2013-14 regular season on Oct. 30, two days after the scheduled hearing.

The Astros also say that Comcast “orchestrated the (bankruptcy) filing in bad faith” in an effort to gain a “tactical advantage over the Astros in their partnership dispute.” The request for a trustee, they add, is improper because the trustee would have power to make decisions regarding media rights agreements, which the Astros claim “cannot be assigned as a matter of law.”

Because such intellectual property rights cannot be reassigned, and because the CSN Houston partnership dispute involves agreements that are governed by state law, the Astros claim that allowing the case to remain in bankruptcy is “a road to nowhere.”

The Astros said CSN Houston failed to make rights fee payments to them that were due on July 31 and Aug. 30 and that the ballclub informed the network that it would terminate its agreement with CSN Houston and retake their broadcast rights as of Sept. 30 if the money was not delivered by Sept. 29. Comcast headed off that possibility by filing the bankruptcy case on Sept. 27 “as an end run,” according to the response filed Monday.

The response touches on several familiar topics, including the requirement that any rights agreement must be approved unanimously by the four-member CSN Houston board, which includes one representative from the Astros and Rockets and two from Comcast, but also amplifies on the heretofore behind-the-scenes disagreements between the partners.

Unanimous consent, the team said, is “indispensable to the protection of the Astros’ media rights because, without them, the Comcast and Rockets directors (voting together) could control the value of the Astros’ most valuable asset – their media rights – by causing the network to enter into undervalued affiliation agreements, modify the terms of the Astros’ media rights agreement or file for bankruptcy.”

The Rockets have not commented on any disagreement with the Astros, and Astros owner Jim Crane referred to the topic only in general terms during an interview last week.

The Astros’ response also touches on several elements of bankruptcy and contract law that in terms of complexity transcend the basic issue that has concerned Rockets and Astros fans: the inability to see their teams on their satellite or cable carriers.

For example, they say the complaints by the four Comcast affiliates do not meet the requirement for an involuntary Chapter 11 proceeding of of three or more entities with “undisputed, bona fide claims.” The ballclub claims that two of the Comcast entities’ claims are based on “unauthorized oral contracts” to which the Astros did not consent.

The Astros also claim that their media rights deal is a personal services agreement as well as a trademark agreement and cannot be assigned to another party through bankruptcy or without the Astros’ consent.

The Astros also maintain that the case should be dismissed because there is no “reasonable likelihood” that Houston Sports Regional Network can be reorganized in bankruptcy court. Even if the ownership structure is changed under bankruptcy, the team claims, the Astros will retain their broadcast rights and will be free to sell them to another party.

Officials with the NBC Sports Group, which manages CSN Houston, had no comment on the Astros’ motion.
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DavidRocket · Oct 8, 2013

CSN status?

Anyone know the status of the CSN deal with the Rockets/Astros?

Any word on whether the Rockets games will still be aired on CSN this season?

dsid411 · Oct 9, 2013

I've been interning at CSN Houston for the past few weeks and nothing seems to have changed since the filing. It's still business as usual. So I'd assume the games will still be showing on CSN Houston.

danielcp0303 · Oct 15, 2013

http://blog.chron.com/ultimateastro...trying-to-cheat-team-out-of-share-of-network/

The Astros on Tuesday accused Comcast of using bankruptcy proceeds as a “smokescreen” for its plans to cheat the ballclub out of its ownership share in Comcast SportsNet Houston and Comcast.

The accusation is included in the Astros’ 32-page motion, filed on Tuesday with U.S. Bankruptcy Judge Marvin Isgur, in opposition to requests by four Comcast affiliates’ that Isgur name a trustee to oversee, Houston Regional Sports Network, the Astros-Rockets-Comcast partnership that is the parent company of CSN Houston.

Isgur has set an Oct. 28 hearing to rule on the Comcast motion for a trustee and on the Astros’ motion to dismiss the involuntary Chapter 11 bankruptcy case. Comcast was scheduled on Tuesday to file its response to the Astros’ motion to dismiss.

The Comcast entities argue that a trustee is needed because the four-member board, which includes one representative each from the Rockets and Astros and two from Comcast, cannot agree unanimously, as required by company regulations, on distribution agreements.

The Astros, however, replied, “What Comcast now disparages as ‘dysfunction,’ ‘deadlock’ and ‘gridlock’ is nothing more than the Astros’ assertion of their bargained-for voting rights in this partnership.”

The Astros’ opposition to a court-appointed trustee covers mostly familiar ground from its previous filings in the case. It does, however, include at least three new revelations.

In one case, the Astros reveal that the Rockets and Astros have the right as of the network’s first anniversary, which was Oct. 1, to force Comcast to accept carriage agreements with the likes of DirecTV, Dish Network, Suddenlink or AT&T U-verse if the teams wish to do so.

Comcast, the Astros said, does not have that right and is attempting through bankruptcy court, with the appointment of an interim trustee, to gain powers it does not have under the partnership agreement.

Another new element included in the Astros’ filing is that the Astros and Comcast agreed in May to make capital contributions to the network, payable in three installments. The Astros agreed, but Comcast refused to make its third contribution unless all three partners agreed to fund, and the Rockets “elected to secure an appraisal of the network prior to making a funding decision.”

The Rockets have declined since the involuntary Chapter 11 case was filed last month to comment on the matter, and team officials said Tuesday that no comment would be forthcoming.

Also, the Astros said that they and Comcast have made several proposals to restructure and recapitalize the network and that negotiations were under way when the Comcast affiliates “interrupted them” with the involuntary bankruptcy petition on Sept. 27. Astros owner Jim Crane said last week that the Astros had made such an offer, but this is the first time that acknowledgment has been included in court filings.

“Comcast’s allegations of conflicts and deadlock are a smokescreen, designed to hide what is really going on here,” the Astros said in their motion opposing appointment of a trustee. “Comcast orchestrated a collusive involuntary bankruptcy filing and is attempting to recast the valid exercise of bargained-for contract rights as a deadlock … (and) to facilitate its plan to acquire the Network’s assets and the Astros’ media rights without the Astros’ consent.”

The Astros also say that the appointment of a trustee would be fruitless because the team has the right to terminate its media rights agreement with Comcast if a trustee is appointed. The bankruptcy court has no jurisdiction over that decision, the team claims, because its media rights agreement is a personal services contract and a trademark license and cannot be reassigned under state law in Delaware, where the network is organized as a limited partnership.

“Appointing a trustee will not resolve this intra-partnership dispute,” attorneys for the Astros wrote. “… All roads in this chapter 11 proceeding lead to a dead end.” The team also says that a trustee is not needed because there is no allegation of “fraud, dishonesty, incompetence or gross mismanagement” as is required in such cases.

The ballclub’s filing restates its position that the Astros exercised their right not to accept carriage fees contained in a “handful of informal proposals” from Comcast that were “significantly below” the monthly subscriber fees being paid by Comcast’s Houston cable system, which makes up the bulk of CSN Houston’s audience.

“The Astros have always been, and continue to be, willing to entertain unprofitable affiliation agreements if limited to a short term so as to allow for the network to renegotiate longer term profitable deals,” the team said. “When, however, Comcast put forward proposals with terms – and, in particular, base rates – that would have resulted in the network not being profitable, the Astros exercised their consent right.”

The Astros also say the trustee is not needed because there are no unaffiliated third-party creditors at risk in CSN Houston’s operations.
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danielcp0303 · Oct 15, 2013

Astros threaten to take game broadcasts away from CSN Houston

Attorneys representing a group of Comcast-affiliated companies said Tuesday that their motion to place the parent company of Comcast SportsNet Houston into Chapter 11 bankruptcy must be allowed to stand because dismissal would likely end to the network’s destruction and the loss of 130 jobs.

“If this bankruptcy case goes forward, the business can survive,” the attorneys wrote in their submission to U.S. Bankruptcy Judge Marvin Isgur. “If the case is dismissed, it will not.”

At another point in the document, the Comcast affiliates warn that if the case is dismissed and the Astros are allowed to shop their games to a carrier other than CSN Houston, “At best, the network’s remaining assets would be sold in a fire sale. All of its 130 employees will lose their jobs. The fundamental purpose of chapter 11 (bankruptcy) is to prevent such a result.”

The filing by four Comcast affiliates, including a unit of the Philadelphia-based company that made a $100 million loan to launch CSN Houston in October 2012, contained some of the sharpest rhetoric thus far introduced into the battle between Comcast and the Astros over the future of Houston Regional Sports Network, a partnership among the Astros, Rockets and Comcast that is the parent of CSN Houston.

They wrote that if the involuntary bankruptcy case, filed Sept. 27, is dismissed as the Astros request, the result will be “the collapse of the network and hence the destruction of millions of dollars in value, as well as unemployment for the more than 130 individuals whom the network now employs. That would be enormously wasteful, and is entirely unnecessary.”

Another passage refers to the “Astros’ apparent strategy of sabotaging the network by blocking its ability to raise capital or revenue from carriage agreements at market terms” with carriers such as DirecTV, Dish Network, Suddenlink and AT&T U-verse.

Other harsh phrases in the 26-page document:

- The Astros are making a “literally unprecedented” argument by accusing the Comcast affiliates, each of which claims it is owed money by the network’s parent company, of filing their bankruptcy request in bad faith. To the contrary, the Comcast units claim, the network faces bankruptcy as “the natural and obvious result of the Astros’ refusal to permit the network to enter into carriage agreements at market-clearing prices.”

- The Astros are seeking to regain their media rights, which they claim they can sell to another bidder because CSN Houston failed to make three monthly rights fee payments during the 2013 baseball season, because “the Astros apparently now feel (the agreement with CSN Houston) is not rich enough to suit them.”

- The Astros’ arguments are “liberally salted with unsupported (and untrue) allegations about Comcast’s motives and supposed bad faith.”

The Comcast affiliates — National Digital Television Center, CSN California, Comcast Sports Management Services and Houston SportsNet Finance – also claim that the Astros do not have proper legal standing to contest the bankruptcy motion because only the alleged debtor – in this case, Houston Regional Sports Network – can challenge the contention that it has failed to pay its bills.

They also challenge the Astros’ contention that their media rights agreement under which CSN Houston is allowed to televise games is a personal services contract, which the Astros claim is an agreement that is outside the jurisdiction of bankruptcy court.
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mugrakers · Oct 15, 2013

Well at least it looks like we will be able to watch the Rockets one way or the other. Either CSN dissolves and the Rockets immediately get picked up by another provider or CSN gets to use bankruptcy to not allow the Astros to block a deal. Hence, we get to watch the Rockets.

NotChandlerParsons · Oct 15, 2013

mugrakers said: ↑

Well at least it looks like we will be able to watch the Rockets one way or the other. Either CSN dissolves and the Rockets immediately get picked up by another provider or CSN gets to use bankruptcy to not allow the Astros to block a deal. Hence, we get to watch the Rockets.
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I wouldn't count on it. It could turn into a knock down drag out fight. Maybe Comcast will take over and approve a deal; maybe the court will appoint a trustee who OKs a deal. But it could go on for a long time.

HTown_DieHard · Oct 15, 2013

mugrakers said: ↑

Well at least it looks like we will be able to watch the Rockets one way or the other. Either CSN dissolves and the Rockets immediately get picked up by another provider or CSN gets to use bankruptcy to not allow the Astros to block a deal. Hence, we get to watch the Rockets.
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Jim Crane is soooo John Boehner.

Nero · Oct 15, 2013

HTown_DieHard said: ↑

Jim Crane is soooo John Boehner.
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Boy have you got that one wrong!

lol

HTown_DieHard · Oct 15, 2013

Nero said: ↑

Boy have you got that one wrong!

lol
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Something about blocking a vote/deal...

Rockets2K · Oct 15, 2013

HTown_DieHard said: ↑

Jim Crane is soooo John Boehner.
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you should refrain from posting anything that could spark a political debate in this forum, if you wish to discuss political crap go on over to the Debate and Discussion subforum over in Hangout. http://bbs.clutchfans.net/forumdisplay.php?f=28

DavidRocket said: ↑

Anyone know the status of the CSN deal with the Rockets/Astros?

Any word on whether the Rockets games will still be aired on CSN this season?
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I'd advise you to keep an eye on this thread http://bbs.clutchfans.net/showthread.php?t=244517

MadMax and Refman are lawyers in real life and they have been doing a great job of covering the legal aspects of this situation.

danielcp0303 · Oct 22, 2013

http://blog.chron.com/ultimaterocke...stance-than-astros-on-csn-houston-bankruptcy/

The Rockets have broken ranks with the Astros, their partners in the parent company of Comcast SportsNet Houston, by informing a federal bankruptcy court that they agree with a motion by four Comcast affiliates to keep the troubled partnership under Chapter 11 protection.

The 18-page statement filed with Bankruptcy Judge Marvin Isgur on Monday is the first time the Rockets have shown their hand in the contentious disagreement between the Astros and Comcast over the future of Houston Regional Sports Network, the Astros-Rockets-Comcast partnership that owns CSN Houston.

Isgur will preside next Monday over a hearing on the Astros’ motion to dismiss the bankruptcy case and Comcast’s motion to name an interim trustee for the network.

If Isgur dismisses the case, attorneys for the Rockets say, the Astros are likely to reclaim their broadcast rights from CSN Houston, because those rights were not paid during the last three months of the Major League Baseball season. Four Comcast subsidiaries filed the involuntary Chapter 11 case on Sept. 27 to prevent that move by the Astros, which would have taken place on Oct. 1.

Allowing the Astros to pull their rights from CSN Houston, the Rockets say, “would compel the Rockets entities to terminate the Rockets agreement, thereby causing the network to implode.”

Aside from that phrase, the Rockets’ statement generally strikes a moderate tone than the sharply worded filings by the Astros and Comcast, although it does agree with Comcast on the essential point that bankruptcy reorganization is the best way to ensure the network’s survival as the NBA season openers approach next week.

“The chapter 11 process and this court’s oversight will prove the best means of assuring full payment of creditors, realization of the owners’ equity investments, protection of the network’s business (including its employees’ jobs) and satisfaction of the fans expectation of high quality sports media coverage,” attorneys for the Rockets said in the statement.

“The alternative is liquidation, resulting in huge losses for creditors, no return on equity, terminated employees and no ability in the near term for Houston fans to see their favorite teams on television.”

The Rockets also said the team has “no interest in placing blame on any party as it relates to the current predicament.” By contrast, the Astros say Comcast is trying to take the team’s equity interest in CSN Houston through an improper bankruptcy filing, and Comcast subsidiaries say that the network’s success has been stymied by the Astros’ opposition to carriage agreements that the baseball team feels do not provide sufficient revenue.

However, the Rockets also oppose Comcast’s request for an interim trustee. Naming a trustee, they say, “will defeat one of the core purposes of the chapter 11 process in this case – namely, to bring divergent parties together to forge a consensus that will maximize value for all stakeholders.” A trustee, they say, “could well discourage negotiations among the parties.”

Instead, the Rockets propose naming a “responsible officer” to run CSN Houston’s day to day operations and suggests that the court order Comcast, the Astros and Rockets to negotiate for one week “to attempt to reach consensus on a path forward.”

On other points, though, the Rockets veer more toward Comcast’s view. They say the Astros are trying to prevent CSN Houston being in bankruptcy because “they do not perceive it to be in their own interest.” However, they add, “Individual stakeholder self-interest” is not sufficient grounds for the Astros to challenge a decision that would be in CSN Houston’s best interests.

The Rockets also said they “respectfully disagree with the Astros entities and believe that a successful reorganization (under Chapter 11) is possible” for CSN Houston. They also question the Astros’ assertion that the case does not belong in bankruptcy court because the Astros’ broadcast rights agreement, which the team licenses to CSN Houston to air games, is not subject to bankruptcy law.

“The chapter 11 process should not be cut off at the knees by dismissal of the petition before the process even has a chance to function,” the Rockets’ attorneys said.

In the wake of the Rockets’ statement, Giles Kibbe, the Astros’ general counsel, said today that the Astros “respect but disagree with (the Rockets’) position on this matter.”

“The two teams have very different media rights deals,” Kibbe said. “In order for the Astros to have a top tier payroll in MLB, we must receive profit from the network in addition to our media rights fee. The Rockets’ media rights fee, alone, puts them in the top tier of the NBA. They don’t have to rely on the network being profitable. This is a very significant structural difference that causes the teams to view this situation differently.”

He added, “We have a great relationship with the Rockets and nothing that happens here is going to change that.”

CSN Houston has been unable to arrange carriage agreements with DirecTV, Dish Network, AT&T U-verse and Suddenlink and is available in only about 40 percent of the 2.2 million TV households in the Houston area.
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Indaface · Oct 22, 2013

Well I hope the judge rules in favor of the Rockets...whatever helps get games on tv and takes money out of Jim Crane's pockets is good with me.

ima_drummer2k · Oct 22, 2013

danielcp0303 said: ↑

http://blog.chron.com/ultimaterocke...stance-than-astros-on-csn-houston-bankruptcy/
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Okay, pretend I have no idea what any of this legal mumbo-jumbo actually means. Just PRETEND.......

Can anyone tell me how it affects my ability to watch the Rockets on Dish Network this season?

TIA

Bobbythegreat · Oct 22, 2013

ima_drummer2k said: ↑

Okay, pretend I have no idea what any of this legal mumbo-jumbo actually means. Just PRETEND.......

Can anyone tell me how it affects my ability to watch the Rockets on Dish Network this season?

TIA
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The short version of the story is that if the judge sides with Comcast and the Rockets over the Astros then there will be a restructuring plan that will lead to deals with all of the cable providers so that we'll all be able to see the Rockets play this season. If the judge sides with the Astros......well more of the same.

danielcp0303 · Oct 22, 2013

ima_drummer2k said: ↑

Okay, pretend I have no idea what any of this legal mumbo-jumbo actually means. Just PRETEND.......

Can anyone tell me how it affects my ability to watch the Rockets on Dish Network this season?

TIA
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Honestly, it's up in the air. The Rockets are in favor of upholding the bankruptcy, but instead of a trustee being appointed to run the network, they'd rather have a week or so to try and work out their disagreements. Both the Astros and Rockets both acknowledge that if the bankruptcy is dismissed, they will leave CSN Houston and find somewhere else to go.

Captain Hook · Oct 22, 2013

There is a chance guys! Rockets on our providers!

KlutchQT · Oct 22, 2013

Let us pray.

Carl Herrera · Oct 22, 2013

ima_drummer2k said: ↑

Okay, pretend I have no idea what any of this legal mumbo-jumbo actually means. Just PRETEND.......

Can anyone tell me how it affects my ability to watch the Rockets on Dish Network this season?

TIA
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I would say don't hold your breath either way. Absent a settlement between the parties, there is no quick way out of this (and if a quick settlement was likely, they would not be in court in the first place).

The only realistic thing I see that could bring Rockets game on Dish would be the judge siding with the Rockets and Comcast, leading to the Astros becoming more willing to compromise, but that's even a long shot.

So, get Comcast cable or get one of those illegal streams.

Captain Hook · Oct 22, 2013

Carl Herrera said: ↑

I would say don't hold your breath either way. Absent a settlement between the parties, there is no quick way out of this (and if a quick settlement was likely, they would not be in court in the first place).

The only realistic thing I see that could bring Rockets game on Dish would be the judge siding with the Rockets and Comcast, leading to the Astros becoming more willing to compromise, but that's even a long shot.

So, get Comcast cable or get one of those illegal streams.
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My dreams are shattered a little....

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