Rockets Remain in Lead Affiliate Negotiating Role in CSN Houston Bankruptcy Case

The Houston Rockets remain in the lead affiliate negotiating role as part of the bankruptcy proceedings engulfing Comcast SportsNet Houston.

U.S. Bankruptcy Judge Marvin Isgur has approved the Rockets’ position through Feb. 4. The NBA club -- which has been serving as the chief negotiator since Dec. 12 when it took over from another CSN Houston partner, the Houston Astros -- had requested an extension in light of it making “significant process” in adding potential affiliate partners.

In their request for the extension, the Rockets said they received an offer on Jan. 6 from an unnamed party and are “in the midst of significant negotiations with at least one other party."

The Rockets also filed a status report with the court saying that Comcast has made a bid to purchase an undisclosed portion of CSN Houston that it does not already own.  Comcast/NBCUniversal owns 22% of the service, while the Astros and Rockets hold 46% and 32%, respectively.

In addition to Comcast,  CSN Houston has only been able to secure deals with a handful of smaller operators, giving it a 40% presence within the 2.2 million-home Houston DMA. However, the embattled RSN  has failed to reach distribution agreements with DirecTV, Dish Network, AT&T U-verse, Time Warner Cable and Suddenlink, among others, within its five-state TV territory. 

As a result, the RSN, which has reportedly seeking a monthly subscriber fee of $3.40, has been unable to meet its rights-fee obligations to the Astros and the Rockets. Typically, RSN’s derive 80% of their revenue from subscriber fees.

On Sept. 27, four Comcast-related entities filed for an involuntary petition for Chapter 11 bankruptcy protection for the RSN. Houston SportsNet Finance, which loaned CSN Houston $100 million to build a studio and for start-up costs, had indicated at that point that it would be willing to buy the RSN. The Rockets have also expressed a similar sentiment.

Under the RSN's structure there has to be a voting unanimity among the parties -- the ballclubs have one piece, while Comcast/NBCU hold two -- on major operational decisions, notably affiliate agreements.