A contentious negotiation!
David Barron has already done a good job of running down the pertinent points in this dispute. Richard Justice also took a fire bomb to it in this Sports Update. Richard Oliver came down somewhere in between in this piece for the San Antonio Express.
I'm not sure I've taken a side yet. I'm still mulling over all the possibilities and ramifications. What I can do, however, is give you readers all the bullet points about this deal, talk about how it will affect you individually and why the Astros would want this, all after the jump.
As Barron states in his article, this is somewhat old news. The Astros and Rockets tried to do this very thing back in 2004, but were unsuccessful. They did get the right to renegotiate their deal put into the agreement they signed with Fox Sports Houston, though, a sort of early termination clause. That's what they've been exploring now, and the reason why this has come to the surface.
The major stumbling block before for the Houston teams was that they lacked a distributor. Sure, anyone can say, "I'm starting my own network!" If you don't want to sound like a crazy person, you best have some way to broadcast your stuff. Back in 2004, the Houston teams did not have this lined up. They wanted out of the deal, but they had no good way to make it happen.
Enter Comcast. The cable giant has swooped onto the scene lately in a bid to take over the sports market. They are trying to heavily compete with ESPN, but they're making inroads everywhere. That's why this article, discussing the new SB Nation Regional sites, brings up Comcast's goal to undermine ESPN's Local venture. They have a lot of money and they're not afraid to use it, especially after buying out NBC.
In the proposed deal, Comcast would be a 30 pecent stakeholder in the new network. I'm assuming that the Astros and Rockets would split the other 70 percent evenly, leaving Drayton McLane with 35 percent of the revenue stream from this "new" network. More importantly, Comcast would have the burden for setting up distribution and, more importantly, worrying about programming the other 18 hours of the day when there's no pregame, games or post-game shows. That's a big deal. If the Houston teams didn't have that, they'd be stuck with the expense of producing a lot of their own content. This way, they push that onto the minority partner for a much cheaper cost, in the long term.
When would this ComcastHouston station go on the air? The current contract that Fox Sports has with the Astros and Rockets would run out starting in the fall of 2013. So the 2014 season would be the first time Astros games could be aired on it. That gives the teams three years to come up with a plan for the station, implement it, get out of their contract with FSN, staff it and negotiate content deals with other cable providers and the satellite companies.
Those last two parts are important. Staffing the new station doesn't seem like a big deal, until you think about who pays the on-air talent for the TV broadcasts. Right now, the Astros pay their radio announcers, but Jim DeShaies, Bill Brown, Greg Lucas and Patti Smith are all paid by FSN. There's no telling if how long their contracts run, if this new network would be able to bring them over, etc. Since we can all agree that JD is the best color guy the Astros have, this is no small thing.
The last point, about negotiating distribution deals, is really where it could affect lots of Astros fans. Comcast would have to work out deals with tons of smaller cable companies around Texas before they could be shown. That means viewers in San Antonio, Austin and the rest of Central Texas might be locked out of watching Astros games for a while. Look no further than Comcast's disputes with the NFL and Versus to see how contentious those negotiations can get. Now, broaden that to include at least seven or eight different big providers and some smaller ones in the current Astros viewing radius. It would most likely not be a completely smooth transition.
The other thing to mention is that the Astros and Rangers have the same broadcast territory, assigned by Major League Baseball. That's why I can't watch the Astros using MLB.TV here in College Station, because I should technically be able to watch them on my own TV. But I'm blacked out. Same way with Rangers games. Right now, the framework in place to divide up Texas into markets who would get the Astros and Rangers is informal and is basically decided by FSN. That's why there could be different games on FS Houston and FS Southwest. But, without the ability to broadcast Astros games, FSN would just put the Rangers on everywhere in the state. I'm not sure Comcast will be able to negotiate the same kind of market share for its Astros games.
So, why would Drayton want to do this? Revenue, revenue, revenue. The teams with their own regional networks basically print their own money. It's been rumored that the YES Network is valued at close to one billion dollars. I'm skeptical of that figure, though, because of the shady bookkeeping that can go on with these situations. The Yankees can use team assets to bump up the cost of the network and vice versa. That's also why this is such an attractive option for McLane. The Astros would be able to report the value of the station as part of the team's overall value. Sure, they should technically only report 35 percent of it as their own, but that's still a lot. And, the potential revenue streams from it could far exceed the 40 million FSN pays currently for the TV rights.
You might then think this is just McLane trying to prop up the value of his team before a sale. I don't think that's the case. The Astros would be in a significantly better place with that sort of revenue stream than without it. Think about it this way: an extra two million dollars could have been spent on JaCoby Jones, if this station were live right now.
It has to be an enticing offer from the team's perspective. Plus, they'd have the same sort of control over the broadcast that they do on the radio. I'm sure there'd be a bump in team access, maybe more former players talking on the station. I haven't watched enough of the other networks to see how they program, but you get the idea.
Oh, and then there's the small matter of your cable bill. Yes, another station will raise your bill price. Some providers may choose to only offer it on a tiered sports bloc. I know I'd be disappointed if that's the case, since I found little use for the Sports Plus pack when I had it from DirectTV.
So, that's basically what's going on. Three giant corporations are fighting over millions of dollars and it may end up with you paying more every month on your cable bill. As I said, I'm not sure who's right or wrong in this, but I wanted to lay out both sides for you as best I can. Now, discuss.