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Kiss Your Astros Goodbye: The CSN Houston Fiasco

Image courtesy of Sports-Kings.com.A bad product is difficult enough to sell as it is. It’s even harder to sell when you tell the public you don’t really care how bad it is.

So it goes for Houston Astros owner Jim Crane. His team has by far the smallest payroll ($24.33 million) in Major League Baseball. Predictably, it has the fewest wins, too. While Crane’s strategy of building up the farm system and bringing up prospects over the long term has supporters, his telling fans they can “write a check for $10 million” if they want a better team isn’t exactly a genius PR move.

It’s also just one reason why Comcast SportsNet Houston, the Regional Sports Network partially owned by the Astros, finds itself on the losing end of a carriage war — one more thing the Astros are losing.

After the Astros and the NBA’s Houston Rockets both fought for years with Fox Sports over network ownership, Comcast struck a billion-dollar deal with both teams last year that gave them the ownership they were seeking. The Astros got 46.384% of the newly formed CSN Houston, while the Rockets got 30.923%. The deal promised to be a $60-million-per-year windfall for both teams.

A funny thing happened, though, on the way to that windfall — nobody wanted to pay for the new network. CSN Houston launched last October in the roughly 1 million Houston-area homes that subscriber to Comcast, which is about 40% of the market, but other major carriers — DirecTV, Dish Network, AT&T, Suddenlink, etc. — all said they wouldn’t agree to Comcast’s carriage demands.

At the heart of the dispute is Comcast’s belief that because Houston sports teams have a large regional fan base, CSN Houston is a truly regional network and deserves to be carried in most of Texas and its surrounding states. The carriers have countered that, no, CSN Houston is a local channel that covers local teams — the Astros, the Rockets, and the Houston Dynamo of MLS — and they see no reason to carry the channel outside of Houston at the rate that Comcast is demanding, which is reportedly as high as $3.40/month per subscriber.

The standoff lasted for so long that Houston Mayor Annise Parker offered to hold a summit last April with carriers and CSN Houston officials in order to reach some sort of resolution. As the mayor wrote in her letter to all invited parties:

The proud followers of our Houston teams – many of whom have paid for the venues where the Astros, Dynamo and Rockets compete – have been patient as your negotiations with Comcast SportsNet Houston have unfolded. That said, as the Rockets push toward the NBA playoffs and the Astros and Dynamo seasons get underway, the situation is intolerable.

The emphasis in that paragraph is mine. The city paid for the arenas for these teams, and now the network owned by those teams is demanding a huge premium to show those games on TV. Add that to the outrageous price — even the YES Network charges a lower fee — and Jim Crane’s screw-winning-now approach to building the Astros, and you can probably guess the fan reactions…

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That’s just one comment taken from David Barron’s blog at the Houston ChronicleRead through the comments on articles like thisthis, and this, and you’ll find zero support for CSN Houston and its owners among Houstonians.

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This one might be my favorite:

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When sports fans in your city are contacting carriers and telling them not to carry the channel that shows their local teams, that should be a sign that you’re doing something very, very wrong.

What we have here is a massive overreach by both Comcast and the Astros to try and wrangle an unreasonable amount of money out of pay TV subscribers. Seven months later, the Rockets are gone till November, nobody wants to watch the hapless Astros, and most anyone who cares enough to watch the Dynamo can probably afford to buy tickets to watch those games in person. As a result, CSN Houston, which was supposed to bring $60 million/year to the teams that owned it, is on pace to make only $40 million in carriage fees in its first year of operations. Even attempts to offer the carriers a “free preview” of the channel this month have gone horribly wrong.

Perhaps this is why George Postolos, the Astros’ president and CEO who kept harping on about “fair market rate” for the channel, resigned from his position on Monday.

Clearly, that “fair market rate” is not $3.40/month per subscriber, and since Houstonians aren’t switching to Comcast in droves so that they can pay that much to watch the worst team in baseball, CSN Houston will have little choice but to give up its hard line and lower its price in order to get the carriage it wants. How soon that happens remains to be seen.

Perhaps the bigger question, though, is this: is the CSN Houston fiasco just one city’s response to a team owner it doesn’t like, or is this a sign of things to come? Could we see this same situation play out soon in Los Angeles, where SportsNet LA promises to drive up the price of TV by $5/month, or in Philadelphia, where a battle for the Phillies between Comcast and Fox Sports seems imminent? Would fans reject those new channels as well? Would non-fans give up on cable in protest? Is the RSN market a bubble on the verge of bursting? What happens to pro sports when it does? We might get to find out before too long.

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Live in Houston? How do you feel about Comcast’s strong-arm tactics? Leave a comment below with your thoughts. Then stop by our home page and find out how much of your pay TV bill gets funneled to pro and college sports organizations every year.

11 Responses to Kiss Your Astros Goodbye: The CSN Houston Fiasco

  1. There is one additional piece to this equation. The people at DirecTV and Dish Network in particular have decided that Houston will be a test case for them to attempt to force tiered pricing on the marketplace. They, understandably, are tired of being saddled with more costs for the same basic pricing structure and want to force CSN into submission. The Astros — and it’s definitely the demands of the Astros, not the Rockets on this one — and the cable providers have forced a line in the sand situation. It’s only who blinks first.

    • That’s interesting. I wrote in my Cablevision v. Viacom piece — http://www.whatyoupayforsports.com/2013/04/cablevision-v-viacom-1/ — that one of the possible outcomes is carriers gaining the ability to bundle channels by genre and offer them to subscribers separately — a Sports bundle, a News bundle, a Food & Travel bundle, etc. — as a means of keeping subscribers (non-sports fans, especially) from switching entirely to streaming sites. It’s not quite a la carte, but it’s a step in that direction. Perhaps DirecTV and Dish are hoping to show networks they have the power to do that.

  2. Lifelong Houston resident, grew up attending Astros & Rockets games. Huge sports fan. I hope that my carrier (DirecTV) refuses to offer this channel on a regional basis as reportedly demanded by CSN. And I hope that all carriers adopt this posture on all local sports channels — which should go back to being premium channels.

    I haven’t missed having the Astros games this year — I watch the national games when I’m craving baseball. And while I did miss some of the Rockets games in the stretch playoff run, I would have watched maybe 15 of the 82 games during the season — and again, used the national games to scratch that itch.

    And Crane should remember that FSN carries all of the Texas Rangers games in Houston — so I can very easily become a Ranger fan instead of an Astros fan, especially if I want to cheer for a winning team with a real front office. Speaking of which….I like how Mark Cuban runs his team too….hmmmmmmmmmmm.

  3. Funny thing is I live in Philly otherwise known as The People’s Republic of Comcast. I have had Dish Network for 15 years and never got my Regional Sports Network (ComcastSportsnet Philly) bc of a terrestrial loophole. The loophole was closed by the FCC about 2 years ago but still no local Philly Sports. Asked Dish Network what the deal was and they said they cant agree to a fee rate with Comcast. When I read that Fox might try to grab the Phillies to launch another network I became very excited. Dave anyway you could find an update for me on when I might be able to see ComcastSportsnet Philly on satellite?

  4. Crane is a complete jackass not only have I missed every Astro game but two I also missed the entire Rockets season except the playoffs Crane cares not for any fans but only putting $ in his pocket while having a double A team pretending to be a major league club!Just say no tithe slime called Crane!!!

  5. I have watch the Astros all my life and now I can’t because of Comcast! I hope that direct tv and the others tell Crane thanks for nothing by buying the Astros! You have killed the fan base! Oh and look at all the empty seats in your ballpark Crane and Comcast!

  6. The Atros bring in the Money Ball types to tell us who gets on base—they forgot about strikeouts–where we lead the league—oh yes former Astro leads the league in hitting but he plays third base for the Braves–I guess someone did not like the way he combed his hair—the one guy who is playing his rear end off is the Center Fielder Barnes—wow has he made some catches but I am sure we will be removing Tal’s Hill next year—what else can we do to screw things up

  7. I wouldn’t watch the Astros regardless of comcast’s antics. Major League Baseball is run by a crook. In the last few years he’s forced the Astros into the Junior League to fill a hole he himself created moving a team he is chief owner of to the Senior League. He has forgone a suspension on a player on a team he owned that later admitted full guilt. And he forced the sale of the Rangers. Aside from that it’s a flat out poor product they’re fielding anyway. Mark my words, less than 20% of all “prospects” they have will ever be worth anything and it will be half a decade before we find it out. So that’s at least 5 years of a subpar team in a sub par league that has been robbed of all it’s history and stripped of all it’s stars. I fully expect that the Astros will be moved some time in the next decade.

    As for the Rockets. the only part of a basketball game that actually decides anything is the last two minutes. I will get to see a good portion of that on sportscenter.

    The one great thing i miss is the dynamo, they’re the most convergent market in Houston. It’s a shame they decided to move forward with completely shooting themselves in the foot instead of actually making money. New digs, new grounds, new players, and a shameful new-found showing of greed.

    The real losers in all of it are the fans missing out on games held in stadiums they paid for. The real solution is fans killing attendance to these teams. The only message teams understand is lost revenue. It sucks as a fan to do so, but it will accomplish something. At least you have the Texans, they play to a national audience all 16 games, and actually win a few of them.

  8. […] Making the situation worse was Crane’s strategy to gut the Astros’ payroll in favor of filling the farm system with prospects, which made the team the laughingstock of both the city and the sport. Houston fans were so angry at Crane and the team that they contacted carriers and told them not to carry CSN Houston. […]

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