Area teams could buy AT&T SportsNet Southwest
A decade after losing millions of dollars from the collapse of Comcast SportsNet Houston, the Astros and Rockets are negotiating to get back into the regional sports network business as owners of AT&T SportsNet Southwest.
If negotiations proceed as planned, according to sources with knowledge of the talks, the teams will create a new business entity that will assume ownership of the network from Warner Bros. Discovery.
While negotiations continue, Astros and Rockets games will still air on AT&T SportsNet Southwest, which has carried both teams since 2014.
Officials with the Astros, Rockets and Warner Bros. Discovery declined comment on the nature and progress of the negotiations.
Warner Bros. Discovery, which owns AT&T SportsNet channels in Houston, Denver and Pittsburgh, informed teams last month that it would seek bankruptcy protection for AT&T SportsNet if it could not reach an agreement to arrange new ownership for the networks.
Meanwhile, Diamond Sports, which owns 19 RSNs branded as Bally Sports, filed Tuesday night for Chapter 11 bankruptcy protection in Houston. The case was assigned to Judge Christopher Lopez.
Diamond’s initial court filing listed both assets and liabilities between $1 billion and $10 billion. Its largest unsecured debt is $1.8 billion to its bondholders, followed by $77 million to Dolan Broadcast Properties and $40 million to DirecTV.
Published reports have said the reorganized Diamond Sports could drop money-losing telecast agreements with at least four MLB teams. The company’s filing said it owed $30.8 million to the owners of the Arizona Diamondbacks, one of the teams whose TV contract it might relinquish.
Houston, however, is expected to emerge from the RSN shuffle with local team ownership — a stunning contrast from developments in 2013-14, when the Astros and Rockets lost control of CSN Houston in a bankruptcy court dispute with Comcast. Each team lost more than $100 million in unpaid rights fees plus hundreds of millions of dollars in equity with the collapse of CSN Houston.
CSN Houston’s collapse resulted in a drawn-out, bitterly contested bankruptcy court settlement that enabled DirecTV and AT&T to buy the network for $1,000 in 2014.
Comcast and the teams continued to battle in court even after the launch of AT&T SportsNet Southwest in 2014. That dispute, however, was settled in December.
The Houston channel, which will get a new name once the Astros and Rockets take ownership, will join team-owned RSNs in several markets that thus far have avoided the worst of the financial woes enveloping Bally Sports and AT&T SportsNet.
Under the proposal, the Rockets and Astros would acquire AT&T SportsNet Southwest and with it the license to telecast their games. The Astros owned 60 percent and the Rockets 40 percent of their previous joint venture before bringing in Comcast as a partner in 2010 for the CSN Houston launch, but it was unclear if those percentages would continue for the new venture.
The Houston teams are in a stronger position than some of their counterparts because they have distribution contracts for their games through 2032 with Comcast, AT&T and DirecTV. The Comcast deal originated with the launch of CSN Houston in 2012, and AT&T and DirecTV signed on with the 2014 launch of AT&T SportsNet Southwest.
AT&T SportsNet Southwest is available to be acquired because WBD is seeking to reduce debt and pare down expenses, and regional sports do not fit with that business plan.