Major League Baseball’s Astros were authorized to find a carrier for Houston Regional Sports Network LP, which televises the team’s games, after a judge ruled the club could act as lead negotiator in developing a business plan for the future of the network.
U.S. Bankruptcy Judge Marvin Isgur at a hearing yesterday in Houston declined to rule on the validity of Comcast Corp. (CMCSA:US)’s bid to force the network into involuntary bankruptcy, a move opposed by the Astros.
The judge also withheld a decision on the Astros’ request to have the bankruptcy request dismissed, in hopes that the network’s owners -- Comcast, the baseball team and the National Basketball Association’s Rockets -- can reach an amicable resolution to turn its fortunes around. The judge closed the hearing to the public more than once yesterday to foster negotiations among the cable operator and the sports teams.
“The order is a pretty extraordinary order,” Isgur said at the end of the hearing, which spanned two days. The judge required the consent of the parties to add a provision that “the assumption and assignment of the media rights carriage agreement will no longer require the unanimous consent of all the parties.”
The ruling allows the Astros, acting on behalf of the network, to shop the media rights agreement to other carriers, such as Fox Sports or DirecTV (DTV:US), through assumption and assignment of the contract.
The baseball club will hold weekly calls with Comcast and the Rockets regarding the negotiations and may bring them into the discussions as well, according to the ruling.
The judge will hold a hearing for an initial update on the status of the bankruptcy case on Nov. 13, with another scheduled to follow on Dec. 12, when his ruling giving the Astros the right to lead the negotiations is set to expire, court papers show.
“We are abating for a while” on whether the Comcast creditors’ attempt to put the network in bankruptcy should be granted as well as holding off on the question of “whether we should be in bankruptcy at all,” Isgur said at the end of the hearing.
Thomas A. Clare and Harry Perrin, lawyers for the Astros, didn’t respond to e-mails seeking comment on the accord.
Creditors, including affiliates of Philadelphia-based Comcast, filed an involuntary Chapter 11 bankruptcy petition against Houston Regional Sports on Sept. 27 “to avoid the destruction of the network’s substantial value,” according to court filings.
Comcast, the biggest U.S. cable operator, claimed it’s owed more than $100 million and the network hasn’t been paying its debts as they come due.
While the Rockets supported Comcast, the Astros called the involuntary bankruptcy filing a power grab by the cable giant. Major League Baseball also opposed the bankruptcy, citing the Astros’ and its own control over intellectual property and media rights.
The involuntary filing was “a transparent attempt to acquire the network and gain control over the Astros’ most valuable asset, the media rights to televise their own Major League Baseball games,” the Astros said in court papers filed Oct. 7.
Comcast asked the court to appoint a Chapter 11 trustee to take over control of the company and oust management, with which it had reached a “debilitating deadlock” in a disagreement over the direction and management of the network, according to court documents.
Comcast, which owns NBCUniversal LLC, said in filings that it’s willing to buy the network’s assets, which have “significant value.”
“Comcast/NBCUniversal and its affiliates are pleased with Judge Isgur’s order, and believe that it preserves CSN Houston’s assets and ability to provide its valuable programming,” Tim Buckman, a company spokesman, said in an e-mail today. “We welcome the Astros’ efforts as lead negotiator to serve the Network’s best interests and look forward to an improved future for all partners.”
The case is In re Houston Regional Sports Network LP, 13-bk-35998, U.S. Bankruptcy Court, Southern District of Texas (Houston).
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