Sunday, January 20, 2013

Some Thoughts on the CSN Houston Deal

Let me preface this by giving my belated stamp of approval to the Astros front office for hiring Alan Ashby to replace Jim Deshaies on the Astros TV broadcasts. No one can truly replace JD, but having someone with vast experience in broadcasting who also has a history with the team will at least alleviate some of the heartache. The news that Geoff Blum will be in the mix too as Bill Brown scales back his schedule is, in my opinion, gravy. Blummer's sense of humor will be a welcome addition.

With that said, I'm afraid I'm going to have to take the Astros' business office to the proverbial woodshed ... again. It really seems that for every positive move the business side has made, they have taken two giant leaps backward in other ways.

Today, Brian Smith of the Houston Chronicle tweeted out a link to this piece from David Barron, also of the Chronicle. I'm well aware that the new Astros/Rockets regional sports network, CSN Houston, is not available to 60% of Houston viewing households since I am a DirecTV subscriber. What galls me about the article is the characterization by CSN President Matt Hutchings and Astros President George Postolos that DirecTV (and by implication, Dish Network and U-Verse) is being unreasonable and that CSN Houston only wants what is fair.

Let's look at a few facts. First of all, this Reuters article gives us an idea of what some of the monthly subscriber fees are which are currently being charged by various regional sports networks. Keep in mind that CSN Houston is asking for $3.40 per month per subscriber and is requiring that the network be placed on the basic level tier. It was reported that the previous fee charged by FSN Houston was estimated at $2.50 per subscriber per month.
  • YES Network (Yankees and Nets) - $2.99 per month
  • Time Warner Sportsnet (Lakers and Galaxy) - $3.95 per month for some subscribers/reportedly $3.40 for DirecTV
  • Fox Sports North (Vikings, Twins, Timberwolves, Wild, Gophers and Lynx) - $3.68 per month (the most expensive of all the Fox regional sports networks) 
Granted, the YES Network rates have been in place for quite some time and are slated to go up soon, but this is where they currently stand. I saw reports that most subscription fees fell in the range of $2.00 to $3.00, but was unable to find anything definitive.

Next, let's look at ratings information.
  • The Yes Network, currently $2.99 per month for subscribers, has been the most watched RSN for 10 straight years.
  • Time Warner Sportsnet, currently reported to be $3.40 per month for DirecTV subscribers, features the top TV draw in the NBA as the Laker's ratings from last year show.
  • Fox Sports North has the highest subscription rate of all, but includes football, hockey, the WNBA and college sports in addition to baseball and basketball. I wasn't able to find specific ratings information, but the above link shows that the Timberwolves had one of the fastest growing viewerships last season.
The Astros and the Rockets, however, have had a precipitous drop in viewership since 2007 with this article from Sport Business Daily showing a 35% drop in Astros viewership during the 2012 season alone. And lest we forget, Barron reported that a low of 1092 average households viewed the September 9, 2012 Astros game on FSN Houston.

It is unfortunate for Jim Crane that he purchased the Astros at a time when the team (and its viewership) has reached such a low point. In a better year, he would have much more leverage in these negotiations. In any event, I really cannot see how DirecTV is being unreasonable unless they are making other demands of which I am unaware. DirecTV most likely fails to see the value in charging ALL of its subscribers almost a dollar a month more than it did for FSN Houston so that 1092 average households can watch a Sunday game in September. I simply do not see how $3.40 per month, which would be one of the highest fees charged for an RSN, constitutes fair market value, and apparently DirecTV agrees with me.

Crane is responsible to his ownership group to get the best offer he can get with the holdouts. I understand that and I can respect that. But he cannot allow the situation to continue into the season. It is difficult enough to be an Astros fan right now. The Astros front office is threatening to make it more difficult. In addition to the threat of no televised games to 60% of Houston households, there is still no radio team in place with only 34 days to go until the first Spring Training game.

If a tree falls in the forest and no one is around, will it make a sound? If a game is broadcast to no one, will there be anyone left to hear it when it is finally broadcast to someone?

5 comments:

  1. Right, its hard to sell a bad product that people don't seem to want. I myself have followed the Astros for 25 years, however I can't get 740 very well at night and with .no tv deal in Austin, I guess I'm just out of luck. if I cant follow the games, I'm sure not gonna go to Houston and spend money. it would be tough for me , but the team is telling me to get lost, it seems.

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  2. First of all, good information on this situation. I'm not sure 100% who is to blame(Astros, Rockets, CSN), but it is wild to see the Rockets games being cast aside a negotiating tool. I have to imagine many people who are Rockets fans first then Astros fans, are becoming less-enamored with Jim Crane's baseball business day by day.

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  3. I really don't see where using the YES network as an example is valid, because as you said that deal was struck a long time ago and is about to expire. Their new deal could be used as an example, but it really doesn't make any since to use the current deal that is in place to draw any conclusions from.

    Secondly, that's all the more reason for Crane to demand for more. This deal will likely be in place for 10 years or so when the team is competitive and the deal needs to be close to what other teams are getting as well. I get what Crane and co are doing here, and it really seems like it makes a lot of sense to me.

    I would assume that negotiations will go down to the wire, and that Crane will make a deal before the season starts.

    Not having a radio crew in place right now doesn't seem like that big of a deal either. They are interviewing candidates, and Steve Sparks is a name that's been mentioned. Point is, the team is not going to not have a radio team. They will have one. Does it matter that they are not announced already. Save for a couple of appearances on FanFest I'm not for sure theirs that much of a need for a broadcast team in January.

    Also, in regards to Farmstros comment, pretty much everyone denied that a deal was ever in place and denied by the Astros. Until I hear otherwise from credible sources I don't think it makes sense to hold Jim Crane responsible for false reports.

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    1. Anonymous,

      Even if these latest reports about the Astros blocking a deal are unsubstantiated, which they appear to be, it IS substantiated that half the Rockets' season has been lost to viewers who don't have Comcast. That is what is wild to me.

      Granted it is not entirely The Jim Crane Baseball Company which is to blame. That is why I wrote, "I'm not sure 100% who is to blame." Yet, THE JCBC IS the largest player in this lucrative game, so I think it is appropriate for Rockets fans to be frustrated with and becoming less-enamored with Crane's business as well as this game's other players.

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  4. That is precisely why I used additional examples, but by all accounts $3.40 would be one of the highest fees. And as I said, Crane has the responsibility to the ownership to get as much as he can, but I don't think there's any way that he gets $3.40. The question is who will blink first, and will Astros fans be caught in the crossfire? I don't think that your assumption that a deal is a foregone conclusion is necessarily a valid one.

    As to your second point, a radio team does not simply go on the air unprepared. I met Bill Brown the other night and he told me that he has been studying the American League since November. Unless the team plans to scrap the ST broadcasts which the radio team has covered for as long as I remember, they face the very real possibility of being ill-prepared and failing in their first exposure to the Astros fanbase.

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