Comcast has partnered with MLB’s Houston Astros and the NBA’s Houston Rockets to launch its 11th sports channel. The pay TV giant has about 800,000 customers in Houston, and has a 20% ownership stake in the new Houston channel. The remaining 80% belong to the Astros and the Rockets.
Astros and Rockets games used to be televised on Fox Sports Southwest, which was available to 9 million pay-TV households in Texas and other nearby states. However, the Astros and Rockets opted to start their own exclusive sports network this year in the hopes of having more control over ad and broadcasting revenue.
This is another loss for the Fox Sports Net franchise, which has recently been out-bidded by Time Warner Cable for the rights to broadcast Laker and Galaxy games in Los Angeles.
Comcast hopes to hammer out distribution deals for the new channel with the other major pay TV providers in Houston, such as DirecTV and Dish Network, before the NBA regular season kicks off on Oct. 31. There shouldn’t be issues in securing the necessary broadcast deals—but if they aren’t done before the start of the season, Astros and Rockets fans who aren’t Comcast customers may miss regular season home games as a result.
If successful, the new sports channel can produce a revenue windfall for the Astros and Rockets owners. The idea is to emulate the financial success of the Yankees’ Yes Network in New York, which has added to the overall value of the team. While the Astros and Rockets are not quite as popular as the Yankees, getting a larger share of the ad revenue and broadcast rights pie can definitely enhance their bottom line and increase the teams’ overall value.
In addition, Comcast may be able to increase their revenue source, since other pay TV providers have to pay them for the rights to carry Astros and Rockets games. However, DirecTV and Dish Network have proven that they are willing to play hardball is the asking fees are not to their liking. There has been a rash of blackouts over carriage fees disputes, so it would be best for everyone involved if negotiations don’t devolve into an all out war.
As long as the asking price for the new channels are reasonable and won’t cause other pay TV providers to raise their prices, securing distribution deals shouldn’t be a problem.