DirecTV-AT&T venture takes over Comcast-run CSN Houston

The buzzer rang Monday on Comcast Corp.'s costly bid to televise Astros baseball and Rockets basketball games in the Houston area.

A partnership of DirecTV and AT&T Inc. took possession of CSN Houston's studios near the Toyota Center and laid off 75 of the 141 employees of the bankrupt, Comcast-controlled regional sports network.

The legal and financial tussle over the Rockets and Astros games has been watched nationally as evidence of a limit to how much regional sports networks can charge pay-TV distributors.

A similar scenario - though one with billions of dollars at stake - is playing out in Los Angeles. SportsNet LA, controlled by Time Warner Cable Inc., also cannot get pay-TV companies to distribute Dodgers games.

DirecTV sports networks president Patrick Crumb said Monday that the Houston ownership change may have been the nation's first "hot swap" of a cable sports channel, with a new ownership group taking over an existing channel while the channel aired content.

DirecTV renamed the network Root Sports Southwest. Houston sports experts said that with the new DirecTV/AT&T ownership, Monday night's Rockets basketball game against the Memphis Grizzlies would be available on more TV sets in the Houston area than have been available in years.

CSN Houston launched in 2012 but attained only about one million subscribers in the Houston area because, its critics said, the network was charging too much money for its distribution into pay-TV homes - an estimated $3.50 a month per household, in part to watch one of the worst teams in Major League Baseball, the Astros.

"This was doomed when [CSN Houston] went into the market and asked for too much money," said Michael Cramer, director of the Texas Program in Sports and Media at the University of Texas in Austin. "Sure, there is a lesson here. You can't charge more than it's worth."

Comcast, the Astros, and the Rockets jointly owned the network, and Comcast managed it. Comcast owned 22 percent of the network, the Astros 45 percent, and the Rockets 33 percent.

The Philadelphia cable giant forced CSN Houston into bankruptcy in October 2013 after a bitter business dispute with Astros owner Jim Crane. A federal bankruptcy judge in Houston recently approved a reorganization plan that resulted in the ownership change.

DirecTV's Crumb said Root Sports Southwest had a "great start," with four million subscribers on the AT&T, DirecTV, and Comcast cable-TV systems in the Houston area and other parts of Texas and nearby states.

Comcast is appealing part of the bankruptcy court's decision in the case. It has been awarded $26 million of a $100 million secured loan to CSN Houston and is seeking to recoup more from the team owners.

NBCUniversal spokesman Tim Buckman confirmed that the CSN Houston's signal "switched off" Monday morning.

A year ago, Comcast took a $236 million write-off related to the financial troubles at CSN Houston.