Astros owner files lawsuit over network dispute
HOUSTON (AP) — Houston Astros owner Jim Crane has sued the team’s former owner and a pair of media companies, alleging he’s lost possibly hundreds of millions of dollars because they misrepresented the value of a regional television network that broadcasts Astros games.
The lawsuit, filed in state court in Houston on Thursday, accuses former Astros owner Drayton McLane Jr., as well as Comcast Corp. and NBC Universal Media of fraud, misrepresentation and conspiracy. The suit also accuses McLane of breach of contract.
Astros games are broadcast in the Houston area on Comcast SportsNet Houston. When Crane bought the Astros in 2011 for $615 million, part of that included a more than 40 percent stake in the regional television network.
But only 40 percent of the city’s television households could view games this year; most cable providers in the area did not have carriage agreements.
In his lawsuit, Crane alleges that McLane fraudulently boosted the value of the network by false representing the subscription fees that providers would pay. The lawsuit says McLane knew these rates were “too high and that other distributors would not agree to pay the rate.”
At a news conference Friday, Crane said the network’s failings have cost the team “tens, probably hundreds” of millions of dollars in revenue and if the network deal stays in place, losses would continue for years.
“We now face a situation where either we accept millions of dollars in loss each year, with the damage to this franchise and this city for next 20 years, or we fight back,” Crane said. “I did not buy this team to have a low payroll and be mediocre. We bought this team to win championships and we bought part of this network so our fans can watch the games.”
In September, affiliates of Comcast filed an involuntary bankruptcy petition on behalf of Comcast SportsNet Houston. The petition was made after the Astros had indicated the team likely would end its agreement with the network. The Astros are asking that the petition be dismissed.
Comcast, which owns NBC Universal, said it rejected any claims of wrongdoing.
“It appears that Mr. Crane is suffering from an extreme case of buyer’s remorse, and aiming to blame the network’s challenges on anything but his own actions,” Comcast said in a statement. “Comcast/NBCUniversal looks forward to vindicating itself in this litigation and also remains committed to a reorganization of the network in bankruptcy court.”
McLane said in a statement the sale of the Astros was “absolutely transparent” and his side had provided thousands of pages of documents and answers to all questions that Crane and his representatives had.
“This was one of the most complex and scrutinized transactions of my business career,” McLane said. “The accusations that have been reported are hollow and appear to be an attempt to recreate the facts.”
The other partner in the network, the Houston Rockets, is not named as a defendant in the lawsuit, even though the suit says that Rockets owner Leslie Alexander also was aware the subscription fees the network was proposing were too high.
The Astros had the lowest payroll in the majors this year at about $29.3 million as they finished a major league-worst 51-111, their third straight 100-loss season.
Crane said the network’s ongoing problems won’t change plans he had to increase the payroll sign free agents.
“We won’t let this alter the on field success,” he said.
Follow Juan A. Lozano on Twitter: https://twitter.com/juanlozano70