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Dwight Howard Houston Move Boosts Comcast Over Time Warner Cable

Dwight Howard’s decision to leave the Los Angeles Lakers for the Houston Rockets also means a victory for Comcast Corp. (CMCSA) against Time Warner Cable Inc. (TWC)

Howard, a rebounding, shot-blocking, 6-foot-11-inch (2.1-meter) center, said yesterday he’d sign an $88 million, four-year deal with the National Basketball Association’s Rockets instead of staying with the Lakers for five more years. The choice is a boon for Comcast’s Houston sports network while potentially taking viewers from Time Warner Cable’s more popular Lakers channel in Los Angeles.

“The Rockets have landed the biggest free agent in the world,” Comcast SportsNet Houston said last night on its website. “Dwight Howard is coming to Houston.”

The three-time Defensive Player of the Year gives an immediate boost to Houston’s championship aspirations. That may convince pay-TV companies such as DirecTV (DTV) and Dish Network Corp. (DISH) to shell out for the rights to carry Comcast’s Houston network for the first time, said Lee Berke, president of Scarsdale, New York-based LHB Sports, Entertainment & Media.

“A lot of fans in Houston and throughout the state are going to want to see the Rockets play,” Berke said in an interview before Howard’s decision was announced. “Comcast SportsNet will have more leverage in getting deals done.”

Time Warner Cable’s Lakers networks, meanwhile, could see a dip in ratings and advertising revenue with Howard’s departure, Berke said.

Comcast is the largest U.S. cable provider and owns 13 regional sports networks, more than any company other than 21st Century Fox Inc. Time Warner Cable, the second-largest U.S. cable operator, pitched Howard his own TV show on its Lakers channel in an attempt to persuade him to stay, ESPN reported.

Team Meetings

In addition to the Lakers, with whom he spent one season, and the Rockets, the 27-year-old Howard talked to the Dallas Mavericks, Golden State Warriors and Atlanta Hawks, according to ESPN. The Lakers put up billboards in the L.A. area urging him to re-sign with the team.

Comcast SportsNet Houston probably will ask for $3 to $3.50 per subscriber per month from pay-TV operators after failing to agree on deals in 2012, Berke said. The network is jointly owned by the Rockets, Major League Baseball’s Houston Astros and NBC Sports Group, a Comcast unit.

Houston is the 10th-largest U.S. pay-TV market, according to data from research firm SNL Kagan. Comcast is the region’s largest provider by customers, with about 684,000 video subscribers. DirecTV, Dish, AT&T Inc. (T)’s U-verse and Suddenlink Communications serve a combined 1.1 million subscribers, according to Kagan data. At $3.50 a month, Comcast could reap about $10 million annually by striking a deal for the regional sports network with all those providers.

The Rockets finished last season with a 45-37 record with the core trio of James Harden, Jeremy Lin and Chandler Parsons.

Softened Blow

Time Warner Cable SportsNet has already locked up long-term deals with providers including DirecTV and AT&T’s U-verse last year -- with Howard in the fold. That will soften the blow for the New York-based company despite Howard’s departure, Patrick Rishe, a sports business professor at Webster University in St. Louis, said in an interview.

“It’s far more important for Comcast and Houston to obtain Dwight Howard,” Rishe said. “The Lakers brand is solidified. I think they may go through a rough patch, but I don’t know if Howard would be the savior even if he signs. Howard in Houston makes a bigger splash.”

The Lakers channel also has a Spanish-language sister station, SportsNet Deportes.

Most Expensive

Regional sports networks are some of the most expensive cable channels for pay-TV operators to carry due to their strong demand among sports fans and the high cost for broadcast rights. Time Warner Cable agreed earlier this year to pay more than $7 billion over 25 years for the right to create a network that airs Los Angeles Dodgers games.

Time Warner Cable SportsNet and Comcast SportsNet Houston representatives both spoke to Howard about the media coverage benefits they planned to offer him, according to ESPN.

Howard is a seven-time All-Star. He has averaged 18.3 points, 12.9 rebounds and 2.2 blocks per game for his career.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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