Case Document 5 Filed in TXSB on 09/28/13 Page 1 of 11 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

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1 Case Document 5 Filed in TXSB on 09/28/13 Page 1 of 11 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS In re: : : : Chapter 11 HOUSTON REGIONAL SPORTS : NETWORK, L.P. : Alleged Debtor. : Case No.: : : DECLARATION OF JON D. LITNER IN SUPPORT OF PETITIONING CREDITORS MOTION FOR AN ORDER APPOINTING AN INTERIM TRUSTEE 1. My name is Jon D. Litner. I am the President of Comcast Sports Management Services, LLC ( Comcast Services ), a Delaware limited liability company. I make this Declaration in support of the Petitioning Creditors motion for the appointment of an interim trustee in this Chapter 11 case. I make this Declaration solely in my capacity as President of Comcast Services. In that capacity, I am familiar with and have personal knowledge of the facts stated herein. The Network 2. Houston Regional Sports Network, L.P. d/b/a Comcast SportsNet Houston (the Network ) is a Delaware limited partnership. The primary purpose of the Network is to create and operate a regional sports programming service ( Service ) that produces, exhibits, and distributes sports programming on a full-time basis, including live Astros and Rockets games within the league-permitted local territories. Partners in the Network 3. The Network has three limited partners and one general partner. The limited partners in the Network are Houston SportsNet Holdings, LLC ( Comcast Owner ), Rockets Partner, L.P. ( Rockets Partner ), and Astros HRSN LP Holdings LLC ( Astros Partner ).

2 Case Document 5 Filed in TXSB on 09/28/13 Page 2 of Houston Regional Sports Network, LLC (the General Partner ), is the general partner in the Network and, subject to certain limitations, exercises exclusive management, supervision, and control over the Network s properties and business. The General Partner s sole purpose is to serve as the Network s general partner; it has no authority or power to act outside of that role. The General Partner has three members: (1) Comcast Owner, (2) JTA Sports, Inc. ( Rockets Owner ), and (3) Astros HRSN GP Holdings LLC ( Astros Member ). 5. Rockets Partner and Rockets Owner are affiliates of Rocket Ball, Ltd. d/b/a the Houston Rockets ( Rockets Team, and together with Rockets Owner and Rockets Partner, the Rockets ), a professional basketball franchise in the National Basketball Association. Astros Partner and Astros Owner are affiliates of Houston Astros, LLC ( Astros Team, and together with Astros Owner and Astros Partner, the Astros ), a professional baseball franchise in Major League Baseball. Comcast Owner is an affiliate of Comcast Corporation (together with its affiliates, Comcast ). 6. The General Partner is managed by a Board of Directors (the GP Board ) that is comprised of one representative each from the Astros and the Rockets and two representatives from Comcast. Effectively, the GP Board manages the Network, pursuant to the Second Amended and Restated Limited Liability Company Agreement of the General Partner, dated October 29, 2010 and executed by and among the members of the General Partner (the GP Operating Agreement ). 2

3 Case Document 5 Filed in TXSB on 09/28/13 Page 3 of The current formulation of the Network (described above) was created in October 2010, when the Astros and the Rockets reached an agreement with an affiliate of Comcast for the purpose of launching the Service, a new regional sports network that would distribute the teams games and other team-related programming in their respective league-permitted local territories. On October 29, 2010, after lengthy negotiations among Comcast, the Rockets and the Astros, including then-owner of the Astros, Drayton McLane, the parties entered into the Network s and General Partner s operating agreements and other integrated transaction documents (the Transaction Documents ), pursuant to which Comcast was admitted as a limited partner of the Network and as a member of the General Partner. The Services Agreement and Comcast Services Claim 9. One of the Transaction Documents executed on October 29, 2010, was an agreement (the Services Agreement ) with Comcast Sports Management Services, LLC ( Comcast Services ). Pursuant to the Services Agreement, Comcast Services agreed to provide the Network with management oversight and various defined Operational Services in exchange for an annual fee (the Service Fee ) 3

4 Case Document 5 Filed in TXSB on 09/28/13 Page 4 of 11 The pro-rated amount due as of the filing of the involuntary petition is $1,251, Comcast Services has provided the Network with management oversight and defined Operational Services in accordance with the terms of the Services Agreement and is otherwise in compliance with the Services Agreement. 11. The Network s debt to Comcast Services pursuant to the Services Agreement is not contingent or subject to bona fide dispute, and Comcast Services does not believe that the Network disputes the liability or amount of Comcast Services claim. Astros Media Rights Agreement and the Network s Failure To Pay Debt 12. On October 29, 2010, the Network also entered into an amended and restated media rights license agreement (the Astros Media Rights Agreement ) with the Astros

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6 Case Document 5 Filed in TXSB on 09/28/13 Page 6 of Deadlock in the Network s Management and Inability to Improve Cash-Flow 22. Regional sports networks like the Network generate the vast majority of their revenue by entering into affiliation agreements with MVPDs that agree to carry the networks in exchange for per-subscriber fees

7 Case Document 5 Filed in TXSB on 09/28/13 Page 7 of Back in October 2010, in conjunction with the negotiation of the other Transaction Documents, the Rockets and Astros negotiated directly with Comcast Cable regarding the terms and rates that it would agree to with respect to its carriage of the Network s Service

8 Case Document 5 Filed in TXSB on 09/28/13 Page 8 of On November 17, 2011, Jim Crane and a group of investors (the Crane Ownership Group ) purchased the Astros from Drayton McLane, including the Astros interest in the Network and its General Partner

9 Case Document 5 Filed in TXSB on 09/28/13 Page 9 of With the GP Board at a complete impasse, the Network is powerless to continue its affairs and pay its debts. As described in greater detail below, the deadlock among the parties has thwarted all efforts to engage in any constructive exercise to salvage the Network

10 Case Document 5 Filed in TXSB on 09/28/13 Page 10 of Comcast Services thus believes that the General Partner is unable to operate the Network s business affairs for the benefit of creditors and other stakeholders, and believes that it 10

11 Case Document 5 Filed in TXSB on 09/28/13 Page 11 of 11 would be in the best interest of Comcast Services and the best interest of the Network s other constituencies for an independent Chapter 11 trustee to conduct a fair and open auction process for the Network s business assets on a going concern basis. Comcast Services has substantial concern that if the existing corporate governance structure remains in place, the Network will remain encumbered by management deadlock and paralysis and the Network will be unable to take actions necessary to operate its business affairs for the benefit of creditors and other stakeholders. 36. In short, the Network s past and present behavior and the precarious state of its finances makes clear that the appointment of an interim trustee is necessary in order to both preserve the property of the estate and to prevent loss to the estate. I declare under penalty of perjury that the foregoing is true and correct. _/s/ Jon D. Litner Jon D. Litner Dated: Stamford, CT September 28,