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06-09-14-R
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06-09-14-R
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Executive Summary <br />FRC’s Review of Comcast’s Formal Renewal Proposal <br />© Front Range Consulting, Inc.Page 4 <br />burdensome, and unnecessary to evaluate Comcast’s overall financial capabilities. <br />Moreover, due to rapid and ongoing changes in technology and the cable industry, <br />Comcast would be otherwise unable to make reliable pro forma financial projections <br />for the life of a 10-year franchise. Nevertheless, to try to accommodate this request, <br />Comcast has supplied a 3–year history as Exhibit 13 and subscriber information as <br />Exhibit 16. <br />Further, with regards to the financial projections of each year of the proposed term of the <br />franchise, they simply referred to this response above. As such there is no data provided by <br />Comcast that will allow any measurement of impact of meeting the future cable related needs <br />and interests. <br />Also Form III.D asked Comcast for information about its financial goals including historical rate <br />of return on investment. Comcast’s response7 was: <br />Overall financial goals for the member cities’ systems are to provide a reasonable return <br />on existing and newly invested capital, commensurate with the anticipated risks of the <br />business and the required returns of the capital markets. Since business and market <br />risks change over time with the economy and as competition and technology rapidly <br />increase, Comcast has not established a stated rate of return for the system. <br />Actual financial returns will always be dependent upon satisfying customers with an <br />array of service offerings delivered in an economically efficient manner. Financial <br />returns do and will vary across cable systems as a result of competition, market <br />characteristics, regulation, and system efficiencies. <br />Without the required historical and pro forma financial data include data on subscriber rates <br />and Comcast’s financial goals like return on investment, Comcast has not presented any <br />evidence that would suggest that the RFRP requirement would be overly burdensome on <br />subscribers and would not meet Comcast’s financial goals. Quite to contrary, Comcast avoids <br />addressing the fact that PEG obligations are subscriber pass-throughs and will have no impact <br />on the financial results of Comcast. Based on FRC’s analysis of subscriber rates in the NSCC <br />franchise areas, PEG fees historically assessed to subscribers have risen at a much smaller rate <br />of increase than has the cable rates under Comcast’s control. <br />FRC has noted that the Proposal has improperly attempted to use the FRC Financial Analysis of <br />Comcast Corporation8 as some sort of endorsement of Comcast financial capability to operate <br />the cable system. The financial report was not meant to assess the financial capability of <br />Comcast but was, as shown in the report, an attempt to ascertain the level of profitability that <br />Comcast generates in the franchise area. With the level of profitability estimated, Comcast <br />7 Proposal at 45. <br />8 See Attachment D to the RFRP.
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