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7 <br /> transfer is not in the public's interest and disapprove the transaction. <br /> The consultants performed a review of the cable television and media trade journals to seek <br /> information about the principals involved and to become better acquainted with the various <br /> aspects of the transaction. <br /> FINDINGS: <br /> In the recently completed round of FCC-1220 rate making proceedings, CVI used a return on <br /> investment value which exceeded the 11.25% benchmark rate. The program service rate <br /> proposed by the company incorporated rate of return of 15.0%. Alternately, Time Warner <br /> Cable chose to use the benchmark rate calculation rules limiting its rate of return to the <br /> maximum allowable under the FCC benchmark rules, 11.25%. <br /> Consequently, present and future subscribers to the CVI system in the franchise territory may <br /> realize a reduction in equipment and installation rates as a result of Time Warner's acquisition of <br /> the company. Time Warner's Hourly Service Charges for some services are less than those <br /> charged by Cablevision Industries. <br /> Recently approved by the local franchise authority is CVI's FCC-1205; it reflects equipment and <br /> installation costs realized in fiscal year 1994 (each FCC-1205 filing reflects the previous year's <br /> costs). The approved equipment and installation rates will remain in effect until August 1996. <br /> Next August, TWI (not CVI)will file an FCC-1205 reflecting costs realized during the 1995 fiscal <br /> year. This filing may reflect the lower Hourly Service Rates which TWI had been charging in <br /> other franchises. Also, though Time Warner would not be allowed to exceed the maximum <br /> permitted rates as set out in the FCC-1205 calculations, it could charge less. <br /> The FCC-1205 filing cycle would continue in August 1997, when TWI would file another FCC- <br /> 1205, reflecting costs from 1996 when CVI was under full control by TWI. The full benefit of <br /> TWI's lower service charges could be realized by subscribers at this time. <br /> 5 <br />