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S- x.Where a certain rate base or expense element was not justified under our rules, such cost was disallowed",p(p(88"  S- x\in whole or in part. S yOh- x,ԍThe Commission has made it clear that operator incurred costs do not necessarily establish the operator's right  xto recover those costs from subscribers. See Implementation of Section of the Cable Television Consumer Protection  xand Competition Act of 1992: Rate Regulation, MM Docket No. 92266, Report and Order and Further Notice of Proposed Rulemaking ("Rate Order"), 8 FCC Rcd. 5631, 5794 n.619 (1993). Where a reported cost was disallowed, we have made appropriate adjustments.  xyEven with our adjustments and disallowances, however, we find that the Operator's monthly CPST rates  S- x=in effect on September 1, 1993 have been justified and are reasonable.S yO- xԍOperator requested confidential treatment of documents and attachments of its cost of service submission in  x=its Request for Confidentiality, dated October 27, 1995. For the purposes of this proceeding, our review and  xdetermination of Operator's CPST cost of service rate was based on nonconfidential information provided by  xOperator in its initial cost of service submission. Given that our findings of Operator's rate justification are not  xbased on any materials for which Operator seeks confidential treatment, we need not address Operator's request for  xconfidential treatment of those materials at this time. Moreover, the documents and attachments listed by Operator's  xRequest for Confidentiality, are filing requirements under our Rules, or publicly available information, and are nonconfidential.  The following adjustments were made to Operator's filing:  S8-  a)XxCapitalized StartUp Losses reported on Form 1220, Worksheet A, Line 14 were based on the   Ocumulative retained earnings deficit of the previous owner of the franchise as of December 31,   1990. As specified in the Final Cost Rules at paragraph 71, Capitalized StartUp Losses may be   included in rate base by build and hold operators to the extent that they represent reasonable   incurred cumulative net losses plus unrecovered interest expenses connected to funding a regulated   #rate base. Since the Hammond franchise was acquired by Operator, the losses claimed by   Operator do not fit this definition. Moreover, our rules do not allow losses incurred by original  S -  system owners to be included in rate base by subsequent purchasers. The acquisition premium   |paid by Operator when the system was purchased, i.e. the purchase price less the net value of   tangible assets acquired, effectively reimbursed the prior owner's losses. For Operator to claim   mCapitalized StartUp Losses based on the prior owner's cumulative losses plus the acquisition   premium as Franchise Cost on Form 1220, Worksheet A, Line 12, then, is redundant and   inappropriate. Consequently, we excluded all $19,102,565 in Capitalized StartUp Losses reported  S0-by Operator. 0 S yOP- xԍInformation regarding the actual adjustments made to Operator's FCC Form 1220, can be found in the public  x<file for the abovereferenced community which is available in the Cable Services Bureau's public reference room,  xor through the Commission's copy contractor, International Transcription Services (ITS), 1919 M Street, NW, Washington, DC, 20554, or by calling ITS at (202) 8573800.(#   0XxHowever, as detailed in paragraph 59 of the Final Cost Rules, Operator is entitled to acquisition  |related intangibles reduced by 34% of the system purchase price. Operator reported a system   purchase price of $45,821,540 on Form 1220, Worksheet C, Item 8, of which $37,765,344 was   reported as Intangible Assets. We subtracted 34% of the purchase price, or $15,579,324, from   reported Gross Intangible Assets. We then adjusted the Accumulated Amortization and   Amortization Expense accounts proportionately. After these adjustments, the value of Net Intangible Assets totaled $15,015,267, or $9,581,445 less than originally reported by Operator.(# "h,p(p(88"Ԍ S-  b)XxOperator allocated the majority of its common costs based on subscriber ratios, i.e. the number   {of tier subscribers divided by total subscribers, and weighted channel ratios, i.e. the number of tier   subscribers times the number of tier channels divided by total subscribers time total channels. We   1find that both of these methods cause biased allocations of common costs to regulated service   tiers, and overlook the cost causative relationship between plant usage and the number of channels   supported. For these reasons, we redistributed Operator's common costs based on channel ratios, i.e. the number of tier channels divided by total channels.(#  S-  c)XxHome Shopping revenues recorded on Form 1220, Worksheet A, Line 52 were assigned directly   to an unregulated tier. However, Operator offered Home Shopping only to its CPS subscribers.   Since Operator's Home Shoppingrelated expenses were assigned to the CPS tier, we reassigned   Operator's Home Shopping revenues to the CPS tier in conformity with the matching principle under generally accepted accounting principles.(#  S - CONCLUSION  S - ` #x5.` ` In total, our adjustments reduced Operator's MPR on its FCC Form 1220 from $43.11 to  x$21.15. Therefore, we find that Operator has justified its CPST rate of $14.30, effective September 1,  S0- x1993 to August 31, 1995 .  0S yO- xiԍ This finding is based solely on the representations of Operator. Should information come to our attention  xYthat these representations were materially inaccurate, we reserve the right to take appropriate action. This Order is  xnot to be construed as a finding that we have accepted as correct any specific entry, explanation or argument made by any party to this proceeding not specifically addressed herein. We also find that Operator has justified its CPST rate of $15.80, effective September 1, 1995.  S- ` x6.` ` Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  x[C.F.R.  0.321, that the monthly CPST rate of $14.30 charged by Operator in the community referenced above, from September 1, 1993 to August 31, 1995 IS NOT UNREASONABLE.  S@- x  S- ` x7.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  x[C.F.R.  0.321, that the monthly CPST rate of $15.80 charged by Operator in the community referenced above, effective September 1, 1995 IS NOT UNREASONABLE.  Sx- ` x8.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  xC.F.R.  0.321, that the complaint referenced herein against the CPST rates charged by Operator in the community referenced above IS DENIED. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@Elizabeth W. Beaty x` `  hh@Chief, Financial Analysis and Compliance Division  S -x` `  hh@Cable Services Bureau#Xj\  P6G;9XP#