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Public Notice
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Ottawa, 19 October 1990
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Public Notice CRTC 1990-97
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Rate of Return Measures and Profitability Benchmarks for the Cable Television Industry
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In Public Notice CRTC 1990-53, dated 15 May 1990, the Commission stated that it would retain a consultant to: (i) propose and assess various methods that could be used to measure cable industry profitability, including rate of return on net fixed assets, and any alternative measures which might be appropriate; (ii) propose appropriate benchmarks for use in connection with current or proposed methods of establishing profitability levels; and (iii) assess the feasibility of establishing an appropriate profitability benchmark within a range, rather than as a single, fixed number. With respect to the third task, the consultant would examine the basis on which a licensee's allowed return would be established within this range.
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The contract to carry out this study was subsequently awarded to Dr. Cleveland S. Patterson, Associate Professor of Finance at Concordia University, Montréal, and President of Cleveland S. Patterson and Associates Ltd., Toronto. Dr. Patterson's report, entitled "Rate of Return Measures and Profitability Benchmarks for the Cable Television Industry", has recently been filed with the Commission, and is now being made available for public comment.
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Written comments on Dr. Patterson's report should be sent to the Secretary General, CRTC Ottawa, Ontario K1A 0N2, by 21 December 1990.
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All written comments received by that date will be taken into account by the Commission in making a final determination as to the appropriate rate of return measure and profitability benchmark to be used in assessing proposed rate increases pursuant to s. 18(8) of the Cable Television Regulations, 1986.
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Until the Commission issues its final decision in this matter, it will continue to measure profitability primarily on the basis of the rate of return on average net fixed assets, measured over an historical period of 8 years, and will maintain the benchmark at its current level of 24%.
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Alain-F. Desfossés
Secretary General
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