News Corp (NWS) 2017 Q1 法說會逐字稿

Good day and welcome to the News Corp first-quarter fiscal 2017 earnings call. Today's call is being recorded. Media is allowed to join today's conference in a listen-only basis.

At this time for opening remarks and introductions, I would like to turn the call over to Mr. Mike Florin, Senior Vice President and Head of Investor Relations. Please go ahead, sir.

Thank you very much, Matt. Hello everyone and welcome to the News Corp's fiscal first quarter of 2017 earnings call. We issued our earnings press release about 30 minutes ago and it is now posted on our website at NewsCorp.com.

On the call today are Robert Thomson, Chief Executive, and Bedi Singh, Chief Financial Officer. We will open with some prepared remarks and then we will be happy to take questions from the investment community.

This call may include certain forward-looking information with respect to News Corp's business and strategy; actual results could differ materially from what is said. News Corporation's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information.

Additionally this call will include certain non-GAAP financial measurements such as total segment EBITDA, adjusted segment EBITDA and adjusted EPS. The definitions and GAAP to non-GAAP reconciliations of such measures can be found in our earnings release.

With that, I will pass it over to Robert Thomson for some opening comments.

Thank you, Mike. The most recent quarter has highlighted a continuing digital development at News Corp at a time of great transition for media companies, many of which are struggling to cope with the evolution.

Our growing portfolio of digital products and our global character have enabled us not only to weather those profound changes but to build a firm foundation for a profitable future.

There is no doubt that two of our core markets, the US and UK, have been characterized by a certain amount of uncertainty in the economic and political environment but we have remain focused on developing long-term and robust sources of revenue while curtailing costs without undermining the quality of our uniquely valuable content.

Collaboration among our businesses has increased with the sharing of lessons, software and data to provide more valuable insights for our clients, readers and advertisers.

During the first quarter of our financial year 2017, despite a distinctly soft print advertising market and [patent] weakness in the British pound, our revenues were down only slightly. It is thus clear that our emphasis on digital real estate has given the Company more resilience in even difficult trading periods. We are still at the early stages of that real estate development particularly in the US where we are renovating realtor.com whilst living in the house. We expect that rates of growth at realtor.com will increase later in the year as new products and pricing take hold in a US property market that is itself still recovering from the extreme dislocation of the financial crisis.

For the most recent quarter, total segment EBITDA declined 1% versus the prior year but half of that decrease was due to planned investments and one-time transaction costs and we do not expect the quarterly performance to be reflective of the full-year results. In fact, we expect to see EBITDAR improvement in the remainder of the year largely driven by growth in digital real estate and at HarperCollins.

As our real estate business continues to evolve and expand, we are now highlighting listing-based revenues separately in the digital real estate services segment to better reflect our performance and provide a clearer indication of the trajectory in that increasingly important segment. Significantly, this highlights our reduced reliance on traditional advertising which today accounts for only a third of our total revenues.

In addition to the strength of digital real estate, we are also pleased with the trends in book publishing and at News America Marketing which showed continuing growth in its in-store product revenue and is ahead of schedule in achieving its year-end goal of 10 million downloads of the Checkout 51 app which provides incentives for shoppers and unique marketing opportunities for consumer goods producers and retailers.

As mentioned, one of the more profound changes at News Corp since its reincarnation in 2013 is the burgeoning of the digital real estate business, building on our earlier success with REA in Australia and complementing that with investments in the US, East Asia and India. REA performed well again in the quarter despite some weakness in listing volume. Pricing improved and services provided to agents were enhanced. Revenues expanded by 16% in local currency including sales of the recently acquired iProperty. REA is the clear market leader in Australia and has proven the robustness of its business by expanding reach and revenue despite macroeconomic fluctuations in Australia.

Move, which operates realtor.com, experience 9% revenue in the first quarter as we revamped the site and retooled its products. With the rollout of Showcase 2.0 in December and deeper penetration from the recently launched Seller Leads and Turbo products, we are confident revenue momentum will build in the coming months.

We firmly believe realtor.com will make a meaningful contribution to segment revenue and EBITDA growth this year. We are investing for the long-term but not at the expense of returns for investors. According to comScore, engagement with realtor.com leads the competition by a significant margin. Since our acquisition of Move two years ago this month, realtor.com's audience has grown more than 60% and brand awareness of realtor.com is at 87% which is up more than 25% in the last 18 months.

In book publishing, HarperCollins reported a 14% increase in EBITDA despite a 5% decline in revenues which was largely the result of the impact of the comparison with last year's sale of Go Set a Watchmen, The To Kill a Mockingbird prequel sequel. The HarperCollins team is increasingly focused on books which resonate beyond the traditional elites as is evident from the popularity of such titles as J.D. Vance's Hillbilly Elegy and Sarah Young's books including the new Jesus Always which builds on the success of her Jesus Calling series.

Also performing well are The Black Widow by Daniel Silva, the Magnolia Story by Joanna and Chip Gaines and Commonwealth by Ann Patchett. While the consolidation of our international operations in tandem with the Harlequin acquisition has given us a significantly more powerful global platform. We are also able to use our trade assets to market crossover successes from the Harlequin stable of writers which is increasing both sales and margins for select titles.

In coming weeks, we will see the release of the highly anticipated Settle for More by Megyn Kelly. That title, Settle for More will be our motto in coming quarters. We also have optimistic expectations for Veronica Roth's next book, Carve the Mark. Veronica wrote the extremely successful Divergent Trilogy. And for Chaos by Patricia Cornwall.

In news and information across our mastheads, we saw a more challenging print advertising marketplace as has already been articulated by other companies in the sector. While digital advertising increased, that growth was not enough to offset the decline in print. There is no doubt that the advertising market is in upheaval and that they renewed advertiser focus on viewability and measurability could naturally benefit trusted brands with accurate metrics.

Hype and hip are not alternatives to quality and integrity. In the middle of this commercial commotion is appropriate that ad agencies are under scrutiny as too much ad tech is fad tech.

Advertising at The Wall Street Journal was down 21% but our circulation revenue rose 6% and the number of paid digital subscribers at The Wall Street Journal across the 1 million mark in September. The transition of The WSJ was highlighted by the fact that digital accounted for a record 55% of revenues this quarter. Obviously some of that change is due to the decline in print advertising but it also reflects the emphasis on broadening the digital subscriber base and the long-term strategy of upselling higher-yielding specialist products to those subscribers.

Historically advertising accounted for about half the revenues at Dow Jones but that ratio is now closer to one-third. Clearly there is a renewed emphasis on cost control including a reduction in headcount at Dow Jones and a redesign of the Journal itself. You will be able to see the results of that redesign in coming weeks and it will be obvious that print remains a very powerful platform and that the Journal has an audience of unique influence and affluence.

At News Corp Australia, we continue to confront the cost base while broadening our range of digital offerings. We experienced strong digital paid subscriber growth in the first quarter and expanded the number of mastheads with a freemium hybrid model allowing limited free access along with a paid for premium subscription. That model builds on the success we have seen at the Australian. Meanwhile at news.com.au, Australia's leading news website. advertising revenue rose more than 30% in local currency compared to the same period last year.

Sports is a vital part of our offering in Australia which is why we announced the acquisition of the Punters Paradise website in October offering news, analysis and comparative odds for horseracing and other sports.

At the same time, we are keen to dispose of non-core assets to sharpen the focus of our operations. To that end, we sold our stake in New Zealand Media & Entertainment and hope to complete be sale of CarsGuide and the Sunday Times in Perth by the end of fiscal Q2.

At News UK, The Times continues to gain market share and drive higher volume growth experienced a 13% gain in print circulation in the first quarter in a sector that is too often defined by a decline. At The Sun, while advertising revenues have fallen, the digital audience has expanded dramatically since the pay wall was lifted late last year. We are seeking to attract loyal readers with quality content and not digital drive-bys distracted by vacuous contentious click (inaudible).

In September, there were almost 46 million monthly visitors to The Sun compared to 15 million uniques in September 2015 before the lifting the pay wall. News UK also benefited from carve out price increases for its mastheads and from the launch of [Sunbeds] in August.

With the acquisition of Wireless Group, the team at News UK is working on the integration of this valuable asset leveraging talent across platforms, fashioning new ad packages to take advantage of multimedia opportunities and cross-promoting our brands including Sunbeds which should be a powerful generator of future revenue for the Company. Speaking of successful popular titles, digital ad revenue for Q1 grew 42% year-over-year at the New York Post where the broader digital Post digital network had a record 65.1 million unique visitors in September an increase of 109% year-over-year based on internal metrics.

At News America Marketing ,in-store products continued to post strong revenue growth driven by the creation of innovative [ad news]. Point-of-purchase persuasion is a powerful asset that we have at News America Marketing which also has valuable direct links to advertisers who rely on its unique market intelligence. In the past, digital has been a rather modest part of News America Marketing's offering but the acquisition of Checkout 51 has changed that outlook dramatically. We had targeted the acquisition of 10 million members this calendar year for Checkout 51 but could top that total this month if not this week.

The larger the audience, the better quality offerings, the stickier the experience. That virtual cycle is clearly in motion at Checkout 51 where we have had an influx of new deals from companies such as Procter & Gamble, [Mandalay] and General Mills. We have just launched a Spanish language version of the app to appeal to the large and growing Latino audience in the US while we are able to gather rich permission data from users that is of supreme value to advertisers wanting an insight into shopping habits.

And we looking forward to the integration of PayPal into Checkout 51 expected by December which will make it even easier for consumers to receive rebates for their purchases.

Foxtel posted modest year-over-year growth in cables satellite subscribers although there was higher churn partially related to promotional no contract offers last fiscal year. Foxtel remains keenly focused on improving the quality of experience for subscribers and providing more product focus hence the decision to unwind the Presto joint venture with Seven West. The executive team led by Peter Tonagh is determined to convey to potential subscribers the clear relevant merits of Foxtel Play whose offering is vastly superior to that of competitors.

Foxtel Play's streaming service will roll out next month and will present consumers with greater choice and flexible packages as well as much easier access to Foxtel's premium content including Fox Sports, whose viewer numbers have repeatedly set records in recent months.

To ensure that subscribers have an unparalleled experience, Foxtel announced this quarter a new agreement with HBO that will give Foxtel even more extensive rights to HBO's library of content through 2021. Despite the focus on product enhancement and infrastructure investments, we are encouraged to see relatively stable EBITDA this quarter.

As for Fox Sports, the record ratings were particularly pronounced for NRL, while there were also strong performances by Aussie Rules Football and motor racing. NRL viewership was up 11% for all games and those exclusive to Fox Sports were up 15%. For AFL, total viewership was up 8% while the preliminary final between the Giants and the Western Bulldogs with the ultimate match of the year was the number one subscription TV program so far in calendar year 2016 in Australia.

That increased viewership as well as expanding digital advertising were catalysts for advertising growth of low double digits in local currency in the first quarter which compares rather favorably to the listless levels elsewhere in the industry. Costs were higher in the first quarter as was expected reflecting the timing sports expenses about which Bedi will have further details. Thankfully these quarterly costs are not reflective of the full-year exposure.

Globally we continue to integrate our Storyful and Unruly acquisitions into our existing brands. News UK now brings Storyful and Unruly into joint pitches for digital advertising. Storyful, which has a unique ability to divine meaningful moments on social media has become a part of the pitch for our Dow Jones risk and compliance business. If a consumer has a problem with products and uploads a video or a comment, Storyful's unique access to social platforms globally allows it to track the virality of the incident. It also remains the world's leading authenticator of social video for news agencies and broadcasters around the world.

In conclusion, News Corp is not just a news company. We are a digital real estate company and a global and information company. We are proud of our progress but also leading the way in defining a digital future for media whether it be through the strength of our mastheads, our mobile or the rapid growth of innovative news and commercial apps. That focus on long-term growth is complemented by a rigorous monitoring of costs in the here and now. We are extremely conscious of our responsibility to shareholders to create products that will prosper while ensuring that we are canny custodians of our traditional businesses in transition.

Speaking of canny, I now pass you over to our CFO, Bedi Singh.

Thanks, Robert. We reported fiscal 2017 first-quarter total revenues of $1.97 billion, down 2% compared to the prior year. Currency had a $36 million unfavorable impact to revenues with modest year-over-year improvement in the Australian dollar more than offset by continued weakness in the British pound.

Total segment EBITDA was $130 million including $5 million in transaction related costs for the Wireless Group acquisition compared to $165 million in the prior year. For the quarter, EPS from continuing operations were a negative $0.03 compared to positive $0.22 in the prior year. Adjusted EPS from continuing operations was negative $0.01 versus positive $0.05 in the prior year.

Before discussing segment performance, as Robert noted, listing based revenues from our digital real estate businesses are now captured in a new real estate line on our income statement to better highlight that growth. Prior to this change, those revenues were reflected within advertising revenues.

We have also adjusted prior year comparatives for this. This real estate revenue line represented 9% of total revenue this quarter and grew 19% compared to the prior year.

Turning to the individual operating segments, in news and information services, revenues for the quarter decreased 5% from the prior year to approximately $1.2 billion. And within segment revenues, advertising which accounted for just under 50% of revenues decreased around 11% or down 10% in local currencies driven by weaker global print ad trends.

Circulation and subscription revenues decreased 4% but were up 1% in local currency which is relatively stable with last quarter and the prior year driven by higher paid digital volume and price increases.

News and information services segment EBITDA this quarter was $46 million, down from $83 million in the prior period. This decrease was driven by lower print advertising revenues combined with $12 million in additional investment spending at Checkout 51 and the $5 million in Wireless Group transaction costs partially offset by cost savings initiatives.

Looking at performance across our key units, at Dow Jones, domestic advertising declined 21% versus the prior year quarter which is greater than last fiscal fourth quarter rate reflecting a weaker print marketplace most notably in the finance and technology categories.

On a positive note, Wall Street Journal circulation revenues grew by over 6% this quarter due to higher subscription pricing and higher digital paid subscribers with digital only subs surpassing the 1 million mark during the quarter as Robert noted. At the professional information business, revenues were relatively stable. As Robert mentioned, Dow Jones announced a series of initiatives focused on modernizing the newsroom and rationalizing print circulation and pagination while shifting resources to digital.

As part of the plan, we are targeting approximately 8% or a $100 million reduction of the cost structure on an annualized basis by the end of fiscal 2018. The restructuring program will begin implementation in Q2 this year and is expected to continue into Q3 with an anticipated restructuring charge of between $50 million to $60 million pretax during fiscal 2017 and benefits starting to phase in over the remainder of the fiscal year. We believe this timely response for the secular print advertising declines will leave the business well-positioned to maximize the digital growth opportunity.

At News Australia, advertising revenues for the quarter declined 7% or approximately 11% in local currency relatively similar to the last fiscal fourth quarter. Circulation revenue at News Australia increased modestly for both reported and on a local currency basis as a result of cover price increases and higher paid digital subs offsetting print volume declines.

While we continue to benefit from the cost reduction program that News Australia announced in the second half of fiscal 2016 which totaled around 5% of the cost base, we are now embarking on further cost initiatives. We expect an additional AUD40 million in cost savings this fiscal year while we continue to push digital initiatives more broadly.

At News UK, whilst reported advertising revenues decreased 28%, ad revenues were down midteens in local currency primarily due to print declines. Circulation revenues at News UK declined midteens versus the prior quarter but were relatively flat in local currency as cover price increases at both The Sun and The Times were offset by single copy volume declines. News UK also benefited this quarter from previously announced cost savings initiatives as well as lower production costs and remains focused on identifying further cost reductions.

At News American Marketing, the business overall performed well with revenues relatively flat versus the prior year driven by midteens growth in domestic in-store revenues. Domestic FSI revenue was down midteens due to lower volume. At Checkout 51, (technical difficulty) adding approximately $3 million this quarter and well on pace to achieve $10 million by the end of this calendar year which as Robert mentioned are the key initiatives for accelerating the digital transition of News America Marketing.

Turning to the book publishing segment, revenues decreased 5% but segment EBITDA improved 14% versus the prior year which included the release of Go Set a Watchmen that had accounted for $32 million in revenues in the prior year quarter.

EBITDA margins improved 12.3% from 10.3% in the prior year driven by the mix of titles. This quarter benefited from a strong new release slate including Black Widow by Daniel Silva, Hillbilly Elegy by J.D. Vance and Sarah Young's Jesus Always. Total digital revenues were approximately 20% of consumer revenues similar to the prior year.

In digital real estate services, total segment revenues increased $35 million or 18% to $226 million. Segment EBITDA was $67 million, up from $57 million in the prior year. REA's revenue grew 22% or approximately 16% in local currency due to an increase in Australian residential depth revenue benefiting from favorable product mix combined with modest revenue contributions from iProperty.

Results were partially offset by softer listing volume in Australia declining approximately 8% versus the prior year. REA reported their fiscal first-quarter earnings today and just concluded their conference call which provided more quarterly details.

Move revenues rose 9% to $93 million versus the prior year reflecting continued strong performance from [Colebrook], after more than doubling in Q1 fiscal 2016 as well as growth in software services revenue albeit at a slower rate. The Move team is focused on the next generation showcase product as we expect to rollout later this quarter and further penetration of recently launched new products including Turbo and Seller Leads. We therefore expect revenue growth to accelerate in the second half of the year and are on track to deliver increasing positive contributions to segment EBITDA this fiscal year.

Average monthly unique user growth at realtor.com remains strong, up 15% year-over-year two $53 million in the quarter.

In Cable network programming, revenues increased by 3% compared to the prior year quarter primarily due to advertising growing midteens benefiting from higher ratings across the board as well as higher contributions from digital advertising.

Segment EBITDA in the quarter was $14 million which was $14 million lower than the prior year quarter due to as expected, costs related to the simulcast of additional NRL matches from Channel 9 and the airing of the Sri Lanka Australian cricket tour partially offset by the absence of the EPL rights costs.

We do expect EBITDA to improve in Q2 due to the absence of costs from the English Premier League and Rugby World Cup which we had in the prior year.

With respect to earnings from affiliates, Foxtel entered the quarter with approximately 2.9 million total subscribers with closing cable and satellite subscribers increasing approximately 1% compared to the prior year period. Last month Foxtel announced that it had bought out Seven West Media shares in the Presto joint venture and the Presto service will be subsequently closed and Foxtel will shift its IP efforts to Foxtel Play. Existing Presto customers will be invited to move to the new Foxtel Play and Presto will cease operations on January 31, 2017.

Foxtel recorded a $21 million loss as a result of the decision to cease Presto operations and our equity income was $11 million lower principally as a result of this. Foxtel revenues for the quarter increased 5% and were up 1% in local currency and EBITDA increased 2% but was down 2% in local currency due to higher programming costs and marketing.

Churn as expected remained above prior year at 15.5% as we cycled through some historical low contract offers. Importantly, underlying year-on-year churn data when adjusting for the impact of new customer offers has been more stable. ARPU for the quarter was down approximately 3% or around AUD88.

Capital expenditures from continuing operations for the quarter was $49 million, lower than $63 million in the prior year. And turning to the balance sheet, net cash at September 30 was $1.1 billion including $377 million of debt related to iProperty. Cash on the balance sheet is down from fourth quarter 2016 principally reflecting the payout of the News America Marketing settlement of around $250 million.

So in summary, while the quarter faced some obvious challenges as we have noted, we expect to see improvements for the remainder of the year versus the prior year.

A few points to highlight. While print advertising trends remain very volatile and visibility continues to be limited, we have stepped up our cost savings initiatives particularly across Dow Jones and expect improved EBITDA performance in the current quarter and the balance of the year. We would also be including the contributions from Wireless Group within the news and information services segment from October 1.

Book publishing should see favorable comparisons and we look forward to the release of Settle for More by Megyn Kelly, Chaos by Patricia Cornwall and The Magnolia Story by Chip and Joanna Gaines, as well as carryover sales from Jesus Always by Sarah Young which debuted last month. We have a strong roster of titles this year and expect to see a return to growth in digital which bodes well for the year ahead.

Fox Sports Australia as I mentioned, should benefit from lower rights costs in the second quarter and should see an improvement in EBITDA versus the prior year. For the full-year, costs should be down modestly in local currency with no major (inaudible) impacting this fiscal year.

For digital real estate, we expect continued revenue and EBITDA growth for the segment. While listings volumes in Australia for the second quarter remain lower than the prior year, we expect continued growth benefiting from favorable pricing and increased penetration.

Realtor is expected to roll out Showcase 2.0 later this quarter and the revenue lift is expected to be more second half weighted reflecting the timing of contract renewals. We expect to see a strong improvement in EBITDA contribution from realtor this year.

With that, let me hand it over to the operator for Q&A.

(Operator Instructions). Entcho Raykovski, Deutsche Bank.

Hi, Robert. Hi, Bedi. My question is around using information services. You obviously have spoken about digital advertising revenues offsetting some of the print declines. Can you give us an idea of some of the quantum of growth within digital ad revenues and also any breakdown you can give a by jurisdiction as well with what sort of trend you have seen within digital ad revenue growth would be appreciated. Thank you.

Thanks very much for the question. As for the future itself, unfortunately I don't have Sybilline power so it is difficult to define. At Dow Jones, we are seeing some improvement in October but beyond that I don't have the confidence to give you a forecast. Just more broadly before we get into the granular detail, what we are seeing at the moment is some mayhem in the ad market. Advertisers are having ads placed on sites that seem almost to have contempt for for-profit companies, although they have their products bobbing around in bilge water. And that ad apostasy just simply can't continue ad infinitum. So at heart, we are very confident about our quality of content, our quality audiences and the quality canvas we have for advertising.

At News Australia, we saw advertising down about 11% excluding FX in the quarter. News UK, advertising in total was down midteens, print was down high teens, digital up low teens. And at Dow Jones, advertising was down 21% but we have experienced double-digit growth for digital at News UK and Australia. We are emphasizing the quality of our data and our quality of commission data that is in our audiences and we are building out more segmented products for advertisers so that we will be able to target those quality audiences in a meaningful way. And I think what we are talking about is a longer-term strategy but one that should have results in the short term.

Craig Huber, Huber Research Partners.

A question on The Wall Street Journal, just what are your thoughts on why the declines have accelerated a negative 21% at the Print Wall Street Journal this last quarter and what is your outlook over the coming quarter?

I think there is a broader issue about advertising generally. There is definitely mayhem in the market. I think some advertising is driven more by trend than by substance and when you have that amount of volatility in the broader markets, you are going to have for certain mastheads in certain quarters a fair amount of volatility and that was certainly the case that The Journal.

Tech advertising was down to a certain degree, finance also. On the other hand in the WSJ Magazine, we had a record issue in September. So it is not as though advertisers have abandoned print as a sector and print is a very powerful platform. It is that there is a lot of content out there, frankly a significant amount of that content is less meritorious and more meretricious.

The only thing I would add, Craig, is that advertising is pretty much week by week and what we are seeing though is that when we look at October, there is some tempering of this rate of decline that we saw in the first quarter. Now whether that continues for the rest of the quarter, it is difficult to say but certainly in The Wall Street Journal and at News Australia and at News UK, we are seeing some tempering of the decline. So visibility is limited but at least we are seeing things improve a little bit.

Brian Han, Morningstar.

Just one question. You have had a $500 million buyback program in place for a while now and yet you have only bought back a fraction of that to date. Just wondering how the Board thinks about all this especially during times when the stock price is depressed?

Well, we do have a $500 million provision. We have bought back a modest amount of stock but clearly when we think in terms of capital allocation, it is a broad-based strategy which includes internal investment, it includes returns to investors and we have also a modest dividend in place. And but it has to be based on an understanding of the long-term value of the Company and that is what guides all of our decisions and the Board's decisions about the buying back of stock. Thus far, we have bought back $71 million but that will be -- any further moves will be in the context of that broader strategy.

(Operator Instructions). Peter Stamoulis, Evans and Partners.

Hi, good morning. I was hoping you could provide some color around free cash flow operations for the business. Obviously they are $300 million for the quarter and what the expectations are going forward? And I suppose can we track EBITDA and what we can we expect around conversion of free cash flow? Thank you.

Free cash flow, obviously we reported negative for this quarter. As I mentioned, it is mainly driven by the fact that we had a payment to make for settling the News America Marketing litigation which that was $250 million. We had accrued for that last year and now we paid it out this quarter. We also had slightly higher working capital this quarter, some of it was due to the acquisitions of iProperty and obviously we had lower EBITDA. So all of those factors contributed to that.

You shouldn't take the first quarter as being indicative for the rest of the year. We are very focused on generating healthy positive free cash flow and I would say mainly it is all timing things this quarter. So without giving a specific number though, I think we are striving to make sure that we are very healthy for the remainder of the year.

At this time we have no questions in the queue but I would like to remind everyone again. (Operator Instructions). Craig Huber, Huber Research Partners.

I'd be curious to hear what the margins were like at move.com versus a year ago, the profits there?

We don't give out specific margin information as you know, Craig. We have started giving out obviously revenue information based on your last request. I would say that margins are growing and if you exclude stock-based compensation, EBITDA was higher than we had before and it is ramping up is what I would say. And so we are not giving a specific number but we are on track to be very meaningfully profitable for the next quarter onwards.

Brian Han, Morningstar.

Thanks, gentlemen. Just one more. In your other division, I appreciate, Robert, that you want to continue to canvas new businesses to invest in but the $180 million cost in the other division still seems quite substantial. Do you think there is any room to reduce that cost base?

We are continuing to strive to reduce the -- as you call the other, which is principally our corporate and overhead costs and it has come down a lot since we started showing our results two or three years ago. So we have been constantly bringing that down and we would expect to see some improvement on that as we go forward. And UK newspaper matters which are included in that are obviously coming down as we reported.

Entcho Raykovski, Deutsche Bank.

Just a follow-up from me around the new agreement with HBO which you mentioned that Foxtel has entered into. Can you give us any more indication of the terms of that agreement and the sort of uplift in costs which it resulted in and if it was a significant -- appreciate you might not want to give us the exact numbers but how significant that uplift kind of thing?

Your instinct is correct. We are not going to give you the accent numbers. But look, I think the key word at Foxtel is focused. The rights you are talking about are exclusive to subscription TV. As you know, we have taken the decision to close down Presto. Frankly we thought that was a distraction from the core brand and core proposition which has by far the best programs in Australia as I'm sure you well know from your personal experience.

Eric Katz, Wells Fargo.

So you mentioned looking through the balance of the year several segments talking about improvements particularly in EBITDA. I was wondering if you can give a little bit more color on that because it sounds overall that you expect improvements but I don't know if that means for instance the news EBITDA would be higher or growth rates would be better. Any particular quarter or back half of the year that you would point out in any particular segment?

I will start and then Bedi will no doubt complement my comments. But in digital real estate as Bedi has indicated, we expect momentum as the year unfolds with new products and new pricing and it will be strongly EBITDA positive. That is certainly a growing business. At HarperCollins, you need only to look at the bestseller list at the moment to get a sense of the impact of our titles. And we are very pleased with the focus on books like The Magnolia Story, like Sully and no doubt like Megyn Kelly's Settle for More that will have broad impact on society and a positive impact on our accounts. And we think that Fox News as we get into the spring selling season in Australia for sports given the record audiences of last year and the buzz around both Rugby League and Aussie Rules next year that that will be efficacious also.

Thank you, Eric. Thank you all for participating. Have a great day and we will talk to you soon.

Once again, this does conclude today's conference call. Thank you all for your participation.