News Corp (NWS) 2017 Q4 法說會逐字稿

Good day, and welcome to the News Corp Fourth 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'd like to turn the conference over to Mr. Mike Florin, Senior Vice President and Head of Investor Relations.

Please go ahead.

Thank you very much, Kevin.

Hello, everyone, and welcome to News Corp's Fiscal Fourth Quarter 2017 Earnings Call.

We issued our earnings press release about an hour ago, and now it's posted on our website at newscorp.com.

On the call, today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer.

We'll open with some prepared remarks, and then we'll 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 Corp'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'll pass it over to Robert Thomson for some opening comments.

Thank you, Mike.

Fiscal 2017 was an important year for News Corp as we posted tangible improvement in profitability powered by the fast-growing Digital Real Estate Services segment.

And we monetized premium content while continuing our commitment to increase operating efficiencies.

Since our reincarnation, we have been assertively digital and have led the global debate on the value of content by word and by deed at a time of profound change in our markets and in society.

That strategy continues to pay off as evidenced by our full year operating results and by the broadening debate for which News Corp has been a catalyst.

We are more than sum of our parts.

Our acquisitions in digital development have changed the composition of the company but enhanced the personality and principles that have defined us since the conception of the original News Corporation.

Revenues were relatively stable this year at over $8.1 billion despite the lost free print advertising headwinds and an extra week in the prior year.

But importantly, total segment EBITDA improved to $885 million compared to $684 million in the prior year, which included litigation settlement charges and gains.

Even absent those settlements and other items, adjusted total segment EBITDA expanded 5%.

For the quarter, we took significant impairments, as we recognized the challenges facing print and oriented the company towards the future.

Susan will provide you with further details.

In the fourth quarter, excluding the impact of the Zillow settlement, digital real estate continued to deliver on its potential not only as a strong source of growth but also in its rapidly expanding contribution to overall adjusted EBITDA.

At both REA and Move, we are pleased to see increased traffic, improved engagement and continuing revenue growth, particularly at realtor.com, where Move is making positive contributions to segment EBITDA.

From a lagging #3 player in the U.S. market, realtor.com has become the most engaged with audiences and the most important source of leads for realtors.

We are still far from satisfied with our progress, as we firmly believe that the U.S. digital property market is still in an early phase of its evolution and expect many more years of strong audience and revenue growth.

In December, realtor rolled out Advantage, a state-of-the-art listing agent product, capturing real-time feedback about potential leads and providing more-targeted ad prominence for properties.

The company also unveiled new technological advances with its use of image recognition and augmented reality to highlight listing details on smartphones via its Sign Snap and Street Peek products.

We are very conscious of the key role of realtors and do not seek to disintermediate them as is clearly the aspiration of some companies in the sector.

Just this week, realtor.com was pleased to enter an agreement with the Real Estate Board of New York to provide a direct syndicated feed of listings from more than 600 brokerage form -- firms in New York City, further expanding our presence in that important market.

REA continues to outperform the competition in Australia.

In June, achieving a record market share of 74% against domain and 7.8x higher time spent on the site.

REA is also enhancing engagement through new products as well as through the creation of compelling content relevant to buyers, sellers and agents.

During the year, we divested REA's European operations, renewing our focus on core markets in Australia and East Asia.

And we recently expanded into the complementary mortgage business with the acquisition of Smartline.

That acquisition along with a strategic partnership with NAB allows REA to tap into a $400 billion a year home loan market.

Also in fiscal 2017, News Corp's standing as the world's largest digital real estate business was bolstered through the merger of Housing.com and PropTiger.com, creating India's most comprehensive digital real estate platform.

That market is at an early stage of its development.

So we see an important role in ensuring that all families in India have access to accurate listings and insightful information when making such a crucial investment.

Some of the highlights excluding the impact of the extra week last year were: The Wall Street Journal saw strong digital growth, ending with nearly 1.3 million digital subscribers, representing 56% of the journal's total paid subscribers, up almost 70% in the past 2 years.

In fact at Dow Jones, we saw 10% circulation revenue growth in the fourth quarter, the largest in it has experienced since fiscal 2011.

Meanwhile, the teams streamlined print costs and reinvested in digital through the implementation of our WSJ 2020 strategy.

In total, digital accounted for 55% of Dow Jones' full year revenues.

Our professional information business has gained in strength with risk and compliance delivering a strong performance and a healthy sales pipeline.

For the year, risk and compliance revenues rose over 20% with close to 30% growth year-on-year in Q4, and we expect even higher growth in fiscal '18.

At the New York Post, digital ad revenue more than offset declines in print advertising for 2 straight fiscal years.

The Post has also had success in monetizing mobile with 41% of digital ad revenue coming from mobile in fiscal 2017.

We are sharing lessons about mobile successes and techniques around the entire company with far greater rapidity and alacrity.

While print advertising remains challenged across the newspaper industry, our emerging digital advertising platform, News IQ, will help us meet the needs of advertisers through precise and permissioned customer data from our monthly unique U.S. audience of over 110 million people.

We strongly believe that for advertisers, our ability to deliver premium content in a prestige environment will set us apart from the polluted platforms and commodified content.

We will have more details for you about the formal launch of News IQ in coming months.

On the other side of the globe, we saw particular success at The Australian, where readership virgined to nearly 0.5 million a day as of May, resulting in higher revenues and EBITDA.

The blossoming of The Australian reflects the immense value of excellent journalism and the importance of strong editorial leadership.

Meanwhile, news.com.au is the #1 news brand in Australia according to Nielsen.

And taste.com.au is Australia's foremost food site.

Overall, News Corp Australia remains the country's largest print and digital publisher and, including REA, reaches more than 16.1 million Australians each month.

In the U.K., The Times was the only national newspaper to show print circulation growth in the fourth quarter.

In fact, subscriptions to those Times and The Sunday Times reached an all-time high of nearly 0.5 million as of June 30.

And on the digital front, The Times and The Sunday Times are hosting over 200,000 digital-only subscribers representing 45% of its paid subscriber base and growth of 10% for the quarter versus the prior year.

Digitally, The Sun is fast closing the gap with The Mail in the U.K., more than doubling our global monthly unique visitors in the past year to reach a record 85 million in June.

The integration of Wireless Group, which connected The Sun sports devotees with its flagship station, talkSPORT, is proceeding, and the complementarity between the platforms is already clear.

This year, talkSPORT won the radio rights for the English Football League, making it the biggest holder of exclusive English football rights among U.K. broadcasters.

And we'll also deploy Wireless Group's expertise to improve the quality of our audio products around the company.

News America Marketing stabilized its business this year, thanks to the impressive performance of its in-store products.

There is no doubt, retailers are under pressure from digital competition.

And providing an enhanced in-store experience is an imperative.

Meanwhile, Checkout 51 comfortably surpassed its goal of reaching 10 million users during this year.

At year-end, the company boasted a valuable digital membership base of over 14 million strong and growing.

That is triple the number of members at acquisition in July 2015.

Book Publishing has flourished, as HarperCollins showed its understanding of the American heartland, underscored by best-selling titles such as The Magnolia Story by Chip and Joanna Gaines and J.D Vance's Hillbilly Elegy.

We also saw digital audio sales increase by 47% year-over-year and expanded our foreign language footprint, an important driver for long-term growth, as we seek to exploit our bestsellers across languages and borders.

The rise of audiobooks is a particularly notable trend highlighted by the success of Mark Manson's The Subtle Art of Not Giving a (Expletive), which has audio sales of over 470,000 and print of over 490,000, showing the power of savvy, self-help books and of the audio genre.

Returning to Australia.

Fox Sports Australia secured its market-leading position through the extension of A-League soccer rights and successfully launched the FOX LEAGUE channel, its dedicated Rugby league offering.

Foxtel has undergone a major brand refresh, which has coincided with the rollout of Foxtel Now, a streaming service with premium content and multiple price points.

Foxtel will complement that with the launch of a dedicated, low-cost IP box in the coming months, while the improved iQ3 state-of-the-art set-top box is showing encouraging results.

In the fourth quarter, total subscribers at Foxtel including IP improved slightly from the third quarter.

And we saw an improvement in cable satellite churn.

One other area I would like to mention in this review of fiscal 2017 is the global impact of our principled stand on intellectual property and the responsibility of the digital duopoly.

It is crucial that algorithms are not used to discriminate against quality journalism, and that societies have an informed debate about potential algorithmic abuse.

As a result of our efforts, we have begun working with Facebook and Google on a subscription mechanic, one which could help bring more readers to our mastheads and fundamentally change the content ecosystem.

In conclusion, reflecting on the quarter and the year, we are more confident than ever in the power of content and connectivity.

Whether it's the news of the day, the match of the week, the book of the year or the home of a lifetime, we are dedicated to informing and inspiring our readers and our partners.

And in an age of digital opacity, we are committed to making markets more transparent and more lucrative for our advertisers and allies.

Our newer businesses have brought much innovation and energy to the company.

And our ability to drive growth is patent and potent.

Even so, we are not complacent.

We will continuously drive our digital businesses and build our brands.

As custodians of the company with the proudest of histories, we know that the past is a platform for the future.

For these reasons and more, we're looking forward to the coming year with much confidence in the prospects for shareholders and for our partners.

And with that, I'll pass it to our CFO, Susan Panuccio.

Thank you, Robert.

Before I review the financial results, I wanted to highlight a few themes from this past year and the quarter.

News Corp's expansion into digital real estate is poised to reshape our long-term growth.

We posted very strong operating results this quarter at both REA and at Move.

In this quarter, the segment accounted for 40% of total segment EBITDA even while investing in developing markets.

And as a point of reference, our revenue in this segment has nearly tripled since separation and is approaching $1 billion annually.

We think there is a good long-term tailwind to the segment and see further revenue opportunity beyond the core property search.

We are making progress transitioning News and Information Services to digital.

We have seen increased evidence that our quality newspapers, the Wall Street Journal, The Times of London and The Australian have a clear digital path.

All 3 now have digital paid subscribers that are approaching or are, in the case of The Wall Street Journal, beyond 50% of total subscribers.

And they're showing solid growth in paid volumes and improving circulation revenues.

We are continuing to right size the cost base by removing legacy costs at News and Information Services.

However, I believe this is more we can do as I mentioned last quarter, which I'll discuss shortly.

With that, I would like to now discuss our financial results.

For the full year fiscal 2017, total revenues were $8.1 billion, a 2% decline compared to the prior year.

You will recall that the prior year had a 53rd week, which positively impacted fiscal 2016 revenues by $112 million.

Reported total segment EBITDA for the year was $885 million compared to $684 million in the prior year.

As a reminder, the prior year included a one-time charge of $280 million for the settlement at News America Marketing and the one-time gain of $122 million related to the Zillow settlement.

Adjusted EBITDA for the year, which excludes the settlement, the impact of currency, the legal costs related to the U.K. newspaper matters as well as acquisitions and divestments, rose 5%.

During the full year, we had significant non-recurring items impacting earnings per share.

These included pretax noncash impairment charges of $785 million, principally related to the fixed asset write-down at The Australian and the U.K. publishing businesses.

In addition, equity earnings of affiliates included a pretax write-down of $227 million to reduce our carrying value of Foxtel.

These were offset in part by a pretax gain of $107 million at REA from the sale of their European businesses and an improvement in the full year operating results.

As a result of these items, earnings per share from continuing operations were negative $1.27 compared to $0.28 in the prior year.

Again, as a reminder, earnings per share in the prior year benefited from a lower tax expense due in large part the release of U.S. tax asset valuation allowances associated with the divestment of Amplify.

Adjusted earnings per share from continuing operations were $0.36 versus $0.40 in the prior year.

And now for the quarterly financial detail.

We reported fiscal 2017 fourth quarter total revenues of $2.1 billion, down approximately 7% versus the prior year.

Again, prior year revenues included $112 million impact from the 53rd week.

Reported total segment EBITDA was $215 million compared to $361 million in the prior year, which included $122 million gain related to the Zillow settlement and the benefit of the extra week.

Excluding the Zillow settlement gain, last year's EBITDA would have been $239 million.

For the quarter, earnings per share from continuing operations were negative $0.74 compared to $0.16 in the prior year, with the prior year benefiting from the Zillow settlement gain.

Results this quarter include a noncash impairment charge of $464 million primarily related to the write-down of fixed assets of the U.K. newspaper group.

Taking these into account, adjusted earnings per share from continuing operations were $0.11 versus $0.10 in the prior year.

Turning now to the individual operating segments.

In News and Information Services, revenues for the quarter declined 10% compared to the prior year to $1.3 billion.

Over half of the revenue shortfall, this quarter of $77 million was related to the 53rd week in the prior year.

Within the segment revenues, advertising declined around 12% or down 11% in local currency.

The 53rd week impacted advertising by $33 million, excluding the 53rd week and currency impact, advertising fell 6%.

Circulation and subscription revenues decreased 9% or 6% in local currency.

The 53rd week contributed $39 million and accounted for the vast majority of decline this quarter.

Excluding the 53rd week and currency impact, circulation revenues rose 1%.

News and Information Services' reported segment EBITDA this quarter was $103 million, down 36% versus the prior period.

The decline was primarily driven by lower print advertising revenues, a timing shift at News America Marketing between Q3 and Q4 of this year, which I highlighted last quarter, and the impact of the 53rd week.

I will now look at the performance for the quarter across our key operating divisions and excluding the 53rd week.

At Dow Jones, total advertising revenue declined 14% versus the prior year period, fairly similar to the third quarter rate but better than the first half rate.

Digital accounted for approximately 37% of Dow Jones advertising revenues this quarter.

We again saw strong paid volume growth at the Wall Street Journal where total subscriber volume across all formats reached 2.3 million, a 12% year-over-year increase driven by higher digital-only subscriptions, which rose 34% versus the prior year.

Year-over-year circulation revenue growth at Dow Jones accelerated to 10%, up from mid-single digits last quarter, driven by volume gains and higher subscription pricing at The Wall Street Journal.

Importantly, the growth rate this quarter was the highest level achieved since fiscal 2011.

In July, The Wall Street Journal increased subscription prices to new customers by $2 to $5 per month depending on the bundle and also increased cover prices by $1 for both the Monday to Friday and the weekend edition.

Professional information business revenues were flat in the fourth quarter but grew modestly excluding foreign currency, as the year-over-year growth at risk and compliance accelerated to around 30%.

Importantly, the pipelines for new business at the professional information business is encouraging, giving us increased confidence that growth can be sustained into fiscal 2018.

On cost initiatives, Dow Jones realized about $60 million of cost savings in fiscal 2017 related to The Wall Street Journal 2020 initiative and is on track to achieve at least $100 million in underlying cost savings on an annualized basis by the end of fiscal 2018.

Cost reductions are across operations, advertising and the newsroom, which is being streamlined to be digital and mobile-first.

At News Australia, advertising revenues for the quarter declined 1% or 2% in local currency helped by the acquisition of ARM.

Excluding that and the sale of The Sunday Times in Perth, advertising declined approximately 10% in local currency, similar to the prior quarter.

Circulation revenues at News Australia increased 1% or were flat in local currency as the acquisition of ARM, cover price increases and higher-paid digital subscribers were offset by print volume declines and the sale of The Sunday Times.

We are making progress with digital subscriptions in Australia as well.

Robert mentioned the turnaround at The Australian partly due to the success of its digital subscription offering, which now has over 95,000 subscribers.

Across the News Australia masthead, we now have approximately 360,000 paid subscribers including the ARM properties, over 30% higher from the prior year.

We are continuing our assessment of the cost structure at News Australia.

While we achieved approximately $40 million of cost savings in fiscal 2017, it is clear that more work needs to be done particularly given our reliance on print in that market.

We expect ongoing cost reductions in fiscal 2018 while continuing to drive our digital transition.

Additionally, with the integration of ARM, we continue to look at our broader regional community newspapers to ensure the optimal operational and cost structure exists.

At News U.K., advertising revenue trends are similar to last quarter as the results were likely impacted by the general election and the Euro championships last year.

Circulation revenues at News U.K. were down 14% or modestly year-over-year in local currency, primarily due to the lower print volume and no newsstand price increase at The Sun this year as compared to the prior year, partially offset by growth at The Times.

Trends at The Times remained positive with print volumes up low single digits this quarter.

As Robert mentioned, digital subscribers at The Times and The Sunday Times is up over 10% this quarter versus the last year to 201,000.

At The Sun, the average monthly unique users reached 81 million in the fourth quarter, more than doubling versus the prior year and hitting a record of 85 million in June, as we continue to build audience to drive and improve monetization.

Finally, at News America Marketing, revenues were down 8%, partially related to the shift in timing of in-store products, as mentioned last quarter, and 2 fewer inserts versus the prior year.

Turning to the Book Publishing segment.

Revenues for the quarter decreased 6% to $407 million, mostly due to the 53rd-week negative impact from foreign currency fluctuations and declines in the children's division, which faced a difficult prior year comparative.

Segment EBITDA decreased 22% to $39 million due to lower revenues, higher compensation expense and write-off related to a few new releases this year.

Titles to highlight this quarter include Michael Crichton's Dragon Teeth as well as carryover sales from J. D. Vance's Hillbilly Elegy and Sarah Young's Jesus Always.

Total digital revenues for the quarter were 20% of consumer revenues compared to 19% in the prior year due to strength in digital audio.

In Digital Real Estate Services, total segment revenues increased $22 million or 10% to $251 million.

And adjusted revenues increased 16%, which excludes the impact from divestment of REA's European business and Move's TigerLead as well as currency impacts and acquisitions.

Total reported segment EBITDA was $87 million versus $175 million last year with last year reflecting the gain from the settlement of Zillow.

Excluding the Zillow settlement, acquisitions, divestments and currency movements, adjusted segment EBITDA growth was 67%.

REA Group revenue grew 7% due to improved product mix including higher penetration for [Premier All] and higher yield.

The growth was partially offset by a $10 million or 8% decline in revenue resulting from the divestment of the European businesses.

Similar to last quarter, REA will report results that present Europe as discontinued operations.

So you will see a larger-than-usual variance this quarter between our reported revenue growth than in the past.

Their call will commence shortly after the conclusion of this call.

REA recently acquired a majority stake in Smartline, one of the leading mortgage brokers in Australia, and entered into a strategic partnership with the National Australia Bank.

Part of REA's strategy is to integrate property and finance search to better capture value for lead volume.

Move revenues rose approximately 10% to $108 million versus the prior year, again driven by a very strong performance from connection suppliers, which is benefiting from higher lead volume and improved pricing optimization and higher non-listing Media revenues.

TigerLead, which was divested in November, contributed $4 million in the prior year, and the 53rd revenue contribution was $6 million.

Excluding those items, revenue growth would have been approximately 23%.

We also grew customers and yields while also posting accelerated lead volume.

As expected, realtor contributed to segment EBITDA this quarter and for the full year.

And we expect to build on that momentum in fiscal 2018.

Average monthly unique user growth at realtor.com remains strong up 9% year-over-year to 58 million in the quarter.

In Cable Network Programming, revenues decreased $7 million or 5% compared to the prior year quarter due to the $10 million impact from the 53rd week in the prior year and lower subscriber revenues, mostly offset by the addition of the Australian News channel, the operator of Australia's Sky News networks, and favorable foreign currency fluctuations.

Segment EBITDA in the quarter rose 4% to $24 million driven by lower programming costs.

With respect to earnings from affiliates, equity losses were $19 million this quarter compared to equity income of $5 million last year.

Our equity loss pickup this quarter included an $11 million negative impact related to a change in the fair value of

Foxtel's investment in the Ten Network, which has moved into voluntary administration and a further $3 million loss related to Foxtel's Presto wind-down.

Both numbers reflect our 50% share.

Foxtel revenues for the quarter declined 3% to $600 million.

EBITDA decreased 9% to $150 million and was down 10% in local currency due to the decrease in revenue and higher programming costs, principally related to the new AFL contract.

Regarding its operating metrics, Foxtel ended the quarter with 2.8 million total subscribers, which was lower than the prior year primarily due to the shutdown of Presto.

In the fourth quarter, Foxtel Play was relaunched as Foxtel Now, which was supported by a new marketing campaign alongside the relaunch of the Foxtel brand.

Including Foxtel Now, total subscribers increased modestly versus the third quarter.

In the coming months, Foxtel plans to launch an IP dedicated box, which will include a tuner for access to free to air along with enhanced guided user interface.

In the fourth quarter, cable and satellite churn improved to 13.3% from 14% last year, the first year-over-year improvement since the second quarter of last year.

Cable and satellite ARPU for the quarter was down approximately 3% to around AUD 86.

And finally, for the full year fiscal 2017, capital expenditures from continuing operations were flat at $256 million.

Heading into the new fiscal year, there are a few points that I would like to note.

At News and Information Services, overall ad trends at this point for our key mastheads remained stable with the fourth quarter, although we had seen a slight improvement at Dow Jones.

The first quarter should benefit from the increased subscription prices at Dow Jones that I mentioned earlier as well as increased cover prices in the U.K. and Australia.

We assume continued print declines into fiscal 2018, that will aggressively seek out cost reductions.

Dow Jones will continue with their 2020 program.

And the Australian business continues to transform its cost base as it reinvests the digital growth.

Fox Sports Australia will face an incremental AUD 30 million to AUD 40 million in higher rights costs mostly related to the new NRL contract.

We expect to offset much of that from operating efficiencies and a higher affiliates' revenue.

On Book Publishing, overall trends remain favorable with digital contribution relatively stable.

The pipeline for the year looks strong with releases from key authors such as Ree Drummond, Daniel Silva, Karin Slaughter, Chip and Joanna Gaines, Bernard Cornwell, Victoria Aveyard, Erin Hunter, and Donna Hay.

At Digital Real Estate Services, we continue to expect strong revenue and EBITDA contribution from both REA and Move.

At Move, we are pleased with the progress at realtor.com, particularly the revenue improvement in the second half of fiscal 2017 and want to build on that momentum this year.

We will continue to roll out our Advantage product, our listing agent offering, to the balance of our customers in the first half of the year and remain focused on further site enhancements to drive audience growth.

REA should benefit from higher pricing, continued penetration of listing (inaudible) products and increased revenue from the expansion into mortgage brokering for which the company has provided some guidance.

Given these trends, we expect to see improvement in the first quarter versus the prior year.

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

(Operator Instructions) And we will take our first question from John Janedis with Jefferies.

Can you talk a little bit more about digital service in The Wall Street Journal?

As you had anniversary the new cycle from the election and the price increases kick in, do you expect continued growth?

Or are you seeing a slowdown?

I know it's early.

And with the increased engagement, to what extent are you seeing incremental demand from advertisers?

John, indeed, we are continuing to see strong digital growth.

And I think you need to understand that there are really, for the Wall Street Journal, 2 paths to that growth: one is getting in the initial WSJ.com subscription; and secondly, developing products that allow us to up sell premium customers to premium products, which obviously has far more elasticity and a greater premium profile.

And so that is continuing well.

I think it's fair to say on the digital advertising front that in the last half of the fiscal, we didn't see the growth that we wanted.

I think we have to be candid about that.

There have been some changes made in that department under the leadership of Will Lewis in recent months.

And we are confident that you will see, as you suggest, an improvement in advertising, which is coordinated with -- indeed with the improvement in digital audience.

We'll go to Kane Hannan with Goldman Sachs.

Just on Move performance in the quarter and heading into FY '18, I'm wondering if you could give us a sense of the level of investment in that business into '18?

And then a sense of the EBITDA contribution you made in the fourth quarter, please?

Well, Kane, clearly in the way that Susan and I described with -- in direct comparisons, difficult.

It certainly was the EBITDA positive, as we indicated it would be.

And we were very happy with the progress there.

I think what was particularly reassuring was -- and it should be so for investors, at the beginning of the year, we said, we'd see slow growth in Q1 and Q2.

And we said it would accelerate in Q3 and Q4, and that is indeed what happened.

And we like the momentum that we're -- we've achieved going into the -- this current year.

As Susan mentioned, the underlying revenue growth was 23%.

But look, we're not, for a second, complacent.

We are pushing Ryan and the team very hard at realtor.

Because we believe that they have a tremendous opportunity for growth in what is still an emerging lead market.

we'll go to Entcho Raykovski with Deutsche Bank.

My question for Susan, given that you've been in the role now for a number of months, just interested in your perspective on capital management within the business, and whether you feel that the -- there are further opportunities to deploy that capital to acquire further assets.

Thanks, Entcho.

And in my view it is important to be balanced between reinvestment that shareholder returns.

But we are focused on reinvestment for the long term that will drive shareholder value.

As I've already said in the previous calls, we'll continue to monitor all our options.

And That's effectively what we will be looking at.

We will go next to Alan Gould with Rosenblatt Securities.

Robert, I've got a question for you regarding the comments Jeff Bezo's made at the recent newspaper conference, talking about the strength of the paper business, and if you invested in it, you could grow the businesses.

Is that only for the big national papers?

What can we do to, in a quicker way, stop the newspaper EBITDA from its continual declines?

Well, I think I was with Jeff at that conference, and I agreed with what he said at least about newspapers.

There is no doubt that there is potential for growth really across the spectrum.

Clearly, with a paper like The Australian or The Wall Street Journal or The Times, given the demographic, there is already a strong digital growth.

But actually for our other papers, our other mastheads as well, there is potential, but it is dependent upon broader changes in the content ecosystem, which is why we've been so insistent that the large digital platforms need to take responsibility for content.

They -- it's not just about accounting, it's also about accountability.

So we will continue to push for a subscription mechanic that makes sense for them but certainly makes sense for newspaper masthead's.

And that would frankly benefit us.

It will benefit other players in the industry.

But we have full confidence in what I would regard as the fact that our journalism is superior which of itself allow our papers to charge a premium.

We go next to Tim Nollen with Macquarie.

I wonder, Robert, if you could please comment on the underlying ad market.

I think you did give a mention that it seems to be improving a little bit into the second half of the calendar year here.

But any comments on advertisers' thinking in terms of perhaps putting a little bit more money into what's called a traditional media versus digital media, if it can be stated that way.

Just because we've had a lot of mixed results from a lot of media companies and ad agencies in their Q2 calendar years, I'm just curious what your underlying sentiment is on ad spending, please.

Yes, I think it's fair to say that not only media companies are under pressure, ad agencies are under pressure.

Because there's no doubt, many clients are unhappy with some of the digital company that they keep.

And therefore, we firmly believe that premium products and premium audiences will be important, almost regardless of the medium.

What -- well, what we're certainly seeing across most of our properties is, Wall Street Journal aside as I mentioned earlier, an increase in digital ad growth and the potential, for example, in the U.K. with The Sun where you had a -- an exponential increase in its digital audience.

And now we're improving engagement levels, it is obviously real.

But that shouldn't take away from the potential of some of what is referred to as the traditional print products.

For example, the WSJ magazine spring edition this autumn will have a record amount of advertising in it.

So that of itself shows the importance of print as a platform.

But all -- but it all depends on the quality of content, the reliability of the environment and the level of engagement.

And I think, Kim (sic) [Tim] , just to add something from me as well.

On The Australian newspaper, given the great growth that didn't seem from the subscriber perspective as well.

It's actually seeing print advertising increase year-over-year, which is quite unusual in this particular environment.

But I think notwithstanding that it is still very poor visibility.

And it remains very difficult to predict exactly what those trends will be going forward.

Our next question will come from Brian Han with Morningstar.

Robert or Susan, what percentage of News and Information division revenue is generated from News America Marketing?

And also the $175 million in other divisional losses, can you please shed some light on how much of that is from operating business losses?

And how much of it is from just corporate overheads?

So on the NAM numbers, we don't call out the NAM numbers separately in relation to revenue.

So we haven't given those before in the past.

So with -- we're not going to give those going forward.

In relation to the $175 million in other, that really has the head office costs that shift within those numbers.

So that makes up the bulk of that number.

We'll go next to Craig Huber with Huber Research Partners.

Can you tell us please what your cost-cutting plans are for U.K. papers and Australia?

You give The Wall Street Journal.

What will those 2 numbers be at the end of -- annualized basis, the end of fiscal '18?

Also curious what is move.com's EBITDA in the quarter we just finished?

So just in relation to the costs targets, the only number we've actually given out is a The Wall Street Journal's number, which was $100 million annualized by the end of fiscal 2018.

In relation to the Australian newspapers, we haven't given out the number.

We did say that they delivered AUD 40 million of cost savings in last financial year.

We would expect it to be at least that in the coming year albeit we did also mention we'll be reinvesting for growth.

And across the U.K. newspapers, they also have fairly aggressive costs targets in there, we haven't quantified those numbers publicly.

In relation to the types of activities that they're looking at, they're focusing predominantly on, I guess, is essential-type costs with non-content related costs.

When we continue to believe that we have to invest in our content in order to drive our products going forward.

So we really are looking at any other sort of back-office costs or centralized costs that we can have a look at going forward.

And Craig, this is Robert here.

On Move or realtor.com, as we refer to it, there is absolutely no doubt it was EBITDA positive when you look at the appropriate comparables.

It is on a very positive track.

What we're particularly emphasizing at this stage given the phase of the growth of the market is revenue and audience growth.

And we are confident you'll see both this year.

We'll go to Raymond Tong with Evans & Partners.

Just wondering whether you can talk about the strategic priorities for Foxtel in the medium term.

Is it still sort of driving the subscriber growth over short-term profitability?

Raymond, Robert here.

We're pleased with the launch of Foxtel Now.

The programming lineup, in particular game of Thrones, has obviously made a difference.

The business itself is changing in its character and will continue to change in a way that we think is positive.

There's no doubt that, that lineup of rights that we have at Foxtel and Fox Sports in the realm of sports rights whether it be Rugby League or Aussie rules or A-League soccer is impressive.

And we understand that, that is a market that is changing and that the -- will be quite possibly more competition for rights in the future.

But that was why we took the strategic decision to buy those rights long ahead.

Because that -- the upheaval in the market was obvious at that time.

And we have full confidence in the future of both Foxtel and Fox Sports.

At this time, there are no further questions.

I'll turn the conference back to Mr. Mike Florin for any additional or closing comments.

Great.

Thank you, Kevin.

Thank you all for participating today.

Have a great day.

Ladies and gentlemen, that does conclude today's conference.

We thank you for your presentation.

You may now disconnect.