News Corp (NWS) 2018 Q4 法說會逐字稿

Good day, and welcome to the News Corp 4Q FY 2018 Conference Call.

Today's call is being recorded.

(Operator Instructions)

At this time, I'd like to turn today's conference call over to Mike Florin, Senior Vice President and Head of Investor Relations.

Please go ahead, sir.

Thank you very much, Carrie.

Hello, everyone, and welcome to News Corp's Fiscal Fourth Quarter 2018 Earnings Call.

We issued our earnings press release about an hour ago, and it's now 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 measurement, 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 ours earnings release.

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

Thanks, Mike.

These are certainly uncertain times for some media companies, including social media companies.

So it is quite significant that during fiscal 2018, News Corp grew revenues and total segment EBITDA and was an influential voice of reason and reform in a sector that is evolving but remains in need of profound change.

When the new News Corp was launched 5 years ago, we promised to be relentlessly digital and global and that we would remain faithful to the principles and the values inherited from the founding company.

It was also crucial for our shareholders that we become more than the sum of our parts.

And while we ardently believe there is much toil ahead, we are confident that closer integration between and among our companies is helping us realize that potential.

Our news mastheads and digital property sites continue to work closely to drive valuable audience and traffic.

And while our higher-quality journalism is crucial to the burgeoning of Storyful and to the exponential expansion of Mansion Global.

These are not just contrived concepts but measurable outcomes, and our full year numbers provide hard evidence of the company's successful evolution.

This past year, as a result of the transformative combination of Foxtel and Fox Sports Australia and muscular performances of Book Publishing, Digital Real Estate Services, the new News Corp crossed the $1 billion threshold in profitability.

And for the fourth quarter, both revenues and EBITDA were distinctly higher compared to the previous year.

Meanwhile, constructive conversations are underway with Google, YouTube and Facebook to recognize providence, contract (technical difficulty), piracy and share the permission data that was generated by our journalism and our creative work.

We sense that these companies are conscious that the editorial ecosystem is changing and that IP is a priority, while piracy and pedantry are anathema to the growth of a healthy and harmonious community.

We are watching closely as Amazon, a dominant horizontal platform, expands into more verticals, bringing the possibility of algorithmic abuse.

We are reassured that the dominant algorithms are under increasingly close scrutiny internationally.

Thankfully, the credulous have been succeeded by the sedulous.

One important development reflected in the most recent quarter is the combination of Foxtel and Fox Sports Australia.

We now control the combined company.

And with the enhanced structure and a new leadership team in place, the combined business, obviously, increases the share of subscription revenues.

At the time of our separation, almost half of News Corp revenue came from advertising.

Today, our revenues from advertising for the year accounted for less than 1/3 of the whole.

In fact, this quarter, subscription and other nonadvertising revenues now exceeded 70%, giving News Corp a healthy foundation for growth in an age in which subscription is increasingly important for revenues and for a deeper relationship with customers.

The new Foxtel will also work much more closely with our mastheads, which we expect to become an important marketing platform for subscriber growth.

I was in Australia in recent days, and it's patent that there is an renewed vigor, creativity and customer consciousness at the company.

We have traditionally suffered from a paucity of summer sports offerings, but the securing of rights from Cricket Australia for 6 years and the launch of a dedicated cricket channel mean that we will have a year-round offering for the first time and believe that seasonal customer churn will decline.

Our mastheads will certainly play a crucial role in complementing our broadcast platform in the pursuit of cricket victories.

For Foxtel, we are confident that the current phase of investment in rights and technology should drive increased subscriptions and value for our investors.

The new team is acutely aware of the importance of improving the user interface and customer service and the need to innovate, such as the introduction of an over-the-top streaming service later this year to give more Australians easier access to premium sports.

We indicated our plans for an IPO when we announced the combining of Foxtel and Fox Sports Australia and that continues to be our goal.

In News and Information Services, we were able to offset print advertising declines through our expanding digital revenues.

We have seen notable success in subscriber growth at Dow Jones, which crossed the 3 million subscriber mark in June, with digital accounting for more than 60% of the Wall Street Journal subscribers.

Also, at The Australian and The Times and The Sunday Times, digital subscribers are now more than half of the total subscriber base.

Notably, at The Times and Sunday Times, we surpassed 500,000 total subscribers in June.

Meanwhile, according to ComScore, in May, Sun Online topped MailOnline in the U.K. in unique visitors.

It is no coincidence that such growth in readership comes alongside independent research, highlighting the trustworthiness of the Times of London and the Wall Street Journal.

In an era in which veracity is a particular virtue and hyperbole is no longer hip, we are proud to have the most-trusted news brands around the world.

These brands offer increasingly important venues for advertisers who want their reputation burnished, not tarnished.

It is, thus, unsurprising that The Sun and The Times grew their full year ad revenues for the first time in 7 years.

Wireless Group saw another strong set of audience figures this quarter, with the listening hours at our (inaudible) stations up 14% versus the prior year based on the latest industry data, outpacing the overall market.

And revenues in the most recent quarter rose significantly, thanks in part to England serendipitous success at the World Cup but also because of the marketing prowess of our U.K. and digital platforms.

At Dow Jones, fiscal year circulation revenues grew 10%, largely due to digital subscriber growth at the Wall Street Journal.

Meanwhile, there was a solid 7% increase in full year revenues at the Professional Information Business, which is the largest year-on-year jump in their annual revenues since the creation of the new News.

There was a particularly pleasing performance in Risk and Compliance as companies recognized the importance of Dow Jones' insight and intelligence in areas crucial to the health of the business.

The Dow Jones' team is also working closely with the team at Storyful, whose unique understanding of social media around the world is crucial for companies seeking to avoid reputational roadkill.

The New York Post is gathering momentum in a tough [tabloidient] market and is a standup performer in greater New York, where its positive influence is matched by a positive audience response.

The Post digital network, including pagesix.com, had 101 million unique visitors in June, up 51% on the previous year.

Clearly, that growth is far superior to that of the New York Times and the struggling Daily News.

The Wall Street Journal also added more digital subscribers and had significantly higher circulation revenue growth this quarter than the New York Times.

In Australia, digital subscriber growth continue to pace, while our team addressed the cost base to stabilize and strengthen the business.

The results of that vigilance were reflected in a positive segment EBITDA contribution for the year and a platform for future growth.

Cost savings and potential partnerships with traditional rivals around the world, such as Fairfax in Australia and a plethora of publishers in the U.K., have become possible as the media landscape has changed dramatically.

But we will never enter into agreements that undermine the essential character of commercial purpose and social role of their publications.

As for Book Publishing, our team at HarperCollins, through their expert discovery of great authors and empathetic curating of manuscripts and clever marketing campaigns, ensured strong results in the fourth quarter and for the full year.

That success was reflected in the popularity of its frontlist titles and in the effective leveraging of its substantial backlist.

One benefit of that backlist was the $28 million in revenues coming from the sublicensing deals involving J.R.R.

Tolkien's works.

As Gandalf observed, perhaps with Chief Executives and investors foremost in mind, "All we have to decide is what to do with the time that is given us."

HarperCollins also saw continued growth in its digital revenues, thanks to the rising popularity of downloadable audio books.

And we had substantial success in financial '18 with the strong sales of the best-selling The Subtle Art Of Not Giving A Expletive, and from Joanne Gaines' Magnolia Table, which, according to BookScan, is the fastest-selling U.S. cookbook in history.

In children's books, we had particular success with The Hate U Give, which you'll see in the theaters later this year as a film from 20th Century Fox.

Now we come to our fastest-growing segment, Digital Real Estate Services, which has been a particular priority since the formation of the new News.

Overall, Digital Real Estate Services segment revenues rose 22% and segment EBITDA rose 24% for the year.

We have become the most global digital property company, and we certainly still have the potential for rapid growth without alienating realtors by becoming hot to trot house-flippers.

At Move, home of realtor.com, core real estate revenues for fiscal '18 grew 20%, with total revenues up a healthy 15% for the year.

realtor.com continued to show strong audience gains and maintained its lead -- tangible lead with 1.5x higher engagement compared to its nearest competitor.

We are continuously working to improve returns for realtors and enhance experience for customers.

It is worth noting that realtor.com has nearly doubled its revenues since the acquisition by News Corp less than 4 years ago.

We believe that our largest investment since the split, which has been both lucrative and transforming, is undervalued by Wall Street, given realtor.com's significant revenue expansion, impressive increase in audience and the value of its peers in the digital real estate sector.

We remain committed to users of this site, who are making an important investment for their families, and to realtors, whom we have no intention of usurping, unlike certain other companies.

Meanwhile, in Australia, REA continued to be an industry leader in both audience and innovation, expanding into adjacencies like the mortgage broker business, which has quickly gained traction with 350,000 self-completed financial profiles as of June 30.

At the close of this fiscal year, 5 years since our rebirth as a company, we are proud to have leaders and creators so strong, passionate and purposeful, and numbers so self-evidently robust and a future that holds much promise for growth in audience, revenue and profit.

Behind the impressive results, are the people of News Corp, who serve our readers, members audiences and advertisers, all have contributed to our success this year and over the past 5 years, and have laid the foundations for a particularly prosperous and fecund future for our investors.

With that, I will turn the microphone over to Susan Panuccio.

Thank you, Robert.

Before I review the financial results, I wanted to highlight 5 themes from this past year-end and the quarter where we've made significant progress.

We've taken steps to stabilize the News and Information Services segment, and this year, showed tangible improvement through a combination of cost initiatives and digital investments.

We are seeing strong digital paid subscriber growth across many of our key properties where digital subscribers now exceed print.

Revenues were stable for the quarter and the fiscal year, and the segment EBITDA reflected moderation in declines, a material improvement from recent trends.

In addition, we continue to focus on potential industry solutions, which include our recently announced printing agreement for Fairfax in Australia.

We have focused on strengthening our Digital Real Estate Services platform this year, which we have done by expanding into relevant adjacencies, investing in new businesses and products and growing our core audiences.

This segment was our biggest EBITDA contributor, and annual revenues now exceed well over $1 billion and have more than tripled since separation.

The performance at our Book Publishing segment this year underscores the value of premium content and global scale, posting record revenues since the company separated.

We completed the Foxtel and Fox Sports Australia combination, which gives operational control to News Corp, reshapes our revenue base and provides more flexibility for News Corp moving forward.

And we continue to actively look at our portfolio.

This year, we sold several noncore investments, including our stake in SEEK Asia and magazines in Australian and continue to evaluate our options with respect to our regional and community newspapers in (inaudible).

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

For the full year fiscal 2018, total revenues were over $9 billion, an 11% increase compared to the prior year.

This includes the consolidation of Foxtel in the fourth quarter.

On an adjusted basis, which excludes the impact from acquisitions and divestments and currency fluctuations, as disclosed in the press release, revenues rose 2%.

Reported total segment EBITDA for the year was nearly $1.1 billion compared to $885 million in the prior year, a 21% increase over the prior year period.

Adjusted EBITDA for the year, which excludes the Foxtel impact and other items as disclosed in the press release, rose 6%.

During the full year, we had several non-reoccurring items impacting EPS.

Those items included pretax noncash write-downs of $1.2 billion, primarily related to Foxtel/Fox Sports Australia and News America Marketing, which we reported in the third quarter, and a $237 million charge, reflecting certain onetime adjustments as a consequence of the U.S. Tax Act.

Finally, the fourth quarter included a loss of $337 million related to the Foxtel transaction, primarily resulting from the write-off of the Fox Sports Australia channel distribution agreement and the result of the transaction, which is reflected under other net.

Reported EPS from continuing operations were negative $2.60 compared to negative $1.27 in the prior year.

Adjusted EPS from continuing operations were $0.44 versus $0.36 in the prior year.

And now to the quarterly financial details.

We reported fiscal 2018 fourth quarter total revenues of $2.7 billion, up 29% versus the prior year.

On an adjusted basis, which excludes the impact of the Foxtel consolidation and the other items disclosed in our release, revenues rose 5%.

Reported total segment EBITDA was $312 million compared to $215 million in the prior year, adjusted segment EBITDA, which excludes the Foxtel impact, rose 13%.

For the quarter, reported EPS were negative $0.64 compared to negative $0.74 a year ago.

Adjusted EPS from continuing operations were $0.08 versus $0.11 in the prior year.

Turning now to the individual operation segments.

In News and Information Services, revenues for the quarter were $1.3 billion and rose 1% versus the prior year.

Within segment revenues, advertising revenues were down 2% and circulation and subscription revenues increased 5%, with foreign currency benefiting advertising by 1% and circulation and subscription revenues by 2%.

Within the segment, reported revenues at Dow Jones rose 3%, News U.K. rose 4%, News Australia declined 3% and News America Marketing fell 2%.

News and Information Services segment EBITDA this quarter was $94 million, down 9% versus the prior year, which is a notable improvement on the declines we experienced in the third quarter.

There are a few highlights, which I would like to mention from the segment.

We again saw strong digital subscriber growth across our news businesses.

At Dow Jones, circulation revenues grew 9% and at the Wall Street Journal they grew 10%, benefiting from strong growth in the Wall Street Journal digital-only subscribers, which were up 25% year-over-year and up 7% versus our fiscal third quarter.

In addition, we again saw healthy year-over-year digital subscription growth at The Times and The Sunday Times, up 27%; and also at News Australia, up 14%.

The Professional Information Business, or PIB, at Dow Jones posted 6% revenue growth, led again by Risk and Compliance, which grew 35% in the quarter versus the prior year and, as expected, exceeded $100 million in total sales this year.

We remain very encouraged by the pipeline and trajectory of growth.

Just to frame the size, our PIB products in fiscal 2018 generated 27% of Dow Jones revenues.

Fourth quarter advertising trends across our news portfolio improved modestly from the fiscal third quarter rate.

The U.K. was again a solid performer, with advertising up 6% versus the prior year or flat in local currency, led by digital advertising growth and higher year-on-year performances of both The Sun and The Times.

News Australia advertising declined 6% versus the prior year in reported and local currency, showing further moderation of print advertising declines.

Dow Jones advertising was down 10%, also reflecting an improvement in print declines at the Wall Street Journal.

The closure of the Wall Street Journal international print editions in Q2 impacted Dow Jones advertising revenue by $5 million, accounting for nearly half of the advertising decline in this quarter.

We remain very focused on cost initiatives, particularly at News Australia.

While much work is still to be done, pleasingly, News Australia showed some stability and profitability, helped by ongoing cost initiatives, which have exceeded our initial expectations, and also higher digital revenues.

As we mentioned last quarter, we have been working with industry participants about potentially shaping or sharing printing and distribution facilities to drive further operating efficiencies across our key markets.

News Corp Australia entered into a commercial printing arrangement with Fairfax Media to provide printing services in New South Wales and Queensland.

We expect to realize approximately AUD 10 million of cost savings on an annualized basis from this agreement and continue to explore other opportunities to increase efficiencies.

Finally, at News America Marketing, revenues were relatively stable as weakness in inset products were mostly offset by mid-single digit growth in in-store advertising products.

Profit contribution improved due to effective cost management.

Turning to our Book Publishing segment.

We posted a very solid quarter, driven by strong frontlist and backlist performances, combined with the contribution from the previously announced sublicensing agreement of Tolkien's Lord of the Rings trilogy with Amazon.

Revenues for the quarter increased approximately 20% to $490 million, and segment EBITDA increased 82% to $71 million.

The Tolkien agreement, which highlights the value of intellectual property, impacted revenues by $28 million or 7%.

This quarter also benefited from several successfully new releases, including Magnolia Table by Joanna Gaines, I'll Be Gone in the Dark by Michelle McNamara and Girl, Wash Your Face by Rachel Hollis, as well as the continued strength of backlist titles, such as The Subtle Art by Mark Manson.

Overall, the backlist contributed approximately 49% of consumer revenues in the quarter, down 54% from last year.

While revenues this quarter were driven by the success of the frontlist, backlist revenues still grew at a healthy rate on an absolute basis.

Total digital revenues for the quarter grew 12%, the highest growth in recent periods due to the strength of the downloadable audiobooks and represented 20% of consumer revenues, in line with the prior year.

In the Digital Real Estate Services segment, revenues increased 19% to $299 million.

Reported segment EBITDA was up 14% to $99 million.

REA Group revenues grew 27% due to very strong residential debt-to-revenue growth in Australia, including higher penetration for premier (inaudible) and increased yield, the integration of the Smartline acquisition and benefit from currency.

Revenue growth was partially offset by lower listing volumes.

As always, please refer to REA's earnings release and their conference call, which will commence shortly after this call for additional details.

Move revenues rose 11% to $120 million versus the prior year, driven by continued success of its Connections for Buyers product.

Connections for Buyers benefited from higher customer flow and yield as well as increased lead volume, albeit at a slower pace than the prior year.

(inaudible) real estate revenues, which includes listing and lead-based products, grew 17%.

As I mentioned last quarter, we have been reducing our non-listing advertising loads as part of the site redesign, initially within select markets to improve engagement and lead volume with encouraging nearly sign.

Average monthly unique users at realtor.com were approximately 63 million for the quarter, rising 9% versus the prior year.

As expected, Move's expensive were higher this quarter due to planned brand marketing and traffic-acquisition costs to drive revenue growth and partly to increase our traction in New York City.

We are also rebranding our core suite of professional services and tools ahead of a commercial launch in the coming months.

Turning to Subscription Video Services, which includes the newly combined Foxtel and Fox Sports Australia businesses and Sky News.

You will see that we have attached to the press release the pro forma statements for the past [2] years.

Revenues were $610 million versus $140 million a year ago.

On a pro forma basis, reflecting the Foxtel transaction, last year's revenues were $643 million.

Segment EBITDA in the quarter was $97 million versus $24 million in the prior year.

As I alluded to last quarter, reported results for the segment include onetime transaction cost of $12 million.

On a pro forma basis, segment EBITDA declined to $109 million from $178 million in the prior year, primarily due to the revenue impact I just noted; higher programming costs, which reflect increased NRL and SSI rights cost; as well as $10 million of transition costs.

On operating metrics, Foxtel's total closing subscribes were over 2.8 million as of June 30, up nearly 2% versus the prior year and prior quarter, driven by Foxtel Now subscriptions, offset by lower cable and satellite subscribers and the termination of the wind down of the T-Box and Optus subscribers.

In the fourth quarter, cable and satellite residential churn was 12.5%, down from the 13.3%, and ARPU was down 3% to AUD 80 per month.

In the segment, subscription revenues totaled $523 million for the quarter, accounting for over 85% of segment revenues.

Subscription revenues were down 4% year-on-year on a pro forma basis, resulting from the subscriber mix.

Advertising revenues totaled $67 million for the quarter, accounting for over 10% of segment revenues.

Advertising was down 12% year-on-year on a pro forma basis, primarily due to lower advertising at the Foxtel network channels.

As I mentioned last quarter, there will be some short-term reinvestment required at Foxtel to drive volume and improve the subscriber trajectory.

I will briefly describe what these are.

Firstly, beginning in the second quarter of fiscal 2019, we will start to incur the costs associated with the recently acquired Cricket Australia rights.

We also face a full year of NRL costs related to the step-up from the new rights contract, which will likely be in the region of AUD 20 million or USD 15 million.

Secondly, we anticipate the launch of an IP-only sports offering in the second quarter and are also actively considering other nonsports IP-only products targeted at specific demographics.

Thirdly, the incremental depreciation and amortization as a consequence of the consolidation was approximately $75 million in the quarter.

Finally, our full year results include approximately $60 million of CapEx related to the consolidation of Foxtel in the fourth quarter.

For fiscal 2018, Foxtel CapEx was approximately $285 million.

At this point, we expect Foxtel's fiscal 2019 CapEx to increase by at least $50 million to reflect expenditures related to higher penetration of next-generation set-top boxes, including 4K upgrade and some additional project spend relating to improving its IP platform.

It is important to note that a significant amount of Foxtel's CapEx is subscriber related, which includes set-top boxes and capitalized installation costs and will be driven by sales volume.

As Robert mentioned, our goal continues to be driving towards an IPO and believe that improving subscription volumes will be key to our long-term value creation.

Over-the-top will be a key growth initiative, and our goal will be to maintain the broadcast subscriber base and manage churn effectively.

Finally, I would like to mention a few other themes as we enter into fiscal 2019.

At News and Information Services, while print advertising trends continue downwards, they have been relatively stable, but visibility remains limited.

As a consequence, we are very focused on driving higher penetration of digital paid subscriptions, rolling out new digital advertising solutions and delivering ongoing cost initiatives, particularly in Australia and at News UK.

The segment achieved some stability this year, and we remain focused on continued improvements.

At Subscription Video Services, we expect reinvestments this year, as I mentioned, focusing on launching new OTT products, 4K, the next generation of the IQ box and managing our valuable broadcast space.

In Book Publishing, overall, we are very pleased with the performance of HarperCollins.

Underlying trends seem relatively stable, and we remain focused on expanding our foreign language penetration.

We will cycle some challenging comparisons in the coming year, but we are excited about our new releases, including the recent release of Daniel Silva's The Other Woman and a November release of Homebody by Joanna Gaines.

At Digital Real Estate Services, we expect continued revenue growth of both REA and Move and for the segment to continue to play an important role in our revenue and EBITDA mix.

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

(Operator Instructions) Our first question will come from Kane Hannan with Goldman Sachs.

Just on the Foxtel asset that you mentioned, could you just comment on what you see as, I suppose, the key hurdle this business would need to achieve on before you'd be willing to go ahead with such a transaction?

Is that just the subscriber growth that you were mentioning at the end then?

Kane, it's Robert here.

I've just returned from Australia, and it's fair to say that with Patrick Delany, you have a new team, a new mood, a new momentum.

And that will be crucial for the success in subscriptions that are, generally speaking, not just for an IPO but for the health of the business generally, we'll all be using as a benchmark.

But there is absolutely no doubt that Foxtel has the best portfolio programs and sports rights, and the latter being enhanced by the cricket rights.

And there's no doubt as well that the Australian audience prepared to pay for programming is far greater than previously presumed.

So it's fair to say both the circumstances on the ground and the context of the Australian market give us confidence in the future of Foxtel.

I think, Kane, I'd probably just add that we obviously have done a lot of investment in the business as it stands anyway, and we've got the cricket rights as well and other sports contracts that we now have locked up for a significant period of time.

And it is important that we monetize those and start to push the subscriber growth, and that will be by a combination of broadcast and these new OTT propositions that we launched.

So we are focused on both of those.

And we're focused also on cost reductions out there as well.

So there's a major transformation going on across that business.

And as Robert alluded to, the management team down there sort of hit the ground running and doing a great job so far.

Our next question will be from Eric Pan with JPMorgan.

So with the change in the media consolidation rules in Australia, which sort of allow your competitor Fairfax to come together with 9. Would you say you're a seller or acquirer of assets in that market?

I would say we're a focused operator.

Susan just mentioned Foxtel and Fox Sports and that combination.

We want to make more than the sum of the parts.

Their consolidation has given us control of the company in tandem with our partner Telstra, and that will be our absolute focus.

Our next question will be from Brian Han with Morningstar.

It's a very quick question.

The revenue increase from sublicensing Lord of the Rings, is that revenue almost 100% margin?

And should we be baking those earnings in for the foreseeable future?

No, that's not 100% margin.

So I think we -- the $28 million was the revenue increase, and we netted about $21 million.

What you should be baking into the future is that we have an excellent team at HarperCollins, led by Brian Murray.

And that team has become very deft at monetizing one of the most healthy backlists available.

Next question comes from Raymond Tong with Evans & Partners.

Just a couple of questions.

Firstly, just on the Move revenue growth has moderated a bit in the quarter.

Just wondering, can you talk to some of the key areas of investments and how you sort of are thinking in terms of revenue growth going forward?

And just on the Subscription Video Services, clearly, there's a bit of investment coming up that you've outlined.

And just wondering, how you think about the EBITDA trajectory into the medium-term for that business.

Raymond, look, we're very optimistic about the potential for continued growth of core revenues at realtor.

As Susan mentioned, what you define as core is -- rose 17% year-on-year.

But actually, the main product within that Connection for Buyers was up 23%.

So that's still a healthy growth rate.

We're not complacent.

But on a macro level, there has been a slight slowing down in existing home sales in the U.S., but that's not a given trend given the health of the U.K. -- U.S. economy.

And you would expect over coming quarters, though I'm not a soothsayer, that if the housing market picks up, you'll see a pickup also in core realtor revenues.

And Raymond, I think just in relation to your second question on Foxtel and our expectations around EBITDA for the coming year, we, obviously, don't give out guidance in relation to that.

But I think it would be fair to say we've talked about some reinvestment activities that we're planning to do there.

And we, obviously, have got the cricket rights sort of coming with the costs associated with that.

We, clearly, are going to be launching some new products and platforms that will come out into marketplace, which will start to grow subscribers and push that through.

So we're expecting, going forward, that there will be a balance of, obviously, investments with growth coming through, and then we would be expecting in latter years to pick up.

Our next question will be from Craig Huber from Huber Research Partners.

I've got 2 quick questions, please.

What was the circulation revenue percent change with and without currency by region?

And then I also want to ask about the cost for News and Information.

Looked like it was up about 2% year-over-year.

Assume it was closer to flat if you adjust for currency, but is there much room here in your guys' minds or plan here to take out another large chunk of costs going forward in that segment?

Maybe, Craig, I might handle those, if I will.

So in relation to Dow Jones, circulation revenues were up 9% both in local currency as well.

News U.K. circulation revenues were down 1%, and in News Australia, circulation revenues were flat.

So that's in relation to that question.

The second question, you're right.

If you adjust for M&A and other matters then the costs were flat across News and Information Services.

And I think it's fair to say we've probably got businesses at different growth rates in different parts of their cycles.

So Dow Jones we'll probably see as more of an investment going forward.

They have got revenue growth.

Obviously, they had revenue growth this year.

We're expecting to continue to invest in marketing and acquisition costs as they continue to push those digital subscribers.

I think it would be fair to say that News Australia, we're balancing cost reinvestments with costs out.

And we do believe that there's more work that can be done down there, and the team is very focused on that.

And at News U.K., there is indeed still opportunities around costs out there.

We'd expect those probably to be lesser than the ones that we would see in Australia as they continue to reinvest in their digital products over there.

So I think it's a mixed bag across the group, but we certainly see more opportunities in front of us.

Just to supplement Susan, Craig.

As she mentioned, Dow Jones subscription revenue was up 9%.

It was actually 10% at the Wall Street Journal.

And what you have there is a tremendous base for the potential upselling of premium specialist content at premium prices.

So our subscription base while growing faster than the nearest competitor is also a base with a different composition, and one with real price elasticity.

(Operator Instructions) Our next question will be from Andy Levy with Macquarie Securities (sic) [Macquarie Research].

Just one from me on the Foxtel IPO.

I was wondering if you could just talk to the motivation waiting to IPO, Foxtel down the track, what News Corp would be looking to do with its holding in terms of would it reduce it through that process.

Or would you be looking at your partner exiting through that process?

Look, we can't go into details about the future per se.

All I would articulate is our absolute confidence in our ability to grow revenues, to grow the subscriber base and to grow profitability at the combined company over coming years.

That means, extra value for the company, but in particular, it will mean extra value for our investors.

At this time, I'm showing no further questions in the queue.

I'd like to turn it back over to Mike Florin.

Great.

Well, thank you, Carrie.

And thank you all for participating today.

Have a great day, and we'll talk to you soon.

Take care.

Thank you.

Ladies and gentlemen, this concludes today's teleconference.

You may now disconnect.