News Corp (NWSA) 2014 Q4 法說會逐字稿

Good day and welcome to the News Corp fourth quarter earnings call. Today's conference is being recorded.

(Operator Instructions)

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

Thank you very much, Blake. Hello, everyone, and welcome to News Corp's fiscal fourth quarter 2014 earnings call. We issued our earnings press release about an hour ago, and it is now posted on our website at www.newscorp.com. On the call today are Robert Thomson, Chief Executive; and Bedi Singh, Chief Financial Officer. We'll open with some prepared remarks, and then we will be happy to take some 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 for the 12 months ended June 30, 2014 identifies risks and uncertainties that could cause actual results to differ, and these statements are qualified by the cautionary statements contained in such filings. Additionally this call will include certain non-GAAP financial measurements. The definition of and a reconciliation of such measures can be found in our earnings release and our 10K filing.

Finally, please note that certain financial measures used on this call such as segment EBITDA, adjusted segment EBITDA, and adjusted EPS are expressed on a Non-GAAP basis. The GAAP to non-GAAP reconciliation of these non-GAAP measures is included in our earnings release. With that I'll pass it over to Robert Thomson for some opening comments.

Thank you, Mike. We have now completed one full fiscal year as the new News Corp, and it's fair to say that the sensibility of a start up has characterized our pursuit of digital and global expansion for our distinctive portfolio of companies, a portfolio that is diverse in both revenue mix and geographic spread.

We will be building on the Company's proud tradition and the progress attained over the past year, during which we made disciplined strategic acquisitions, targeted divestments, and tactical investment in technological and international initiatives. The Company is at the very center of the global debate over the value of content and the creation of platform permutations for the delivery of that content. Throughout the year, we have also been disciplined on costs and aim to deliver value to our customers, advertisers, and investors.

One year into our existence, the real measure of our progress lies in the answer to this question. Are we better off, better positioned today than when the journey began? For News Corp the answer is a resounding yes. We said on investor day that we would become more digital and global, and we are.

We have increased market share in a number of our businesses, most notably REA and HarperCollins. We said that we would be acutely and astutely cost conscious, and we have been and will continue to be. Our costs this year are down, and we will assiduously search for additional savings. We said that technology is a canvas for our content, and that has never been more true than it is today. We said that the percentage of our revenue that comes from non advertising sources will increase significantly over five years, and one year in, we can see that prediction being borne out.

In fact, today, non advertising sources account for more than 50% of our revenues, and that has provided us added support in a sometimes challenging advertising marketplace and an uneven economic recovery. For the year, revenues were $8.6 billion, a 4% decrease while EBITDA improved 12% to $770 million. Most important, our free cash flow improved by more than $290 million to $365 million.

Let me be more specific about our acquisitions, cost consciousness, investments, digital and global initiatives and the challenges we faced. Our acquisitions and we are in an early phase of our expansion have echoed our determination to grow digitally and globally and show that we will not be rushing naively to overpay for underachieving companies. Just last week we completed the acquisition of Harlequin, which will give HarperCollins a jumpstart on international digital expansion and a platform for future growth.

We believe this was a prudent and disciplined move that will benefit HarperCollins and News Corp. This very day our HarperCollins' executives are in Canada working constructively with the talented Harlequin team. Our first acquisition was Storyful, the world's leading social media news agency, which has already launched FB Newswire with Facebook and last week celebrated 1 billion views of its videos on YouTube. Now we are focusing on monetizing that traffic and using Storyful's unique authentication expertise for the benefit of our businesses and of our clients.

We also continue to recast our portfolio consistent with our cost-conscious focus, and so we sold the Dow Jones local media group and the Community Newspapers group to focus on core branded properties in the US. And we sold the live events business at HarperCollins earlier this year, which we viewed as not core to our mission. We are resizing the cost space and using information services with savings that are made more realizable by the extra focus and increased cooperation in the new News.

This has been achieved through a combination of operational and back office initiatives including a wide range of contract negotiations and health and pension reforms among many other steps. Bedi will elaborate on these efforts shortly. We also expect to achieve natural efficiencies across our businesses as we migrate to digital with consolidation of service and software and the repurposing of platforms. This trend is evident at HarperCollins, which is well down the path of digital migration and which will certainly benefit from Harlequin's success and skills online.

We have made smart targeted investments including, partnerships with real estate sites in China and Hong Kong through REA, the leading online real estate services company in Australia. The deals give us a connection with the still maturing market in China and will bring Chinese investors closer to property opportunities in Australia and elsewhere.

And speaking of REA, I'd like to point out their robust numbers and the ongoing benefit from secular tailwinds as agents are increasingly aware of the high ROI that REA can offer. REA recently announced the purchase of a minority stake in iProperty for $100 million. iProperty has burgeoning online property, advertising operations in Southeast Asia, and just reported revenue growth of over 40%. We are excited about potential global opportunities in this sector.

Also this year, we announced plans to add $50 million to our investment in Seek Asia, a growing employment listings business, as we expand our presence in Southeast Asia, a region which we believe holds tremendous growth potential. Last year, we launched BallBall, which offers exclusive soccer highlights from the five major European leagues to audiences in Indonesia, Japan, and Vietnam through desktop, laptop, mobile, and tablet platforms.

And also on the investment front, this past year we successfully launched the global programmatic advertising exchange which has helped us cut out third party networks and allowed us to work directly with advertisers who want to reach our premium audiences; earning our data and protecting the privacy of our customers are imperatives. While still early, we are certainly pleased with the pricing improvement and extra revenue that we've generated.

We remain firm believers in the power of print, but we are committed to using technology to make our content more accessible, mobile, and profitable. That is why we have been driving digital throughout News Corp. In the UK, The Sun launched Sun Plus, the digital version of the country's most popular newspaper, and we're focused on enhancing engagement with the imminent launch of a new tablet app.

Our News UK publications have integrated innovative sports videos clips and apps and expanded into online luxury shopping, catering to the needs of an extremely desirable demographic. In particular, we've been pleased with The Times which grew in volume, revenue, pricing and market share thanks to great journalism and sustained technological [toil]. A newspaper launched in 1785 has definitely made a successful transition into the digital age.

In Australia, we are pleased to show very strong digital growth through our paid digital subscriber base over the past year, now exceeding 200,000. And The Australian which has just celebrated its 50th birthday released a new iPad app. Today, the Australian has more paying customers than at any time in its history and a larger audience than ever with more than 3 million readers each month.

We are planning to relaunch our paid digital mastheads in Australia with a simplified subscription offering. We'll also begin integrating these digital publications with a unique form of interactive advertising that will take advantage of the strengths of different formats. No matter how esteemed the publication, our teams are working continuously to improve the experience for our readers and for our advertisers.

Also in Australia, Foxtel announced triple play bundling and launched Presto, its new online movie service, which is in its infancy. Foxtel is focused on monitoring market conditions to respond to competitors and to opportunities and on driving penetration to increase the value of this great asset.

Here in the US, Dow Jones released key enhancements to Factiva, and the Wall Street Journal bolstered its digital leadership through new video programming and the launch of WSJD along with verticals focused on economics, marketing, and Washington policy. Also in the US, I am particularly pleased to note that in store advertising has shown impressive growth in this American market. There is as much discussion about owning the point of sale, but the point of purchase is crucial, and that is the strength of our in-store team.

Amplifier launched its new digital curriculum in English language arts for grades six to eight, and we are excited about the quality of the offering as we engage with school districts around the country. In publishing, ebook sales at HarperCollins this quarter were 23% higher versus the prior year thanks in part to the success of the Divergent trilogy, which underscored the power of book blockbusters in a digital environment. And HarperCollins was at the forefront of the industry in forming partnerships with online ebook subscription services, Oyster and Scribd.

Of course, any candid review of the year must include the challenges we have faced including advertising headwinds in Australia and elsewhere, the ability to make confident forecasts is undermined by that erratic patterns that have characterized trading particularly in print which is seriously undervalued as a platform by advertisers. Print is a concentrated, intense reading experience with unique affinity in our digitally distracted age.

Our professional information business at Dow Jones is still in the process of being recast following a period of difficulty about which we've been quite frank. Clients are responding favorably to the new product, pitch and pricing, but the development work is not yet done. The rate of decline has certainly eased, but we expect some softness for a quarter or two. In balancing the opportunities and challenges, we believe there is more upside in the opportunity than downside in the challenge. Our core message is untarnished and unvarnished.

We promised that we would work with restless energy on behalf of investors who understandably expect our creativity is balanced by fiscal discipline and that the expansion does not just mean an expanding cost base. Despite headwinds, we still experienced significant growth in free cash flow, and we showed stable profit margins, demonstrating the strength and diversity of our asset base. We remain focused on driving topline performance and generating sustained and sustainable revenue returns for our shareholders.

In summary, one year into our existence, News Corp is unified by our pursuit of premium content and the building of iconic brands, brands that are potent platforms in a digital age. We understand the deep affinity between those brands and our audiences. That affinity is the nexus of revenue and of profitability. This is a Company where calculated risks are taken, instincts followed and objectives pursued with passion, purpose, and principle.

We are, as our executive chairman Rupert Murdoch said on Investor Day, an eclectic and unconventional Company in an age where such attributes hold great value. We remain fully aware of the challenges we face whether the vagaries of the macro economic cycles in the countries where we work, the ebb and flow of advertising and readership rates, and the mass media mass migration which continues to unfold. Those challenges will be met with a focus on costs and on digital and global growth.

We are intent upon fashioning an ever more rewarding future for our audiences, our employees, and our investors. Now I will turn it over to Bedi to discuss the financials in detail.

Thanks, Robert, and good afternoon, everyone. As Robert mentioned, we made strong progress in our first year to further digitize our asset portfolio and improve our market share across several business units. We prudently reduced our cost base and held consolidated adjusted EBITDA margins relatively stable despite continuing advertising headwinds. For the full year, we reported revenues of $8.6 billion, a 4% decrease versus the prior year.

Excluding the impact of acquisitions, divestitures, and foreign currency fluctuations, adjusted revenues were 1% lower than the prior year. We reported full-year total segment EBITDA of $770 million, which was a 12% increase versus the prior year. Reported results included costs related to the UK Newspaper Matters net of indemnification, which was $72 million for the year.

Excluding all acquisitions and divestitures, costs related to the UK Newspaper Matters and foreign currency fluctuations, adjusted total segment EBITDA was down 2% versus the prior year and would have been flat excluding the dual rent costs of the London office. Fiscal 2014 reported EPS was $0.41 versus $0.81 in the prior year, which included a significant non-taxable gain in other net related to the CMH acquisition and the sale of our ownership interest in Sky Network Television as well as impairment charges net of taxes.

Excluding the impact of all these and other items, our adjusted EPS were $0.46 compared to $0.62 in the prior year. Free cash flow available to News Corp was $365 million, an improvement of $293 million compared to last year. For the fourth quarter, the Company reported total revenues of $2.2 billion, a 3% decrease versus the prior year period, and our adjusted revenue declined by 1%.

Fiscal fourth-quarter total reported segment EBITDA was $127 million, a 2% decrease versus the prior year period. Reported results included $16 million related to the UK Newspaper Matters, net of indemnification. Our adjusted total segment EBITDA this quarter declined by 7% but was slightly up, excluding $13 million of dual rent and other facility costs mainly related to our London office relocation. With that as a brief overview, let's look at our fourth quarter performance for our key segments.

As you can see, we have now added a new reporting segment, digital education, to present, amplify separately, which was previously included in the other segment. In news and information services, revenues for the quarter declined $104 million or 6% versus the prior year period. Adjusted segment revenues were down by 5%. Within segment revenues, advertising declined around 9% this quarter, similar to what we had seen in the third quarter.

Looking at advertising performance across our key publishing units, at News Corp Australia, advertising revenue declined around 16% or 11% in constant currency for the quarter, a slight improvement from the prior quarter. The biggest improvement came from national advertising where we also saw some improvement albeit a smaller magnitude in retail. At News UK, advertising revenue declined around 1% or 11% in local currency fairly similar to last quarter.

Softness was driven by retail combined with a decline in broadband and mobile ad spending versus the prior year partially offset by the late Easter this year. And at the Wall Street Journal, advertising declined low double digits this quarter impacted by much tougher year-ago comps and weakness in a few categories most notably telecom and finance. Total circulation and subscription revenues for the quarter declined around 4%, driven primarily by continued softness in professional information business and Dow Jones, which had a negative $17 million impact to revenues this quarter.

This was an improvement, however, versus the third quarter as we continue to make progress to stabilize trends and retain existing Factiva customers. Total newspaper circulation revenues showed modest growth in local currency, mostly driven by prior quarter subscription and color pricing increases at a number of our mastheads. It's worth highlighting, as Robert mentioned, that this quarter we saw volume and revenue growth in local currency at The Times in the UK and at The Australian, further tangible evidence that our quality newspapers are benefiting from the migration to digital.

At News America Marketing, sales improved 4% versus the prior year period led by double digit growth and in-store advertising and modest growth from the FFI business. Segment EBITDA decreased $80 million in the quarter or 38% as compared to the prior year period, and adjusted segment EBITDA was down 34%. Included in segment EBITDA was $11 million related to the relocation of our London operations for dual rent and other facility costs, and we also incurred much higher expenses at News UK related to specific marketing initiatives as I had discussed last quarter. We also had higher severance costs in the UK this quarter.

In cable network programming revenue, declined $10 million or 7% compared to the prior year quarter due to adverse foreign currency fluctuations. Subscription revenues which accounted for over 80% of Fox Sports revenues were flat but grew 6% in local currency benefiting from higher digital platform subscribers and higher CPI linked cable and satellite affiliate fees. Advertising revenues declined modestly and were fairly consistent with the prior quarter impacted by a soft marketplace combined with the absence of the Lions Tour rugby tournament in the year-ago quarter.

Segment EBITDA in the quarter was flat compared to the prior year. Adjusting the impact of foreign currency fluctuations, adjusted revenues were down 2% and adjusted segment EBITDA improved by 11%. In digital real estate services, revenues increased $22 million or 24% compared to the same quarter last year reflecting higher pricing and uptake of premium products. Segment EBITDA increased $16 million or 35% compared to the corresponding prior year quarter due to the increased revenue.

If you exclude adverse foreign currency impacts, adjusted revenue and adjusted segment EBITDA grew 33% and 41% respectively. Turning to the book publishing segment, revenues improved 10% and segment EBITDA grew 50% versus the prior year quarter. We continue to see very strong performance from the Divergent series by Veronica Roth, which clearly got a boost from the theatrical release in March and has begun to spread overseas.

We sold globally an additional 3.6 million net units of the series this quarter and a total of over 19 million net units for the year. Total ebook net sales for the quarter grew 23% mainly due to the Divergent series and accounted for 22% of Harper Collins' consumer revenue up from 19% in the prior year period.

We have, as Robert mentioned, completed the acquisition of Harlequin Enterprises from Torstar Corporation for CAD455 million. We expect as we've indicated before, the deal to be accretive to earnings in FY15 and to improve our free cash flow. We are just now beginning the integration work with Harlequin, and we will update you on our progress over the course of the year. On an annualized basis, we expect Harlequin will contribute revenues in the $320 million to $340 million range excluding the joint ventures but haven't yet factored any material synergies in the current fiscal year.

We do expect to incur nonrecurring transaction costs of approximately $5 million in FY15. At our digital education segment, revenues decreased $7 million compared to the prior year quarter, primarily due to lower project based consulting revenues and Amplify's legacy assessment business, as I'd also noted on our last call. Segment EBITDA was negative $53 million and was fairly consistent with the prior year.

For the full year, digital education EBITDA loss was $193 million. Amplify remains on track to roll out the English language arts digital curriculum targeted to grades six through eight for this coming fall. We expect to have approximately 10,000 students for our digital ELA curriculum and 20,000 for our digital math and science supplemental offerings signed up this year.

In addition, Amplify will have around 250,000 students signed up for the Fall to use its digital hybrid K through 5 program known as core knowledge language arts, which is viewed as a bridge to our broader digital products offering. And finally, our next generation tablets designed in collaboration with Intel are also on track for a Fall rollout with plans to deploy to at least 26,000 students. In our other segment, which primarily includes corporate overhead and our strategy and creative group, excluding the UK Newspaper Matter costs, segment EBITDA was negative $49 million, compared to negative $76 million allocated in the prior year.

With respect to our earnings from affiliates, Foxtel ended the year with around 2.6 million total subscribers, up 6% versus the prior year driven by higher digital platform subscribers. Cable and satellite shares improved to 12.5%, compared to 14.2% in the prior year. Broadcast ARPU rose 1% for the full year impacted by a February price increase. Foxtel revenues for the year were up 2% on a constant currency basis and EBITDA was up 8% similarly.

Turning now to cash flow. News Corp's cash flow from operations improved to $854 million compared to $501 million in the prior year and free cash flow available to News Corp improved to $365 million compared to $72 million in the prior year. Just a few additional items to note, CapEx for FY14 finished at $379 million, which was in line with our expectations. And included in that CapEx was around $100 million related to costs for the London office relocation and HarperCollins headquarters within Manhattan.

On our ongoing cost savings initiatives, as I mentioned in past quarters, we have been very focused on reducing the cost base. In the aggregate, we identified over $100 million in annualized cost reductions, most of which were realized in FY14. The majority of savings behind distribution and production including renegotiated paper and new contracts, closing or divestitures of warehouses and printing plants, reduced software technology spend through aggressive procurement efforts, and restructuring of healthcare and pension plans. And we will continue to look at further efficiencies in the coming year.

Let me now discuss a few drivers that we see for FY15. At news and information services, we will be looking to enhance our payroll offerings with planned relaunches across all regions. We will still have the dual facility expenses related to the relocation of the London office in FY15 of around $25 million. While the professional information business at Dow Jones remains challenged, we do expect stabilization over the course of the year.

Advertising remains relatively weak, but our ad sales teams are cautiously optimistic and we hope for improvements. We expect continued strong performance at News America Marketing led by in-store advertising. At the cable network programming costs should be up only modestly given the few additional events this year including the Asian Cup in January and the Cricket World Cup in February/March, and we have no major rights renewals coming up this year. At book publishing given the huge success of Divergent last year, at this point we do expect Harper Collins to face tougher comps particularly in the second half of FY15 before reflecting performance from the Harlequin acquisition.

At digital real estate we expect continued strong performance benefiting from favorable secular trends and high ROI through the agents. At digital education the focus will remain to broaden its curriculum and drive further sales adoption. Given that the curriculum is now in the commercial rollout phase, we will begin capitalizing some of the content development costs. We expect to capitalize $60 million in FY15 related to ELA and that EBITDA would improve by at least this amount. We expect, however, our total cash investment spent at Amplify to be relatively similar in FY15 as it was in FY14. Corporate overhead and creative and strategy group will likely spend similar levels to FY14 in the range of $160 million to $180 million.

Finally, CapEx for FY15 should be around $400 million including the additional $60 million capitalized software costs at Amplify as well as around $70 million in the UK to complete the London office relocation. In summary, FY14 was a very busy year for News Corp as we balanced ongoing operational efficiencies with prudent investments and strategic acquisitions to expand our global footprint and digital offerings.

We remain steadfast on stabilizing top line performance and look forward to updating you on our progress throughout the year. With that, let me turn it back to the operator for our Q&A session.

(Operator Instructions)

John Janedis, Jefferies.

Bedi, now that you've been public for a year can you give us your current views on return of capital given your free cash flow generation last year and then on new segments, the decline in EBITDA at least in the fourth quarter was a bit more than I would have expected. Are those marketing initiatives going a step down in the next quarter or two, and are you starting to run out of levers to pull on the costs front?

Thanks, John. Let me start by addressing the fourth quarter, clearly as we had also mentioned in the third quarter we expected to see additional marketing cost in London, which indeed did come through, and once viewers out there will be beneficial to us in terms of revenue in the quarters to come. The London relocation obviously results in an extra expense in that quarter, and the professional information business at Dow Jones is also soft.

That gives you a sense of the kind of impact those things had in Q4. With respect to your earlier question, I think the way to think about it is we're still very focused on making sure that the business is stabilized, especially in news and information services, and we look for additional investments and smart strategic and disciplined acquisitions clearly with the view to generating long term shareholder value per share which remains kind of our mantra.

[Etchio Rakowski], Deutsche Bank.

My question is around Amplify, and you've obviously provided some guidance there into FY15. Is that contingent on targets being met throughout the year, or are you feeling it's too early in the performance of the business necessarily to be setting targets?

It is Robert here. To be honest it's a little early in the business to be setting targets, but what we're focused on is the development of the curriculum. That's the key part of the investment we've undertaken at Amplify. And we said to you 18 months ago that in 18 months we would have a much clear indication of the trajectory of the business. And I think it's fair to say, now that we are getting a sense of that, and we still hold ourselves to that deadline. As the business unfolds over the next 12 months we will be keeping you updated about sales, about sales patterns and about the substance of the business.

If I could just add to that, clearly ELA was the production effort, and now it's gone to market, but we still have a lot of production effort behind math and science which will continue in 2015 and sales for those products will start at the end of 2015.

It is a significant investment, but it's clearly a significant opportunity.

I'm sorry, just to follow up, in the coming few months do have specific student targets that you do need to reach? Are you prepared to disclose those?

We don't have specific targets. This business as you can understand is evolving, it's in the early stage of the evolution. It is evolving quickly, and as we passed key metrics will pass those metrics on to you.

Justin Diddams, Citi.

A question on the news information services business. Given we enter FY15 with what's potentially continuation of these advertising declines, do think there's scope again in FY15 to cut the same amount of costs out of the cost base? Otherwise we probably need to put in a EBITDA number much lower for this year if you're not able to cut those costs. I just wanted to clarify that it was $100 million spend on the office move In the UK.

In terms of CapEx that we spent in the London building, that was in FY14 it was $75 million of capital expenditure, and we expect somewhere in that region in FY15 as well just to fill out the building completely. People have started moving, but not all the floors are occupied.

Justin on your question about cost and advertising trends, first of all on cost clearly we're -- because of the concentration in the new focus of the new News, we are finding opportunities to consolidate and to cut costs, and that frankly is not going to stop. That's separate from trends in the advertising revenue, which clearly the winds have been buffeting, but what we are seeing are really different circumstances in different regions, and at the moment there are indications that the rate of decline has declined in Australia.

There are green shoots on the [Nullarbor] plain. Part of that is we did great work by our team in Australia. We focused on local advertising, and local advertising revenue trajectory has changed in Australia. The national market is different, but there will be an increasing focus on that as well, and that's a great tribute to Julian Clarke and Peter Turner and our advertising team in Australia.

At Dow Jones and the Wall Street Journal, it clearly was a quarter of decline, but as we look forward a little bit, you'll see that for example WSJ magazine, which didn't exist when News Corp took over Dow Jones, in September it will have two issues, one of them a record amount of revenue, you can count the pages for yourself. Meanwhile in the UK in the last quarter, clearly there was some marketing spend.

Now I know companies like to blame the World Cup for all sort of ailments, but it was clear that if England had progressed beyond the group stage in Brazil that advertising would have picked up, there would have been momentum, but it's also fair to say that the England team failed to exceed low expectations.

Michael Morris, Guggenheim Securities.

With respect to the Wall Street Journal and the value of the content, the fact that I think it must have access to for most business professionals, can you talk a little bit about the pricing power there, how you look at pulling levers on pricing and the risk domestically, and also when you look at that brand outside of the US, where do you think you are in fully leveraging the brands and content, and what could we be looking for there in the future?

I think it's fair to say that we haven't fully leverage the brand, and Will Lewis has been doing a marvelous job since he took the helm. He's looking at not only overseas opportunity, but what more, to your point, can be done to leverage and take advantage of the necessity that many people have to read Wall Street Journal content. But also looking at different platforms for delivery of that content. And over the period since the News Corp acquisition, we've been seeing strong year-after-year growth in circulation revenue, and there's no reason for that not to continue.

Alexia Quadrani, JPMorgan.

When you look at the book publishing business which has clearly been an out performer for some time here and you look at a book like Divergent which is a multiple part. There are several books in the series. How long of a tail does that typically have? I know you mentioned more challenging comps in the back half of your fiscal year. But, for the next couple of quarters can we continue to benefit from the series, or have we already played it through a bit?

It's a little difficult to forecast, neither Bedi nor I are soothsayers. And it is -- it's a blockbuster but for example, there are variables that may have an efficacious impact such as the release of the second movie in the trilogy, which is scheduled for the spring. It's -- we're -- at the moment it's fair to say that were still seeing benefits.

Doug Arthur, Evercore.

Robert, you alluded to stepped up or accelerated rollout of digital content in the news and information group given the success of the Sun Plus. That's not new strategy, but in terms of this marketing spend, as you do similar efforts in Australia, perhaps more stepped up in the US, are we likely to see marketing spend line go up as a result in line with this effort?

I wouldn't draw too many conclusions, long-term conclusions from the last quarter. I think one of the advantages we have as a company now is that we learn from experiences in different places. The executives in London, Sydney and New York are constantly talking about efficient marketing spend, and so that focus is enabling us to generally over the longer term keep the marketing spend to the minimum necessary.

Craig Huber, Huber Research Partners.

My first line of question, please, what was the cash level on your balance sheet at the end of the quarter and also, what is holding you back from buying stock and/or putting in place a quarterly dividend and a follow on. Thank you.

Our cash balance at the end of the quarter and obviously the fiscal year was $3.1 billion. In terms of how we think about deploying the cash, as we've said before we're very focused on making sure that we do smart strategic acquisitions, that we make sure the top line is getting stabilized, we make internal investments in projects such as BallBall. So that's really the front line focus to make sure we build long-term shareholder value at the Company.

Adam Alexander, Goldman Sachs.

Just a question on Dow Jones institutional business; it's obviously been a drag through FY14. You mentioned that you'd seen some stabilization. It just wondering if you could give some color around what's the key area of customer pushback there and how you're going about addressing that?

Just to be frank, the key area of pushback was in fact TiVo, where we had changed the offering in a way that to be honest some of the clients found unacceptable. So what we've done, and we've listened to our clients, we've perfected the product, the pitch and the pricing, and we're starting to see some positive feedback there.

Eric Katz, Wells Fargo.

With regard to the investment in Regroupement in Southeast Asia can you tell us a little more about that asset and if you think you can move the needle in the segment off of really strong growth rates? And then secondly, foreign currency has been a big headwind for you in FY14, but it seems like you'd be lapping some of those comes. Do you feel like you've made a bit of a tailwind now in FY15 as you lap that?

It's hard to predict on foreign currencies. But, yes, I think generally speaking, shouldn't be as unfavorable as we saw in 2014. The iProp -- are you asking about the iProperty acquisitions? Sorry, I didn't get the first part of the question.

Yes.

We've taken a small stake in iProperty. I think we've disclosed it's 17% or 17.5%. It's really REA that's done that, and I think it's part of the stated objective of expanding outside Australia, but near to Australia in a sense, so that you have the ability to monitor what's going on in the region that's close by. We'll have a board seat on that company for that investment, and I think we will help them and encourage them to grow. There may be cross-platform opportunities with other things we're doing in the region such with as with CK Shear or with BallBall which we haven't fully exploited yet.

I think it's fair to say that at the investor day we indicated that we would increase our presence in East Asia and frankly in the US. We're keeping that promise. As Bedi said it's relatively small at this stage investment, but it's a small investment in a fast-growing region.

(Operator Instructions)

Alice Bennett, CBA.

I have a question around Fox Sports, maybe just a bit of a clarification. Did you say that casual local currency revenue was down 2% but subscription up 6%? If that's the case, what drags down? Is it just advertising, or was there something else that drags the total revenue down to that negative territory?

I think the reported numbers were dragged down by foreign currency, but I think local currency we were up.

Is that the adjusted number?

Yes, adjusted, for currency.

There are no further questions in the queue.

Thank you all for participating and we look forward to sharing with you our progress throughout the year. Have a good night.

That does conclude today's conference. We thank you for your participation.