News Corp (NWSA) 2015 Q4 法說會逐字稿

Good day, and welcome to News Corporation's fourth-quarter FY15 earnings conference call.

(Operator Instructions)

Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Michael Florin, Senior Vice President and Head of Investor Relations. Please go ahead, sir.

Thank you very much, operator. Hello, everyone, and welcome to News Corp's fourth quarter of FY15 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 Bedi Singh, 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 Corporation's Form 10-K for the 12 months ended June 30, 2015, 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 10-K filings. 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, and welcome to you all from Sydney. We have completed our first two years as the new News Corp, with a strong finish in the fourth quarter of FY15. Without being particularly Panglossian, I am confident in asserting that the Company is financially stronger and strategically better-positioned than when we started our journey. We have aggressively shifted to digital across our businesses, through smart and disciplined investments, that also expanded our reach globally. Our acquisition of realtor.com signaled a major expansion of our expertise in digital real estate, making us a global leader in a field that we believe has tremendous growth potential in the years ahead.

We have reduced operating costs where appropriate, and we'll continue to be vigilant in that area. We returned capital with the declaration of a dividend, and we have been executing on our repurchase program, and we have rigorously reviewed our asset portfolio. You will see from today's press release that we are very advanced in a strategic review of Amplify, our digital education business. We will update you on our progress, but our goal is to provide value per share for News Corp shareholders, and to ensure our portfolio is a powerful platform for future growth.

First, let me address the financials, on which Bedi will elaborate in a few moments. For the year, revenues were $8.6 billion, a 1% increase, while total segment EBITDA was $852 million, up 11% on the prior year. These results come despite global and financial instability, quite obviously currency headwinds buffeted the business, and in particular, our revenues and EBITDA were affected by 4% and 6% respectively. Even though our Company was not unique in being impacted by these macro trends, we were able to deliver free cash flow available to News Corp of $368 million, and we expect healthy free cash flow going forward. We were optimistic that we would grow segment EBITDA in the fourth quarter, and in fact, reported EBITDA rose by 50% versus the prior year, and over 60% on an adjusted basis.

Let me be more specific about some key themes. The reality is that the media landscape is undergoing profound change. The traditional ways of creating and distributing news and information are changed. We are not treading water in the roiling sea of change. We are increasingly determined to gather high-quality data to ensure that our users have the best possible experience, while our advertisers can be confident that our readers have a connection to our content, that is particularly strong in its intensity and its affinity; both of which are distinctive in an age of digital promiscuity and digital disloyalty.

We are not simply a collection of unique, powerful assets. We are a Company with complementary platforms. And what makes our businesses so complementary is how much they have in common. Namely, the uncommon power of their news and content, and their data, data about customers, businesses, and markets, that is global in scale and precise in its targeting. In the coming year, we will be enhancing our ability to deliver customized offerings to our readers, clients, and advertisers.

Some existing examples indicate the future ahead. realtor.com has experienced industry-leading growth, in part because of the quality of our real estate, news and analysis, which are an important service to anyone in the US contemplating the purchase or the sale of a property. The moment of moving is a particularly opportune time to influence purchasing decisions. News America Marketing is benefiting from the precise demographic data that we are able to gather from realtor.com. Our clients know that we are able to identify when families are moving, and thus, when they'll need a new television, cable contract, or a car for the garage.

Checkout 51, the digital coupon company we acquired last month, provides precious information about broad consumer habits, but also about specific purchases. While social media companies attempt to identify the intention of shoppers, we have detailed data about actual actions. We will get purchase from purchases. News Australia, launched just last week, News Connect powered by Quantium, which will combine News Corp Australia's scale, touching 7.2 million people each day, with a huge database of transaction information to offer customized audiences, based upon specific buying behavior.

On our acquisition strategy, during the first two years, we've had a clear plan to extend our expertise, build and create powerful platforms for our content, and our clients. Our first acquisition as the new News was Storyful, the world's first social media news agency. Since that time, this online video pioneer has partnered with Facebook, Vice, YouTube and many others, to authenticate and to distribute compelling video content that has drawn hundreds of millions of views. We expect to see increased integration of Storyful across our [masthead] as we build out and distribute native content solutions. It is also a powerful marketing tool for brands and businesses.

In early FY15, we acquired Harlequin, which became part of one of the world's preeminent publishing companies, HarperCollins. Harlequin's global expertise has helped HarperCollins extend its international footprint, and provides a platform for growth in many lands, and many languages. The virtue of that capability became clear when we won the global Spanish rights for Harper Lee's second novel, Go Set a Watchman, whose publication in the US was indubitably the book event of the year.

We completed the acquisition of Move, which operates realtor.com. We had forecast that the mastheads of News Corp would be powerful platforms in driving digital traffic to realtor.com, and that has patently been the case. The site rose from being third place to a clear second, and became the fastest-growing in the sector. We expect that realtor.com will become an increasingly important platform and profit center for News Corp. To give you a sense of the scale of this site, we had over 48 million monthly unique visitors in July, each of whom viewed an average of 25 pages.

As we promised at the time of the acquisition, the digital networks of News Corp helped turbocharge traffic, which is gaining market share, and is positioned to be a core pillar of News Corp's future profitability. In fact, we expect to see positive EBITDA this year, and further growth in coming years. We ended July with traffic up 43% versus the prior year, and more than 70% since our acquisition in November 2014. News Corp has also invested thoughtfully in other businesses to extend our reach.

The REA Group, in which we have a 61.6% stake, bought and increased its own stake in the Southeast Asian online property business, iProperty. We made moves in India, acquiring a stake in Elara Technologies, which owns PropTiger.com, a leading digital real estate marketing platform. We also acquired VCCircle, a top digital data, information, training, and conferences network, and BigDecisions.com, which helps Indian consumers make informed financial decisions. These are companies that complement each other and our global businesses.

Some key business highlights. At Dow Jones, the Wall Street Journal is the premier player in financial news. Today we have over 700,000 digital-only subscribers, and we obviously expect that number to rise. Digital is one-third of our paid subscriber base at present. We acknowledge that the Journal is underpriced and we've taken steps to address that, through a combination of new rates and flexible packaging. This quarter, circulation revenues at The Journal grew 7%, an impressive rate of growth in this marketplace. Our ad revenues at The Journal showed strong sequential improvement in the fourth quarter, and early signs for the first quarter of the current year are particularly promising. This trend highlights the increasing importance of our marquee brand, and a desirable demographic, in a cluttered, confusing, and sometimes confounding advertising market.

We launched WSJplus this year, The Wall Street Journal's customer loyalty program, and it's showing traction with nearly 200,000 active members, thus improving engagements and lowering churn. We've incorporated similar programs across our mastheads in Australia and the UK. We announced new global print editions of The Journal to grow our audience and advertising revenues internationally, as we focus on key financial hubs, and using digital to extend our reach more efficiently in smaller markets.

Our team at Dow Jones is continuing to innovate, having just launched Mansion Global, a new website which leverages a unique customer base to create a premier international and digital luxury real estate platform, in English, Chinese, and Spanish. We saw improvement in the professional information business, including favorable trends in risk and compliance, where growth has been particularly strong, as financial institutions and other companies adapt to tougher regulatory regimes, and we expect continued stability in FY16. We need to more aggressively push video and mobile products, and expand the engagement of consumers throughout the day. We're empowering the journalists with better tools, and integrating the video team with the rest of the news room. We are now implementing the new systems to better and more effectively monetize this valuable inventory.

HarperCollins Publishers have successfully integrated its acquisition of Harlequin, reducing costs, consolidating and opening international offices, and launching more than a dozen authors in multiple languages and countries. The Company was able to take advantage of the unexpected surge in interest in American Sniper after the release of the eponymous film, as well as the ongoing popularity of the Divergent trilogy. Capping the fiscal year was the announcement of Go Set a Watchman, which sold a record number of copies in its first week, and also boosted sales of the legendary To Kill a Mockingbird.

In Australia, Fox Sports has successfully monetized its first-class roster of sports rights, is gaining advertising market share and benefiting from Foxtel's new pricing and packaging strategy to drive subscriber growth. At Foxtel, we saw very strong improvement in cable satellite subscribers, and we also expect the rollout of triple play and improved content offerings at Presto, its subscription video on demand product, to be accretive to growth. Foxtel also announced plans to acquire approximately 15% stake in 10 network holdings, subject to regulatory approval.

REA continued robust growth in revenue and EBITDA, despite some earlier softness in listening volume. It is worth noting that early prospects of FY16 are encouraging. Growth again accelerated in the fourth quarter, and we're confident in the long-term trajectory as REA extends its footprint, expands into adjacencies, and drives premium penetration.

At News Australia of particular note was the improved EBITDA in local currency this year, thanks in part to measured increases in both cover price and subscription rate, innovative digital offerings, and the efforts by the sales team to stabilize advertising trends. Our leadership team in Australia is continuing to develop our mastheads, which are powerful platforms for advertisers in print and in digital. They have launched new apps for our papers around the country, and continue the development of News.com.au, which is the country's leading news website. News Corp Australia also launched [Sync], its own programmatic ad exchange, which we believe will have to most scale with the highest quality content in the marketplace, and we will continue to invest in products that play to that commercial opportunity. For example, the Australian launch of The Australian Business Review and a premium benefits program for readers, the Australian Plus.

In the UK, The Times gained market share and revenue through innovative products and new pricing. One of the world's oldest existing newspapers continues to show great strength in the digital age, thanks to high quality journalism and constant innovation. Advertising remains challenging for a number of our businesses, particularly at the Sun in the UK. We are clearly taking steps to address this issue, including with new products to encourage engagement, and to help drive higher traffic. We plan a deeper role for our programmatic ad exchange, and increased monetization of video and mobile, which we believe are drivers of future growth.

As is the case for all companies with extensive global operations, there has been a significant impact from currency fluctuations, and there will no doubt be more volatility in the macroeconomic environment in the current year. Our clear aim, currencies aside, is to pursue our core digital and global strategy, develop our businesses, and prudently cut costs, to ensure there is a long-term and meaningful return for our investors.

In conclusion, News Corp has clearly evolved from our launch two years ago. We are the custodians of a proud tradition, and we are also fashioning a profitable future in an era of profound change. We have had a strategy that is consistent with our message to investors at the time of our separation. We are more digital and more global, and we have begun to execute on our buyback program and announced a semiannual cash dividend of $0.10 a share in the first quarter of FY16 for payment in the second quarter. The decision by the Board to pay a dividend is a sign of confidence in the state of our business, and faith in our prospects for the future.

We plan to continue our strategy of balancing capital returns with prudent reinvestment, so that we realize our goal of long-term growth and value creation. With stable revenues, EBITDA growth, and robust free cash flow in FY15, we have real reason to be optimistic about the year ahead, building on our success for the benefit of all our customers, employees, and shareholders. As always, we thank you for your support as we continue this journey together.

Now we turn to Bedi for the details of our fourth-quarter earnings and some insight into FY16. Thank you.

Thank you, Robert. News Corp clearly made strong progress in our second full year. We further digitized our asset portfolio, streamlined costs, and began to return capital to shareholders. We finished the quarter with strong EBITDA growth, and we believe we are well-positioned to build on that success in the year ahead.

Just some key financial highlights of the year. These included the seamless integration of the Move and Harlequin acquisitions, moderating EBITDA declines at our news and information services segments including stabilization at the Dow Jones professional information business and growing consumer circulation revenues. Further penetration of our masthead business subscriptions and improved pricing, continued advertising market share gains at Fox Sports Australia, successful subscriber growth at Foxtel due to its repricing and repackaging strategy and product offering expansion, and initiating a capital return program including the declaration of a semiannual cash dividend, and the commencement of share repurchases.

Turning to the financial results, for the full year we reported revenues of $8.6 billion, a 1% increase 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 $852 million, which was an 11% increase versus the prior year. Reported results included costs related to the UK Newspaper matters, net of indemnification, which were $15 million for the year. Excluding all acquisitions and divestitures, costs related to these UK Newspaper matters and foreign exchange fluctuations, adjusted total segment EBITDA was up 15% versus the prior year.

As Robert mentioned, we were impacted by currency headwinds throughout the year, primarily due to the weaker Australian dollar. Foreign currency fluctuations negatively impacted full-year reported revenues by $319 million or 4%, and total reported segment EBITDA by $49 million or 6%. FY15 reported EPS was a loss of $0.26, which includes an impairment charge at Amplify in FY15, and restructuring costs. Including the impact of these and other items, our adjusted EPS was $0.47, compared to $0.46 last year. And free cash flow available to News Corp was $368 million, modestly higher than the prior year.

Turning to the fourth quarter, the Company reported total revenues of $2.14 billion, a 2% decrease versus the prior-year period, and our adjusted revenues declined by 1%, similar to the full year rate. Fiscal fourth-quarter total segment EBITDA was $191 million, a 50% increase versus the prior-year period. Reported results include $8 million related to the UK Newspaper matters, net of indemnification.

Our adjusted total segment EBITDA this quarter grew by 62%. Adjusted EPS was $0.07 compared to $0.01 in the prior year. Currency headwinds negatively impacted fourth-quarter reported revenues by $168 million or 8%, and total reported segment EBITDA by $23 million or 19%.

With that as a brief overview, let's look at our fourth-quarter performance for our key segments. In news and information services, revenues for the quarter declined $154 million or 10% versus the prior-year period. More than 70% of the revenue decline was related to foreign currency. Adjusted segment revenues declined 2%, an improvement from the prior quarter rate. Within segment revenues, advertising, which was 55% of segment revenues this quarter, declined around 13% or 7% in local currency, a similar rate to both the quarter and the full year.

At The Wall Street Journal, domestic advertising was slightly higher versus the prior-year quarter, a notable sequential improvement, as we had expected. We saw improvement in technology, finance, and luxury goods categories. At News Corp Australia, advertising revenues for the quarter declined 23%, but only 8% in local currency, as the market was a bit weaker than the prior two quarters, and we saw weakness in several categories including retail, national and auto this quarter. At News UK, advertising revenues remained soft this quarter, relatively similar to last quarter and the year. We saw year-over-year declines across most segments, particularly retail, IP and telecom, utilities and automotive. As [fund remains] a challenge, and we are continuing to look at additional ways to better monetize our digital offerings and broaden our advertiser base.

At News America Marketing, revenue declined 9% versus the prior-year quarter, due to continued weakness in free-standing inserts, partially offset by growth in in-store advertising. Total circulation and subscription revenues, which accounted for 38% of segment revenues this quarter declined 5%, but was up 2% in local currency. Dow Jones professional information business had a negative $7 million impact to revenue this quarter, but was down only $3 million excluding foreign currency impact, a significant improvement from the prior quarter. We continued to see growth in consumer circulation revenues, led again by The Wall Street Journal which grew 7% this quarter, thanks to new pricing and packages.

Segment EBITDA increased $38 million in the quarter or 29%, as compared to the prior-year period, and adjusted segment EBITDA was up 34%. We benefited this quarter from a combination of increased operating efficiencies at Dow Jones and at News America Marketing, combined with higher prior-year costs at News UK, which had included severance and the World Cup marketing. One item to note in the UK results, the quarter included an $11 million one-time charge related to termination of a distribution contract as part of our ongoing cost reduction initiatives.

Turning to the book publishing segment, revenues increased 8% and segment EBITDA was flat compared to the prior year. Adjusted revenues fell 9% versus the prior year, and adjusted segment EBITDA fell 18%, primarily due to difficult year-ago, comparisons which had higher Divergent sales. Total digital revenue for the quarter was 23% of consumer revenues, down from 24% in the prior year, again, primarily due to the Divergent year-ago comparisons, which impacted total revenues by almost $23 million this quarter. In digital real estate services, total segment revenues increased $76 million or 67%, and EBITDA declined $17 million or 27% compared to the prior-year period, due to foreign currency and the inclusion of News results.

Excluding foreign currency fluctuations, REA's adjusted revenue and adjusted EBITDA grew 15% and 18% respectively, an improvement from the prior quarter, driven by higher depth penetration, even though listing volumes for the market have remained below prior year levels. That said, listing volume has improved in June and July. Reported segment results include $81 million in revenues and an EBITDA loss of $15 million from Move, which includes $5 million of stock-based compensation and $7 million in legal fees for litigation against Zillow. For the full year, excluding stock-based comp and legal fees, Move was EBITDA net positive. On a standalone basis, Move's revenue would have grown 32% versus the prior-year quarter, which is an acceleration from the March quarter. The improvement was led by [coblo] product and non-listing media revenues, benefiting from the successful integration into the Dow Jones programmatic exchange and higher audience levels.

In cable network programming, revenue decreased by $3 million, or 2% compared to the prior year quarter. Subscription revenues fell 3%, benefiting from higher affiliate fees and increased subscribers, which was more than offset by foreign exchange headwinds. Advertising revenues were flat, but up strongly in local currency. Segment EBITDA in the quarter grew 16% despite higher costs and negative impact from foreign currency fluctuation. Excluding the impact of foreign currency fluctuations, adjusted revenues grew by 15%, and adjusted EBITDA by 37%.

At digital education, revenues rose compared with the prior-year quarter, due in part to higher early grade print hybrid sales, and segment EBITDA improved due to development cost reductions. As Robert mentioned, we are in the advanced stages of reviewing strategic alternatives for Amplify. The recent selling season for the new school year for our digital ELA curriculum overall has been disappointing, and the marketplace for digital curriculum has been much slower to develop than we initially expected. Additionally, we are no longer accepting new tablet customers, and will only be providing service and support to existing customers. We have reduced our long-range outlook at Amplify, resulting in a non-cash impairment charge of $371 million this quarter, and we will keep you updated on further developments.

With respect to earnings from affiliates, Foxtel ended the quarter with over 2.8 million total subscribers, up 9% versus the prior year, driven by trading satellite subscribers. Churn improved to 9.9% from 12% in the prior-year quarter. Foxtel revenues for the quarter in local currency were up 2% versus the prior year, and EBITDA declined 16%, due to higher sports programming costs related to the acquisition of V8 Supecars and Formula One rights, higher subscriber fees paid to Fox Sports Australia, combined with higher support costs related to the new pricing and packaging strategies and Triple Play. Subscriber growth remains strong, with total subscribers around 230,000 year-over-year, and growth of 94,000 in Q4. We will be including full Foxtel financials in our 10-K, which we expect to file shortly. Overall, while this was a year of reinvestment, we expect Foxtel to return to EBITDA growth in FY16 in local currency.

Turning to free cash flow, free cash flow available to News Corporation in the fiscal year ended June 30, 2015 was $368 million, compared to $365 million in the prior year. It's worth noting that foreign currency had approximately a $30 million negative impact to our available free cash flow in FY15. Turning now to a few themes for FY16, at news and information services, advertising remains volatile and visibility is limited. Ad spending in the US is up versus the prior year, while trends in Australia and the UK remain soft. We hope to see more stability in the segment driven by prior-year cost initiatives, increased penetration of digital subscribers, and continued stabilization of the Dow Jones professional information business.

At book publishing, we're very excited about our pipeline for FY16, which was highlighted by the release in July of Harper Lee's, Go Tell a Watchman, including, as Robert noted, the Spanish rights for Watchman. However, unlike Divergent, Watchman will skew heavily towards physical books, and given the higher marketing cost and author advance, it will result in more modest profitability. Regarding Harlequin, we remain on track with our cost synergy targets of [$20] (corrected by Company after the call) million, and expect the bulk of the savings to be realized in FY16.

At Move, we are very pleased with the progress at realtor.com. While there's still work to be done, and we expect to reinvest in marketing and in product development in FY16 to further drive market share, we expect Move to be modestly accretive to reported segment EBITDA in FY16, and expect the further ramp in FY17, driven by strong audience gains, lead volumes, and improved ad inventory monetization. REA Group, as mentioned on the earnings call yesterday, listing volume has improved in June, and we expect another year of solid growth.

At cable networks, we expect continued solid performance in local currency, driven by subscriber revenue growth. In the first half of FY16, programming costs are expected to be higher though, due to the inclusion of the Rugby World Cup in September and October. For the first quarter of FY16, given the current spot rate for the Australian dollar, we would expect currency headwinds relatively similar to fourth quarter of FY15. Last year, the Australian dollar rate was $0.93 for the first quarter, roughly $0.20 higher than the current rate. To help frame the currency impact, our 10-K will be disclosing that the impact of a $0.01 change in the US dollar versus the Australian dollar impacted FY15 annual revenues by approximately $31 million and total segment EBITDA by approximately $6 million. CapEx for FY15 was approximately $380 million, which was in line with our expectations, and we expect CapEx to be at a reduced level for FY16.

And lastly, on capital returns, in August 2015, the Company declared a semi-annual cash dividend of $0.10 per share for Class A common stock and Class B common stock. This dividend is payable on October 21, 2015, with a record date for determining dividend entitlements of September 16, 2015. To date, we've repurchased about 3 million shares for $45 million and have approximately $455 million remaining under our share repurchase authorization. And we continue to view share repurchase as opportunistic.

So in summary, FY15 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 initiated a capital return program, and we are in the advanced stages of reviewing our strategic alternatives at Amplify. Overall, we ended the year with stable revenues, EBITDA growth, and significant free cash flow, and we expect that to continue next year.

With that, let me turn back to the operator for Q&A.

(Operator Instructions)

And the first question will come from John Janedis with Jefferies.

Thank you. Could you give us a little more color on Amplify? I assume to some extent you were reviewing Amplify's Access products at the same time as the rest of the business. Can you help us think about a time line? How much is the savings from Access, and are you further scaling back investments in the remaining digital business for 2016? Thank you.

John, it's Robert here. First of all, I'd like to say that the Amplify team has obviously done much innovative work, and it is a very able team, but you can take from our messaging today that we are in the final phase of negotiation with a potential acquirer, and we are in an advanced stage of negotiation, and that we have done a fair amount of institutional introspection and the role at Amplify as part of the core, is clearly different. Apart from me saying that, it's inappropriate at this stage to go further.

Operator, we'll take our next question, please?

Certainly. That question comes from Entcho Raykovski with Deutsche Bank.

Good morning. My question is around realtor.com, and obviously the good traffic that you've seen there. Just in terms of the growth, what are the key drivers? Is the marketing which you've spent within the business, or are you benefiting from the Zillow/Trulia merger that's taking place at the moment? And just on that last point, given that Zillow's moving to a new pricing structure in this quarter, do you expect to benefit from that, as well?

Well, we focused on what we're doing, rather than the complexities of consolidation of Zillow and Trulia. What we particularly noted is that really what we expected to be the case, not in a cocky way but in a confident way, that the powerful platforms News Corporation has will enable us to divert traffic. What's particularly gratifying, apart from the great work that Ryan O'Hara and the team are doing at realtor is that the audience growth rate is continuing to increase. And so if you look at our mobile audience, clearly key in the contemporary environment, in June, that was up 79% year on year. So quarter after quarter, month after month, we are seeing increases in both audience and revenue, and we're very optimistic about the future.

Operator, we'll take our next question, please.

And that question will come from Alexia Quadrani with JPMorgan.

Thank you. My question's just on your commentary on The Wall Street Journal advertising trends. I think you mentioned that they've improved, particularly coming into July. Can you talk about, I guess, how much of that do you think is sort of general industry trends versus your internal efforts at The Journal? And I guess any color on that front would be great. Thank you.

It's certainly true that the trend has improved in The Journal. We started to see some improvement in Q4. What's particularly notable is tech advertising, which of itself tells you that those working the digital world have seen the value of print as a platform, as well as the complementarity of The Journal's print and digital products.

Operator, we'll take our next question.

Thank you. That will come from Eric Katz with Wells Fargo.

Thank you. Just wanted to quickly close the loop on Amplify. Just for modeling purposes, is it fair to assume at this stage that somewhere in the range of $75 million to $100 million of expenses fall off the books now? Secondly on Move, you mentioned some profitability this year and more ahead. Can you just give us a little more detail on the magnitude and cadence of the ramp? Thank you.

I'll take the one on Amplify. Clearly, look, as Robert said, we are in advanced stages of a strategic alternatives process. We have also previously said that we expect, and Robert said that quite clearly, a meaningful reduction in cash expenditures. Beyond that, we're not giving out numbers, and clearly we also depend on where we end up at the end of the strategic alternatives process.

As for revenue at realtor, there are little ingredients to make medium term forecasts. Frankly we've given the current growth rate, and we identified it both traffic and revenue. But in the fourth quarter, revenue was up 32%. What's particularly gratifying, and particularly interesting for the long-term performance of the Company is that the area we focused on which is cobroke and media advertising which had not been a priority in the past are both growing at higher rate than that 32%.

Operator, we'll take our next question, please.

And moving on to Bill Bird with FBR.

Good evening. What's your perspective on realizing the full value of some of your other assets like The Wall Street Journal, particularly given the recent sale of the FT for a very high multiple?

I think we've always had great faith in the value of The Wall Street Journal. I'll let you do the math there. If The Financial Times is worth what the Nikkei Group paid and The Wall Street Journal is a far larger, far more successful, far more profitable market, what's The Wall Street Journal worth?

Operator, we'll take our next question, please.

And that question comes from Craig Huber with Huber Research Partners.

Yes. I have a two-part question please. For the UK advertising, what was that percent change down in the quarter year-over-year, with or without currency? And also, just wanted to better understand, with the roughly $2 billion of net cash on the balance sheet, should investors most likely assume you'll be using that for acquisitions going forward, and that your free cash flow, much of that or part of that, would go to capital returns? Thank you.

Hey, Craig. So in terms of the UK, I think you should think about it in the context of double-digit declines in advertising in local currency. We haven't given out the specific percentage, but that's consistent throughout the year in the quarter, and we're currently seeing that continue into the new fiscal year. With respect to cash balance and then the annual cash flow, I think we have said in the past that the way to think about cash returns is in the context of our annual cash flow, and really the money that's on the balance sheet is for internal investments, acquisitions and other opportunistic things that we would want to do.

Operator, we'll take our next question, please.

Thank you, sir. That comes from Doug Arthur with Huber Research Partners.

Bedi, can you just review the programming sports right cost trends that you see flowing in FY16? You mentioned something I thought it was the Rugby World Cup you mentioned. Is there anything else out there that could impact the year? Thanks.

For the year in the first half, they'll be playing the Rugby World Cup in September, October. So that's something different from what happened in FY15. Other than that, there's nothing else that's significant in terms of sports rights costs that will affect FY16.

Operator, we'll take our next question, please.

And the next question will come from Brett Horn with Morningstar.

Good morning, gentlemen. Thanks for your time. Can you please provide some more color on how you were able to work the cost base so hard in the news and information division in the fourth quarter?

I think if you look at the fourth quarter, we benefited from two or three things. The first one was, we have been restructuring, as you've seen over the years, and the benefits of those restructurings have now started to flow through. That was one piece of it. The other one was in the UK last year, we had mentioned that there was higher marketing expenses so there was a lapping improvement in the quarter with those two things. And I think generally if you look at our headcount across the businesses that's been coming down, and that benefit has also flowed through.

If I could just supplement Bedi's answer. When we spun the Company off two years ago, we made clear that the extra focus and the shared benefits of that focus, we expected to reduce costs in our news division. So we're reducing duplication of technological platforms. We are reducing duplication of software investment, and this is at a time, of course, when you need a fair amount of software investment to remain contemporary and to take advantage of emerging platforms. But that extra focus has enabled our very able teams to do that without increasing any cost base in a way that bruises the business.

Operator, we'll take our next question, please.

(Operator Instructions)

Our next question comes from Craig Huber with Huber Research Partners.

Yes, I have follow-up question, please. Can you just quickly review for us the opportunity to run realtor.com better than it was run before you bought it, please? Thank you.

Well, it's clear that the new team at realtor.com has made a significant impact. Look, it is just the start, but the early returns are certainly sufficient. We are continuing to work on driving traffic. We're continuing to work on driving revenue. And what is fair to say is that the returns thus far have exceeded our expectations, but also given us confidence in the future that realtor.com will become an important pillar of profitability for News Corp.

Operator, we'll take our next question.

And that question comes from Alice Bennett with CBA.

Good morning. Just a clarifying question. I think for both Foxtel and for Move, you mentioned potentially being EBITDA breakeven in FY16. I just wanted to clarify, you're talking a sort of run rate at the back end of the year, or across the full year, talking EBITDA breakeven for those businesses?

Generally, we're not giving quarterly breakout. But I would say for Move, we are going to be EBITDA positive for the full year, and Foxtel is going to see an improvement in its EBITDA growth compared to FY15.

Operator, we'll take our next question, please.

Thank you. Bill Bird with FBR.

Was wondering, just back to digital real estate, do you see a pathway to number one in US digital real estate like REA in Australia? Just given the competitive dynamics and disruption at Zillow and Trulia? Thank you.

We certainly see a pathway. At the moment, realtor.com is the fastest growing of the sites. As you know, it's moved from three to two. It was, a year ago, the slowest growing of the three sites. So the market is already being transformed.

Secondly, the broader characteristics of the US real estate market are themselves auspicious. You are seeing, from last year, where there were about 5 million units in volume in property turnover in the States. That rate, the annual run rate now is close to 5.5 million. You will have noticed the National Association of Realtors, our partner at realtor.com, released some research earlier this week that in Q2 the vast majority of US cities are seeing increases in property prices. So it's no longer just the elite markets of New York, San Francisco, LA and Miami. It's a broader secular change in the property market itself, which indeed helps realtor.com.

Operator, we'll take our next question.

And that question is from Entcho Raykovski with Deutsche Bank.

Just a follow-up for me around Fox Sports Australia, particularly given that a deal was announced earlier this week around the purchase of the NRL rights, non-network. How do you see that positioning Fox Sports? And the uplift that we saw in the pricing, do you think that will be indicative of next time you have to bid for those rights?

Entcho, as you well know, football rights are a contact sport themselves, and the match for NRL rights is probably at around half time and far from over. Really all I can say more about football rights is that I personally am an AFL tragic. For those who need translation, that's an Australian rules aficionado, and the specific outcome that I want to see is this Saturday, and that would be in essence a victory.

Operator, we'll take our next question.

Okay. That question comes from John Janedis with Jefferies.

Just one clarification. Since it sounds like Amplify is for sale, does that mean it goes into disc ops, or would that not happen until a formal announcement?

John, all we can say is we're looking at alternatives and it depends on where we end up at the end of that process.

Operator, we'll take our next question.

That does conclude the question-and-answer session. I'll now turn the conference back over to Mr. Florin for any additional or closing remarks.

Great. Well, thank you all for participating. We'll talk to you soon. Have a great day.

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