News Corp (NWSA) 2016 Q4 法說會逐字稿

Good day and welcome to the News Corp fourth-quarter FY2016 earnings call. Today's call is been recorded.

(Operator Instructions)

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

Thank you very much, Jessica. Hello, everyone, and welcome to News Corp's fiscal fourth-quarter 2016 earnings call. We issues our earnings press release about 30 minutes 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 will open with some prepared remarks and then we will be happy to take questions from the investment community.

This call may include certain forward-looking information with respect to due course business and strategy. Actual results could differ materially from what is said. New Corporation's Form 10-K for the 12 months ended June 30, 2016 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 on our earnings release and our 10-Q filing. Finally, please note that certain financial measures used in this call, such as a 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 will pass it over to Robert Thomson for some opening comments.

Thank you, Mike. And thank you all for joining the call. We ended FY16 with strong results in the fourth quarter, highlighted by robust year over year growth in revenues and EBITDA at Digital Real Estate Services, and a palpable upturn at HarperCollins.

For the fourth quarter, reported revenues were $2.2 billion, a 5% increase versus the prior year. Total reported segment EBITDA was $361 million, up 68% compared to the prior year. This figure includes a $122 million benefit from the Zillow legal settlement. But even absent that adjustment, EBITDA still improved tangibly in the quarter.

In Digital Real Estate we experienced 21% growth in revenues in the fourth quarter, further illustrating the key role this segment is playing in News Corp's success. In fact, since our separation three years ago, revenues at Digital Real Estate have more than doubled, and the segment is expected to become the biggest contributor to EBITDA in the future, thanks to the ongoing growth of REA and the renaissance of realtor.com in the US. This increasing role in one of the world's fastest growing digital sectors augurs well for our future.

Book Publishing entered the year with much momentum, highlighting the value of high-quality content and the ability to leverage that content across both print and digital platforms. HarperCollins success this quarter, with revenues arising 11% and EBITDA surging 52% year over year, was driven by new releases and thoughtful cost initiatives.

Fox Sports Australia had another good quarter, with increased revenues, thanks in part to record ratings which came from capitalizing on its top-tier content and developing our long-term franchises in the country's most popular sports. The quarter's results certainly underscored the tremendous power of live sports, which have increased in relative value in a world of viewer fragmentation and program promiscuity.

While global print ad trends remain volatile, we saw modest sequential improvement in the news and information services sector this quarter, thanks to reduced costs and the continued development of digital. In the fourth quarter, digital revenues accounted for 23% of segment revenues, up from a 19% last year.

In particular, the success of the Wall Street Journal is a testament to the importance of high-quality content with global appeal. This past quarter the WSJ reached 948,000 digital-only subscribers and that total will clearly surpass print subscribers in the near future.

In the fourth quarter, we also relaunched the Sun's website, now reaching over 42 million unique monthly users, compared with 15 million uniques last September before the lifting of the payroll. Our UK team is focused on leveraging that immensely valuable brand across platforms, including through our recently announced offer for Wireless Group. We hope to complete the deal in early FY17 and take full advantage of this valuable media asset, whose recent ratings have continued their handsome growth. TalkSPORT, their flagship station, experienced an 8.4% increase in audience in the most recent quarter, to 3.29 million listeners according to official metrics.

Ruminating on FY16 as a whole, we have shown continued progress on our primary goals -- to become more digital, global and diversified, while containing costs, and mixing prudent divestments with strategic investments. We are certainly proud of our promise, and we are a more focused company than we were at our rebirth in 2013. We assuredly believe that we have laid the foundation for sustainable growth and positive returns for our shareholders.

Now for the business highlights before Bedi provides the financial granularity. Digital Real Estate continues to burgeon and is reshaping the growth profile of News Corp. Our renovation of realtor.com has propelled move to improved profitability on an operational basis, excluding Zillow legal costs, even as we have significantly reinvested in the business. We now look forward to building Move's profitably in the coming fiscal year.

With the refurbished reputation, increased marketing and innovative products, Move and realtor.com are attracting record audiences and ever more advertising, thanks to the freshest listings, unique content, and tools that benefit both realtors and consumers. Traffic to realtor-related sites grew to a record 53 million unique users in the fourth quarter and has been continue to grow in July.

Significantly, realtor.com leads the way in engagement. Its users viewed double the number of pages as the average visitor to Zillow. And, in fact, realtor.com has greater user engagement, as measured by page views per user than LinkedIn, Amazon, Google, and Twitter, according to comScore. That is concrete commitment and serious stickiness, and patently valuable for advertisers, as well as the realtors who benefit from the precious leads that realtor.com provides.

realtor. com has significantly grown its mobile presence, with mobile traffic increasing to more than 50% of overall traffic in the fourth quarter. Additionally, 60% of page views occurred on mobile devices, with mobile accounting for a majority of lead volume in the fourth quarter. Finally, one must note the $122 million gain from the amicable settlement of our litigation with Zillow. We are naturally pleased with these proceeds which assisted cash flow for News Corp in the fourth quarter. We can now focus squarely on execution without legal distractions, however copasetic the outcome.

REA continues to strengthen its business in the Australian market. the Company had another record year in reported revenues and profitability despite the acquisition costs for our property, the leading Southeast Asian property portal. We recently announced the formation of a global property network which will bring together listings from REA, realtor.com, Mansion, Global, PropTiger and iProperty into a comprehensive database accessible to people everywhere, accentuating our position as the world's leading digital property business.

HarperCollins had faced some challenges during the year due to Divergent Trilogy comps and changes in the e-book marketplace. But with those conditions normalizing, the publisher ended the year strongly. Among the notable success stories are Harper Lee's Go Set a Watchman, Daniel Silva's English spy, and books by Anderson Cooper and his mother Gloria Vanderbilt. And in the UK, the polymath David Walliams, now one of the country's leading authors of children's fictions.

Looking ahead to the coming year, we are optimistic about Megyn Kelly's much discussed book, Settle for More, scheduled for November, the highly anticipated Veronica Roth release, and Jesus Always by Sarah Young, the legendary author of Jesus Calling, which has been a best seller for many years.

The Harlequin acquisition has contributed to the growing global impact of HarperCollins, including in France, Italy and Brazil, and the publication of best-selling authors like Daniel Silva, Karin Slaughter, Stephanie Lawrence, and Alyson Noel in multiple international markets. Worth noting is the fact that we achieved our targeted $20 million cost savings following the acquisition and have increased the distribution of leading Harlequin titles.

Foxtel, under new leadership, is driving higher subscriber volume, which is a priority for the business. The network had more than 2.9 million total subscribers at the end of the fiscal year. Foxtel continues to improve its content offering, notably with the acquisition of the rights to the AFL through 2022, and the new agreement with top EBL clubs for broadcast rights, which means that devoted fans won't have to watch their favorite teams in the middle of the night.

With the continuing emphasis on sports, original content, and enhanced IP devices and offerings, such as the Foxtel go mobile product, Foxtel will remain focused on driving higher subscriptions which we believe is key to unlocking value for itself and News Corp throughout FY17.

At Fox Sports we saw record ratings this quarter, driven by the extremely popular NRL, the AFL and V8 Supercars, the Aussie variant of NASCAR. Our airing of all NRL matches live through the simulcast deal with Channel 9 is proving to be particularly popular. And the resonance should increase with the launch of a dedicated NRL channel later in FY17. As a result, we expect advertising trends will remain more positive for Fox Sports than for the industry as a whole, with the network continuing to gain audience share.

Dow Jones experienced strong digital subscription growth over the past year. Circulation revenue for the year at the Wall Street Journal grew mid single digits, thanks to digital expansion and improved pricing. In fact, this year, circulation revenues were higher than advertising revenues, underlying the balanced revenue streams at Dow Jones.

Overall, more than 50% of Dow Jones revenues came from digital this year. That's part of a calculated realignment of the revenue stream and also a testament to the strong and growing value of premium content. Custom content is also a big driver of advertising revenues and we expect it to represent a larger part of Dow Jones' growth going forward.

Dow Jones also continued to roll out new and improved products in FY16, including WSJ Pro, the What's News app, and the WSJ City app in the UK. And, importantly, a Factiva mobile app. Factiva is a treasure trove of valuable content and we are working to customize and enhance the experience for subscribers.

On the institutional side, Dow Jones will continue to push high-growth segments including risk and compliance. As companies are under increasing scrutiny and must necessarily be strictly compliant, we have firm faith in that business, which expanded 34% last quarter compared to a year ago.

At News UK we will continue to leverage the Sun's popular daily news and entertainment features as we enhance our mobile first strategy. We are bolstering reader engagement through such initiatives as the Dream Team, bingo, and sports betting, all of which we expect to see driving incremental revenues in FY17.

While advertising remains challenging, the Times continues to benefit from its premium content and audiences. According to ABC figures, at the end of June, there were 413,600 subscribers to The Times and Sunday Times, an increase of 3.4% year over year. More than 182,000 of the subscriptions are our digital only, an increase from 172,000 in the prior year.

This past quarter, total print sales for The Times were up double digits versus the prior year. That highlights the power of print as a platform and vindicates our commitment to quality journalism when other media companies were slashing and burning their budgets.

News Corp Australia benefited from initiatives that took out 2.5% of fixed costs in the second half of FY16. And further savings are expected in the current fiscal year.

the Company also entered into an agreement to purchase the APN Australian regional media portfolio, which reaches 1.6 million people across print, online, and mobile. We expect the purchase, subject to regulatory and APN shareholder approval, to help us grow in northern Australia and result in significant costs and efficiency synergies in our production and distribution operations.

Meanwhile, the Australian newspaper has grown to a record high readership of more than 3.4 million print and digital readers as of May. This represents an 11% jump over the prior three months.

In the United States, the New York Post had 54 million monthly unique users in June, and 40% of advertising revenues were digital, a figure that could soon surpass 50%. The team has just launched Page 6 TV, which has been performing strongly in a three-week trial across a number of Fox television stations in the US, showing the value of that brand in the Post stable.

News America Marketing ended the year on a strong note thanks to muscular growth in the in-store business. Meanwhile, the Company's focused on accelerating mobile adoption, notably through Checkout 51. This increasingly popular app consistently ranked in the top 10 of all retail related apps, above Walmart and Walgreens, helps consumers across the country save money, and generates a wealth of data which can be leveraged across a number of News Corp businesses.

In FY17, we expect to continue investing in Checkout 51 with a goal of reaching 10 million users by the end of this calendar year, which we believe is a key milestone in drawing additional offers from our CPG partners. The larger the audience, the more compelling the offers we can present, and the greater the loyalty we will win from users. We are seeing that virtuous cycle in motion now at Checkout 51.

We have aimed to make the new news more than the sum of its parts, and that is particularly the case in our exponential digital development. We aspire to be ever more digital and global. And helping us in that mission is a concentration on collaboration, as well as on the selective acquisition of tech startups that extend our digital capabilities.

For example, the Journal, realtor.com, and Mansion Global, have collaborated to turbocharge realtor.com and distribute content of interest to potential property owners, helping drive engagement across their platforms. Our property sites around the world now routinely share software, market metrics, and listings data.

Storyful supplies video to a variety of News Corp mastheads, including the Sun, the New York Post and the Wall Street Journal, as well as sharing expertise with HarperCollins to extend its video outreach. Unruly is providing valuable advertising metrics to enhance the brand-building of our companies, as well as assisting external clients with its unique expertise.

The rapid pace at which the contemporary world is turning, with attendant economic and social upheaval, has put a premium on premium content -- fast, accurate news and information upon which investors and all citizens rely. Insight is invaluable in these complex times.

We believe News Corp is ideally positioned to meet this broad-based societal demand, whether it's Storyful, separating user-generated video fact from video fiction; or our global digital real estate platforms giving the most complete and accurate data to consumers, along with independent analysis to inform investment decisions. In particular, our strategy will focus on areas, including product development, particularly in mobile and video, to drive engagement across our properties; leveraging and further monetizing data, beginning with an important initiative this year linking our US audiences to create a powerful digital network to advertising clients; and capitalizing on opportunistic acquisitions to further buttress our revenue stream and to fortify the foundation for future growth.

This strategy is designed to enhance our businesses in transition, to accelerate revenue growth, particularly at our real estate franchise, and to ensure long-term robust returns for our investors. For the fine detail, I now hand you over to Bedi.

Thanks, Robert. Starting with our fourth-quarter results, we reported FY16 fourth-quarter total revenues of $2.2 billion, up 5% from the prior year. As we had hoped, currency headwinds moderated during the quarter with an impact of only $54 million to reported revenues. As we mentioned previously, this being a 53-weeks fiscal year for us, fiscal fourth quarter includes an extra week, which positively impacted revenues by $112 million, with the majority of that at the news and information services segment.

Excluding the impact of foreign currency fluctuations, acquisitions and divestitures, adjusted revenue grew 6% compared to the prior year, including the extra week, and were relatively flat excluding that. Reported total segment EBITDA was $361 million, which includes the benefit of $122 million related to the Zillow settlement. Excluding that benefit, total segment EBITDA would have been $239 million.

Adjusted EBITDA, which excludes the settlement benefit, as well as acquisitions, the impact of currency, and legal costs related to the UK newspaper matters, grew 23% versus the prior-year period. Both reported and adjusted EBITDA also include the impact of the extra week that I mentioned earlier.

For the quarter, EPS from continuing operations, which includes the Zillow settlement benefit net of tax, was $0.16 compared to $0.01 in the prior year. Adjusted EPS from continuing operations were $0.10 versus $0.08 in the prior year.

For the full year FY16 we reported total revenues of $8.3 billion, a 3% decline compared to the prior year. The decline in revenues included a negative impact from foreign currency of $455 million. Excluding the impact of foreign currency, acquisitions and divestitures, adjusted revenues for the year were flat compared to the prior year.

Reported total segment EBITDA was a $684 million, which includes a one-time charge of $280 million for the settlement of litigation and related claims at News America Marketing and the one-time gain from the Zillow settlement I mentioned earlier.

Negative foreign currency impact reduced segment EBITDA by $70 million this year. Adjusted EBITDA, which excludes both the settlements, as well as acquisitions, the impact of currency, and legal costs related to the UK newspaper matters declined 4%. And for the year, EPS from continuing operations were $0.28 compared to $0.51 in the prior year, and adjusted EPS from continuing operations were $0.40 versus $0.59 in the prior year.

Now let's turn to the individual operating segments for a fourth-quarter review and some full-year highlights. In News and information services, revenues for the quarter rose 1% from the prior year to $1.4 billion. Adjusted segment revenues rose 2%. The extra week added $77 million to revenues or approximately 5%.

Within segment revenues, advertising declined around 5%, or down 7% in local currency, and excluding the impact of the 53rd week, which was similar to the full year rate and the prior-year rate. This was also a sequential improvement from the lower double-digit rate decline in the prior quarter. Circulation and subscription revenues increased 5%, or up 1% in local currency, and excluding the 53rd week were relatively stable with last quarter and the prior year.

News and information services reported segment EBITDA this quarter with $160 million, down 5% versus the prior period. The decline was driven by lower advertising revenues, as well as investment spending and acquisition-related costs in connection with Checkout 51 and Unruly. These declines were partially offset by the impact from the additional week in the quarter and lower operating expenses. Adjusted segment EBITDA increased 10% compared to the prior year.

Looking at performance across our key units, and excluding the extra week in each case, at Dow Jones, domestic advertising at the Wall Street Journal declined around 12% versus the prior-year quarter, with declines in print being partially offset by modest growth in digital. Digital accounted for approximately one-third of Dow Jones's ad revenues this quarter.

Wall Street Journal circulation revenues grew 5% this quarter due to higher subscription pricing and higher digital paid subscribers. We implemented a $4 subscription price increase in July, which will be phased in over the next 12 months. And circulation revenues at the Wall Street Journal have now surpassed total ad revenues in the current fiscal year. Dow Jones's contribution to segment EBITDA increased this quarter and for FY16.

At News Australia, advertising revenues for the quarter declined 13% or about 9% in local currency, relatively similar to last quarter with local outpacing national. Circulation revenues at News Australia declined 3% but were slightly up in constant currency as a result of cover price increases and higher paid digital subs, offsetting print volume declines. As expected, we continue to see the benefit of the cost reduction program implemented at the end of Q2, and realized approximately AUD40 million in the second half and expect to capture further savings in FY17.

At News UK, advertising revenues declined 16%, or down 10% in local currency, an improvement from the prior quarter. Circulation revenues at News UK were relatively flat versus the prior quarter, driven by a lift in paid volume at the Times, and cover price increases taken this quarter for both the Sun and Times. In Q4, the Times saw high single digits paid volume growth likely benefiting from Brexit coverage.

At News America Marketing, revenues were relatively flat versus the prior year excluding the extra week, a marked improvement from the prior quarter. Domestic FSI revenues declined 14% although the rate moderated from the prior quarter. In-store revenues grew mid teens. And digital, which only accounted for 5% of revenues this quarter, doubled, partially benefiting from the expansion of Checkout 51.

Turning to the book publishing segment, revenues increased 11% and segment EBITDA improved 52% versus the prior year as comparable versus the prior year have begun to normalize. This quarter benefited from a strong new release slate from Anderson Cooper, Cameron Diaz, Cynthia Sweeney, David Walliams in the UK, and an improvement in Christian publishing, as well as the impact of the 53rd week. Total digital revenues for the quarter were 19% of consumer revenues, down from 23%.

In Digital Real Estate Services, total segment revenues increased $40 million or 21% to $229 million, which includes the consolidation of iProperty and Diakrit, both of which closed in February. Total reported segment EBITDA was $175 million, which reflects the impact of the settlement with Zillow. Excluding that, segment EBITDA would have been $53 million, up from $45 million in the prior year. Adjusted revenue grew 17% and adjusted EBITDA, which is inclusive of the $15 million legal expenses at Move related to Zillow, grew 24%.

REA's revenue grew 17%, or approximately 21% in local currency, due to higher lift depth product penetration. Move revenues rose 21% versus the prior year, driven by strong growth in the Connection for Co-Broke product, higher nonlisting media revenues, and an improvement in the professional software revenues led by top producers.

Unique user growth realtor.com remains strong, up 17% year over year, to 53 million average per month for fiscal Q4. For the full year, Move's revenue was $357 million, up 27% on a standalone basis. And as we had expected, Move had a positive contribution to segment EBITDA, excluding the impact of legal costs and the settlement gain, but including stock-based compensation. This improvement came despite reinvesting for growth and we expect to build on that momentum in FY17.

In cable network programming, revenues increased by $14 million or 11% compared to the prior-year quarter. On a currency-adjusted basis and excluding the 53rd week, revenues rose around 7%. In local currency and again excluding the 53rd week, subscription revenues improved around 6% and advertising revenues rose high single digits, reflecting record ratings, with viewership up mid teens, driven by the NRL and V8 Supercars.

Segment EBITDA in the quarter rose 5% on a reported basis and 14% adjusted for currency, and reflects additional costs related to the simulcast of three additional NRL matches per week from Channel 9, as we indicated on the last earnings call, as well as a modest benefit from the extra week.

With respect to earnings from affiliates, Foxtel ended the quarter with more than 2.9 million total subscribers, with cable and satellite subscribers increasing approximately 5% compared to the prior-year period, and higher Presto subs despite ongoing competition from SVOD players. Foxtel revenues for the quarter declined 2% but were up 2% in local currency. And EBITDA declined 5% or down 1% in local currency due to higher programming costs and an increase in subscriber acquisition costs driven by new offers launched in January.

As expected, churn in the quarter rose to 14% from around 10%, a similar trend to the prior quarter, largely due to nonrenewal of no contract offers. Importantly, underlying year-on-year churn data, when adjusting for the impact of new customer offers, has been stable. ARPU for the quarter was down approximately 3% to around AUD89. Capital expenditures from continuing operations for FY16 was $256 million, down from $308 million in the prior year, in line with our expectations.

FY16 included a tax benefit of $106 million from the release of valuation allowances resulting from the disposal of the digital education business in our fiscal first quarter. As a result, the Company recorded an income tax benefit of $54 million for the fiscal year. On an adjusted basis, which excludes that benefit, restructuring, and other one-time items, our underlying tax rate was 32.9% for the full year. We expect in FY17 our normalized tax rate will be in a similar range to FY16.

Turning to the balance sheet, cash as June 30 was $1.8 billion and we have total borrowings of $369 million related to iProperty. Subject to court approval, we expect to pay out the remainder of the News America settlement accrual of around $250 million in the first quarter of FY17.

On June 30, we announced an offer for Wireless Group plc in the UK, which is expected to close in the first half of this fiscal year pending regulatory approval and satisfaction of other conditions. We have set aside $315 million for this acquisition as restricted cash on the balance sheet as a result of UK takeover panel rules.

Heading into the new fiscal year there are a few points to note. Advertising trends remain volatile and visibility continues to be Limited, and we continue to aggressively seek out cost reductions.

Fox Sports Australia will face in incremental AUD10 million in Q1, similar to fiscal fourth quarter related to the simulcast of NRL matches. No major sports rights renewals are expected this fiscal year.

For digital real estate at REA, listing volume in July was negatively impacted by uncertainty around the federal election, and first-half revenue growth will likely be skewed to the second quarter. And, finally, on currency, if the spot rate for the Australian dollar holds at current levels at around $0.75, we would expect a modest benefit to the full-year as compared to FY16.

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

(Operator Instructions)

John Janedis, Jefferies.

Thanks, guys. Bedi, can you talk more about the magnitude of the expected cost savings in the Australian print segment beyond the $40 million, given some of the synergies you spoke to? And are there any other programs in the US or UK? And then on a related topic, given the headlines in the regions, can you just talk more about current trends you are seeing on the print side on advertising to start the first quarter on a global basis? Thank you.

Thanks, John. On cost reductions in Australia, we had previously said that the annual program was around 5%, and 2.5% was realized in FY16 and we expect the remainder of that to flow through in FY17. On top of that, I know The Australian operation continues to examine a number of opportunities in shared service functions, et cetera. So, I think we would expect to see slightly higher cost savings even then that in Australia.

In the US, Dow Jones has been cutting costs -- headcount 6% lower this year than it was the year before. In addition to that, they are looking at a lot of the structural issues at Dow Jones, and we expect further cost reduction programs to be implemented this year.

In the UK, there was a big cost reduction program we announced, if you recall, in January/February that's being implemented. FTEs are down 8% year over year. All the marketing spend is slightly higher. But the guys in the UK are also looking at backroom savings and they are looking at consolidation opportunities.

Just to supplement what Bedi said, John, generally there is a culture of cost consciousness in the Company. As Bedi explained, clearly there's a shift, a transition going on in the businesses. Our print is still very precious to us, but digital ever more important, and teams are being realigned accordingly.

The other aspect that we're focusing on, and we're certainly seeing savings -- and a little difficult to quantify but we will be able to articulate it over time to you more precisely -- is in sharing services. That's, for example, particularly the case in the UK where the businesses occupy a single building, which gives us an opportunity to examine what is the right size of services for a contemporary business.

As for ad performances, as Bedi had previously indicated, there is a problem with visibility. There's a certain amount of political instability. There has been in Australia with an election and the uncertainty that followed it. As you know, we are in the midst of an interesting election in the US. And there has been some upheaval in the UK. There's no doubt that that has had something of an impact on the businesses in the last quarter.

Looking ahead, visibility is a bit of an issue. But I think there's a more fundamental, more profound issue, which is that there's a lot of instability in the ad market itself. A lot of advertisers are questioning the return on investment. And we see a particular opportunity, being host to a portfolio of premium sites, to provide them not only with settings appropriate for their advertisements -- i.e., high-quality content -- but measurability.

We talk about visibility, of course, but viewability is very important. And it's interesting that there's an angst-ridden debate in the advertising world about the viewability of ads. As I've said before and it's worth emphasizing again, every print ad is a 100% viewable.

Entcho Raykovski, Deutsche Bank.

My question is around the acquisition of the Wireless Group. Could you talk a little bit more about the strategy behind the acquisition? In particular do you see cost-saving opportunities when you combine it into the remainder of the [ugk] growth or do you see a revenue opportunity from the acquisition?

Entcho, it's really a revenue opportunity. What you have in Wireless Group, and obviously the acquisition is pending, is a series of radio stations, websites and global sports audio rights that very much complement not only the strength of the Sun but those of the Times. It's certainly our intention to develop Wireless Group but also to use it to develop the Sun platform because you can see a wonderful overlap of demography and also an enduring growth in its audience. Radio is these days, unlike some content forms, not subject to the vicissitudes of piracy.

So, we're very optimistic about Wireless Group. We're very optimistic about its potential for all the news UK properties. And just for example, its potential impact on Sun Bets which is being rolled out this year in the UK by Rebecca Brooks and the team.

Obviously during a football match, making the broadcast of the football match exciting, compelling for a quite a lot of listeners and quite a lot of readers, the opportunity to have a flutter is something they are interested in. And so from the sport itself, from sport extensions, right through to the newspapers, we can see genuine concrete benefits.

Eric Katz, Wells Fargo.

Thank you. You may quite a few moves in Australia recently from acquiring APN to we've seen some news around some investments to upgrade paper quality and also shutting down some papers and even speculation of a sale of some local papers. Can you maybe give us a little more perspective into the strategy to reshape the newspaper business in Australia?

Certainly Michael Miller and the talented team in Australia are looking for synergies across the papers, across the websites. And clearly you can create a network effect because each of these newspapers is a platform, and those platforms are complementary. And the other element to bear in mind there is that it obviously helps us with those regional papers to develop, in Queensland in particular, the REA franchise.

Tim Nollen, Macquarie.

Thanks. My question is actually about the books division, a couple things. I think, Bedi, you might have mentioned the e-book revenue was 19%, if I heard that correctly, down from 33%. Could you please clarify if I heard that right? And, if so, why such a sharp drop -- I guess it must be the mix of titles -- and what that means for your print versus your e-business?

And then a second question on the industry, also on the books business. Could you give a breakout of international sales within HarperCollins? You mentioned good global expansion there.

Hi, Tim. Digital revenues were 19% versus 23%, not 33%. So, it wasn't that big a drop. But yes, you are right, every quarter the mix will change a little bit depending on the books and how they are indexed in terms of physical versus digital. But we see overall the digital percentages stabilizing. And we're also seeing good growth in physical books.

In terms of international, we don't break out the international revenue. But I think we've been very pleased with the Harlequin acquisition. I think we've announced in the past a number of authors whose books we've taken in different languages. We used to be just predominantly an English-language publisher, now we publish in all the major languages.

I'd just like to add to Bedi 's thoughts there. We had taken out cost at HarperCollins, we've taken out cost at Harlequin. The upturn in revenue has particularly enhanced EBITDA in the most quarter. And as we've indicated, we're very confident about the momentum in the book industry.

And just one example of the synergistic relationship between Harlequin and HarperCollins, traditionally Harlequin was just a mass-market publisher, so you didn't see it in trade locations, your typical corner or independent bookstore. Now, because of HarperCollins' power of placement, for some of those titles, traditional Harlequin titles, combined with an enhancement of covers and presentation generally, you're seeing that Harlequin authors are getting anywhere between -- certain orders, not all orders, certain orders -- between a 50% to 100% increase in revenue per title.

Fraser McLeish, Credit Suisse.

Thanks. Bedi, can I just check, did you say that Foxtel EBITDA in the fourth quarter was down 1% on an adjusted basis?

Yes. That's correct. On an adjusted basis.

Great. So, that rate of decline has been coming down over the course of the year. And are you more confident you're now at a level where we can get some growth back from here?

I think at Foxtel the key mission, in a sense, is still driving subscriber volume so that we create long-term value, both for Foxtel and its partners. So, I think you'll see we will continue to have offerings in the market, and that might mean that we have to continue investing in some marketing. But we're focused on volume. And at this stage we're not really giving any guidance on where the EBITDA might be. I think PT is very focused on making sure we drive subscriber growth.

Great. Could I just ask about the cost base in general of Foxtel? You're talking about better control or looking at costs across the group. Is there opportunity to reduce costs at Foxtel?

Yes. I think definitely. I think Peter Tonagh and his team are looking at all aspects of costs, including set-top-boxes. And we're looking at all the agreements we have in place to try and see whether we can improve on profitability. It's a constant, ongoing thing they're doing.

And to add to Bedi's thoughts, clearly Peter Tonagh and his team want to focus on the core marketing of the core Foxtel offering. That is the key for growth, not only at Foxtel but also at Fox Sports where, thankfully, we are seeing a take-up of the Fox Sports package in new Foxtel subscriptions well into the 90% range, which is indicative of Fox Sports' power but also indicative of the importance of Foxtel as a conduit for those subscriptions.

Craig Huber, Huber Research Partners.

Just curious for Move, realtor.com, what was the EBITDA in the fourth quarter and the full year? And if you could pull out the legal expenses that would be helpful, please.

In terms of legal expenses, for the full year we spent $38 million and it was $15 million in the quarter. We're not breaking out a specific EBITDA number in a fall Move, but I think it's fair to say we are very pleased with the way Move has performed. And it is EBITDA positive very nicely if you exclude the legal expenses, and even if you exclude stock-based compensation expense.

I would say that we've invested a lot in More in terms of marketing and new products. But I would say that Move is better placed today in terms of EBITDA than it was in its last year as a standalone public company 18 months ago. And we expect that this EBITDA is going to ramp going forward.

Just to reemphasize what Bedi said, our core EBITDA was nicely positive. And, unlike many digital companies, our core EBITDA does indeed include stock-based compensation.

Doug Arthur, Huber Research.

Bedi, adjusted EBITDA of $274 million, up 23%, maybe I missed this, what impact, if any, did the extra week have on that number?

We've given out to the revenue impact of the extra week. On the EBITDA impact I think it's, you can assume that the quarterly margins for each segment can be applied to revenue to derive that. The revenue impact was $112 million for the quarter. The majority of it was in news and information services.

Okay. So I can just extrapolate from there. Okay, thank you.

Brian Han, Morningstar.

Just a couple quick ones. For Fox Sports, what percentage of Fox Sports' revenue is from advertising? And also, how much net debt is in Foxtel now?

Advertising is about 20% of total revenue, and it's been growing quite nicely, thanks in part to the very strong ratings we've been having. I'm sorry, your second part of your question was --?

How much net debt is in the Foxtel vehicle?

It's about $3 billion total debt in Foxtel financial statements.

Okay. Thanks very much, Bedi.

And, by the way, we will be filing those financial statements along with our 10-K, so you should be able to get a full detail of the debt position.

Sacha Krien, CLSA.

Just a couple questions for Bedi, please. Bedi, you called out the legal costs on Move for the financial year. Just wondering if you can do the same for News America Marketing, and whether there's any reason those costs weren't pulled away.

And then, secondly, just in relation to sports rights renewals, I think you mentioned there weren't any major renewals on the horizon. Does that also apply to Foxtel? I thought maybe we had the AFL rights coming through this year.

On NAM, we haven't actually broken out the numbers. It's fair to say that we incurred significant legal costs in FY16, and we would expect those to be considerably reduced going into FY17.

On the sports rights renewals, we actually renewed the AFL deal at Foxtel recently, so we don't expect any additional AFL type renewal at Foxtel.

Through Foxtel, Fox Sports, we have the AFL and NRL rights up to 2022. And I have to say, we're delighted with the ratings this year, particularly the NRL ratings at Fox Sports. Patrick Delaney and the team there are doing a wonderful job of highlighting the value of the franchise.

(Operator Instructions)

Raymond Tong, Goldman Sachs.

Good morning, guys. Just a question on the UK business. Can you maybe give a bit of color on your expectations and the impact of Brexit on the business, please?

Generally, we haven't seen a particular impact of Brexit. There's been a little bit of economic uncertainty. There have been various stimulus measures promised by the Bank of England. We are seeing how the government responds.

To be honest, the most important thing will be, more generally, the economic policy of the UK government. And it's fair to say that one clear sign of our confidence in the UK was our planned acquisition of the Wireless Group. Certainly it's our hope that the UK government will take advantage of the opportunity to introduce policies that are pro growth. And if that's the case then we would expect all of our businesses to thrive and for us to be in a position to take advantage of that circumstance.

It appears there are no further questions at this time. Mr. Florin, I'd like to turn the conference back to you for any additional or closing remarks.

Great. Thank you all for joining. Have a great day and we'll talk to you next quarter.

This concludes today's call. Thank you for your participation. You may now disconnect.