News Corp (NWSA) 2018 Q3 法說會逐字稿

Good day, everyone, and welcome to the News Corp's Third Quarter Fiscal '18 Earnings Conference Call.

Today's conference is being recorded.

At this time, I'd like to turn the call over to Michael Florin, Senior Vice President and Head of Investor Relations.

Please go ahead, sir.

Thank you very much, Sophie.

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

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

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

We will open with some prepared remarks, and then we'll be happy to take questions from the investment community.

This call may include certain forward-looking information with respect to News Corp's business and strategy.

Actual results could differ materially from what is said.

News Corp's Form 10-K and Form 10-Q filings identifies risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information.

Additionally, this call will include certain non-GAAP financial measurements such as total segment EBITDA, adjusted segment EBITDA and adjusted EPS.

The definitions and GAAP to non-GAAP reconciliations of such measures can be found in our earnings release.

With that, I'll pass it over to Robert Thomson for some opening comments.

Thank you, Mike.

In the third quarter, we again saw strong results across the company with revenue growth in every segment.

In fact, we experienced higher growth in the third quarter than in any quarter since our rebirth as the new News in 2013.

The company continues to deliver on its strategic mission to become increasingly global and digital, with an ever-greater focus on collaboration and innovation, and that focus is evident from this quarter's results.

We are particularly pleased with the progress in Digital Real Estate, where revenues grew 27%, and we fortified the business for future growth.

Revenues for the quarter were $2.1 billion, representing a 6% increase year-over-year.

Total segment EBITDA for Q3 was $182 million, a 15% decline from last year, a result that was impacted by certain singular items, which Susan will momentarily detail.

It's worth highlighting that for the first 9 months, reported revenues were $6.3 billion, up 4% year-over-year and total segment EBITDA was $760 million, up 13% on the equivalent period last year.

Reported earnings in the third quarter were affected by noncash write-downs of $998 million related to Foxtel and Fox Sports Australia.

As was previously disclosed in March, a noncash impairment charges of $165 million related to News America Marketing.

Starting with the fourth quarter, the combination of the Digital Real Estate Services and cable TV businesses is expected to account for significantly more than half of our profits.

The Foxtel-Fox Sports Australia consolidation is also expected to make circulation and subscription revenues the biggest revenue stream for News Corp for the first time.

This should give us more protection against the vicissitudes of our volatile advertising market.

The social and political debate over the digital platforms and their influence has intensified in recent months, as is certainly appropriate.

For many years, News Corp, under the leadership of Rupert and Lachlan Murdoch, has highlighted the deleterious effect the platforms have had on journalism.

The outcome of this debate will have a profound impact on our business and on the societies in which we operate.

The end of Google's prejudicial First Click Free policy, which punished high-quality journalism, has already benefited our mastheads, and we appreciate the work of Sundar Pichai in particular.

It is, however, just the first step on the pathway to prominence.

We and other publishers are also in discussion with Facebook, which certainly professes concern about virtue and veracity.

While authenticated professional news may represent a minority of the content on Facebook, there is no doubt that the company needs trusted publishers to enhance an experience that is being polluted by fake news and ubiquitous ill-informed, sometimes malicious gossip.

The sheer amount of personal data collected by Facebook, Google and Amazon means that governments are rightly considering the establishment of an algorithm review board which, if properly conceived, would provide the necessary transparency for individuals, clients and competitors concerned about algorithmic abuse.

These algorithms are already potent, but they are destined to be much more formidable.

And their abundance, potential to skew news and skew our customers' needs to be better understood and monitored.

And an Algorithm Review Board, or ARB, would be particularly useful in the oversight of companies which have horizontal dominance and use that leverage to dominate a vertical, such as Amazon with audiobooks and potentially Facebook with dating.

We are confident that a renewed focus on provenance and on integrity will benefit our mastheads, our journalism and our advertising clients, who are learning more each day about the potential dangers of digital.

Challenging these dominant digital platforms is important for our businesses, but also meaningful for the societies in which we operate.

Now let's examine in more detail this quarter's results.

I'll start with Digital Real Estate Services, which continue to fulfill its promise as a core and increasingly important revenue and profit driver.

REA Group had an impressive quarter, and Tracey Fellows and her team are continuing to provide valuable services to our clients, while being restlessly determined to enhance the experience on the site.

REA maintains a very healthy lead over its competitor and solidified its position with 35% revenue growth year-over-year, helped in part by its emerging financial services business.

REA gained traction with its home mortgage operations.

And as of the end of March, had more than 0.25 million self-completed financial profiles.

Given the concern about the financial services industry in Australia, the team perceives an opening for a business that truly focus on customers' needs and aspirations.

Meanwhile, REA saw strong traffic growth in Southeast Asia with signs of improving revenue trends from the previous quarter, in a market that is still in the early days of its digital evolution.

Last week, REA announced the acquisition of Hometrack Australia, a provider of innovative property data to the financial services sector.

This will allow REA to deliver an increasing flow of insightful intelligence to customers and consumers, and should further strengthen its position at the heart of the Australian property market.

At Move, there was 15% revenue growth, overall, with a healthy 19% coming from its core real estate business.

It was a robust performance in the lead base Connections for Buyers product as well as strong audience growth and more intense engagement.

In the next few months, realtor.com will be launching Realsuite, a mobile-based system which will enable advertisers to provide the best possible service to their clients, increasing responsiveness, highlighting meaningful leads and providing consumers with the level of service they expect throughout the transaction process.

Meanwhile, we note with much interest that Zillow is expanding its Instant Offers program.

Understandably, agents and brokers are eyeing this move with legitimate concern, as we believe Zillow's focus on house flipping is indicative of its long-term intent.

Our very close relationship with agents and brokers is even more valuable today as we work with the industry to drive high-quality lead volume and provide sophisticated market intelligence to sellers and buyers.

At News and Information Services, while print advertising remains challenging, we saw an overall improvement in advertising trends in the third quarter.

News UK reported the second consecutive quarter of ad revenue growth for the first time in 7 years.

And under Rebekah Brooks' leadership, all our U.K. mastheads gained market share in circulation.

Also in the U.K., Wireless Group experienced strong listenership and improved revenues compared to the prior year, with standout performances at Virgin Radio and talkRADIO.

Wireless' audience growth has outpaced the U.K. radio market, in general, based on the latest [radio] data.

talkSPORT is also looking forward, expectantly, to its coverage of the World Cup this June.

Clearly, audience interest will, in part, depend on England's on-field exploits.

Let us hope that past performance is no guarantee of future results.

Unruly had another strong quarter, driven by growth in the U.S., U.K. and Japan as programmatic continues to burgeon.

Unruly's consistent innovation in the ad distribution market and its provision of authenticated audiences make it particularly valuable at a time when advertisers are questioning value and veracity.

At Dow Jones, The Wall Street Journal's digital-only subscriber growth was 24% year-over-year.

Circulation revenues at Dow Jones, again, increased 10% as our publications served a growing public demand for a timely and reliable news.

Total subscribers across Dow Jones recently passed its 3 million target based on preliminary internal metrics, and we expect continued growth in coming quarters.

Revenues at the Professional Information Business expanded 9%, led by the sterling performance of Risk and Compliance, with 45% year-over-year growth in its revenues.

Reducing risk and ensuring compliance are clearly imperatives for our corporate clients.

While advertising declined overall, it did so at a slower rate compared to Q2, driven by low teens digital ad growth.

The New York Post had strong advertising and audience numbers with 87 million uniques in March, a 72% year-over-year spike.

In Australia, we made progress in reviewing our regional papers and continue to focus on core metro titles and The Australian, streamlining the business and improving operating efficiencies.

Digital paid subscribers in News Corp Australian grew 23% and we also saw robust digital ad revenue growth.

One final note for the News and Information Services segment.

Taken together, our premium publications, The Journal, The Times and Sunday Times and The Australian, experienced an average growth in digital subscriptions for Q3 of more than 20%, a testament to the success of the digital transformation of these mastheads.

In Book Publishing, we experienced a strong quarter with robust revenue and profitability at HarperCollins.

This success was driven in part by best-selling U.S. titles such as A.J. Finn's The Woman In The Window, the only debut work of fiction in the past 12 years to immediately reach #1, and the continuing strength of Mark Manson's The Subtle Art of Not Giving a F*ck.

Notably, our Christian publishing arm performed well with one of the year's best-performing titles, Kathie Lee Gifford's The Rock, the Road and the Rabbi, and renewed interest in the works of Billy Graham.

Brain Murray's team continues to look for ways to leverage our global platform, including an important pact with best-selling author, Daniel Silva, acquiring the world rights to 6 more of his books starting with The Other Woman in July 2018.

We have finalized a licensing deal with Amazon to create an original television series based on The Lord of the Rings by J.R.R.

Tolkien, underscoring the power of our back list.

We expect to generate incremental revenue in the fourth quarter of this fiscal year as a result of this deal.

We're excited about the combining of Foxtel and Fox Sports Australia, giving News Corp 65% of the business and our partners at Telstra of 35%.

This agreement creates fresh opportunities for collaboration and comes at a time when over-the-top is becoming a significant part of our consumer portfolio.

We believe Foxtel and Fox Sports Australia, together, will provide consumers a compelling offering with incomparable programming and a tangibly improved user experience.

Cricket is core to Australian culture, and we have secured prime rights for 6 years with Cricket Australia.

Fox Sports has plans to launch a dedicated cricket channel in the coming months to make the most of those rights.

For the first time, fans will be able to watch the game without interruption where and when they want.

Fox Sports will simulcast all cricket matches both in linear and digital formats, and will have valuable exclusivity for a number of crucial encounters.

The cricket contract also means that we are now able to boast strong sports programming year-round, given our core NRL and IFL rights.

And we are optimistic that our more complete sports offering will minimize churn.

The coming year is, obviously, of vital importance and we expect the repositioning to be followed by a renaissance of the company.

In summary, we are pleased with the revenue growth we've seen across every segment of our business.

We cherish the strength of digital subscriptions at our key mastheads, the vigor of our Digital Real Estate and global Book Publishing businesses and the promise of a significant transformation of News Corp with the consolidation of Foxtel in the current quarter.

The character of our company will be enhanced and our reported revenue and EBITDA will be boosted significantly.

With that, I'll turn the call over to our CFO, Susan Panuccio.

Thank you, Robert.

Turning to the financials.

Fiscal 2018 third quarter total revenues were $2.1 billion, up 6% compared to the prior year, with revenue gains across the portfolio led by our Digital Real Estate Services segment.

Reported total segment EBITDA was $182 million, down from $215 million in the prior year.

For the quarter, we reported a loss per share of $1.94 compared to a loss of $0.01 in the prior year.

The loss was primarily driven by the pretax noncash write-downs of $998 million related to Foxtel and Fox Sports Australia, as we communicated in March, and impairments related to News America Marketing which totaled $165 million.

On an adjusted basis, which excludes those and the other items shown in the press release reconciliation table, earnings per share was $0.06 compared to $0.07 in the prior year.

As Robert mentioned, we closed the Foxtel transaction at the beginning of the fourth quarter, and those results will be consolidated with Fox Sports Australia during quarter 4, which I'll discuss in a few moments.

Turning now to the individual operating segments.

In News and Information Services, revenue for the quarter were $1.3 billion, up 2% versus the prior year, a slightly improved rate over the previous quarter.

Foreign exchange contributed $50 million this quarter to revenue.

Within segment revenues, advertising revenues were down 3%, and circulation and subscription revenues increased 7%, with foreign currency benefiting advertising by 3% and circulation and subscription revenues by 5%.

Within the segment, reported revenues at Dow Jones rose 4%, News UK rose 10%, News Australia declined 3% and News America Marketing fell 5%.

More revenue details will be provided in the 10-Q filing tomorrow.

News and Information segment EBITDA this quarter was $85 million, down 31% versus the prior year.

You may also recall that last year's results included a $12 million benefit related to an adjustment to the deferred consideration for Unruly.

We also had higher expenses this quarter at News UK, much of which was timing related.

There are also a few highlights that I would like to mention from the segment.

We again saw digital subscriber growth across our news businesses.

At Dow Jones, circulation revenues grew 10%, the fourth consecutive quarter of double-digit growth, benefiting from strong growth in The Wall Street Journal digital-only subscribers, which were up 24% year-over-year and up 7%, or 101,000, versus our fiscal second quarter.

Pleasingly, we also saw an increase in subscriber ARPU at Dow Jones.

In addition, we again saw strong year-over-year digital subscription growth at The Times and The Sunday Times up 24% and at News Australia up 23%.

At Dow Jones, we saw further revenue acceleration in the professional information business, which contributes to over 1/4 of the Dow Jones revenues.

This past quarter, the Professional Information Business posted 9% revenue growth, led by Risk and Compliance, which grew 45%, and is on pace to exceed $100 million in total sales this year.

Advertising continues to be mixed across our news portfolio, but overall showed slightly better performance than last quarter.

The U.K. was again a solid performer with advertising up 16% versus the prior year, or 3% in local currency, similar to its Q2 performance, led by digital advertising growth and moderating print advertising declines, particularly at The Sun.

News Australia advertising declined 5% versus the prior year, or 9% in local currency, a slight improvement versus the second quarter rate.

Dow Jones advertising was down low double digits, improving on the trend from the second quarter, led by a strong performance in digital advertising.

The closure of The Wall Street Journal international print edition impacted Dow Jones advertising revenues by $6 million, which represented about half of the decline this quarter.

Our cost initiatives are being centered around Australia, given the reliance on print advertising in that market.

We have already significantly exceeded last year's AUD 40 million in cost savings during the first 9 months of the year, and continue to look for additional efficiencies.

We are also continuing to review our portfolio in Australia as we focus on improving our profitability.

And globally, as we have done in the U.K., we are in discussions with industry participants about potentially sharing printing and distribution facilities to drive further operating efficiencies.

Finally, at News America Marketing, overall results were lower but saw a sequential improvement from the second quarter benefiting from one additional insert and higher digital growth, as we expected and communicated on the last earnings call.

Turning to our publishing segment.

We posted a very solid quarter led by strong front list and back list performances.

Revenue for the quarter increased approximately 6% to $398 million and segment EBITDA increased 16% to $43 million.

Total results from general books and Christian publishing drove overall performance this quarter.

As Robert mentioned, this quarter benefited from the continued performance of The Woman in the Window by A.J. Finn and strong performances from the back list.

Overall, the back list contributed approximately 58% of revenues in the quarter, up from 52% last year, helping to drive higher margin.

Total digital revenues for the quarter grew 5% and represented 22% of consumer revenues, in line with the prior year, due to the strength in the downloadable audiobooks which now comprises 25% of digital revenue.

In the Digital Real Estate Services segment, revenues increased 27% to $279 million.

Reported segment EBITDA was up 17% to $88 million.

REA Group revenues grew 35% due to very strong residential debt revenue growth in Australia, including high penetration for Premiere All, the integration of the Smartline acquisition and benefit from currency.

While listing volumes were down modestly, partly due to an early Easter, we saw relatively stable trends in both Melbourne and Sydney.

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

Move revenues rose 15% to $115 million versus the prior year driven by strong performance from connection suppliers, which is benefiting from higher customer flow and higher yield.

While core real estate revenues grew at a notably higher rate than the base growth rate, we saw slower growth in non-listing advertising revenues this quarter as part of a plan to test reducing advertising loads in select markets to drive engagement and lead volume, with early results encouraging.

Average monthly unique users at realtor.com were approximately 61 million for the quarter, rising 10% versus the prior year, and reached 65 million in April.

Move's operating expenses were higher this quarter, driven by planned incremental marketing to drive revenue growth and partly to increased traction in New York.

We are also rebranding our core fleet of professional services and tools ahead of a commercial launch in the next few months.

In Cable Network Programming, revenues increased $7 million, or 6%, to $129 million.

Segment EBITDA in the quarter fell to $16 million from $34 million in the prior year, primarily due to the phasing of programming amortization and higher programming costs related to the NRL, which led to approximately $22 million higher costs this quarter.

We also incurred approximately $2 million of expenditure related to the proposed combination of Foxtel-Fox Sports, which was excluded from adjusted EBITDA.

The bulk of the transaction costs will be recorded in the fourth quarter.

With respect to equity losses from affiliates, equity losses of affiliates of $974 million reflects the $957 million noncash write-down of the carrying value of Foxtel in the quarter, as we had previously disclosed in March.

This compares with negative $23 million in the prior year period.

Foxtel revenues for the third quarter declined 1% to $587 million, and EBITDA decreased 21% due to planned increases in sports programming costs of $80 million, primarily related to The Australian Football League rights and carriage fees for Fox Sports Australia as well as lower revenues.

On operating metrics, Foxtel's total closing subscribers were approximately 2.8 million as of March 31, up nearly 1% versus the prior year, driven by Foxtel Now subscriptions, which were offset by lower cable and satellite subscribers and the termination of T-Box subscribers, as part of the planned wind-down in the quarter.

In the third quarter, cable and satellite churn were 15.4%, down from 16.1% and ARPU was down 1%.

In early April, we completed the transaction with Telstra to combine Foxtel and Fox Sports into a new company, in which News Corp now owns 65%.

The Foxtel results would be consolidated with Fox Sports Australia during the fourth quarter, and it will also include approximately $1.7 billion of debt.

As a consequence of the transaction, there will be some initial reinvestment required to improve the earnings and subscriber trajectory.

To that end, one big step, as Robert highlighted, was securing long-term domestic Cricket rights, which will now materially improve Fox Sports with some offering, focusing on both subscriber volume and churn.

On the core broadcast business, our goal will be to maintain the subscriber base and manage churn effectively.

We are progressing with the rollout of iQ3, which is showing promising signs on churn reduction and ARPU lift, and today has been deployed to approximately 1/4 of our broadcast base.

We expect to continue to expand penetration of new set-top boxes and also to develop a next-generation box with enhanced customer features.

Over-the-top will be a key growth initiative.

This past fiscal year, our product development was focused on launching an IT version of our broadcast offering, which has helped to extend our reach and capture more of the affordable segments.

Our goal in fiscal '19 is to launch new sports and non-sports products built on an IP-only platform targeted at specific demographics.

With new management in the business, we are reviewing the cost base looking across content and operations to deliver further efficiencies and to ensure the business is rightsized to deliver the new initiatives.

Looking to the fourth quarter, there are a few comments I would like to make.

At News and Information Services, advertising trends, so far, appear broadly in line with the third quarter.

However, we do expect slightly higher marketing costs in the fourth quarter at Dow Jones, mostly related to driving higher digital paid subscriber growth.

At Fox Sports and Foxtel, we will consolidate Foxtel in the fourth quarter, which will be reflected in newly formed segment called [Subscription Video Services], which will also include the Australian News Channel operator, Sky News.

Overall, we expect subscriber trends at Foxtel to be relatively similar to the prior quarter, but do expect some additional OTT investment.

Results in the segment are also expected to include transaction costs in the $10 million to $15 million range.

In Book Publishing, we expect to realize over $20 million in additional revenues in the fourth quarter from the agreement with Amazon to license The Lord of the Rings by J.R.R.

Tolkien for a TV series.

At Digital Real Estate Services, we expect continued strong revenue growth at REA, which should show some improvement in listing volumes, helped by the absence of Easter.

And like the third quarter, we anticipate higher investment spending at Move to drive traffic and support new products.

While we're in the process of completing our purchase price allocation of Foxtel and evaluating the related impact from the profit and loss, there are a few items below the line worth mentioning regarding the Foxtel consolidation.

Foxtel standalone depreciation and amortization for the first 9 months totaled $187 million, including $69 million for the quarter.

In addition, we have also amortized an additional $49 million and $17 million for the first 9 months of the quarter and the quarter, respectively, related to the excess cost of our 50% share of the business that we acquired by the CMH acquisition in 2012.

Foxtel results will be removed from the equity income and the 35% stake Telstra owns at the combined company will be reflected in minority interest going forward.

We will also consolidate Foxtel's interest expense, which will reflect the $1.7 billion in debt that we will include on our balance sheet.

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

(Operator Instructions) And we'll take your first question from Alexia Quadrani with JPMorgan.

I was curious, if given all the changes in sort of the broader media industry, specifically the M&A, amongst many of the other media -- your peers, has it influenced your longer-term strategic outlook for your business?

Do you think you have the right size, right asset mix?

I know you've got a lot of different things planned in different parts of your business, but it's sort of a bigger picture question.

Well, Alexia, we're constantly reviewing our situation and opportunities that may or may not arise.

But what we certainly won't be doing is paying silly money for overpriced, overhyped targets.

As you can see with the investments we've made, thus far, with realtor, with Harlequin, we've been able to use our existing assets to transform their value.

And that has been a benefit, obviously, to the company, but most importantly to shareholders.

And we'll certainly always have shareholders in mind when contemplating any potential investments.

Next question comes from Kane Hannan with Goldman Sachs.

On Move, could you just update us on the progress you've been making that pushes the New York market and then whether that was the main driver of the increased customers you called out in the release?

Certainly, we're making genuine inroads into New York where, historically, realtor.com hasn't had a particularly powerful presence.

And overall, the audience at realtor in the quarter was 61 million monthly.

That was up 10% in April, 65 million.

So we're still seeing continued growth not only in New York, but around the country.

And there's much discussion at the moment about the general health of the housing market in the U.S., so listing volumes down about 7.2% year-on-year at present.

But when you look at the broader trends in the U.S. economy, we're clearly going through a phase -- at least I would argue, en route to significantly more liquidity.

The March seasonally adjusted annualized figures for sales are around $5.6 million.

The median sales price was up 5.8% to around $250,400.

And significantly, the number of homes in the U.S. seriously underwater, in Q2 2012, that was 28.6% of U.S. homes seriously underwater.

That's down to 9.5% of homes.

And given the issue at the market, at the moment, is not a problem of demand but a problem with supply and a compounding factor in the past has been a lack of job security.

What -- with the strengthening of the U.S. job market, you'll see more people more confident about moving homes to a better job.

Job mobility means mobility -- mobility means people moving and that will be good for business.

Next question comes from John Janedis with Jefferies.

I was hoping you could give a little bit more detail on digital subscriptions growth at The Journal.

Were you incrementally more promotional during the quarter to drive subs?

Where are you sourcing them from?

And bigger picture, you've obviously been vocal in Google and Facebook.

Any thoughts there on movement in terms of modernization of news content on digital platforms?

John, entitled digital paid subscribers at The Journal were up 24%, so they're now 62% of overall subs.

We're seeing broad-based interest in The Journal.

Obviously, it's a business-oriented publication, but also one with general appeal for a certain demographic and that is quite broad.

The other thing to bear in mind with those subscriptions is that each of them is an opportunity to upsell to higher-priced, high-yielding professional information.

From a broader perspective, our concern has not just been for our publications which, of course, is our prime concern, but also for an ecosystem which was digitally dysfunctional.

One in which premium content was actually diminished in stature by the very fact that, in Google Search, as you weren't basically able to find it.

That has changed and we applaud that measure by Google.

But as I mentioned, that's really step 1 on the pathway to provenance.

So we're engaged and thankfully these days, unlike the past, many more publishers are engaged not only in the U.S. but globally.

And also more governments are engaged in the debate over what the digital landscape should [look] like.

And with more focus on that ecosystem, more focus on provenance, there should be more opportunity for us for more profits.

I think I'll just also add to your question as well.

We are, obviously, looking to expand the offering internationally across education and with students as well.

But what is pleasing is the ARPU is holding up and actually staying up year-on-year.

So I think that's important even as we go through this broader based.

I think the other part of your question was about our office, and I think it's important to note that we haven't changed our interoffice in the U.S., so they have remained consistent.

Notwithstanding that, obviously, the digital growth and the ARPU growth.

The next question comes from Entcho Raykovski with Deutsche Bank.

My question is around the new subscription video services segment.

Could you give us some idea on the expectations for cost growth within the segment given -- in FY '19, so looking beyond the current year, particularly given the acquisition of the Cricket rights?

And I know you've obviously spoken about using over-the-top products and a dedicated Cricket channel, but just interested in whether you think you can recoup those costs.

Well, Entcho, clearly, a problem for Foxtel and Fox Sports has been the summer lull, where there wasn't a compelling sports offering, which was why we acquired the Cricket rights for 6 years.

And one, cost of that summer lull has been significant churn, and with churn comes cost.

So I think we are very confident that the team will put together a compelling summer package that will make Foxtel a year-round experience.

It's a little early for us to give you details, meaningful details about the level of investment in the coming year.

But as Susan mentioned, we will be focusing on the development of OTT and frankly, addressing issues that in the past have been problematic at Foxtel around the user interface.

We want a user interface that's not in your face.

And there's a real opportunity given the new structure at Foxtel, a clearer management lines and the new team under the leadership of Patrick Delany, to take advantage of what is a peerless portfolio of sports and entertainment rights.

I think, Entcho, I'd just sort of just add, our key priorities, whilst we don't give out guidance obviously on cost going forward and what that may look like, is to stabilize the broadcast proposition.

And cricket is, clearly, going to be important part of that, as Robert mentioned, and particularly over the summer months to have a look at churn and also to push volume going forward.

We are looking to expand the rollout of the iQ3 and investing in new Fox going forward, and so that will be something that you will see going forward.

And we're also looking to improve the customer service, obviously, in order to get more customers in.

We've also mentioned that we're looking to expand the OTT propositions, and we want to look at sport as well as non-sports genres, but we also are rightsizing the cost base.

So there's been a lot of cost work actually done today, so even before the merger happened.

And the team down there is still heavily focused on looking at getting costs out so they go and set up with the reinvestment that we're looking at.

So there's going to be lots of activity, obviously, that's going to happen going forward, but you're always in the quest to drive subscribers at a higher value going forward.

Next question comes from Eric Katz with Wells Fargo.

You mentioned earlier, potential reviewing the portfolio in Australia.

Have you identified assets at this point?

Can you size it?

What's the time line and why now?

I think we generally don't comment on, obviously, forward-looking acquisitions or divestments, and I think that's a practice that we'll stick to.

But what we have said in the past is that we are always looking at our asset portfolio.

We had been very clear that we're looking to simplify the portfolio and drive profitable growth.

And to that end, we obviously will look at any opportunity to come our way in relation to the assets that we have down there.

Next question comes from Craig Huber with Huber Research Partners.

First of all, given the detail on the advertising by region and stuff, I guess, a similar question.

What was the circulation revenue for Wall Street Journal Australia and U.K. with or without currency on a year-over-year basis?

And then separately, Susan, if I could ask a housekeeping question.

You gave a lot of D&A numbers there, but is the quarterly D&A number starting here in the June quarter going to be roughly about $170 million?

Where is that going to fall at?

It was about $100 million this last quarter.

Thanks, Craig.

So I think in relation to your first question, in relation to the circulation, so in local currency, we're expecting Dow Jones to be up about 12%; The Wall Street Journal up about 12%; News UK, we're expecting in local currency to be down 5%; and News Aus, we're expecting to be relatively stable.

In relation -- what was your question in relation to the D&A, sorry?

Well, the D&A for the upcoming quarter for the whole companies, including Foxtel, is it about $170 million or something?

We don't comment on -- obviously, Craig on forward-looking projections.

But obviously, as they become clearer, we'll communicate those.

What would it be, if I could ask for the March quarter, if you had it already in there Foxtel?

We had that in the prepared comments actually.

We read that out.

I'll just look back through it.

We had D&A for the first 9 months totaled $187 million, including $69 million for the quarter.

And then we also amortized an additional $49 million year-to-date or $17 million for the quarter in relation to the CMH acquisition.

The next question comes from Brian Han with Morningstar.

Just out of interest, does Mr. Rupert Murdoch still spend much time thinking and talking about News Corp businesses?

Or do you think he's increasingly more preoccupied with what's going on at Fox?

Well, I can only speak for our experience, which is that Rupert is very much engaged in the company, actively so as Executive Chairman.

He's across all the businesses and his level of interest remains intense.

(Operator Instructions) And our next question comes from Raymond Tong with Evans & Partners.

You mentioned that you have passed the $40 million sort of cost out target this year for News Corp Australia.

Can you maybe talk about sort of further cost out opportunities?

And also, you mentioned you're exploring sort of potential sharing of printing costs with Fairfax.

Can you maybe just discuss that a little bit, please?

So the team in Australia continue to remain focused on how they can drive those efficiencies down there.

And they have been looking right across the business, whether it's back office functions and organizational redesign and there's been some announcements that have come out in the market out there anyway over the previous couple of months.

In relation to the industry solutions, I think, as I was said, globally, we're actively looking at whether there are opportunities from a press site facility as well as distribution facilities, and we will continue to explore those options.

Obviously, they need to make sense for both parties and they can be quite detailed in drawn out commercial negotiation.

But we have had tremendous success with both negotiations over in the U.K. and we've had much success.

And we have no reason to believe that we can't draw similar conclusions in other markets that we're having a look at.

So the team do continue to remain focused on replacing legacy systems, removing antiquated practices and driving efficiencies via those means.

And we believe that there's still opportunities where they can continue to get cost out going forward.

And there are no further phone questions at this time.

So I'd like to turn the call back over to Mike Florin for any additional or closing remarks.

Well, thank you all for participating.

Thank you for your help, Sophie.

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

And this concludes today's conference call.

Thank you all for your participation.

You may now disconnect.