Michael Florin:

Thank you very much, operator. Hello everyone, and welcome to News Corp's fiscal third quarter 2024 earnings call. We issued 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 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 identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 the earnings release for the applicable periods posted on our website. With that, I'll pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert, and good afternoon to everyone. As Robert highlighted, we remain focused on the execution of our strategy to transform News Corp with an increased mix of recurring and digital revenues as we continue to expand our information services businesses. This has been balanced with reinvestment in key growth initiatives and cost efficiencies as we navigate ongoing inflationary pressures in our markets. Our third quarter total revenues were over $2.4 billion, down 1% compared to the prior year, while adjusted revenues were flat compared to the prior year. Total segment EBITDA was $322 million for the quarter, up 1% compared to the prior year on a reported and adjusted basis and ranked as the second most profitable Q3 since the company's separation in 2013. For the quarter, we reported earnings per share of $0.05 compared to $0.09 in the prior year. Adjusted earnings per share were $0.11 in the quarter compared to $0.09 in the prior year. Moving on to the results of the individual segments, starting with Digital Real Estate Services. Segment revenues were $388 million, up 7% versus the prior year and up 9% on an adjusted basis. Segment EBITDA was $104 million, up 2% as higher profit contribution from the REA Group was partly offset by lower revenues and approximately $11 million of higher costs at Move. Adjusted segment EBITDA grew 7%. REA had another very strong quarter with revenues rising 15% year-on-year on a reported basis to $256 million and up 20% in constant currency. Growth was again driven by a combination of residential yield increases and improved growth in national listings, favorable geographic mix and customer contract upgrades. New buyer listings rose approximately 6% with Sydney up 20% and Melbourne up 18% despite an early Easter which negatively impacted March volumes. Please refer to REA's earnings release and their conference call for more details. Move's revenues of $132 million were down 6% compared to the prior year with declines continuing to moderate from recent quarters. For the quarter, real estate revenues fell 5% driven by lower referral and lead gen revenues, reflective of the broader industry trends and lower transaction volumes. We saw an improvement in lead volumes for the first time in over two years growing 4% year-over-year, benefiting from product enhancements and some stabilization in the housing market. Average monthly unique users for the quarter were flat versus the prior year at 72 million, but improving 9% from the second quarter. As Robert mentioned,.we announced a rentals partnership with Zillow to syndicate large multifamily rental listings which went live May 1. The agreement financially beneficial allows us to materially expand and improve our rental content offerings and to reallocate investment to marketing and our core buy and sell-side offerings. As we communicated last quarter, we are focused on best positioning realtor.com for a housing recovery and as a result are increasing the rate of reinvestment in the second half of fiscal 2024. To reiterate, some of the key strategic focuses include modernizing the technology stack, ensuring we have the best content for our product offerings and leveraging News Corp's network to drive audience share. Damian has been very focal about the ongoing benefits of buyer agents. And while we will closely monitor the impact of the proposed NAR settlement, we continue to believe in the long-term opportunity for realtor.com and have not altered our strategic direction which already includes diversifying revenues and expanding our seller offerings which continue to scale. Turning to the Subscription Video Services segment. Revenues for the quarter were $455 million, down 5% compared to the prior year. On an adjusted basis, revenues were down 1% versus the prior year. Streaming revenues accounted for over 29% of circulation and subscription revenues versus 26% in the prior year. Total closing paid subscribers across the Foxtel Group were over 4.5 million at quarter end, down 1% from the prior year, but up 5% versus the second quarter as Foxtel transitions into the winter sports season. Total paid streaming subscribers were nearly 3.1 million, increasing 3% versus the prior year, benefiting from a strong start to the AFL and NRL seasons. Kayo added 269,000 paying subscribers this quarter, the highest sequential quarterly net addition since its launch in fiscal 2019, which is consistent with recent trends of customers returning post summer. Foxtel ended the quarter with over 1.2 million residential broadcast subscribers down 9% year-over-year. Broadcast churn was 13.3% versus 12.3% in the prior year, while broadcast ARPU rose 2% to AUD 85 benefiting modestly from new pricing and packaging plans implemented in March. Segment EBITDA in the quarter of $66 million was down only 3% versus the prior year despite the inclusion of $13 million of costs related to Hubbl, which launched in early March and a 4% negative impact from foreign currency fluctuations. Adjusted segment EBITDA increased 1%. Moving on to Dow Jones. Third quarter results were again strong at Dow Jones with revenues of $544 million, up 3% year-over-year with digital revenue accounting for 81% of total revenues this quarter, up 2 percentage points from last year. Circulation and subscription-based revenues represented 82% of total revenues, again reinforcing the stability and recurring nature of the revenue base. We saw strong growth at PIB, with revenues rising 10% year-over-year including a 15% growth at Risk and Compliance to $76 million and 15% growth at DJ Energy to $63 million. Total PIB retention rates remained strong at over 90%. Across the B2B portfolio this quarter over two-thirds of the growth is coming from new customers, new products or upsells with the balance coming from annual price increases. At Dow Jones Energy, the mix between pricing and volume is more balanced this year due to the benefit of a pricing review, which led to above-average increases. Within the Dow Jones Consumer business, circulation revenues were flat versus the prior year, with digital-only subscription growth accelerating from the Q2 rate to 17% year-over-year and higher by 322,000 subscriptions sequentially helped by increased penetration of the Dow Jones bundling offer as they look to better leverage subscription acquisition costs across multiple products, capitalize on minimal overlap between products and drive greater engagement. Bundling accounted for approximately 45% of the incremental digital-only volume growth in Q3 and now represents about 14% of total subscriptions. We have taken price rises this quarter increasing monthly rates by nearly 20% to a cohort of tenured print subscribers. Advertising revenues declined 2% to $86 million with year-over-year declines moderating slightly from the first half with digital improving up 4%, driven by a rebound in technology spend. wsj.com grew 12%, underscoring the strength of the platform and its valuable audience. Print advertising declined 11% due to weakness in the financial sector. Digital represented 63% of advertising revenues, up from 59% last year. Dow Jones segment EBITDA for the quarter grew 8% to $118 million and was again the largest segment EBITDA contributor across the company. Margins improved year-over-year by 110 basis points to 21.7%, driven by the strong B2B performance, which remains on track to be the largest contributor to Dow Jones profitability in fiscal 2024. Costs as expected rose modestly, partly due to the phasing of sales and marketing expenses as we mentioned last quarter. At Book Publishing strong growth in our Christian business was not enough to offset some softness in our road map general books and children's divisions. Consumer softness and headwinds in the mass merchandiser accounts such as Costco and Walmart were greater than we expected in March. Revenues were $506 million, down 2% but that compares with a record third quarter last year, while segment EBITDA improved 2% to $62 million compared to the prior year largely due to the easing of supply chain pressures and the cost efficiencies, driven by the HarperCollins team over the past 12 months. Margin improved slightly to over 12%. We continue to see improvements in supply chain-related costs, with freight distribution and manufacturing costs all down versus the prior year. Return rates again improved compared to last year while inventory levels appear to have normalized across our distribution network. The backlist contributed 63% of consumer revenues, up from 60% last year, while digital sales rose 5% this quarter reaching 25% of consumer sales. Downloadable audio rose mid-teens helped by the recent Spotify partnership. Turning to News Media, performance continued to be challenged in the quarter with print advertising declines returning to more historic levels. Revenues were $530 million, down 6% versus the prior year while adjusted revenues also declined 6%. Circulation and subscription revenues were flat and down 1% in constant currency as cover price increases and digital subscriber growth were offset by lower print volumes. Advertising remained challenging, down 13% both on a reported basis and in local currency, with print advertising trends notably weak across all markets. As our News Media businesses face ongoing print challenges they continue to work hard on their transition to digital and ongoing cost efficiencies. Segment EBITDA of $26 million declined $8 million, which was due to the lower revenue partly offset by lower print volume and newsprint expenses. Adjusted segment EBITDA declined 26%. As for the outlook, similar to our comments last quarter, it is challenging to forecast in the short-term albeit economic indicators vary across markets. Looking at each of our segments, at Digital Real Estate Services, Australian residential new buy listings for April grew 32% due to the timing of Easter, as well as easier comparisons to the prior year. Please refer to REA for a more specific outlook commentary. At Move, we hope to see continued moderation in revenue declines. Like the third quarter, we expect continued reinvestment in marketing and product development, which will be partially offset by cost reductions elsewhere and the new rental agreement with Zillow. In Subscription Video Services, consistent with our message last quarter, we continue to expect modestly higher expenses for the full year and some softness in streaming revenues due to the first half, which may impact full year profitability in local currency. At Dow Jones, while we continue to expect strong revenue and profitability performance for the full year, underpinned by our B2B offerings, we expect modestly higher overall expenses for the fourth quarter and full year. At Book Publishing, overall industry revenue trends appear relatively stable, albeit third quarter was a bit softer than the first half for physical sales, but we are encouraged by the strength in downloadable audio. We continue to expect margins to improve versus the prior year and expect strong performance in Q4, partly due to the prior year comparison. At News Media, advertising revenue trends remain challenging, particularly in Australia, and we will continue to focus on ongoing cost efficiencies in our digital product offerings. For the other segment, we expect costs for the fourth quarter to be in line with the previous three quarters. We now expect CapEx to be relatively stable to last year, slightly lower than our initial expectations. With that, let me hand it over to the operator for Q&A.

Entcho Raykovski:

Hi, Robert. Hi, Susan. So my question is around the Move investment, which you've made during the quarter and you flagged is ongoing. It sounds like it's both marketing and product development. Are you able to confirm that? And how much is going into marketing? How much is going to product development? And on the product development side, are you specifically targeting the sell-side agents with that spend given the NIR settlements? If you can provide some more detail around the sort of products you're investing in? And just more broadly, how do you think that settlement is going to impact the business model going forward? Thank you.

Susan Panuccio:

And Entcho, maybe just to add on that, too, I mean the spend itself is probably broadly focused roughly evenly across both categories. But I think the thing to remember is in relation to the back half of last year, we pulled back significantly on the marketing spend, particularly in Q3 and a little bit in Q4. So the prior year compares will look more challenging in relation to marketing spend. But to think about it more broadly, it's focused on both areas, product and marketing.

Operator:

Our next question comes from David Karnovsky from JPMorgan. Please unmute yourself to ask your question.

Robert Thomson:

Well, as for HarperCollins, we are all bookish to a certain degree and purchases ebb and flow like the pilot books on the bedside table. Early last quarter, sales were strong, and then there was clearly a slight pause in purchasing. But what I can say is that we have seen a return to strong year-on-year performance in April and have a compelling roster of new releases. And even in Q3, we saw an improvement in margin from 11.8% last year to 12.3% this year. We're certainly benefiting from the international expansion of audio books as you mentioned and the efforts of Spotify who have transformed audio book streaming revenue, which rose 14% in the third quarter. So, we're proud to partner with Daniel Ek and his talented team as they roll out streaming globally.

Michael Florin:

Thanks David. Leila, we'll take our next question, please.

Alan Gould:

Thanks for taking the question. Hello Robert, hello Susan. Question on the Google transaction. Can you flesh -- or this renewal can you flesh this out a little bit? And remember at one point last year you talked about a nine-figure deal with the digital companies, I don't recall if that was just Google or others. And does this include generative AI in addition to using your using your journalism for other sources?

Susan Panuccio:

And Alan just from a financial perspective well we've never given a doubt specifically you can assume that it's broadly consistent with the financials of the previous deal.

Robert Thomson:

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

Operator:

Our next question comes from Craig Huber from Huber Research.

Robert Thomson:

Yes Craig.

Robert Thomson:

Craig I'm sure that you and all on the call are sage enough to pass the phrases used in my earlier explanation and define the potential meaning. You can see that we're well advanced now thinking and planning and that planning has involved necessary regulatory steps and those were not simple steps to ensure that we have maximum flexibility genuine optionality. We want to continue to generate momentum and create maximum value for our shareholders. And we're certainly not complacent. Even though the share price has risen as of yesterday just over 46% in the past year we do recognize that there is a significant sum of the parts discount so stay tuned and not indefinitely.

Operator:

Our next question comes from Darren Leung from Macquarie. Please unmute your line.

Susan Panuccio:

Darren I think when we think about it from the last quarter I think we talked about this there was the writers' strike towards the back end of last year and that obviously had an impact on the content that was flowing through there. So, that did have an impact on the subscribers and we're seeing a carry forward of that. I mean that's really what the impact is.

Operator:

Our next question comes from Lucy Huang from UBS.

Susan Panuccio:

I think Lucy you might remember we did --we sort of announced I think probably a year ago the 5% head count reduction. And I think we quoted a number of 160 million for the cost out. I mean it's great that we're actually -- we hit those numbers and exceeded those numbers actually. But the really good thing is that the businesses are actually always focused on costs. So whilst that was a particular exercise that we did across the whole group. Across all our businesses there are different transformation initiatives that they continue to work on as they look for efficiencies. So we feel pretty confident that we've got a good cadence in relation to that that can help offset any shortfalls in revenue. And that's why you've seen such good margin expansion in the year.

Operator:

Our next question comes from Brian Han from Morningstar. Please unmute your line to ask your question.

Susan Lee:

We sort of we're trying to keep the balanced reinvestment within REALTOR itself. So I think I said in my prepared remarks we've got some benefit from the upside in the new rental agreements that we've done with Zillow and we've got some other cost savings that we're doing with realtor. So whilst there is an increase in cost we are trying to manage it there. I think when we sort of think more broadly about costs across the business and sort of to the earlier point that we talked to with Lucy -- we just constantly focus on looking for efficiency. So the UK, we've announced a pivot in the TalkTV strategy to streaming and that should unlock some savings which we'll really see come through in fiscal 2025. The UK team have also announced a joint venture with the Daily Mail Group in relation to joint printing that should unlock further savings. We know our Australian team are constantly iterating when it comes to savings. So we sort of we try and have to think about it broadly across the whole company but specifically in the divisions that we look for those cost savings.

Jamie Laskovski:

Hi, guys. Thanks for the question. I was just wondering if you could elaborate on the underlying company structure changes that have happened so far that were called out and what we should expect over the medium-term growth? Thank you.

Michael Florin:

Thank you, Jamie. Laila, we will take our next question please/

Michael Florin:

Thank you, Laila. Thank you all for participating. Have a wonderful day and we will talk to you soon. Take care.

Michael Florin:

Thank you very much, Operator. Hello, everyone. And welcome to News Corp’s fiscal second quarter 2024 earnings call. We issued 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 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 identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 the earnings releases for the applicable periods posted on our website. With that, I’ll pass over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert, and good afternoon to everyone. As Robert mentioned, we had a strong second quarter, resulting in first half year-over-year improvements in both profitability and revenues. We continue to transform the company and move towards higher, recurring and digital revenues, together with exercising strong capital allocation discipline and balancing reinvestment across the portfolio with ongoing fixed cost reductions. Our second quarter total revenues were $2.6 billion, up 3% compared to the prior year, an increase from the 1% growth delivered in the first quarter. Adjusted revenues grew 2% compared to the prior year. Total segment EBITDA was $473 million for the quarter, up 16% compared to the prior year, driven by strong performances across our three key growth pillars, Book Publishing, Digital Real Estate Services and Dow Jones, which all posted double-digit profit gains. In fact, in the aggregate, those key segments delivered 24% profitability growth this quarter. Our second quarter total segment EBITDA was also the highest in two years. Adjusted total segment EBITDA grew 14% versus the prior year. For the quarter, we reported earnings per share of $0.27, compared to $0.12 in the prior year. Adjusted earnings per share were $0.26 in the quarter, compared to $0.14 in the prior year. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services. Segment revenues were $419 million, up 9%, a notable improvement from the first quarter rate and a return to revenue growth for the first time since the fourth quarter of financial year 2022. On an adjusted basis, segment revenues rose 8%. Segment EBITDA rose an impressive 15% to $147 million due to a higher contribution from the REA Group partially offset by revenue headwinds at Move. Adjusted segment EBITDA rose a healthy 16%. REA had another very strong quarter with revenues rising 22% year-on-year on a reported basis to a quarterly record of $292 million with minimal impact from foreign exchange. Growth was again primarily driven by residential yield increases, improved growth in national listings, favorable geographic mix and customer contract upgrades. Overall, new buy listings rose approximately 8% with Melbourne up 24% and Sydney up 22%. Please refer to REA’s earnings release and their conference call, which will commence directly after hours, for more details. Moves revenues of $127 million were down 13% compared to the prior year, with declines moderating from recent quarters. For the quarter, Real Estate revenues fell 14% driven by lower lead and transaction volumes, reflective of the broader industry trends. Lead volumes fell 7% year-over-year, with December improving to down just 2%, benefiting from a combination of easier comparisons as well as recent declines in mortgage rates. Average monthly unique users for the quarter were flat compared to the prior year at 66 million. The U.S. housing environment remains tough, with existing home sales hitting 30-year lows, although we are hopeful the market will start to show improvement in the second half given recent declines in mortgage rates. That said, irrespective of any market considerations, we are determined to strengthen Realtor.com’s product and content offering so it’s best positioned for success when the housing market improves. To that end, the Realtor.com team is focused on executing several key strategic priorities, which include modernizing the technology platform to help with unifying the customer experience across all platforms, creating unique and scaled data for proprietary content to assist with increased personalization, leveraging News Corp’s network in relation to AI initiatives and capturing audience share and accelerating the diversification of revenues with a greater focus on the sell-side offering. Turning to the Subscription Video Services segment, revenues for the quarter were $470 million, up 2% compared to the prior year. On an adjusted basis, revenues rose 3% versus the prior year. Streaming revenues accounted for 29% of circulation and subscription revenues versus 26% in the prior year. Total closing paid subscribers across the Foxtel Group were over 4.3 million at quarter end, flat with the prior year. Total paid streaming subscribers were 2.8 million, increasing 4% versus the prior year, although declining sequentially due to seasonality at Kayo, tougher financial conditions caused by the inflationary environment for consumers and a weaker sports cycle. Foxtel ended the quarter with 1.3 million residential broadcast subscribers, down 9% year-over-year. Broadcast churn was flat at 12.9% despite the final migration off cable in October, while broadcast ARPU rose 3% to approximately AU$86, helped in part by a price rise for non-platinum subscribers implemented in July. Segment EBITDA in the quarter of $77 million was down 14% versus the prior year, driven by contractual price escalators in Foxtel sports rights agreements and $10 million related to the upcoming launch of Hubbl, partially offset by higher revenues and lower technology and marketing costs. Adjusted segment EBITDA declined 13%. Moving on to Dow Jones. As Robert mentioned, the second quarter results delivered the highest quarterly revenue and segment EBITDA performance since the acquisition of Dow Jones over 15 years ago. Dow Jones delivered revenues of $584 million, up 4% year-over-year, which made Dow Jones the highest segment revenue contributor for the quarter for the first time since it was re-segmented. Digital revenues accounted for 78% of total revenues this quarter, up 2 percentage points from last year. Circulation and subscription-based revenues represented almost 76% of total revenues, up approximately 2 percentage points from the prior year, reinforcing the stability and recurring nature of the revenue base. On an adjusted basis, revenues grew 3%. We saw very strong growth at PIB, with revenues rising 13% year-over-year, including 16% growth at risk and compliance to $72 million and 15% growth at Dow Jones Energy to $62 million. Factiva again posted growth, benefiting from a new licensing deal. Total PIB retention rates remained very strong at over 90%. We are continuing to review our disclosures, with the primary focus on increasing transparency to help the market appropriately value Dow Jones. To that end, we are now providing revenues for both risk and compliance and Dow Jones Energy in the 10Q. Within the Dow Jones consumer business, circulation revenues were flat versus the prior year, with digital-only subscriptions growing 15% year-over-year or by 135,000 sequentially, driven by an increased focus on the Dow Jones bundling offer as they look to better leverage subscription acquisition costs across multiple products, capitalize on minimal overlap between products and drive greater engagement. Bundling accounted for over 70% of the incremental digital-only volume growth in quarter two. Advertising revenues declined 4% to $126 million, relatively stable with the first quarter rate, although digital returned to year-over-year revenue growth for the first time since the first quarter of financial year 2023, rising 1% driven by strength in the technology and auto categories. Print declined 11% due to weaknesses in financial services. Digital represented 62% of advertising revenues, up 59% last year. Dow Jones segment EBITDA for the quarter grew 17% to $163 million and was the largest segment EBITDA contributor, with margins improving 320 basis points to 27.9%, driven by the strong B2B performance, which remains on track to be the largest contributor to Dow Jones profitability in fiscal 2024. Costs declined about 1%, driven by headcount reductions and lower newsprint production and distribution costs, in addition to phasing of sales and marketing expenditure. At Book Publishing, financial performance again meaningfully exceeded our expectations, particularly in profitability. Revenues were $550 million, up 4%, while segment EBITDA improved 67% to $85 million compared to the prior year. Margins increased by almost 600 basis points to 15.5%. The strong performance this quarter benefited from the success of some key front list titles, as Robert mentioned, and saw improvement in backlist sales, including a notable increase from Christian Publishing. Return rates again improved materially due to better sell-through compared to last year, while inventory levels appear to have normalized across our distribution network. Inflationary costs moderated, with lower manufacturing costs, helped by product mix and lower freight and distribution costs this quarter. The backlist contributed 60% of revenues, up from 57% last year, while digital sales rose 15% this quarter and accounted for 21% of consumer sales. Downloadable audio accounted for nearly 50% of digital sales, a record high, and we are pleased with the early positive signs from our partnership with Spotify, which generated incremental digital revenues and EBITDA this quarter. As way of background, Spotify is a usage-based model, not a pooled model. On an adjusted basis, revenues gained 2% and segment EBITDA rose 65%. Turning to News Media, performance in the segment was more challenged. Revenues were $563 million, down 3% versus the prior year, while adjusted revenues declined 5%. Advertising declined 9% and was down 11% in constant currency, while circulation and subscription rose 5% and was up 2% in constant currency, benefiting from cover price increases. Advertising remained particularly challenged, with digital advertising trends again negatively impacted by the lower traffic at several mastheads related to changes in algorithms at the large platforms. That said, as Robert noted, encouragingly, we are seeing some recovery in recent weeks, particularly at the Sun in the U.S. Segment EBITDA of $52 million declined $7 million, which was due to the lower revenue partly offset by lower print volume and newsprint expense and lower spend at TalkTV. Adjusted segment EBITDA declined 15%. As for the outlook, similar to our comments last quarter, it is challenging to forecast in the short-term, albeit economic conditions vary across markets. Looking at each of our segments, at Digital Real Estate Services, Australian residential new buy listings for January grew 12%. Please refer to REA for more specific outlook commentary. At Move, we hope to see continued improvements in lead volumes, with January up 1% year-over-year, given recent declines in borrowing costs, albeit off low prior year comparisons. As we mentioned last quarter, we are expecting some reinvestment in marketing and product development in the second half, increasing from depressed levels last year, which will be partially offset by cost reductions elsewhere. In Subscription Video Services, as mentioned last quarter, we continue to expect modestly higher expenses for the full year. Ongoing inflationary pressures, fewer new releases across entertainment due to the writers and actors strike, and a weaker summer sports schedule has created some softness in streaming revenues, which may impact full year profitability in local currency. At Dow Jones, we expect strong revenue and profitability performance, underpinned by the transformation of our B2B offerings, and as mentioned previously, continue to expect modestly higher overall expenses for the full year. At Book Publishing, overall industry revenue trends remain relatively stable and we are encouraged by the strength in the downloadable audio. We continue to expect margins to improve versus the prior year. At News Media, advertising revenue trends remain challenging, particularly in Australia and we will continue to focus on ongoing cost efficiencies. Finally, given the current spot rate for the Australian dollar versus the U.S. dollar, we do expect some negative translation in the third quarter. With that, let me hand it over to the Operator for Q&A.

David Karnovsky:

Hi. Thanks for taking the question. I guess I’ll ask the AI topic. Robert, you noted in the release you expect to be a core content provider for gen AI companies. Maybe you can speak a bit to current negotiations. What are the key sticking points, key priorities for you or even the red lines for News Corp as you engage on this?

Michael Florin:

Thank you, David. Leila, we’ll take our next question, please.

Entcho Raykovski:

Hi, Robert. Hi, Susan. Maybe if I can pick up on the generative AI question as well. I appreciate there’s only so much you can say, but how do you think about the potential payments which could come for the value of your content relative to what you’re currently receiving from the digital platforms? Is it a similar sort of quantum, could it be even a greater quantum over time? At least on a relative basis, I’d be interested in how you’re thinking about it. And longer term, do you expect that those payments from the digital platforms will continue to come through? Thank you.

Michael Florin:

Thank you, Entcho. Leila, we’ll take our next question, please.

Kane Hannan:

Good morning, guys. Thank you. Maybe just Dow Jones. I think the costs were down about $3 million in the quarter. We can talk a bit more about the Dow Jones cost base, whether we can extrapolate that sort of performance going forward. And maybe to follow on to that, just the professional information services within Dow Jones. I mean, obviously, appreciate the extra disclosure. Did that business see margin expansion in the quarter or is the strong margin expansion for Dow Jones overall more of a mix and cost out in the other businesses?

Robert Thomson:

Yeah. And just to supplement Susan’s answer, obviously, PIB is a priority for Dow Jones and for News Corp. And we are providing more visibility overall about Dow Jones because it’s such a positive story, and frankly, the more you see, the more you’ll like. I mean, overall, the margin at Dow Jones has risen from 24.7% a year ago to 27.9% and now that we’re lapping the purchases of OPIS and CMA, the strong growth rates are clear at these companies, which we have grouped into Dow Jones Energy, where revenues expanded by 15% and it is also, though, worth noting the results of the always burgeoning risk and compliance segment where revenues rose 16%. In short, these are high margin recurring businesses providing essential services and thus have renewal rates well north of 90%.

Operator:

Our next question comes from Craig Huber from Huber Research.

Robert Thomson:

Craig, your presumption about preparation is not ill-conceived. But this being a rather sophisticated audience, one which understands the nuances of phrases and the subtleties of the SEC, you can take the words I used in my statement as purposefully delivered. There is clearly much introspection, not casual, not peripheral, but significant, serious introspection about structure, and it’s functional, not emotional. And the prevailing truth is that we have created options for our shareholders and that’s a tribute to all at News Corp, with the active support of an enlightened Board and leadership from Rupert and Lachlan, and the efforts of our employees around the world. Let us not forget that misguided investment bankers were decidedly downbeat at the time of the split a decade ago. And now, however, the discussion is how to get full value from, how to fully monetize a precious, prestigious portfolio that has an obvious growth trajectory. That is indeed not an evolution, but a revolution.

Operator:

Our next question comes from Lucy Huang from UBS.

Robert Thomson:

Lucy, obviously, we’re pleased with the progress of the PIB business, and as I said, you can see the overall increase in margin at Dow Jones and that is to a large extent due to the success of the PIB businesses. I can’t go into any more details about what plans are, but needless to say, PIB is core to Dow Jones and its core to News Corp.

Michael Florin:

Thank you, Lucy. Leila, we’ll take our next question, please.

Brian Han:

Susan, I noticed the second quarter PCP growth in books EBITDA is exactly the same as the first quarter PCP growth, both exactly, I think, two-thirds up on prior period. Is there some sort of a contracted step up in earnings for books or is that just pure coincidence?

Michael Florin:

Thank you, Brian. Leila, we’ll take our next question, please.

Darren Leung:

Hi, guys. Thanks for the opportunity. I just wanted to ask a bit about the cost out program. Can you give us a feel as to how much has been completed so far this fiscal year of the previous $160 million number? And just a feel for, you know, do you expect more of it to be weighted in third quarter or fourth quarter or maybe another way to answer the question is, what divisions should we expect to see a lot of this cost out come from, please?

Robert Thomson:

And Darren, I’d just like to supplement Susan’s point where we are not going to let these excellent results in any way induce complacency in the company. All the teams are extremely cost conscious and we already are seeing very interesting trends in the ability of AI to reduce costs related to technology spend, to the creation of code, to the cultivation of code. And so not only are we going to be pursuing conventional costs, but we’re looking ahead and trying to make the most of new developments.

Operator:

[Operator Instructions] At this time, we have no further questions. I’ll now hand over to Michael Florin for closing remarks.

Michael Florin:

Thank you very much, Operator. Hello, everyone. And welcome to News Corp’s fiscal first quarter 2024 earnings call. We issued 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 Susan Panuccio, Chief Financial Officer. We will open with some prepared remarks and I will be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp’s business and strategy. Actual results could differ materially from what is said. News Corp’s Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial measurements such as total segment EBITDA, adjusted segment EBITDA and adjusted EPS. The definitions and the GAAP to non-GAAP reconciliations of such measures can be found in the earnings release for the applicable periods posted on our website. With that, I will pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert, and good afternoon, everyone. As Robert mentioned, we are pleased with the positive start to the new fiscal year, returning to revenue growth and posting the second consecutive quarter of profit growth despite the macroeconomic conditions. We have been diligently executing on our long-term plan to drive greater value for our shareholders and believe this is yet to be reflected in our current market value. Our first quarter total revenues were $2.5 billion, up 1% compared to the prior year, marking the first year-over-year revenue growth since the fourth quarter of fiscal 2022. Adjusted revenues also grew 1% compared to the prior year. Total segment EBITDA was $364 million, up 4% compared to the prior year. HarperCollins was the largest contributor to the profit improvement, which is encouraging on the back of last year’s challenging results. Adjusted total segment EBITDA grew 5% versus the prior year. For the quarter, we reported earnings per share of $0.05, compared to $0.07 in the prior year. Adjusted earnings per share was $0.16 in the quarter, compared to $0.12 in the prior year. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services. Segment revenues were $403 million, down 4% compared to the prior year, a notable improvement from the fourth quarter rate. On an adjusted basis, segment revenues declined just 2%. Despite the revenue decline, segment EBITDA rose 3% to $122 million due to higher contribution from the REA Group and cost saving initiatives that move that were partially offset by revenue headwinds. Adjusted segment EBITDA rose a healthy 8%. REA had a very strong quarter with revenues rising 4% year-on-year on a reported basis to $261 million, which included an $11 million or 4% negative impact from foreign exchange. Growth was driven by residential yield increases and growth in national listings, along with 25% revenue growth at REA India. Results were partially offset by a modest decline in Financial Services revenues due to lower settlement activity. Overall, new buy listings rose 1%, with Sydney and Melbourne up 16% and 14%, respectively, enabling upward pressure on yields. Please refer to REA’s earnings release and their conference call following this call for more details. Move’s revenues of $142 million were down 16% compared to the prior year, relatively similar to the fourth quarter trend absent the 53rd-week impact. For the quarter, Real Estate revenues fell 20%, driven by lower lead and transaction volumes reflective of the broader industry trends. Lead volumes fell 11% year-over-year, while realtor’s average monthly unique users declined 12% from the prior year to 76 million in the first quarter based on internal metrics, but improved from 74 million in the fourth quarter. As Robert mentioned, despite challenging market and competitive conditions, we have made solid progress in Q1 across a number of strategic areas including SEO improvements, expanding our sell-side offerings into the launch of a listing agent tool kit, deepening our collaboration with News Corp’s powerful global platform to drive further reach and the recent launch of a new brand campaign. Turning to the Subscription Video Services segment. Revenues for the quarter were $486 million, down approximately 3% compared to the prior year on a reported basis due to foreign currency headwinds. Importantly, on an adjusted basis, revenues rose 1% versus the prior year, the seventh consecutive quarter of growth. Streaming revenues accounted for 30% of circulation and subscription revenues versus 25% in the prior year, and again, more than offset broadcast revenue declines benefiting from both a year-over-year increase in subscribers and price rises at Kayo and BINGE. Total closing paid subscribers across the Foxtel Group reached almost $4.6 million at quarter end, up 2% year-over-year. Total paid streaming subscribers were 3 million, increasing 8% versus the prior year, although declining sequentially impacted by less output at BINGE related to the strikes in Hollywood, as well as typical seasonality at Kayo due to the end of the winter sports codes in September. Foxtel ended the quarter with over 1.3 million residential broadcast subscribers, down 9% year-over-year. Broadcast churn continued to improve, down 280 basis points year-over-year to 11.4%, while broadcast ARPU rose 3% to over A$85 helped in part by a price rise for non-platinum subscribers implemented in July. Segment EBITDA in the quarter of $93 million was down 16% versus the prior year driven by contractual price escalators in Foxtel sports rights agreements. Adjusted segment EBITDA declined 13%. We completed the debt refinancing in the first quarter, which included securing a new A$1.2 billion credit facility. As we said last quarter, given the improved performance and the completion of the refinancing, this provides a pathway for repayment of our shareholder loans. Moving on to Dow Jones. Dow Jones had a strong quarter with revenues of $537 million, up 4% year-over-year despite fully lapping recent acquisitions. Digital revenues accounted for 81% of total revenues this quarter, up 2 percentage points from last year. Circulation and subscription-based revenues represented over 81% of total revenues, up approximately 1 percentage point from the prior year, underscoring the stability and recurring nature of the revenue base. On an adjusted basis, revenues grew 3%. We are continuing to see very strong growth in our Professional Information business with revenues rising 14% year-over-year driven by risk and compliance and strong gains at Dow Jones Energy. Factiva posted modest growth benefiting from a new licensing deal. Retention across B2B offerings remains at over 90% with nearly all of the revenues recurring. Risk and compliance revenues rose 23% with consistent growth between financials and corporates. Europe remained the largest territory at over 50% of revenues and also the fastest source of growth. Secular trends remain very favorable with global corporations navigating complex sanctions and trade guidance, particularly as it relates to Russia and China. We were really pleased with the 20% growth at Dow Jones Energy, which benefited from price escalators, the rollout of new products and new customers. The results also benefited mid-single digits from one-time items and the World Chemical Forum, a new annual event this quarter, which leveraged the wider Dow Jones experience in corporate events. Circulation revenues gained 1% versus the prior year, with digital-only subscriptions growing 12% year-over-year or 101,000 sequentially, which was principally driven by an increased focus on Dow Jones bundling offer as they look to better leverage subscription acquisition costs across multiple products, capitalize on minimal overlap between products and drive greater engagement from customers. We believe that in the medium-term, bundling will drive higher ARPU per subscriber and reduce long-term churn. Advertising revenues declined 3% to $91 million due to 6% and 2% declines in print and digital advertising revenues, respectively, with trends improving from the fourth quarter. Advertising accounted for 17% of total revenue with 66% being digital, up 100 basis points from last year. Dow Jones segment EBITDA for the quarter grew 10% to $124 million with margins improving 120 basis points to 23.1%, the highest first quarter margin since News Corp’s acquisition of Dow Jones, driven by the strong B2B performance, which is on track to be the largest contributor to Dow Jones profitability in fiscal 2024. At Book Publishing, we saw a big recovery from fiscal 2023 results. Revenues were $525 million, up 8%, while segment EBITDA improved 67% to $65 million compared to the prior year. Margins improved over 400 basis points to 12.4%. You will recall the results a year ago were significantly impacted by the Amazon reset of inventory levels and rightsizing of its warehouse footprint. The strong performance this quarter benefited from the success of some key frontlist titles, as Robert mentioned, and also saw improvement in backlist sales, including a notable increase from Christian Publishing. Return rates improved materially, while inventory levels appear to have normalized. Inflationary costs are beginning to moderate with lower manufacturing costs helped by product mix and lower freight and distribution costs this quarter. The backlist contributed 61% of revenues, down from 65% last year, while digital sales rose 3% this quarter and accounted for 22% of consumer sales, within the 22% downloadable audio accounted for 45% of digital revenues. On an adjusted basis, revenues gained 6% and segment EBITDA rose 59%. Turning to News Media. Overall trends continue to be mixed geographically. Revenues were $548 million, down 1% versus the prior year, while adjusted revenues declined 2%. Advertising declined 5% and was down 6% in constant currency, while circulation and subscription rose 2% and was flat in constant currency. At News Australia, advertising saw some improvement compared to the fourth quarter, while the U.K. weakened notably in digital. As Robert mentioned, we did see declines in our traffic at several mastheads related to changes in algorithms at the large platforms which we are monitoring closely and have been felt across the wider publishing industry. Segment EBITDA of $14 million declined $4 million, results included approximately $3 million related to one-time costs as a result of the proposed combination of printing operations in the U.K. with DMG. This initiative demonstrates the continued focus on driving cost efficiencies across our News Media businesses. Before we look at the outlook for the next quarter, I would like to touch on free cash flow. First quarter free cash flow is typically lower due to the timing of working capital payments, including sports rights payments at Foxtel, and this year, it was also impacted from the lower HarperCollins sales in Q4 of the prior year. We anticipate generating strong and positive free cash flow for the year weighted to the second half consistent with prior years. As for the outlook, similar to our comments last quarter, we are continuing to operate in a difficult environment that remains unpredictable in the short-term. That said, we expect the second quarter to continue to show an improvement in revenues and profitability. Looking at each of our segments. At Digital Real Estate Services, Australian residential new buy listings for October grew 16%. Please refer to REA for a more specific outlook commentary. At Move, U.S. housing conditions remain challenging and we are expecting some reinvestment in marketing to improve share of voice levels, including the recently launched advertising campaign and also in product development to ensure we are best positioned to take advantage of market conditions when they improve. In Subscription Video Services, as mentioned last quarter, we continue to expect modestly higher expenses for the full year, driven by sports rights and some costs related to the launch of Foxtel streaming aggregation service, Hubbell, but remain on track to deliver relatively stable results for the year in local currency. At Dow Jones, we hope to see continued improvements in advertising declines, but as typical, visibility is limited. We continue to expect modestly higher overall expenses for the full year and strong revenue growth in B2B revenues. At Book Publishing, while we expect year-over-year improvements versus the prior year, revenue and profit growth is expected to be more modest than the first quarter given overall industry trends and the normalization of return rates. At News Media, revenue trends remain mixed geographically and we will continue to focus on ongoing cost efficiencies. With that, let me hand it over to the operator for Q&A.

Lucy Huang:

Hi. Good morning and thanks for taking questions. My one question is in relation to Move. So I just wonder if you can give us an update into the competitive landscape in the U.S. And just any early thoughts on the recent U.S. court ruling around agent commissions, like do you think this could have an impact on industry dynamics more broadly, and I guess, for the Move business longer term? Thanks.

Michael Florin:

Thank you, Lucy. Laila…

Michael Florin:

… we will take our next question, please.

Alan Gould:

Thank you. Robert, I was wondering if you can get into a little bit more detail about this residulously reviewing our structure? And secondly, if you could comment on how the recent Real Estate lawsuit might affect the realtor and Move? Thank you.

Michael Florin:

Thanks, Alan. Laila, we will take our next question, please.

Ted Karakostas:

Yes. Hi. Thank you. This is Ted on for David. I wanted to ask if you could give us an update on digital ad trends. Any color you can share on the quarter and expectations moving forward would be appreciated? Thank you.

Michael Florin:

Thank you, Ted. Laila, we will take our next question, please.

Entcho Raykovski:

Hi, Robert. Hi, Susan. So, firstly, I just wanted to ask, given that there have been some public comments from a shareholder over the past month about a proposal to spin out REA, interested in your comment as to whether you see merit in that proposal and is that something you are willing to explore or are you looking at other ways, as you have spoken about of closing the valuation gap? And if I can quickly throw a second one in there as well, hopefully, a straightforward one. Given that Foxtel refinanced over the quarter, when do you think the shareholder lines will be repaid? Are there any other impediments or hurdles to that repayment taking place now? Thank you.

Susan Panuccio:

And Entcho, just in relation to your question on Foxtel, we expect a modest return this year and anticipate the bulk of the repayments to come over the next few years. That’s obviously dependent on the current plans and cash flow position.

Operator:

Our next question comes from Craig Huber from Huber Research. Craig, your dial star six on your keypad to unmute.

Robert Thomson:

Craig, look, obviously, HarperCollins’ journey through a rather unique period of unusual circumstances. The pandemic, logistical issues at Amazon, cost pressures and it has emerged from that confluence -- complexity with a strong front, backlist and margins actually dramatically improvement -- improving from the 4% in the final quarter of last fiscal to 12.4%. So we are seeing that margin improvement already. And there’s also no doubt that there’s reason for excitement about the entry of Spotify into audio books. Over the past few years, audio books have been by far the fastest-growing sector. And Spotify itself has really transformed both the concept and the experience of streaming. And so Daniel Ek and I have been discussing audio books for a few years, and we have reached an agreement on a model that is great for orders, for book lovers, for Spotify, and for us. The early signs from the U.K. and Australian markets are certainly positive. And if those trends hold, audio, which now comprise about 45% of digital sales will reach a far higher threshold level, we will be generating significantly more revenue, and as you asked, be improving our EBITDA.

Michael Florin:

Thanks, Craig. Laila, we will take our next question, please.

Brian Han:

Robert or Susan, can you please clarify, did you guys say in Dow Jones B2B earnings are larger than B2C earnings or did you mean its contribution to growth is now larger than B2C?

Brian Han:

On track to be larger?

Robert Thomson:

And for the quarter and they are obviously a higher margin digital high retention rates.

Michael Florin:

Thank you. Thanks, Brian. Laila, we will take our next question, please.

Darren Leung:

Hi, guys. Thanks for the opportunity. I just have one on Move please and the Real Estate revenues were obviously down 20% and you called out listings down 11%, pretty crude, but it sort of implies that yield -- average yield was down about 9%. Can you talk a little bit about the drivers on this front please and how we should be thinking about the yield driver in the remainder of the year? Thanks.

Michael Florin:

Thank you, Darren. Laila, we will take the next…

Michael Florin:

Thanks, Darren. Thank you, Darren.

Michael Florin:

Sorry, Laila, we will take our next question, please.

Craig Huber:

Yeah. I have a follow-up question on realtor.com please. Can you maybe just comment a little further on what you are planning to do on the cost side of the business for the rest of the fiscal year here? I understand obviously the pressure on the topline. But I mean, where do you guys think profits in realtor.com are going to go the -- issue on the topline from a macro standpoint, but you want to invest more it sounds like on the R&D side and in marketing? Thank you.

Michael Florin:

Thank you. Thank you, Craig. Laila, any other questions?

Michael Florin:

All right. Well, thank you all for participating. Have a wonderful day and we will talk to you soon. Take care.

Michael Florin:

Thank you very much, operator. Hello, everyone, and welcome to News Corp's fiscal fourth quarter 2023 earnings call. We issued 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 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 identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 the earnings release for the applicable periods posted on our website. With that, I'll pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. Our second half results show marked improvement from the first half of the year with fourth quarter profitability up year-over-year, highlighting the diversity and durability of our revenue streams, and our ongoing cost efficiencies as we navigated the ever changing macro conditions, supply chain pressures and currency headwinds. As the company continues to transition to digital, digital revenues now comprise over half of the company's fiscal 2023 revenues. We have also transformed the revenue base away from cyclical advertising revenues to one that is much more recurring and subscription base with strong growth prospects. We have made strategic acquisitions that we believe have fundamentally strengthened the company. The acquisitions of OPIS, CMA, HMH, Mortgage Choice, and IBD during fiscal 2021 and 2022, have essentially replaced the revenues from News America Marketing, providing a much stronger base for long-term growth. The company has changed and evolved since 2013, and is well-positioned for future success. We have maintained a very healthy balance sheet, while we strengthen the asset base, transformed digitally, generating healthy free cash flow and continue to improve our operating efficiencies. Turning to our financials, I'll focus on the fourth quarter performance. Fourth quarter total revenues were over $2.4 billion, down 9% year-over-year, which was heavily impacted by the $110 million or 4% negative impact related to the extra week last year, and the $72 million or 3% impact from foreign currency fluctuations. Impressively, total segment EBITDA was $341 million, up 8% year-over-year despite very difficult year-over-year comparisons and weak trading conditions at HarperCollins. Margins improved by over 2 percentage points to 14%. Fourth quarter adjusted revenues declined 7% compared to the prior year, while adjusted total segment EBITDA rose 2% versus the prior year. Both revenues and total segment EBITDA were also negatively impacted by the extra week last year. Adjusted revenue and total segment EBITDA did not exclude that impact. Earnings per share in the quarter were a loss of $0.01 compared to income of $0.19 in the prior year. The current quarter reflects $85 million of restructuring and impairment charges mostly related to our company wide headcount reduction that we communicated on the last earnings call and an $81 million noncash write-down in equity losses of affiliates related to REA's investment in PropertyGuru. The prior year income of $0.19 benefited from $149 million tax benefit. Adjusted earnings per share were $0.14 in the quarter compared to $0.37 in the prior year. Moving on to the results for the individual reporting segments starting with digital real estate services. Segment revenues were $369 million, down 17% compared to the prior year, impacted by the ongoing macroeconomic pressures, a negative impact of $15 million or 4% from foreign currency fluctuations and $14 million or 3% of negative impact from the extra week last year. On an adjusted basis, segment revenues decreased 14%. Segment EBITDA declined 11% to $108 million impacted by lower revenues partially offset by the lower discretionary costs, compensation and broker commissions. Adjusted segment EBITDA declined 5%. REA revenues were $223 million, which declined 11% on a reported basis or down 5% on a constant currency basis. The revenue decline was due to the impact of lower national listings and a decrease in financial services revenue driven by lower settlement activity. New buy listings for the fourth quarter were down 18% year-over-year with the higher yielding metro areas of Sydney and Melbourne showing improvement each month of the quarter, yet ended down 17% and 16%, respectively. Those declines were partially offset by the annual price increases in the residential and commercial businesses, increased uptake in premium products including Premiere Plus, favorable depth penetration and continued strong performance from REA India, which maintained its audience leadership. Please refer to REA's earnings release and their conference call following this call for more details. At Move, revenues were $146 million, down 24% compared to the prior year, which reflects the $40 million or 7% negative impact related to the absence of the extra week. Excluding the extra week impact, revenue declined 17% similar to the third quarter results, with lead optimization in the lead generation products partially offsetting lower lead and transaction volume. Lead volumes moderated to down 14% year-over-year compared to a decline of 30% in the third quarter, while Realtors average monthly unique users declined 20% from the prior year to 74 million in the fourth quarter, based on internal metrics, yet up from 72 million in the third quarter. We remain focused on driving both usage and engagement through continued product enhancements and improvements to SEO, while expanding our core adjacencies of seller, rentals and new homes. Turning to the Subscription Video Services segment. Revenues for the quarter were $501 million, down 4% compared to the prior year on a reported basis due to foreign currency headwinds. On a constant currency basis, revenues rose 3% versus the prior year, the sixth consecutive quarter of growth in constant currency. Streaming revenues accounted for 29% of circulation and subscription revenues compared to 23% in the prior year. OTT revenue growth again more than offset broadcast revenue declines benefiting from both increased subscribers and price increases at Kayo and BINGE. Total closing paid subscribers across the Foxtel Group improved to over 4.6 million at quarter end, up 5% year-over-year. Total paid streaming subscribers approached 3.1 million, increasing 14% versus the prior year and accounted for approximately 66% of Foxtel's total paid subscriber base. Binge continued to expand advertising inventory on the basic product, generating both modest incremental revenues and some upgrade activity to the higher tiered subscription offerings. Foxtel ended the quarter with over 1.3 million residential broadcast subscribers, down only 9% year-over-year. Broadcast churn continued to improve, down more than 260 basis points year-over-year to 11.1%, the lowest level since fiscal 2016, while broadcast ARPU rose 2% to over A$84. Foxtel announced a price rise beginning in July across some of the broadcasters, the first since fiscal 2019 which will benefit the fiscal 2024 results. Segment EBITDA in the quarter of $78 million was down 4% versus the prior year, but was up 4% on an adjusted basis despite higher programming costs, mostly related to contractual escalators across key sports rights. On the product front, following the successful growth in streaming, the business will be launching a streaming aggregation device leveraging the Sky Glass technology. expectation is for a commercial launch later in fiscal 2024 and we will keep you updated on our progress. Moving to Dow Jones. Dow Jones had another strong quarter with revenues of $546 million, down 3% which includes the negative impact of $40 million, or 7% related to the absence of the extra week from last year. We let the OPIS acquisition in March and CMA in June. Digital revenues accounted for 79% of total revenues this quarter, up 3 percentage points from last year. Circulation and subscription based revenues represent over 79% of total revenues, up over 2 percentage points from the prior year, underscoring the stability and recurring nature of the revenue base. On an adjusted basis, revenues declined 6%, but would have delivered a modest improvement excluding the extra week. We are continuing to see strong momentum in our professional information business with revenues rising 10% year-over-year, benefiting from the continued integration of OPIS and CMA, coupled with strong revenues from risk and compliance. Results were partly offset by the extra week last year, which led to a $14 million or 8% negative impact on the performance. Excluding the extra week, PIB revenues grew 18%. PIB revenues this quarter accounted for 37% of segment revenues. And while we don't disclose specific margins, PIB margins are higher than the overall Dow Jones margin and are contributing strongly to segment EBITDA, underscoring the uniqueness and durability of the Dow Jones asset mix. Risk & Compliance revenues rose 10% despite the extra week in the prior year, and continue to grow at a high-teens rate on a like-for-like basis. While 60% of the customers are in the financial services sector, the fastest growth is now coming from corporates with demand driven by the anti-money laundering, financial corruption and ESG screening and monitoring products. Retention remains over 90%. OPIS and CMA's revenue performance remains robust benefiting from price escalators, new products and new customers. Retention rates for OPIS and CMA subscription products remain in the mid 90s, which is underpinning the transformation of Dow Jones revenue base. Circulation revenues declined 6% due to the absence of the extra week, lower print volume and weakness at IBD as we noted in the third quarter. Excluding the extra week impact of $17 million, or 7%, circulation revenues were up 1% year-over-year, which is slightly higher than the third quarter rate. Total Dow Jones digital-only subscriptions grew 12% year-over-year or by 163,000 sequentially, with the year-over-year rate improving from last quarter. Advertising revenues declined 14% to $100 million and accounted for 18% of Dow Jones revenues this quarter with digital down 10% and print down 18%. Excluding the negative impact from the absence of the extra week of $9 million or 8% the decline rate moderated from the third quarter to down 6%. Dow Jones segment EBITDA for the quarter grew 25% to $133 million, as cost growth moderated from the first half. Margins improved to 24%, up from 19% last year. Adjusted segment EBITDA for the quarter increased 17%, a notable improvement over the third quarter and the full year performance. At book publishing, both HarperCollins and the industry more broadly faced challenging headwinds in the quarter. Revenues fell 13% to $446 million, which included approximately $20 million, or 4% of negative impact from the absence of the extra week. Consumer demand slowed in the fourth quarter more than we initially expected, leading to lower friendly [ph] sales and higher returns, particularly in Christian publishing and general books. Most of the weakness was in North America. Segment EBITDA declined 66% year-over-year to $60 million or 4% segment EBITDA margin. Segment EBITDA was impacted by the week top line performance as well as higher than normal levels of royalty write-offs due to the underperformance of certain titles, further compressing profit margins. Despite some unusual headwinds, we are seeing moderation in freight and manufacturing costs, while headcount reduction initiatives are expected to exceed the 5% target. The backlist represented 59% of revenues for the quarter, up 3 points from last year, but down slightly from Q3. Digital sales declined 10% this quarter mostly driven by lower e-book sales and accounted for 25% of consumer sales, up from 24% last year. On an adjusted basis, revenues fell 13% and segment EBITDA fell 70%. Turning to News Media. Revenues were $571 million, down 9% primarily due to the absence of the extra week, which negatively impacted revenues by $36 million, or 6% and the impact from foreign currency of $80 million or 3%. Adjusted revenues declined 7%. Advertising declined around 15%, reflecting a $15 million or 6% negative impact related to the absence of the extra week and a $6 million or 2% negative impact from foreign currency fluctuations. Excluding the impact from the extra week and currency, advertising revenues declined approximately 7% due to weaknesses at News Australia, which was impacted by last year's Federal election, and some softness in real estate and retail. News UK and New York posts were relatively stable versus the prior year. Circulation and subscription revenues decreased 7% due to the absence of the extra week negatively impacting revenues by $90 million or 6% at a $9 million or 3% negative impact from foreign currency. Excluding the extra week and currency impact, circulation and subscription revenues rose 2%, with growth driven by cover price increases in the U.K and Australia and double-digit subscriber growth across News Australia and the Times and the Sunday Times. Segment EBITDA of $45 million rose 36% due to a 12% decline in costs driven by ongoing cost saving initiatives and lower costs related to TalkTV and other digital investments. Adjustment segment EBITDA rose 42%. Turning to the outlook. Market trends remain mixed geographically. That said, we have taken aggressive action over the years to improve our asset base, including a shift to more recurring and digital revenues coupled with strong cost initiatives and focused reinvestment in our core pillars. We still expect some inflationary pressures, but are hopeful that they will be at a more modest rate. We exited the fiscal fourth quarter with a return to total segment EBITDA growth and we hope to see improvements in fiscal 2024. Looking at each of our segments, at Digital Real Estate Services, Australian residential new buy listings for July declined 5%. REA should benefit from double-digit residential lead growth as price increases have been successfully implemented. Please refer to REA for more specific outlook commentary. At Move, while we anticipate improvements in lead volume and transactions across the full year, they will likely remain challenging in the short-term. We also expect higher marketing spend compared to the fourth quarter together with ongoing investment in adjacencies, which we will balance with cost reductions. In Subscription Video Services, we remain pleased with the performance of the streaming products and the ongoing focus on broadcast ARPU and churn as we complete the migration of customers from cable in the first half. We expect modestly higher expenses for the full year driven by sports rights and product investment, which will be more weighted to the first half. We expect full year CapEx and profitability will be relatively stable in local currency. At Dow Jones, we hope to see improvement in advertising declines. But as is typical, visibility is limited. We also expect to see continued strong growth from PIB. We expect modestly higher overall expenses in the first quarter and for the full year in contrast to the fourth quarter. In book publishing, HarperCollins in the industry exhibited more volatility last year than normal. That said, July was encouraging with a return to revenue growth. EBITDA margins lifting from the fourth quarter lows and prior year comparisons are easing. At News Media, July advertising trends remain mixed geographically. We expect TalkTV costs will be similar, if not lower from the prior year in local currency. We have also seen moderating newsprint cost pressures in the U.K. We expect CapEx in fiscal 2024 to be moderately higher than in fiscal 2023 primarily due to digital reinvestment. That being said, our CapEx came in notably lower than we expected this fiscal year. And we will be monitoring it closely with respect to macro and business conditions as we did during the current year. We expect to generate strong cash flows and expect to return a high percentage to shareholders in the form of buybacks and dividends. With that, let me hand it over to the operator for Q&A.

David Karnovsky:

Thank you. Maybe, Susan, just on the cost initiatives. I don't know if there's a way you could frame how much that was contributor in the quarter. And then I think last earnings, you'd stated, you thought the majority of the benefit would come through in the fiscal first quarter. Is that still the case? And then just on the other segment EBITDA that was better sequentially. Is that from the cost savings? And should we think about that line is sustainable?

David Karnovsky:

Thank you.

Operator:

Our next question comes from Alan Gould from Loop Capital. Please unmute yourself to ask your question.

Robert Thomson:

Yes. Alan, look, first of all, on AI you're right by instinct that this is an important moment in the history of news and knowledge, with commercial and social implications and profound impact on creativity and integrity. If fake news and deep fakes are a concern, the potential for sophisticated forgeries for counterfeit content is almost endless. And separately, Generative AI has the potential to recycle itself in what you might call endless, perfidious permutations, and that's why the provenance of the archival base is so crucial and why refreshing daily weekly with incremental improvements is imperative. But -- so the potential is enormous, but garbage in garbage out, garbage all about. We've invested billions of dollars in knowledge creation, actually tens of billions of dollars, and that content certainly has a value in this editorial epoch. And for almost two decades, we've genuinely led the digital debate about provenance, which is echoed in Washington and London, Brussels and Canberra and Tokyo and Rome. For us, what gives me confidence for our company and our community is that the leaders of the largest digital companies are clearly sincerely focused on the issue. They understand our collective responsibility, and we are actively individually engaged in fruitful discussions. So I can't be more specific at this moment. But we see a positive financial result through consensual negotiation, not through litigation. We would like to reward journalists, not lawyers. As for Simon & Schuster, normally we don't speculate on speculation about M&A. But candidly, as you intimated, we wouldn't be prepared to go that high given that in our case, you could reasonably expect 18 months of scrupulous scrutiny by the antitrust authorities, with all related legal costs and the financial opportunity cost. We obviously have great respect for the company and its authors. But given the regulatory risk, we were quietly hoping that, frankly, Simon & Schuster would be reminded, and that we would get the company for a bargain, but it obviously didn't end up in the Barnes & Noble bargain bin.

Alan Gould:

Thank you.

Operator:

Our next question comes from Kane Hannan from Goldman Sachs. Please unmute yourself to ask your question.

Robert Thomson:

Okay. We're certainly aiming high when it comes to Foxtel. And you can see from the success that we've had in streaming, total streaming subs rose 14% to 3.1 million, and our streaming revenues rose 26%, so that's also healthy growth ARPU. At the same time, broadcast churn fell sharply and was 11.1% in the quarter compared to 13.8% in the prior year, while broadcast ARPU rose 2%. So where else in the world are you actually witnessing a decline in the broadcast churn rate while experiencing a continuing surge in streaming, that really is the Foxtel success story.

Michael Florin:

Thank you, Kane. Leila, we'll take our next question, please.

Entcho Raykovski:

Hi, Robert. Hi, Susan. My question is around the Foxtel shareholder loan. Obviously, you flagged the intention for it to be repaid. Just interested in once that's repaid, do you expect any recourse to News Corp from lenders? In other words, will you have to guarantee any of the Foxtel refi? And I guess as part of answering that question, is there anything in particular which has driven the ability of Foxtel to refinance, particularly if you're not guaranteeing the loan. And sorry, I will just extend it a little bit further. Should we read this into a preparation for a potential spin out of Foxtel down the track? Obviously, that's been speculated for a little while. Thank you.

Robert Thomson:

Yes. Entcho, obviously, we can't comment specifically about an IPO. But what I can say with absolute certainty is that the success we've had with Foxtel has given us absolutely the option of optionality.

Michael Florin:

Thank you, Entcho. Thanks, Entcho. Leila, we will take our next question, please.

Craig Huber:

Great. Thank you. Book publishing, obviously, the margins and the profit dollars there were much lower than I think most people expect it certainly me, but also they are much lower than what the pre-COVID stuff. Is there any reason to think this environment that the revenue performance and the margins won't continue for at least a few more quarters? This is my question.

Michael Florin:

Thank you, Craig. Leila we will take our next question.

Lucy Huang:

Thanks, Robert, and thanks, Susan. I just had one question on Professional Information Services. Are you able to talk through kind of what drove the growth over the fourth quarter. Is it -- or what's the contribution from subscriber growth versus price growth in that business? And I guess maybe if you can talk through some of your margin expectations coming into the fourth quarter. Is there expected to be more incremental investment in this space? Or could we see margins continue to expand into next year? Thanks.

Michael Florin:

Thank you, Lucy. Leila, we will take our next question, please.

Brian Han:

Hi. On the Wall Street Journal, can you please provide some color on digital subscription pricing in terms of how much it rose in the June quarter and what the outlook may be for '24?

Michael Florin:

Thank you, Brian. Leila, we will take our next question, please.

Darren Leung:

Hi, guys. Thanks for the [indiscernible]. Just a quick one on Move, please. It looks like the revenues declined 24%, but listing is obviously only down 20%. So I just wanted a bit of clarity in terms of essentially the first period where we've actually seen revenue growth decline more than volume growth. So I just wanted a clarity as to what's happening to the yield and other products space, that's usually been a bit of an offset for the business, please?

Susan Panuccio:

And Darren, there's a little bit of noise in the numbers because of week 53. If you exclude the week 53 impact, it was actually down 17%, which was consistent with what it was down last quarter.

Michael Florin:

Thank you, Darren.

Michael Florin:

Thanks, Darren. Leila, we will take our next question.

Craig Huber:

Great. Thank you. I appreciate the much better results in this quarter and you guys have had some really good results you ever since COVID happened, in particular. But it comes up all the time with investors, why is this company News Corp so complicated. And is there any potential movement here to simplify the company going forward? I just -- I guess, I'd love to have updated thoughts on that with what you can tell us. Thank you.

Michael Florin:

Thank you, Craig. Leila, we will take our next question.

Michael Florin:

Great. Well, thank you, Leila, and thank you all very much for participating. Have a wonderful day, and we will talk to you soon. Take care.

Michael Florin:

Thank you very much, operator. Hello, everyone, and welcome to News Corp's fiscal third quarter 2023 earnings call. We issued 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 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 identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 the earnings release for the applicable periods posted on our website. With that, I'll pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. Our financial results this quarter demonstrated tangible improvements from the first half, which combined with the implementation of our aggressive cost actions should position News Corp well, for fiscal 2024. Third quarter total revenues were over $2.4 billion down just 2% year-over-year which was a significant improvement from the second quarter rate and included a $98 million or 4% negative impact from foreign currency headwinds. Excluding the impact of foreign currency fluctuations, acquisitions and divestitures third quarter adjusted revenues were flat compared to the prior year with improving trends at the news media Subscription Video Services and publishing segments offset by the decline at digital real estate services segment. Advertising trends were mixed across our geographies. Total segment EBITDA was $320 million 11% lower compared to the prior year's record Q3 profits. Results included $7 million of professional fees related to the proposed merger with Fox and the potential sale of Move. Adjusted total segment EBITDA declined 15% versus the prior year. For the quarter, we reported earnings per share of $0.09 compared to $0.14 in the prior year. Adjusted earnings per share were also $0.09 in the quarter compared to $ 0.16 in the prior year. Before I discuss the quarter, I wanted to provide an update on our headcount reduction program. Reductions across the business units will vary given the differing nature of our businesses and costs work done to date. We currently expect the annualized gross cost savings to exceed $160 million, up from our initial estimate of at least $130 million, with the majority of the savings to be reflected in fiscal 2024. We also expect to incur approximately $90 million to $100 million of cash restructuring charges related to the headcount reductions in the second half of fiscal '23. Moving on to the results for the individual reporting segments starting the digital real estate services. Segment revenues were $363 million down 13% compared to the prior year, impacted by the ongoing macro economic pressures on both the U.S. and the Australian housing markets. The results include a negative impact of $30 million or 3% from foreign currency fluctuations. On an adjusted basis segment revenues decreased 10%. Segment EBITDA declined 26% to $102 million impacted by lower revenues, the negative impact related to currency headwinds and higher costs related to REI India, partially offset by lower costs at Move. Adjusted segment EBITDA declined 24%. REI revenues were $222 million, which declined 10% on a reported basis or down 4% on a constant currency basis. The revenue decline was primarily driven by lower residential revenues and to a lesser extent softness in financial services. In the quarter Australian National residential buy listings were down 12% with Sydney and Melbourne down 20% and 18% respectively. Those declines were partially offset by the annual price increases in the residential and commercial businesses, increased uptake in premium products including premiere plus, favorable depth penetration, and another robust performance from REI India, which maintained its audience leadership. Like our other businesses at News Corp. REI is taking steps to reduce expenses with a focus on discretionary operational spend and marketing costs. Please refer to REI's earnings release and their conference call following this call for more details. At Move revenues were $141 million down 17% compared to the prior year, real estate revenues were down 23% driven by lower lead and transaction volumes reflecting broader housing market challenges. Lead volume fell 30% while Realtors average monthly unique users declined 24% to $72 million in the third quarter based on internal metrics yet up from the $66 million in the second quarter. Realtor has been focusing on optimizing revenues via a prioritized set of initiatives while managing operating expenses as the business weathers ongoing market headwinds initiatives include enhancing media advertising placements, including implementing a broader partnership with the businesses across News Corp, optimizing lead allocation across markets, accelerating our go direct path for new homes and building out the rentals vertical. Turning to the Subscription Video Services segment. Revenues for the quarter were $477 million down 3% compared to the prior year on a reported basis due to foreign currency headwinds. On a constant currency basis revenues rose 2% versus the prior year the fifth consecutive quarter of growth in constant currency. Streaming revenues accounted for 26% of circulation and subscription revenues compared to 20% in the prior year and again more than offset broadcast revenue declines benefiting from both volume growth and higher pricing at Kayo and Binge. Total closing paid subscribers across the Foxtel group improved to nearly $4.6 million at quarter end up 6% year-over-year. Total paid streaming subscribers were approximately $3 million increase in 16% versus the prior year and accounted for approximately six to 5% of Foxtel's total paid subscriber base. Paid subscribers for Kayo reached a record of over 1.3 million up 14% year-over-year. Net adds from the prior quarter improved to 183,000, the largest sequential increase in seven quarters with the start of the popular winter sports codes in March. Revenues also benefited from a price rise implemented in February. Binge paid subscribers grew 22% year-over-year or 109,000 net ads from the last quarter to nearly 1.5 million subscribers benefiting from the successful release of The Last of Us. As Robert mentioned, on March the 30th Foxtel introduced advertising within the Binge basic product, the product accounts for approximately 30% of all been subscribers. We expect a modest revenue contribution from advertising beginning in the fourth quarter. Foxtel ended the quarter with over 1.3 million residential broadcast subscribers. Broadcast churn continued to improve down 200 basis points year-over-year to 12.3%. In fact, Foxtel retail churn was just under 10% for March 2023. Broadcast ARPU rose 2% to over 84 Australian dollars. Segment EBITDA in the quarter of $68 million was down 14% versus the prior year. Adjusted segment EBITDA declined 9% reflecting higher sports costs due to contractual escalators and enhancements. Moving on to Dow Jones. Dow Jones posted healthy top line growth in the third quarter with revenues of $529 million, up 9% compared to the prior year. Digital revenues accounted for 79% of total revenues this quarter up three percentage points from last year. Circulation and subscription based revenues represented over 80% of total revenues up three percentage points from the prior year, underscoring the stability and recurring nature of the revenue base. On an adjusted basis revenues were flat impacted by weaker advertising revenues compared to the prior year. We are continuing to see very strong momentum in our professional information business with revenues rising 38% year-over-year reflecting the acquisitions of Opus and CMA coupled with strong revenues from risk and compliance. PIP revenues accounted for 37% of segment revenues. Risk and Compliance revenues rose 16% despite a three percentage point negative impact from foreign currency, led by an increasing demand for screening and monitoring and financial crime search products. The pipeline remains robust, most notably in EMEA. Opus and CMA strong revenue performance is helping reshape Dow Jones revenues to be more recurring, as we have increased pricing across our customer base. As Robert mentioned, its carbon index offering continues to expand and we expect will lead to the creation of new products for current and new customers. Retention rates for Opus and CMA's products remained well over 90% in the quarter. Circulation revenues declined 1%. The modest decline was driven by lower print volumes and some softness in IBD. Total Dow Jones digital only subscriptions grew 10% year-over-year or by 208,000 sequentially, the highest net add since the fourth quarter of fiscal 2021. The focus this year has been on the launch of bundles, which expanded to include IBD in the third quarter. Advertising revenues declined 14% to $88 million and accounted for 17% of Dow Jones revenues this quarter within advertising digital fell 17% and print was down 8% with notable impacts from the technology and finance categories as we mentioned last quarter. While the advertising market remains challenged, we are seeing encouraging signs with the rate of decline abating after hitting a low in December each successive month showed an improvement with March notably down mid single digits and we saw further improvements in April. Dow Jones segment EBITDA for the quarter grew 24% to $109 million as cost growth moderated from the first half or be at the business is still experiencing the impact of inflationary pressures. The results also reflect the lapping of transaction costs related to the Opus acquisition last year. Segment EBITDA margins rose to over 20%. Adjusted segment EBITDA for the quarter declined 11%. At book publishing revenues were flat at $550 million, driven by higher Christian book sales offset by foreign currency fluctuations. After a challenging first half of the year, we saw some positive trends with stability in Amazon orders in North America following the reset in the first half as well as stronger performance from several recent titles. Segment EBITDA declined 9% to $61 million. Costs rose approximately 1% reflecting ongoing supply chain issues in North America specifically in manufacturing, distribution and freight costs, which are now showing signs of moderation. The headcount initiative is well underway, which should result in lower employee costs in the fourth quarter. In the quarter HarperCollins also settled a three month long strike with the UAW, the backlist represents 60% of revenues for the quarter up slightly from last year. Digital sales declined 3% this quarter and accounted for 23% of consumer sales in line with the prior year. On an adjusted basis revenues rose 2% and segment EBITDA fell over 7%. Turning to news media. Revenues were $563 million down 3% and included a $42 million or 7% negative impact on revenues from foreign currency fluctuations. The adjusted revenues rose 4% improving from the prior quarter rate. Circulation and subscription revenues declined 4% but rose 4% in constant currency. Growth on a constant currency basis was driven by cover price increases in the UK and Australia and double digit digital subscriber growth across news Australia and the Times and the Sunday Times. Advertising trends improved this quarter as advertising revenues were down 5% but gained 2% in constant currency. Advertising revenues and News UK rose 8% in constant currency led by strong digital advertising performance, which is continuing to benefit from the growing scale of the sun.com in the U.S. and improved performance at the Times and Sunday Times. Advertising was flat at News Australia in constant currency and notably both Australia and the New York Post benefited from an improvement in print advertising this quarter. Segment EBITDA of $34 million declined 13% reflecting a much more modest decline from the first half rate as incremental year-over-year investments related to the Talk TV initiative in the UK, and other digital initiatives in Australia slowed to approximately $30 million. Newsprint costs remain a challenge having $14 million of negative impact this quarter from higher prices. Those pressures were partially offset by ongoing cost saving initiatives across the businesses. Adjusted segment EBITDA fell 5%. Turning to the outlook. As a reminder last year's fourth quarter, including an extra week which contributed $110 million to revenues or about 4% to revenue growth and will impact prior year compares. We continue to face some supply chain and inflationary pressures and advertising conditions remain uncertain. However, it is important to note that the company's exposure to advertising has materially declined as a result of the reshaping of our portfolio, including the acquisitions of Opus and CMA. In fact, advertising revenues represented only 16% of total revenues in the third quarter. Despite the extra week of difficult prior comparison, and ongoing foreign exchange headwinds given current spot rates, we expect to see improvements in profitability in the fourth quarter as we continue to implement aggressive cost initiatives. Looking at each of our segments a digital Real Estate Services Australian residential new by listings for April declined 24%. Please refer to REI for more specific outlook commentary. At Move like the third quarter, we expect lead volumes to remain challenged in the near term and we will continue to balance marketing spend and reinvestment in adjacencies with necessary cost reductions elsewhere. In Subscription Video Services, we continue to expect the Foxtel group's profitability in local currency for the full year to be relatively stable to the prior year despite a step up in sports rights costs in the second half related to annual contractual escalators. At Dow Jones, we saw an improvement in advertising in April, albeit visibility remains limited, as the prior year compares will be further impacted by the extra week in fiscal 2022. We expect the rate of investment spending to slow which would lead to improve profitability in the fourth quarter. We have now fully lapped the Opus acquisitions in the third quarter and will lapse CMA in June. In book publishing April, revenue trends was soft consistent with industry data, but we expect cost pressures to start to moderate and are optimistic about our release slate, which as Robert noted includes Magnolia Table, Volume 3 from Joanna Gaines and Queen Charlotte, a Prequel to Bridgerton from Julia Quinn and Shonda Rhimes. At news media, advertising trends remain volatile with limited visibility. We expect total segment costs to decline in part due to lower incremental costs related to the Talk TV investment, which launched in April 2022 and we hope to see improve profitability for the segment. We have also seen moderating newsprint cost pressures in the UK. With that, let me hand it over to the operator for Q&A.

David Karnovsky:

Hi. Thank you, Robert, following up on your comments about generative AI, I'd be interested to get kind of your expanded view on how you think this tech is going to impact how consumers receive their news and information and what opportunities or risks that opens up for you in terms of your relationship with readers. And then maybe as a follow on what use cases do you see for the technology and the generation or repackaging of some of the news content you produce? Thank you.

Michael Florin:

Thanks, David. Leila we'll take our next question please.

Kane Hannan:

Good morning guys. Thanks for the question. Maybe just the cost out which interested, I suppose some of the commentary there particularly Dow Jones and books was pretty positive on the top line outlook and how things have been improving. There's interested why the cost targets been upgraded with that backdrop. And I suppose as a follow on to that, just what the net benefit of the [indiscernible] program was in the first quarter, if we think about all in with the restructuring charges potentially coming through? Just --

Susan Panuccio:

And Kane Just to add our business units, they're quite experienced to identifying areas for improvement, and we can leverage those across the group as we looked for cost savings, which is one of the reasons we've been able to drive additional cost savings. We're not going to get into the details without sort of the net off of the cost savings but we can expect that as we head into fiscal [2024] from Q1 we really would expect to see the majority of both cost savings on with P&L.

Operator:

Next question comes from Craig Huber from Huber Research. [Operator Instructions].

Susan Panuccio:

We haven't quantified it, Craig. But what I can say is it cuts across lots of different areas. We're looking at discretionary spend, as you'd expect office expenses, T&E we have a look across our print sites, and we're constantly looking for opportunities around our manufacturing plants and what we can do there. We look at our casual cost base with the variable costs. We have a look at marketing costs as well. So it's really a variety of costs that we continue to focus on. And as I said that the businesses are pretty good at actually having a look at this now.

Operator:

Next question will come from Darren Lung from Macquarie.

Susan Panuccio:

Actually, I think the comps are up year-on-year because we are still experiencing some of the supply chain pressures. I mean, what I would say is freight costs, we're seeing a moderating of that as we're seeing an easing of some of the supply chain pressures on shipping costs. But we are seeing enhanced paper costs still coming through and we're seeing some additional fuel costs are coming in because of the inflationary pressures. So it was a little bit mixed. We are seeing the moderation but they have been up.

Michael Florin:

Thank you, Darren, Leyla we will take our next question, please.

Alan Gould:

Thanks for taking the question. Robert, Susan I'm always shocked how well the news media business continues to hold up. Two things on there. Can you give us a little more detail of what's happening with Talk TV and the plans to turn that profitably? And secondly, just shocked to see print advertising actually doing better than digital advertising this quarter? What is happening there?

Susan Panuccio:

I mean Alan just on the print side, I mean look at it has been a pleasant surprise. And we've seen this over the last couple of years as it relates to print advertising. It really just depends on categories. Down in Australia, they've seen a pickup in travel advertising, which has really helped down there as the market has started to open up. They do get some good tailwind through retail, in different quarters as well. So it really is variable each quarter, but it's down to the different categories.

Operator:

We'll take a follow up from Craig Huber from Huber Research. Go ahead Craig your line is open.

Robert Thomson:

Craig, as I mentioned earlier, there clearly has been an adjustment at Amazon. That adjustment as we understand is complete. And so those awkward moments are past. And now really it's down to the quality of the front list and expanding impact about backlist. For example, in the most recent quarter a backlist was 60% of sales. As you know, backlist generally is more profitable for us. And so now we have an opportunity to make the most of our excellent authors and our marketing potential.

Michael Florin:

Thank you, Craig. Thank you. Leila we will take our next question, please.

Michael Florin:

Great. Well, thank you, Leila. And thank you all for participating. Have a great day. And we'll talk to you soon. Take care.

Michael Florin:

Thank you very much, operator. Hello, everyone, and welcome to News Corp's fiscal second quarter 2023 earnings call. We issued 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 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 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 the earnings release for the applicable periods posted on our website. With that, I'll pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thanks, Robert. Before I discuss the quarterly results, I want to expand on Robert's opening comments. As we noted in our recent SEC filing, we have been engaged in discussions with CoStar about a potential sale of move. Any potential transaction would need to not only maximize shareholder value, but also strengthen realtor.com's competitive position. We do not plan on making additional comments on this call regarding the potential transaction, and we'll update the market when appropriate. Turning to our fiscal 2023 2nd quarter results. The macro environment weighed heavily on the financial results and conditions worsened as the quarter progressed, most notably in December. Second quarter total revenues were over $2.5 billion, down 7% year-over-year, which included a $171 million or 6% negative impact from foreign currency headwinds. We -- excluding the impact of foreign currency fluctuations, acquisitions and divestitures, second quarter adjusted revenues fell 3% compared to the prior year. The revenue decline was primarily driven by the Book Publishing and Digital Real Estate Services segment. On a constant currency basis, we saw continued growth in circulation and subscription revenues, which was partially offset by a modest decline in advertising revenues. Total segment EBITDA was $409 million, 30% lower compared to the prior year's record profits. The results included $6 million of onetime costs incurred by the special committee and the company regarding the proposal from the Murdoch Family Trust, which has now been withdrawn and the special committee has been dissolved. Adjusted total segment EBITDA declined 28% versus the prior year period. For the quarter, we reported earnings per share of $0.12 compared to $0.40 in the prior year due to lower total segment EBITDA and higher losses from equity affiliates. Adjusted earnings per share were $0.14 in the quarter compared to $0.44 in the prior year. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services. Segment revenues were $386 million, down 15% compared to the prior year, impacted by the ongoing macroeconomic pressures on both the Australian and U.S. housing markets. The results include a negative impact of $26 million or 5% from foreign currency fluctuations. On an adjusted basis, segment revenues decreased 10%. Segment EBITDA declined 28% to $128 million, impacted by lower revenues and a negative impact related to currency headwinds, partially offset by lower broker commissions REA adjusted segment EBITDA declined 22%. REA revenues were $240 million, down 16% on a reported basis, including a 9% negative impact from foreign exchange. Revenues were impacted by the weakness in financial services due to fewer settlements amid rising interest rates and a decline in residential revenues driven by lower new buy listings. In the quarter, Australia national residential buy listings were down 21% with Sydney and Melbourne down 34% and 31%, respectively. Those declines were partially offset by price increases in the residential and commercial businesses, higher contribution from Premier Plus and favorable depth penetration as well as continued momentum at REA India, which is scaling in both traffic and revenues. Please refer to REA's earnings release and their conference call following this call for more details. At Move, revenues were $146 million, down 14% compared to the prior year, with real estate revenues down 17% driven by lower lead and transaction volumes, reflective of the broader housing market challenges, unique lead volumes fell 37%, while Realtor's average monthly unique users were $66 million in the second quarter based on internal metrics. Turning to the Subscription Video Services segment. Revenues for the quarter were $462 million, down 7% compared to the prior year on a reported basis due to foreign currency headwinds. On a constant currency basis, revenues rose 3% versus the prior year, the fourth consecutive quarter of growth in constant currency, underscoring the improved stability of the business. Streaming revenues accounted for 26% of circulation and subscription revenues compared to 19% in the prior year and again, more than offset broadcast revenue declines, benefiting from both volume growth and higher pricing at Kayo and BINGE, we also benefited this quarter from growth in commercial revenues as the prior year results were impacted by the pandemic-related lockdown. Total closing paid subscribers across the Foxtel Group reached over $4.3 million at quarter end, up 10% year-over-year. Total paid streaming subscribers were approximately $2.7 million, increasing 25% versus the prior year and represented 62% of Foxtel's total paid subscriber base. Kayo paying subscribers reached over $1.1 million, up 11% year-over-year, but declined sequentially from the first quarter as it exhibited typical seasonal patterns with the end of the AFL and NRL seasons in September. Given its enhanced and expanded content offerings, Foxtel has rolled out a price rise to its Kayo customers effective this month on its basic to stream tier. BINGE paying subscribers grew a robust 48% year-over-year to almost 1.4 million subscribers, benefiting from a strong release slate, which included the second season of white Lotus and carryover demand from House of the Dragon. As Robert mentioned, we are looking forward to the introduction of advertising within BINGE later this fiscal year and have begun selling launch packages. Foxtel ended the quarter with 1.4 million residential broadcast subscribers, down 10% year-over-year. Broadcast churn improved sequentially and year-over-year to 12.9% despite the migration of cable subscribers to streaming or satellite. At quarter end, less than 80,000 subscribers remained on cable as Foxtel continues to migrate subscribers from cable by fiscal year-end. Broadcast ARPU rose 2% to AUD 83. Segment EBITDA in the quarter of $90 million was 5% higher versus the prior year, which reflects an 11% negative impact from foreign exchange. Adjusted segment EBITDA increased 16% despite higher sports and entertainment costs. Moving on to Dow Jones. Dow Jones posted a strong top line performance in the second quarter with revenues of $563 million, up 11% compared to the prior year. Digital revenues accounted for 76% of total revenues this quarter, up 4 percentage points from last year. On an adjusted basis, revenues rose 1%, impacted by a weaker advertising marketplace compared to the prior year. Circulation revenues grew 3%, driven by strong year-over-year volume gains, including bundled offerings with total Dow Jones digital-only subscriptions up approximately 10% to over $4.1 million. We are particularly pleased with the performance of our professional information business, which saw revenue growth accelerate from the prior quarter to 45%. PIP revenues accounted for 33% of segment revenues. The integration of OPIS and CMA are progressing in line with our expectations as the businesses benefit from the strong demand across numerous industries, including metals, carbon plastics, sustainability, biofuels and renewables, while yields continue to rise and retention remains strong. Risk and Compliance revenue growth accelerated from the prior quarter, up 13% despite a 7 percentage point negative impact from foreign currency. We saw improved growth in all regions, underpinned by a healthy new business pipeline most notably in EMEA, led by demand for screening and monitoring and financial crime search products. Retention remains strong at above 90%. Advertising revenues declined 7% to $131 million, with digital advertising revenues down 3% in the quarter and print down 13%, which was mostly due to weakness in December, with October and November reasonably stable versus the prior year. Digital advertising accounted for 59% of total advertising revenues, which improved 3 percentage points from last year. The technology and financial categories, which are typically our 2 largest advertising categories were both impacted by the macro conditions. We saw digital advertising growth at the wallstreetjournal.com, underscoring its premium audience. However, this was more than offset by the declines at MarketWatch, which face more headwinds as its audience and advertising demand tend to be more stock market-sensitive. Dow Jones segment EBITDA for the quarter declined 3% to $139 million, reflecting a higher spending rate compared to both the prior year and first quarter, driven by costs related to the OPIS and CMA acquisitions, higher compensation costs and phasing of marketing expenses. Adjusted segment EBITDA for the quarter was down 16%. We expect cost growth to moderate in the second half, and I will provide more detail on this later in my commentary about the outlook for the upcoming quarter. At Book Publishing, while we saw some impacts from the logistic constraints at Amazon, the results were mostly hampered by significant softness in consumer demand across the industry, notably in North America. On the cost side, lower cost due to volume declines were partially offset by ongoing supply chain inventory and inflationary pressures, further contracting margins. For the quarter, revenues declined 14% to $531 million and segment EBITDA declined 52% to $51 million. The backlist represented 57% of revenues, up slightly from last year, partly driven by weaker frontlist performance with the mix being more weighted towards physical copies rather than digital, which had an adverse impact on margins. Digital sales declined 7% this quarter and accounted for 19% of consumer sales. On an adjusted basis, revenues fell 11%, and segment EBITDA declined 51%. To mitigate the recent challenges, HarperCollins has already implemented price increases and has been actively reviewing its cost structure, including the recently announced 5% company-wide headcount reduction. Turning to News Media. Revenues were $579 million, down 9%, which included a $65 million or 10% negative impact on revenues from foreign currency. Adjusted revenues rose 1%. Circulation and subscription revenues declined 7%, but were up 4% in constant currency. Growth on a constant currency basis was driven by cover price increases in the U.K. and Australia and double-digit subscriber growth across News Australia and The Times and The Sunday Times. We saw advertising conditions worsened from the prior quarter, albeit with variance across our markets. Advertising revenues were down 13%, but down 3% in constant currency. Advertising at News U.K. was down modestly in constant currency as lower print advertising revenues were partially offset by strong growth in digital advertising at -- the Sun, which has seen very strong momentum in both page views and yields from its U.S. site. Advertising trends were notably weaker in Australia and at the New York Post. During the quarter, we saw that December was the weakest month for both the U.K. and the New York Post, while in Australia, November was the most challenging with December showing modest improvements month-over-month. Segment EBITDA of $59 million declined 47%, which was driven by approximately $22 million of higher costs related to the Talk TV initiative in the U.K. and other digital investments, notably in Australia as well as nearly $21 million negative impact from higher newsprint pricing. New York Post remained a positive contributor to segment EBITDA. Adjusted segment EBITDA fell 43%. Free cash flow for the 6 months ending December 31 was lower than the prior year due to lower total segment EBITDA as well as the timing of working capital payments, which included the payment for sports rights in the second quarter. We remain focused on driving strong and positive free cash flow generation for the year. Turning to the outlook. We continue to expect a higher cost due to supply chain and inflationary pressures, advertising conditions remain challenging and visibility is limited. We expect ongoing foreign exchange headwinds, albeit at a more modest impact given recent spot rates. We remain committed to reducing costs where we can, driven by headcount reductions across our business units, prioritized marketing spending and lower discretionary costs, while balancing investment spend. Looking at each of our segments. Our digital real estate services, Australian residential new buy listings for January declined 9%. Please refer to REA for a more specific outlook commentary. At Move, we expect lead volumes to remain challenged in the near term, due to macro conditions, albeit moderating mortgage rates have led to early signs of improving trends in the housing market. In Subscription Video Services, we remain pleased with the performance of the streaming products and the ongoing focus on broadcast ARPU and churn as we continue to migrate customers off cable. We are very encouraged by the year-to-date performance and continue to expect the Foxtel Group's profitability in local currency for the full year to be relatively stable. Profitability will be skewed to the fourth quarter as we expect third quarter cost to be higher in local currency compared to the prior year given the contractual escalators and expanded content from the AFL and NRL. At Dow Jones, we remain focused on the integration of OPIS and CMA. January advertising trends were similar to December with revenues down versus the prior year, and we expect trends to remain challenged, especially given the ongoing pressures within the technology category, noting that visibility is limited as usual. As I mentioned earlier, we expect the rate of investment spending growth in the second half to be more modest than the first half rate, which should aid profitability. In Book Publishing, we are optimistic about our new release, which should help with the performance in the second half, although near-term industry trading conditions have remained challenged. At News Media, similar to the second quarter, we expect ongoing inflationary cost pressures, especially on newsprint prices, which will be balanced by targeted cost initiatives. We will continue to see incremental costs in relation to product investments, albeit at a lower rate than the second quarter. And finally, in relation to the potential sale of Move and the special committee's work on the now withdrawn proposal, we expect to see some additional onetime transaction costs in the third quarter. With that, let me hand it over to the operator for Q&A.

Kane Hannan:

Just 2 quick ones. One, just that $0.05 head count reduction you're talking about, I mean we saw the 5% reduction for books -- do we think that's broadly consistent across the News Corp group? Or could it be more skewed to Dow Jones or NIS or some of the other segments? And then try luck, obviously seen the move and I take your comments, Susan, or how do I think about the importance of REA in the broader portfolio, if we assume that the Move -- was complete. And so some of the synergies of owning REA would diminish without the Move asset in the portfolio. So just interested, there's any comments you can make that.

Operator:

Our next question comes from David Karnovsky from JPMorgan.

Robert Thomson:

Well, first of all, it's difficult to specifically identify or quantify the Amazon effect, I wasn't to say that it's real. And you can see from the fact that there was a 14% decline in revenues and will segment EBITDA fell 52%, that the impact of inflation generally was profound. But let's be very clear, this is not the new normal. The relatively large EBITDA fall shows inflation, which over the past year, has risen significantly had an impact. And it was because of the mix of titles, you've probably heard that physical was around 81% of the business in the most recent quarter. In the past, years, digital has been as much as 24% or 25%. So -- and the physical is obviously more impacted by inflationary pressures given paper, printing and distribution. Susan?

Operator:

Our next question comes from Craig Huber from Huber Research.

Operator:

[Operator Instructions]

Susan Panuccio:

Craig, I'll just -- I'll take these. So the first question in relation to the equity losses, we've actually got a small investment in a wagering platform down in Australia, the sub USD 50 million investment, and the quarter reflects some start-up losses in relation to that venture. I think importantly, we don't expect that equity loss reflected in Q2 to the run rate going forward? And then just in relation to OPIS and CMA, we don't break out the run rate for that going forward. But you can see from the adjusted revenues was up 1%, and you can see the impact of what the reported numbers were.

Entcho Raykovski:

Susan. Just one very quick clarification around the 5% head count reduction and I'd appreciate that must be a difficult decision. Presumably, that only applies to the wholly owned assets and not REA. And then just secondly, I appreciate you're not talking about the sale move specifically. But assuming it was to go ahead, how do you think about the use of the proceeds, given they could be reasonably material. Are you thinking about reinvestment? Or are you thinking about further returns to shareholders?

Operator:

Our next question comes from Alan Gould from Loop Capital.

Robert Thomson:

Well, first of all, I think we've spoken on past calls about the prospect of Imperial overstretch among some of the U.S. entertainment companies. I think that prognostication is indeed coming to pass. And it also shows you the value of the Foxtel platform. It's of itself clearly a success story, not only for our company or for Australia, but globally. They've got the streaming mix right they've secured the sports rights long term truly matter to viewers and not only one sport in one region, but across sports and regions. And looking here from New York Foxtel genuinely being transformed by much toil and sustained sagacity and it has evolved from what you might call euphemistically, a complicated situation to a genuine opportunity, and we will be opportunistic with that opportunity.

Robert Thomson:

As for simplification, look, simplification and transparency, obviously important, as you can see by how the company is involved in recent years. We've broken out the Data Jones numbers, which shed some light, not only on its potential and potency, but on the situation of and revival of News Media, as you know, the New York Post was profitable last year and will be likely to be profitable again this year, and that profitability should increase over time. And -- you know that in that sector, we've sold News America Marketing, which became more peripheral over time given the changes in that sector. The peripheral is we're not the integral. But simplification does not mean reductio ad observers. And it does mean focusing on core growth engines which is why we've invested in the professional information business at Dow Jones and the fruits of that investment already obvious, even in difficult trading conditions overall.

Brian Han:

Robert, you mentioned making price adjustments were necessary. Where do you see the priority divisions for such adjustments from this point onwards?

Operator:

Next question comes from Johnny Huynh from Evans & Partners.

Susan Panuccio:

Look, I think we're just doing a soft launch in relation to the ad tier down in Foxtel. It hasn't yet launched. So we haven't got any learnings from that, and we just expect a modest uptick in the current financial year as a consequence of that launching later in the fiscal year. So we'll have more learnings from that once we've got it out in the marketplace.

Darren Leung:

I just wanted to ask quickly, in the release, it indicates some in relation to Realtor or Move that as part of the transaction is to create shareholder value and strengthen Realtor’s competitive position. So I appreciate not talking about the transaction as such. But can you give us an idea as to what strengthened competitive position looks like, please?

Susan Panuccio:

And look, I think I'd also add that it is important for us if and when we complete any sale, what actually goes to an owner where we believe we'll continue to invest and grow that business going forward. I think that's important for any assets that we look to sell. .

Michael Florin:

Great. Well, thank you, Leyla and thank you all for participating. We look forward to talking to you soon. Have a wonderful day to talk to you soon. Bye.

Mike Florin:

Thank you very much, operator. Hello everyone and welcome to News Corp.'s fiscal first quarter 2023 earnings call. We issued 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 Susan Panuccio, Chief Financial Officer. We'll open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp.'s business and strategy. Actual results could differ materially from what is said. News Corp.'s Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 for the applicable periods posted on our website. With that, I'll pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. We have entered fiscal 2023 with a different macro environment, including volatility in foreign currency impacting our headline results from our Australian and UK businesses. Throughout fiscal 2022, we successfully navigated the company to be in a position of strength, guided by our ongoing cost transformation work, which we have balanced with investment and innovation to drive digital expansion. The first quarter of fiscal 2023 presented some challenges, particularly at HarperCollins, but most of the businesses performed well in constant currency and suffice to say that News Corp remains well positioned given the strength of our asset mix, healthy balance sheet, and the continued diversification of our revenue base. First quarter total revenues were approximately $2.5 billion down 1%, which included a $153 million or 6% negative impact from foreign currency headwinds. Excluding the impact of foreign currency fluctuations, acquisitions and divestitures, first quarter adjusted revenues grew 3% compared to the prior year. Total segment EBITDA was $350 million down 15% compared to the prior year, which saw a record profit with 53% growth. That being said, total segment EBITDA this quarter was still up 31% over fiscal 2021, underscoring the material changes in recent years. Also noteworthy is that the majority of the profit decline this quarter was driven by lower sales from Amazon due to the reset of its inventory levels and the right sizing of its warehouse footprint, as well as foreign currency fluctuations, neither of which we believe are reflective of underlying performance. Adjusted EBITDA declined 13% versus the prior year period. For the quarter, we reported earnings per share of $0.07 compared to $0.33 in the prior year. Adjusted earnings per share were $0.12 in the quarter compared to $0.23 in the prior year. Moving on to the results for the individual reporting segments, starting with digital real estate services, segment revenues were $421 million down 1% compared to the prior year. The results include a negative impact of $20 million or 5% from foreign currency fluctuations. On an adjusted basis, segment revenues increased 3%. Segment EBITDA declined 14% to $119 million impacted by higher employee costs and increased marketing costs driven by strategic investment activities of both Move and REA together with negative impact related to currency headwinds. The increasing investment costs at Move was due to the expansion into adjacencies including seller leads, rentals and new homes as we focus on the longer term opportunity. Adjusted segment EBITDA declined 7%. Move's revenues were $169 million, down 6%, following 30% growth in the prior year period. For the quarter, real estate revenues fell 9% driven by lower lead and transaction volumes, reflective of the broader industry trends. Consumer affordability constraints impacted unique lead volumes, which declined 32% in the quarter, although that was a slight improvement from the fourth quarter rate. Those trends were partially offset by price optimization within the traditional lead gen business, higher sell-through of our hybrid offering, market VIP, home price appreciation and continued advertising gains. We also had revenue growth from our adjacencies, including the acquisition of UpNest albeit these revenue streams are still in the early stages of development. Referral offerings accounted for approximately 30% of total revenues, down from 32% last year, impacted by lower transaction volumes, partially offset by higher home prices. Based on our internal metrics, Realtor’s average monthly unique users were 86 million in the first quarter. REA had another strong quarter, with revenues rising 2% year-on-year on a reported basis to $252 million, which included a $20 million or 9% negative impact from foreign exchange. Growth was driven by price increases, contribution from Premier Plus, favorable debt penetration and product mix and growth in national [listings] (ph), partially offset by a modest decline in financial services revenues due to lower settlement activity. Overall, new buy listings rose 5% with Sydney and Melbourne up 5% and 12% respectively. Please refer to REA's earnings release and their conference call following this call for more details. Turning to the Subscription Video Services segment. Revenues for the quarter were $502 million, down approximately 2% compared to the prior year on a reported basis due to foreign currency headwinds. Importantly, on an adjusted basis, revenues rose 6% versus the prior year, accelerating from the prior quarter rate of 4% growth. Streaming revenues accounted for 25% of circulation and subscription revenues versus 19% in the prior year and again, more than offset broadcast revenue declines. Total closing paid subscribers across Foxtel Group reached almost 4.5 million at quarter end, up 16% year-over-year with the growth rate improving 3 percentage points from the fourth quarter. Total subscribers, including triallers reached over 4.6 million. Total paid stream subscribers reached over 2.8 million, increasing 34% versus the prior year and adding 117,000 sequentially with streaming subscribers now representing 63% of Foxtel's total paid subscriber base. Kayo paying subscribers reached almost 1.3 million, up nearly 19% year-over-year, slightly down from the fourth quarter levels due to typical seasonal patterns with the end of the AFL and NRL seasons in September. BINGE paying subscribers grew a robust 67% year-over-year to over 1.3 million subscribers benefiting from the release of the House of the Dragon and the popularity of the Foxtel Original series, The 12. Foxtel ended the quarter with over 1.4 million residential broadcast subscribers, down 10% year-over-year, similar to the fourth quarter rate. Broadcast churn was 14.2% compared to 14% in the prior year, partly reflecting the acceleration of migrating subscribers of cable. Broadcast ARPU rose over 1% to approximately AUD 83. Segment EBITDA in the quarter of $111 million fell 3% versus the prior year, significantly impacted by currency, with adjusted segment EBITDA increasing 5%. Moving on to Dow Jones. Dow Jones continued to post strong performance in the first quarter with revenues of $515 million, up 16% compared to the prior year, with digital revenues accounting for 79% of total revenues this quarter, up 4 percentage points from last year. Results included a full quarter from both the OPIS and Chemical Market Analytics acquisitions. On an adjusted basis, revenues rose approximately 6%. Circulation revenue grew 5%, driven by strong year-over-year volume gains with The Wall Street Journal digital-only subscriptions, up 13% to over 3.1 million and total Dow Jones digital-only subscriptions also up 13%. Professional information business revenues rose 40% and accounted for approximately 35% of segment revenues driven by the acquisitions of OPIS and CMA. Revenues from the acquisitions are progressing in line with our expectations as the businesses benefited from strong demand across numerous industries, including metals, carbon, plastics, sustainability, biofuels and renewables while yields continue to rise and retention remains strong. Risk and Compliance revenues grew 6%, although currency had a 10 percentage point negative impact on revenue growth given the business' higher exposure to Europe and APAC. Advertising revenues grew a healthy 4% to $94 million despite lapping 29% growth in the prior year. Digital advertising revenues rose 11% in the quarter as we continue to see very strong yield improvement and saw growth in all categories, especially in B2B this quarter. Digital advertising accounted for approximately 65% of total advertising revenues, which improved 4 percentage points from last year. Print advertising revenues were down 6%. Dow Jones segment EBITDA for the quarter rose 19% to $113 million as margins continued to improve with 50 basis points expansion year-over-year to nearly 22%, helped by the inclusion of OPIS and CMA. Adjusted segment EBITDA for the quarter was down 1%, reflecting higher employee costs. At Book Publishing, as we flagged during the quarter, results were materially hampered by Amazon's reset of inventory levels and rightsizing of its warehouse footprint resulting in significantly lower orders and higher returns. Supply chain pressures continue to impact freight and manufacturing costs but are showing some signs of easing from recent quarters. As it relates to Amazon, we have not seen similar inventory level adjustments from other book distributors or retailers. And as Robert noted, consumer demand has remained healthy, and consumer sales data remained consistent with prior quarters. For the quarter, revenues declined 11% to $487 million and segment EBITDA declined 54% to $39 million. We estimate Amazon accounted for almost the entire year-over-year revenue decline and the majority of the year-over-year segment EBITDA shortfall. Our backlist contributed 65% of revenues, up slightly from last year, benefiting from the demand of Tolkien titles helped by the premier of the Rings of Power on Amazon. Digital sales rose 1% this quarter and accounted for 23% of consumer sales. On an adjusted basis, revenues fell 7% and segment EBITDA declined 51%. Turning to News Media. We continue to see relatively strong advertising trends, particularly at News Australia. Revenues were $553 million, down 4% versus the prior year, largely due to currency, which had a $62 million or 11% negative impact on revenues. Importantly, despite macro uncertainty, adjusted revenues for the segment increased a healthy 6% compared to the prior year due to strength in circulation and subscription and advertising revenues in constant currency. Circulation and subscription revenues declined 6%, but that included a 12% or $32 million negative impact from currency fluctuations. Growth in constant currency was driven by cover price increases in the U.K. and Australia and increase in content licensing revenues and double-digit subscriber gains across News Australia and The Times and The Sunday Times. Advertising revenues declined 4% compared to the prior year, which included a 9% or $22 million negative impact from currency fluctuations. Growth in constant currency was driven by an increase in digital advertising revenues, primarily at The Sun where digital revenue yet again eclipsed print revenue, while Australia benefited from strong print preperformance led by a recovery in retail and travel, which were impacted by the lockdowns in the prior year. The New York Post also posted strong digital gains. Segment EBITDA of $18 million declined 47%, driven by over $20 million of higher costs related to Talk TV and other digital investments, together with higher newsprint production and distribution costs across the businesses, which are being impacted by the current inflationary and supply chain challenges. Adjusted segment EBITDA fell 44%. Before we look at the outlook for the next quarter, I would like to touch on free cash flow. First quarter free cash flow is typically lower due to the timing of working capital payments, and we remain focused on driving strong and positive free cash flow generation for the year. Turning to the upcoming quarter. We continue to expect higher costs due to supply chain and inflationary pressures. Advertising conditions and mix and visibility remains limited across the businesses. We also expect ongoing foreign exchange headwinds, given the current spot rate for the Australian dollar and pound sterling compared to the prior year. Looking at each of our segments. At Digital Real Estate Services, Australian residential new buy listings for October declined 18% as we lapped tougher prior year comparisons. Please refer to REA for more specific outlook commentary. At Move, we expect lead and transaction volumes will be challenged in the short term, and we will continue to take steps to mitigate those pressures while balancing ongoing investments with cost discipline. In Subscription Video Services, we remain pleased with the performance of the streaming products and the ongoing focus of broadcast ARPU and churn as we continue to migrate customers from cable to streaming. At Dow Jones, we remain focused on the integration of OPIS and CMA. Advertising visibility remains short term. However, we are expecting a more challenging second quarter. We also expect the rate of investment in the second quarter to be higher than the prior year as we continue to focus on driving consumer subscription and enhancing our PIB offerings. In book publishing supply chain and inflationary pressures continue to persist, albeit are showing signs of easing. We still expect headwinds from Amazon in the second quarter, although with strong customer demand, we expect any issues to be short term in nature. At News Media, like the first quarter, we expect incremental costs in relation to product investments across the businesses, including top TV and other digital initiatives, together with ongoing inflationary pressures, including newsprint prices. Before we open for questions, I would like to remind everyone that we will not be addressing any questions related to the special committee and/or a potential combination with FOX Corporation, as Robert stated earlier. With that, let me hand it over to the operator for Q&A.

Kane Hannan:

Maybe just on the book publishing side of things. Helpful comments there at the end around Amazon and the broader inflationary pressures. Just give us a sense of, I suppose, the margin decline in the first quarter, some 50 basis points and what you'd attribute to Amazon's impact and what you'd attribute to, I suppose, the inflationary side of things that is probably going to continue for the rest of the year? And then just as a second sort of quick follow-on. Just talk about how you're thinking about M&A in the book publishing space and whether you think Harper would have any of the regulatory pushback that Penguin Random House had with their proposed acquisition?

Susan Panuccio:

And Ken, maybe just to frame the Amazon impact. The majority of the EBITDA decrease was due to Amazon. We had hopes that it will be limited to Q1, but we are expecting to see some impacts coming into the second quarter. But all things being while we expect the second half to pick back up. And the inflationary impacts have been coming down actually. We are seeing it slightly offset by volume, but we can hopefully again, expect to see those subside a little bit in the second half.

David Karnovsky:

Robert, on Wall Street Journal digital subscribers. Can you talk to the trends there for the prior 2 quarters? I think you mentioned a tough market. I wanted to see how you view factors like new cycle or economy? And then Dow Jones digital ads grew strongly in the quarter. Is that sort of disassociated to the macro or would you expect some impact to the demand eventually?

Susan Panuccio:

And David, look, I think on the advertising. We didn't quite catch what the question was, but we actually been really pleased with the performance of advertising in Dow Jones, they have been growing advertising quarter-on-quarter for quite a few quarters now, which has been really pleasing and actually have surpassed our expectations as to how well they've been doing. I did say in my comments that we were expecting it to be a little bit more challenged come Q2. Q2 is one of the biggest advertising quarters across our markets, but it's still pretty early days, and we'll see how that pans out. So we do expect it to be a little bit more challenged in the second quarter against tougher comps.

Darren Leung:

Just a quick one about the BINGE subscriber growth. So it's up quarter-on-quarter. Any feel for how much was driven by House of the Dragon versus potential [Indiscernible] from cost conscious consumers, and maybe another way to frame that is did the trend pace increase?

Operator:

And next question is from Brian Han from Morningstar.

Robert Thomson:

Brian, very much so because we see a bright long-term future for Realtor. And that's why we are indeed investing. We're rightly cost-conscious. But whether it's rentals, whether it's the sell side as well as the buyer side, we're continuing to invest in products because there is absolutely no doubt about the long-term opportunity that digital real estate presents in the United States.

Operator:

Next question is from [Jonny Hein from Emerson Partners] (ph).

Robert Thomson:

Well, generally, we're very pleased with the BINGE performance. Bringing in advertising gives us another layer of revenue potential and I have no doubt that as the team does its modeling of that potential that we'll be able to update you in coming quarters as it's unfurled to the market.

Operator:

There are no further questions from the line.

Michael Florin:

Thank you very much, Sarah. Hello, everyone, and welcome to News Corp's Fiscal Fourth Quarter 2022 Earnings Call. We issued 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 Susan Panuccio, Chief Financial Officer. We'll open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 for the applicable periods posted on our website. With that, I'll pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. Fiscal 2022 was another record year for News Corp. We have taken significant steps over the years to reshape and strengthen the portfolio, reduce fixed costs, transition to become more digital and generate incremental high-margin revenues. I will come back to some thoughts about our fiscal 2023 outlook. But suffice to say that News Corp is well positioned as we move into fiscal 2023, given the strength of our asset mix and balance sheet and the continued diversification of our revenue base. Fiscal 2022 fourth quarter total revenues were almost $2.7 billion, up 7%. The fourth quarter includes an extra week, which positively impacted revenues by $110 million. That impact was more than offset by foreign exchange headwinds of $139 million. Excluding the impact of foreign currency fluctuations, acquisitions and divestitures, fourth Quarter adjusted revenues grew 9% compared to the prior year, including the extra week. Total segment EBITDA was $315 million, up 50% versus the prior year, primarily due to higher overall revenues and lower costs in the Other segment, partially offset by higher costs from recent acquisitions and the negative impact from foreign currency fluctuations. The current quarter results include a onetime $20 million legal settlement charge for Insignia. Adjusted EBITDA grew a healthy 34% versus the prior period. For the quarter, we reported earnings per share of $0.19 compared to a loss of $0.02 in the prior year. Adjusted earnings per share was $0.37 in the quarter, compared to $0.16 in the prior year. Our free cash flow generation remains strong and remains a key area of focus. Moving on to the results for the individual reporting segment for the fourth quarter, starting with Digital Real Estate Services. Segment revenues were $443 million, an increase of 7%, compared to 74% revenue growth in the prior year. The results include a negative impact of $22 million from a valuation adjustment of future trail commissions at REA's financial services business and a negative impact of $20 million or 5% from foreign currency fluctuations, partially offset by the $21 million contribution from Mortgage Choice and the benefit from the extra week, which added $14 million to Move's revenues. On an adjusted basis, segment revenues increased 7%, which does not exclude the benefit from the extra week. Segment EBITDA declined 11% to $121 million, driven by the $14 million negative impact at REA related to the revaluation of trail commissions and an $8 million or 6% negative impact related to currency headwinds as well as higher employee costs at both REA and Move. Adjusted segment EBITDA declined 1%. Move's revenues were $193 million, up 4% following 68% growth in the prior year. For the quarter, real estate revenues grew 3% and accounted for 84% of total revenues. Price optimization within the core lead gen business, higher penetration of our hybrid offering market VIP and continued home price appreciation, coupled with higher advertising revenues, helped to offset the impact from lower lead volumes and transaction volumes. Move's revenues also benefited by $40 million from the extra week. Referral offerings accounted for approximately 31% of total revenues, up from 30% last year. Based on our internal metrics, Realtor's average monthly unique users were $93 million in the fourth quarter. Lead volumes in the quarter fell 39% compared to the prior year, impacted by continued lack of supply and home price appreciation as well as the recent rising mortgage rates. Home prices remain high, growing in mid-teens in June, underscoring the continued supply and demand imbalance. During the quarter, Move acquired Up Nest advancing realtor seller and listing agent strategy and continue to make investments in rentals and new homes as they build out those adjacencies. In the last 2 years, Realtor's focus was not only to take advantage of the strong market dynamics during the pandemic, but also to position itself for long-term growth while focusing on core competencies and improving the product to deliver deeper and richer information for consumers and customers. This is evidenced by the shift to the data-rich referral base model with the integration of Opcity, which enabled the launch and expansion of Market VIP, the hybrid product, and sell a marketplace to allow customers to explore seller leads without risking own capital to enter buying. These investments, together with the UpNest acquisition have allowed us to expand our scale compared to 2 years ago and capture other elements of the transaction life cycle. REA had another strong quarter, with revenues rising 10% year-on-year on a reported basis to $250 million as growth in residential depth revenues and the contribution from the Mortgage Choice acquisition more than offset the negative impacts from currency fluctuations and the revaluation of trail commissions. REA continued to benefit from the favorable market backdrop, which saw Australian residential new buy listings rise 2% despite comparing against 54% growth in listing volumes in the prior year and expected uncertainty around the federal election in May. Please refer to REA's earnings release and their conference call following this call for more detail. Turning to the Subscription Video Services segment. Revenues for the quarter were $524 million, sequentially higher than the third quarter and down approximately 3% compared to the prior year on a reported basis due to foreign currency headwinds. Importantly, on an adjusted basis, revenues rose 4%, accelerating from the prior quarter rate of 1%. Streaming revenues accounted for 23% of circulation and subscription revenues versus 16% in the prior year and more than offset broadcast revenue decline this quarter. We believe this is a key inflection point for the business and has helped underpin the recent stability in Foxtel Group's revenue. Total closing paid subscribers across the Foxtel Group reached over 4.4 million at quarter end, up 13% year-over-year. Total subscribers, including trial has reached over $4.5 million. Total paid streaming subscribers reached 2.7 million, increasing 34% versus the prior year and adding 114,000 sequentially, with streaming subscribers now representing 61% of Foxtel's total paid subscriber base. Kayo benefited from strong winter sports content, very high retention from the initial repricing of the legacy Live Pass customers and the successful implementation of the price rise in May. Kayo paying subscribers reached almost 1.3 million, up nearly 23% year-over-year. Binge paying subscribers grew 63% year-over-year to 1.2 million subscribers, which is relatively stable with the third quarter as net adds were impacted by the timing of content availability and the record adds in the third quarter. In July, we announced a AUD 2 price rise for Binge standard offering. Foxtel ended the quarter with approximately 1.5 million residential broadcast subscribers, down 10% year-over-year, with the rate of decline modestly improving from the third quarter rate. Foxtel continues to focus on managing broadcast churn, which reduced by over 3 percentage points year-over-year in the quarter to 13.8%, even though cable customers are being actively migrated to the iQ5. This reflects 11 consecutive months of year-over-year churn reduction. The focus on retaining high-value subscribers for broadcast ARPU steadily rise by 2% to AUD 83 segment EBITDA in the quarter of $81 million rose 23% versus the prior year and 32% on an adjusted basis. Foxtel continues to exhibit healthy cash generation and use existing facilities to pay its AUD 306 million of July USPP maturities. For the full year, the business showed stability in revenue and segment EBITDA. And as Robert mentioned, full year adjusted revenues improved for the first time in 5 years, which is a great result for the business given the challenges of recent years. As expected, total costs were relatively stable in local currency. Moving on to Dow Jones. Dow Jones continued its strong performance in the fourth quarter with revenues of $565 million, up 26% compared to the prior year, with digital revenues accounting for 76% of total revenues this quarter, up 4 percentage points from last year. Results include a full quarter from the OPIS acquisition and 1 month from the Chemical Market Analytics acquisition, which closed in early June. On an adjusted basis, revenues rose an impressive 16%, with the extra week contributing $40 million. Circulation revenues grew 17%, reflecting an additional $17 million for the extra week as well as strong volume gains in digital-only subscriptions. Total Dow Jones digital-only subscriptions were over 4 million, up 14%, including 88,000 net adds in the fourth quarter. Professional information business revenues rose 47% and accounted for 32% of segment revenues, driven by recent acquisitions and growth across all product lines, partly due to $14 million of additional revenues from the extra week. We are focused on further expansion of PIB, which was significantly enhanced with the acquisitions of OPIS and CMA. These acquisitions continue to move Dow Jones to a more recurring and digital revenue base with very high retention rates, strong margins, premium products and optionality into new market verticals. While we don't break out margins specifically for PIB, it is fair to assume that the products in the business have attractive margins, which we expect to be enhanced by our recent acquisitions. Revenue from Risk & Compliance increased 19%, driven by higher sales activity, including strong growth across all regions, most notably in Europe, and we have a very strong pipeline of new business activity. OPIS generated $37 million of revenues in the quarter, with the business benefiting from price rises, high customer retention and strong demand in existing verticals. CMA contributed approximately $6 million of revenues in the quarter. Advertising revenues grew 13% to $116 million despite lapping 45% growth in the prior year. The extra week contributed $9 million to revenue. Digital advertising revenues rose 16% in the quarter despite facing a record 53% growth comparable from the prior year. Digital accounted for 58% of total advertising revenues, which improved 2 percentage points from last year. We continue to see very strong yield improvement and full strength in the B2B, B2C and finance categories this quarter. It is also noteworthy that the vast majority of our digital advertising comes from direct sales rather than via third-party programmatic exchanges, which has been helpful to our yield improvement. Print advertising rose 9%. Dow Jones segment EBITDA for the quarter rose 54% to $106 million. Excluding the contribution from the acquisitions, currency fluctuations and other items disclosed in the release, adjusted segment EBITDA for the quarter rose an impressive 30% despite higher employee costs and higher sales and marketing costs. At Book Publishing, HarperCollins posted 4% revenue growth to $513 million and segment EBITDA declined 2% to $47 million as we continue to navigate supply chain and inflationary pressures as communicated during the fiscal year. To that effect, margins were down slightly from the prior year. We saw revenue growth driven by a strong front list performance in general books and a $20 million benefit from the extra week. Our backlist contributed 56% of revenues, down slightly from last year, impacted by lower sales of the Bridgerton series compared to last year. Digital sales rose 9% this quarter and accounted for 24% of consumer sales. On an adjusted basis, revenues rose 4% and segment EBITDA declined 6%. Turning to News Media, where the momentum continued in the fourth quarter. Revenues were $629 million, up 6% versus the prior year and included $53 million or 9% of negative impact due to currency headwinds, but more than offset the additional $36 million from the extra week. Adjusted revenues for the segment increased 14% compared to the prior year. We again saw a very strong performance in advertising as well as continued growth in circulation and subscription revenues, which was driven by the contribution from our recent content licensing deals, higher digital subscriptions and cover prices. Digital revenues continued to expand, increasing to 35% of segment revenues from 32%, primarily driven by the strength of digital advertising, which we expect will soon be the largest source of the segment's advertising revenues. Within the segment, revenues at News Corp Australia increased 6% and revenues at News UK were flat as both were materially impacted by currency headwinds. The New York Post also continued to show strong top line growth, up 23%. Circulation and subscription revenues rose 3%, including double-digit digital subscriber growth across News Australia and the Times and Sunday Times Currency headwinds had a $26 million or 9% negative impact, which more than offset the $19 million benefit from the extra week. Advertising revenues increased 8% compared to the prior year, with strength in digital across all our key mastheads, most notably at The Sun, where digital exceeded print advertising for the third consecutive quarter, benefiting from significantly higher yields and its successful launch in the U.S. Currency negatively impacted advertising revenues by $21 million or 9%, partially offset by the additional $15 million from the extra week. Segment EBITDA of $33 million increased also by that amount, reflecting higher revenues, partially offset by incremental investments of over $20 million related to Talk TV in the U.K., which launched in April, and other digital initiatives. News Corp Australia and News UK contributed $23 million and $16 million, respectively, to the segment EBITDA growth. And the New York Post and Wireless Group were also again positive contributors. News Corp finishes fiscal 2022 more dependent on recurring and circulation based revenue, less dependent on advertising revenue and with greater cost discipline across the company as a consequence of navigating the past couple of years. As for fiscal 2023, we expect to see an improvement in top line revenue growth, partially driven by the integration of OPIS and CMA, but also by continued digital gains across the company, albeit much will dependent on macro conditions and the volatility of foreign currencies. We expect CapEx to be modestly higher in fiscal 2023 and anticipate strong levels of free cash flow. For the upcoming quarter, I would like to discuss a few things. We expect cost impacts from continued supply chain and inflationary pressures, together with wage inflation challenges, to continue. We will take necessary action to address those pressures, including pricing adjustments, together with our ongoing focus on cost management. Visibility on advertising remains limited across the businesses, and we continue to expect foreign exchange headwinds given the current spot rate for the Australian dollar and pound sterling compared to the prior year. Looking at each of our segments at Digital Real Estate Services, Australian residential new buy listings for July rose 7%. Please refer to REA for a more specific outlook commentary. As Robert mentioned, across the industry in the U.S., inventory and active listings improved in June as we begin to cycle into more normalized year-over-year comparisons. We still assume lead volumes at Move will be challenged in the short term, and we'll look to mitigate that through yield optimization, new or enhanced products as well as balancing ongoing investment with cost discipline. In Subscription Video Services, we remain pleased with the performance of the streaming products and the ongoing focus on broadcast ARPU and churn as we continue to migrate customers from cable. We look forward to the launch of House of the Dragon on Binge later this month, which we will expect will drive an improvement in net subscriber additions, and we continue to expect to see stability in earnings in local currency across the year. At Dow Jones, we remain focused on the integration of OPIS and CMA. We expect the rate of investment in the first quarter to be higher than the prior year as we continue to invest to drive consumer subscriptions and enhance our PIB offerings. As a reminder, over 75% of Dow Jones revenues are recurring or subscription-based, the majority digital, with a strong margin, and we feel confident of its growth trajectory leading into 2023. In Book Publishing, supply chain and inflationary pressures continue to persist. We look to capitalize on our global English language rights for J.R.R. Tolkien's work in our back list as we look forward to the release of The Rings of Power on Amazon Prime in early September. At News Media, we still expect higher content licensing revenue from our platform deals as we implement elements of the broader Google partnership, such as subscribed with Google and also benefit from our expanded Apple relationship. We expect incremental costs in relation to product investments across the businesses, including Talk TV and our other digital initiatives, together with pressure on newsprint prices. As a reminder, we have recently raised cover prices in both the U.K. and Australia this calendar year. With that, let me hand it over to the operator for Q&A.

Entcho Raykovski:

Rob, Susan, it's Entcho here. I've got a question in relation to Move, particularly given those comments you've made around the next conversation. I'm just conscious that Zero have guided to declines in their IMP revenues in the double digits into the September quarter. It sounds like you are more positive given the yield improvements that you've mentioned. I guess, can you expand on whether you're likely to see in your revenue growth into the next quarter, notwithstanding some of the challenges in the macro environment?

Operator:

Next, we move on to Kane Hannan with Goldman Sachs.

Robert Thomson:

Kane, obviously, The Lord of the Rings series or the series based on The Lord of the Rings is going to have a profound impact on HarperCollins' performance, and the related publicity will no doubt stimulate sales. We're not in a position to give you an accurate forecast for the future, but it is fair to say it's going to be a significant moment for HarperCollins in coming months.

Operator:

Next, we move on to Craig Huber with Huber Research Partners.

Susan Panuccio:

I might take that one, Craig. So look, obviously, if our revenue grows, we expect cost to increase given the variable nature of some of our businesses. And we are expecting supply chain and inflationary pressures most notably in manufacturing at HarperCollins and on newsprint prices at the mastheads together with wage inflation. Our business units are so far more in tune with the levers that they can use having successfully navigated the past couple of years. We do have a healthy pipeline of ongoing cost-saving initiatives, which gives us confidence that we can continue to take our cost to help mitigate some of those macro challenges.

Alan Gould:

Robert, I just wondering if you can give us a little more insight on what's happening with these platform deals with Facebook, which supposedly is resisting paying for news going forward. And what the implications would be in Australia, given the recent laws that have been implemented there?

Operator:

And we move on to Darren Leung with Macquarie.

Susan Panuccio:

No, there's no acquisitions in Risk & Compliance basically within the period segment, but not Risk & Compliance.

Brian Han:

So strategic moves that you guys would like to do with REA, but cannot do due to the fact that you don't own 100% of it? And Susan, what is the revenue base of Risk & Compliance and now within Dow Jones?

Brian Han:

Yes. What would you like to do with REA, but you cannot do it because you don't own 100% of it?

Susan Panuccio:

And Brian, just in relation to the number for Risk & Compliance, the annual revenue was $225 million for '22, 2020, excluding week 53, so 18% growth in the full year, and we had a 19% growth in Q4.

John Cardoso:

This is actually John on for David. Just touching on the U.S. real estate market again. But given the current cross-currents of a stabilizing market against a weakening macro backdrop, how should we think about the performance of the different product offerings that move, particularly as it relates to some of the more referral-based services versus the more lead-heavy ones?

Susan Panuccio:

And John, maybe I can just add to that as well. Given some of the headwinds that we face within the core legion with volumes down, we have had success in driving increased revenue given higher yield. And we've also recently launched the hybrid product, Market VIP, which we're starting to see growth, and that's getting traction as well. So that's helping to mitigate some further headwind.

Operator:

And we have no further questions. So I would like to turn the conference back over to Mike Florin for any additional closing remarks.

Operator:

Thank you. And that does conclude today's teleconference. We do appreciate your participation. You may now disconnect.

Mike Florin :

Thank you very much, operator. Hello, everyone, and welcome to News Corp's fiscal third quarter 2022 earnings call. We issued 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 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 identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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.

Susan Panuccio:

Thank you, Robert. Fiscal 2022 third quarter total revenues were approximately $2.5 billion, up 7% reflecting strong growth across our core pillars led by digital real estate services and Dow Jones, which includes benefits from our recent acquisitions and our continuing shift to digital across the company. Total segment EBITDA was $358 million higher than the prior year by 20%. And, as Robert mentioned, marked the highest third quarter total segment EBITDA on records since separation, reflecting our ongoing focus on costs. Those results came despite approximately $15 million of one-time cost related to the Opus transaction, which closed on February the 28 and a $16 million negative impact from currency headwinds. Excluding acquisitions, currency fluctuations, and other items disclosed in the release, adjusted revenues and adjusted total segment EBITDA rose 6% and 25% respectively. Reported EPS were $0.14 compared to $0.13 in the prior year. Adjusted earnings per share in the quarter was $0.16 compared to $0.09 in the prior year. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services. Segment revenues were $416 million an increase of 19% compared to the prior year. The results include the contribution from the acquisition of Mortgage Choice, as well as the negative impact from foreign currency fluctuations. On an adjusted basis segment revenues increase 14%. Segment EBITDA rose 17% to $137 million or up 18% on an adjusted basis. Like the second quarter, the driver of segment EBITDA improvement was REA while segment EBITDA contribution from news was flat compared to the prior year. News revenues were $170 million similar to last quarter and up 5% year-over-year, this followed 37% revenue growth in the prior year and is now approximately 44% higher than pre-pandemic levels in the third quarter of fiscal 2020. For the quarter real estate revenues grew 7% and accounted for 85% of total revenues. Price optimization within the core Lead Gen business, home price appreciation and the resulting flow through to commissions within the referral model together with higher advertising help to offset limited inventory impacting both lead volumes and transaction volumes. Referral offerings accounted for approximately 28% of total revenues up three percentage points compared to the prior year and was the biggest driver of year-over-year revenue growth this quarter. Based on our internal metrics, Realtor’s, average monthly unique users were 95 million in Q3 reaching a 100 million in March, while unique users were down 3% year-over-year, they are still 40% above pre-pandemic levels in the third quarter of fiscal 2020. Like the second quarter revenue growth was partially offset by the divestiture of top producer in March, which negatively impacted revenues by approximately two percentage points. Lead volumes in the quarter were sequentially higher than the second quarter. However, they declined 22% compared to the prior year impacted by lower new listings and the recent rise in mortgage rates. The team remains focused on driving audience growth, scaling the core real estate business and investing in and growing adjacent businesses, while keeping a watchful eye on the macro environment. REA had another very strong quarter with revenues rising 30% year-on-year on a reported basis to $246 million, which includes a $38 million contribution from the Mortgage Choice acquisition. REA enjoyed another quarter of favorable trends, including an 11% increase in Australian residential new buy listings with Sydney up 14% and Melbourne up 8%, despite lapping tough comparisons. REA also benefit from higher yields, increased penetration, and favorable product mix. Financial services benefited from an increase in settlements, as well as the integration of Mortgage Choice. And the team continues to innovate with the launch of Premier Plus in March and enhanced offering that delivers additional marketing features to listings. Please refer to REA's earnings release and their conference call following this call for more details. Turning to the Subscription Video Services segment, revenues for the quarter were $494 million, relatively stable from the second quarter and down approximately 6% compared to the prior year on a reported basis due to foreign currency headwinds. On an adjusted basis, revenues rose 1%, a strong improvement from the second quarter rate of minus 3%. Streaming revenues, now account for 20% of circulation and subscription revenues saw notable acceleration in the growth rate from the second quarter. Total clients paid subscribers across the Foxtel Group reached $4.3 million at quarter end, up 23% year-over-year. Total subscribers, including trialists, were over 4.5 million. The year-over-year increase was driven by higher BINGE and Kayo subscribers, partially offset by the expected decline in residential broadcast subscribers. Commercial subscriptions rose modestly over the prior year helped by the easing of lockdown restrictions. Total streaming subscribers reached over 2.7 million with paying subscribers up 62% from the prior year and 421,000 sequentially to approximately 2.6 million. Streaming subscribers reached 59% of Foxtel's total paid subscriber base. Kayo benefited from the return of the winter sports codes [ph] and saw record early ratings with total subscribers over 1.2 million. 138,000 paid subscribers were added in the quarter, a notable acceleration from the second quarter, taking paid subscribers to over 1.1 million. Similar to Kayo, BINGE had a strong quarter increasing its total subscribers to over 1.3 million. Paying subscribers increased to over 1.2 million, up 135% from the prior year. BINGE added 284,000 paid subscribers in the quarter, the most quarterly additions since the launch of the service in 2020. BINGE's growth continued to be driven by the depth and diversity of its content library and the popularity of new shows such as Love Me, a Binge original, Euphoria, and the Walking Dead. Foxtel ended the quarter with over 1.5 million residential broadcast subscribers, down approximately 11% with the rate of decline stable versus the second quarter. Commercial subscribers ended the quarter 240,000 and improvement both sequentially and year-over-year. Retaining high value customers remains the focus for broadcast subscribers, which has led to churn improvements with churn reducing almost six percentage points year-over-year in the quarter to 14.3%, which reflects eight consecutive months of year-over-year churn reduction. Broadcast ARPU rose by 2% to AUD82. Segment EBITDA in the quarter of $79 million was down 13% versus the prior year, driven by higher programming costs, partly due to increased availability of entertainment content as well as modestly high marketing investment in streaming. Cost control remains a key focus at Foxtel, and we continue to expect full year cost to be flat versus the prior year in local currency, which is helping to underpin strong cash generation. The fourth quarter segment EBITDA will face more favorable prior year comparisons. Moving on to Dow Jones. Dow Jones continued its strong performance in the quarter with revenues of $487 million, up 16% compared to the prior year with digital revenues accounting for 76% of total revenues this quarter, up two percentage points from last year. Results for the quarter include IBD and one month of the recently acquired Opus. Circulation and subscription revenues increased 15%, including 16% circulation revenue growth, primarily reflecting the acquisition of IBD and continued strong volume gains in digital-only subscriptions. Digital-only net ads at Dow Jones were 167,000 subscribers, including 118,000 at the Wall Street Journal, the highest quarterly additions this fiscal year. Professional information business revenues rose 13% and accounted for 29% of revenues. Revenue growth from Risk & Compliance increased 12%, despite a 3% negative foreign exchange impact driven by the higher entry rate at the beginning of the year and strong growth across the Americas, Europe and Asia. Opus accounted for approximately $10 million of revenues in the quarter. As a reminder, the business did $129 million of revenues in its last full year with very strong margins and with revenues almost all recurring and digital. Advertising revenues, which accounted for 21% of revenues this quarter, remained very strong, growing 20% to a $102 million, despite difficult prior year comparisons. Digital advertising revenues rose 21% in the quarter on top of 30% growth in the third quarter of the prior year and accounted for 62% of total advertising revenues. We continue to see strong yield improvement led by direct display and saw particular strength in the finance and technology categories. Print advertising continued to surprise on the upside with 18% growth year-over-year, partly due to easy prior year compares, but also due to strength in the technology category. Dow Jones segment EBITDA for the quarter rose 7% to $88 million following growth of 61% in the third quarter of the prior year. As mentioned earlier, included in the quarter is approximately $15 million of one time transaction costs related to the Opus acquisition. Excluding the contribution from IBD and Opus currency fluctuations and other items disclosed in the release adjusted revenues and adjusted segment EBITDA for the quarter rose 9% and 16% respectively. Over the last few weeks, we have received questions from investors about our exposure to the war in Ukraine. Across the company, our exposure to the region is at Dow Jones, the region accounts for a de minimis amount of Dow Jones' gross revenues, almost entirely in [indiscernible]. And so far, the impact from close accounts and/or canceled contract is immaterial. We are also beginning to see opportunities in risk and compliance emerge due to increased sanctions and regulatory requirements. At Book Publishing, HarperCollins posted 5% revenue growth to $515 million and segment EBITDA fell 16% to $67 million. However, consumption levels continue to remain materially above pre-pandemic levels. Current quarter results were impacted by the ongoing global supply chain and inflation new pressures on freight and manufacturing cost as well as very difficult comparisons with the prior year, which benefited from a higher back list performance driven by The Bridgerton Series by Julia Quinn. The Bridgerton Series still performed well this quarter, but revenue contribution was down approximately $14 million versus the prior year. As flagged during our last earnings call, we saw an increase in manufacturing costs, partly due to supply chain issues, including higher inbound international freight and fuel prices. Digital sales declined 6% this quarter and accounted for 23% of consumer sales, which was almost entirely explained by the lower Bridgerton sales, which did particularly well in the ebook format last year, and also contributed to the strong margin performance in the prior year. HMH continued to perform according to plan. For the quarter, HMH contributed $35 million in revenues and $3 million in segment EBITDA and remains on track to deliver $20 million in annualized cost synergies. Turning to News Media, the momentum in this segment continued during the quarter revenues were $580 million up 5% versus the prior year, which included $25 million or approximately five percentage points of negative impact due to currency headwinds. The underlying growth rate in local currency was similar to the second quarter. We again saw improvement in advertising as well as strong growth in circulation and subscription revenues, benefited by the contribution from our recent content licensing revenues. Within the segment revenues at NewsCorp Australia and News UK increased 2% and 4% respectively. Wireless Group and the New York Post also continue to show strong top line growth. Adjusted revenues for the segment increased 10% compared to the prior year. Circulation and subscription revenues rose 5% benefiting from strong digital subscriber growth, incremental revenues from the platform agreements and cover price increases. Currency headwinds, negatively impacted circulation and subscription revenues by $12 million or four percentage points. Advertising revenues increase 9% compared to the prior year with strength in digital across all our key markets. Most notably at The Sun, which more than double digital advertising revenues versus the prior year. Currency negatively impacted advertising revenues by $10 million or five percentage points. Segment EBITDA of $39 million increased $31 million compared to the prior year, reflecting the higher revenues. Margins improved to almost 7% from 1% last year. Results were partially impacted by hiring investment related to TalkTV and marketing support for new digital product offerings at NewsCorp Australia. I would now like to talk about some themes for the upcoming quarter. We remain encouraged with our strong year-to-date results and that we have already delivered record profitability since separation for the company at the end of Q3. But we are clearly mindful of the lack of visibility from the ongoing impacts of the pandemic, the broader macroeconomic impacts from the war in Ukraine and the cost impacts from continued supply chain and inflationary pressures, particularly in book publishing and our [indiscernible], together with wage inflation and talent retention across the company. We expect these challenges to continue in the short term. At Digital Real Estate Services, Australian residential new buy listings for April declined, 8% impacted by the timing of the Easter and ANZAC Day holidays. REA anticipates growth rates to slow as it cycles strong prior period listing volumes, which grew 54% in the fourth quarter of last year had potential impacts around the upcoming federal election in May. Please refer to REA for more specific outlook commentary. At Move, despite tougher comparisons and the macro environment, we continue to see strong yields. We expect to continue to reinvest in Move, as we drive the core business and expand into relevant adjacencies, particularly in new homes and rentals. Similar to last year, we expect investments in the second half. In Subscription Video Services, we remain pleased with the performance of the streaming products and the ongoing focus on broadcast ARPU and churn. As mentioned earlier, we expect full year costs in local currency to be relatively flat versus the prior year. And we expect improvement in profitability in the fourth quarter against the prior year. At Dow Jones, overall revenue trends across the business remains strong. We do expect the rate of advertising growth to be impacted next quarter, by a more difficult prior year comparison, which saw advertising grow by 45%. Excluding the impact from acquisitions, we expect the rate of cost growth to be higher than the third quarter as we continue to invest to drive consumer subscriptions and enhance our Professional Information Business offerings. And as Robert mentioned, we expect to close the Base Chemicals acquisition in June. In Book Publishing, we expect another quarter of strong front list releases and supply chain and inflationary pressures to persist. At News Media, overall advertising trends remain favorable, albeit recognizing that visibility is limited. We continue to expect incremental annual revenues from the recent platform agreements with the majority of that allocated to News Media. We expect incremental costs of at least $20 million in relation to product investments across the businesses, including TalkTV in the fourth quarter. On the Other segment, we expect costs in the second half to be slightly higher than the first half due to the phasing of costs, but lower than the prior year. Finally, note that this fiscal year is on a 53-week basis and will include an extra week of financial results. I would also like to note that similar to the third quarter, we do expect foreign exchange headwinds to continue, given the current spot rates for the Australian dollar and pound Sterling compared to the prior year. With that, let me hand it over to the operator for Q&A.

Entcho Raykovski:

Hi Robert. Hi, Susan. Entcho Raykovski here. If I can just sneak in two questions please. I mean the first one is on Move. I appreciate the comments Susan you've just made around fourth quarter. I'm conscious that the comps are particularly difficult with, I think, it was 68% revenue growth in the PCP. Can you talk about what yield benefit you might expect to see in that fourth quarter? And could you conceivably see revenue growth within Move, given that tough comp? That's the first question. And secondly, I have a question on the pace of the buyback by my calculus you've done, I think, $158 million so far versus an authorization of $1 billion. Do you think there is scope to accelerate that particularly if you think there is value on offer in the current share price? And could we see that in the coming months? Thank you.

Susan Panuccio:

And Entcho, so just in relation to the buyback, your numbers were accurate. That is what we have brought back to date. And you will notice from that that we have been buying back at a relatively steady rate since we announced the buyback like last calendar year. We haven't given a timeframe in relation to the execution of that buyback. But as always, we will continue to look at the reinvestment opportunities, versus the shareholder returns and monitoring the share price.

Operator:

Our next question is from Kane Hannan with Goldman Sachs, please go ahead.

Susan Panuccio:

Okay Kane I'll take those. So just in relation to Kayo, the price increase will hit. I think it's towards the end of May. So we'll actually see pretty limited impact of that in Q4. So it's 250 and it'll hit on the 9 of May. But we will obviously see the benefit of that as we go through into next financial year. In relation to News Media, what I would say about that is we obviously have seen really strong growth within that segment over the course of the year. And we are taking a balanced approach to reinvestment. So we are expecting to see profitability improve in Q4, obviously subject to revenue trends, and foreign currency and how that trades. And we will make sure that the revenue upside will help some of the cost investments that we're going to have within that business. And we will continue to focus on margins within that segment.

Operator:

We'll take our next question from David Karnowski with JPMorgan. Please go ahead.

Robert Thomson:

Yes, we're very pleased with the first phase of integration as you say said, it is early. But clearly enough international events have only highlighted the economic, commercial and political importance of energy policy and prices and the shift to renewables. Both Opus and Base Chemicals are essentially a hundred percent digital recurring subscription revenues and rather high EBITDA margins. But these are premium products at premium prices. And we have a very large base of potential, professional customers through our Barron's, WSJ, IBD and MarketWatch audiences. That vast base will create an ongoing funnel of possible premium subscribers for Opus. You'll certainly see the positive impacts in coming quarters. And it is obvious that this is a pivotal moment for Dow Jones.

Operator:

We'll take our next question from Darren Leung with Macquarie. Please go ahead.

Robert Thomson:

Darren we’re pleased overall with the professional information business. Newswire provides an important service not just for the professional side, but also for our consumer journalism. And we're fully invested in the, in the future of developing that Newswire’s business. And you'll see in coming quarters, as I said, with the Piers acquisition, just how much potential professional information business actually has.

Mike Florin:

Well, I'm sorry Darren the detail I gave you is the detail that I will give you. Thank you.

Robert Thomson:

I think Darren it’s fair to say that that Factiva newswires is relatively stable. Keith, we'll take our next question please.

Operator:

Our next questions from Brian Han with Morningstar. Please go ahead.

Robert Thomson:

No. The second supposition is not accurate. Look, advertising generally has been excellent, particularly in digital and you see it from Dow Jones to the New York Post, which is on track as we've indicated for genuine profitability. But across, in total, the business units, Dow Jones advertising up 20%; News UK, 32%; New York Post, 13%; and News Australia, 2%, obviously currency affected. So strong growth and indications are that growth remains relatively robust.

Operator:

At this time, we have no further questions in the queue.

Operator:

Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.

Mike Florin:

Thank you very much, Jess. Hello, everyone, and welcome to News Corp's Fiscal Second Quarter 2022[ph] Earnings Call. We issued 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 Susan Panuccio, Chief Financial Officer. We've all been with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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.

Susan Panuccio:

Thank you, Robert. As Robert mentioned, we are delighted with our second quarter and first half results, marked by strong revenue growth, further margin expansion and record high total segment EBITDA. Fiscal 2022 second quarter total revenues were over $2.7 billion, up 13%, reflecting strong revenue growth across the company with our three-core pillars, Digital Real Estate Services, Dow Jones and Book Publishing growing 19%. Total segment EBITDA was $586 million, higher than the prior year by 18% and a record high total segment EBITDA for the company since separation. Excluding acquisitions, currency fluctuations and other items disclosed in the release, adjusted revenues and adjusted total segment EBITDA rose 8% and 16%, respectively. Reported EPS were $0.40 as compared to $0.39 in the prior year. Adjusted earnings per share were $0.44 in the quarter compared to $0.34 in the prior year. During the quarter, we commenced our share buyback and announced the acquisition of Base Chemicals. As Robert mentioned, we anticipate both the OPIS and Base Chemicals acquisitions to close in the first half of calendar 2022. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services. Segment revenues were $456 million, an increase of 35% compared to the prior year. The results include the acquisition of Mortgage Choice and the consolidation of REA India, formerly Elara at REA. On an adjusted basis, segment revenues increased 22%. Segment EBITDA rose 25% to $178 million or 29% on an adjusted basis. We continue to see higher investment spending at Move and at REA, but at a more moderated rate than the first quarter, notably at Move. Move's revenues were $169 million or up 9% year-over-year off the back of 28% revenue growth in the prior year, primarily driven by the historically high lead volumes, which rose over 30% last year. Real estate revenues improved by 13% and accounted for 86% of total revenues. We saw higher revenues from the traditional lead generation business, fueled by higher yields and increased penetration from Market VIP Move’s hybrid product. Referral offerings accounted for approximately 32% of total revenues and continued to benefit from record high home prices and higher referral fees despite lower transaction volume. Encouragingly, close rates also improved. Average monthly unique users for the second quarter were $85 million, up 6% over the prior year. Like the first quarter, revenue growth was partially offset by the divestiture of Top Producer in March, negatively impacting revenues by approximately 3 percentage points. Overall, as anticipated, lead volume declines moderated from the first quarter, down 9%, and we are now seeing the emergence of more typical seasonal patterns. Importantly, lead volume is up 18% compared to pre-pandemic levels. Yields remain robust given strong agent demand, which is more than offsetting the impact from lower lead volume. Expanding into adjacencies, including new homes and rentals and establishing partnerships like the recently announced Open Door and Orchid Life[ph] partnerships in the seller's marketplace remain a key focus in the second half. REA had another outstanding quarter with revenues rising 56% year-on-year on a reported basis to $287 million, which includes the $41 million contribution from the Mortgage Choice acquisition and $10 million from REA India. As a reminder, financial service revenues are reflected on a gross basis in the revenue line in our financial disclosures and broker commissions are reflected in costs. REA enjoyed very favorable trends this quarter, including a 22% increase in Australian residential new buy listings double the first quarter rate with Sydney, up 39%; and Melbourne, up 25%, aided by easing of lockdown restrictions. REA also continued to benefit from higher yields, increased depth penetration and product mix. Financial services not only benefited from the integration of Mortgage Choice but also saw record levels of applications and settlements. Please refer to REA's earnings release and their conference call following this call for more details. Turning to the Subscription Video Services segment. Revenues for the quarter were $498 million, down approximately 3% on both a reported and adjusted basis and relatively stable from the prior quarter, as the declines in Foxtel residential broadcast revenue and continued COVID impacts on commercial venues were partially offset by strong growth in streaming revenues, which now account for 19% of circulation and subscription revenues. Total closing paid subscribers across the Foxtel Group reached over 3.9 million at quarter end, up 19% year-over-year, improving from the prior quarter rate by 2 percentage points. Total subscribers, including trialists, were approximately 4.1 million, the highest on record. The year-over-year increase was driven by higher Binge and Kayo subscribers, partially offset by the expected decline in residential broadcast subscribers, albeit at a more moderated rate than the first quarter. In aggregate, total streaming subscribers rose 66% from the prior year to almost $2.3 million, of which approximately $2.2 million were paying subscribers. Streaming products in the aggregate reached 56% of Foxtel's total subscriber base. Binge had an outstanding quarter, increasing its total subscribers to over 1 million similar to Kayo. Paying subscribers more than doubled from the prior year to 928,000. Binge added 126,000 paid subscribers in the quarter, almost double the net adds of the first quarter. Binge's growth continued to be driven by the depth of its content library and the popularity of new shows, including a Binge original show, Love Me. Kayo subscribers followed seasonal patterns with total subscribers slightly down from the first quarter, consistent with the prior two years. The winter codes of AFL and NRL remain key acquisition drivers for Kayo with cricket and motorsports providing essential viewing over the spring and summer months to satisfy the year-round sports fans. Australia's winter sports codes will resume in the third quarter with the return of AFL, NRL, Netball and Supercars. Broadcast churn declined to 13%, the lowest level since the first quarter of fiscal 2019 and down 4.5 percentage points versus last year. The Foxtel team continued to focus on product enhancements and higher ARPU subscribers, resulting in broadcast ARPU increasing almost 3% from the prior year to AUD82 and helping to mitigate subscriber volume declines. Foxtel ended the quarter with 1.6 million residential broadcast subscribers with the sequential decline being the lowest since the fourth quarter of fiscal 2020. Commercial subscribers increased from the first quarter as parts of Australia opened up and were flat versus the prior year at 218,000. Segment EBITDA in the quarter of $86 million was down 31%, driven by one-off events such as the Ashes and the phasing of certain sports rights costs together with investments in marketing and technology. Costs were consistent with our outlook commentary, and we continue to expect full year total cost to be relatively flat if not down slightly in local currency, helping to deliver strong cash generation at Foxtel. Moving on to Dow Jones. Dow Jones continued its strong performance in the quarter with revenues of $508 million, up 14% compared to the prior year, with digital revenues accounting for 72% of total revenues this quarter, up 2 percentage points from last year. Adjusted revenues, which notably excludes the impact of IBD, rose 10%. Circulation and subscription revenues increased 12%, including 13% circulation revenue growth, primarily reflecting the acquisition of IBD and continued strong volume gains in digital-only subscriptions. Digital net adds improved from the first quarter with Dow Jones adding 148,000 digital-only subscribers, including 115,000 at the Wall Street Journal. Professional Information Business revenues rose 9% and accounted for 25% of revenues. Revenue growth from Risk and Compliance increased 17%, driven by a higher entry rate and strong growth across the Americas, Europe and Asia, and we continue to see modest revenue growth in Newswires. Advertising revenues, which accounted for 28% of revenues this quarter grew 23% to $141 million, the highest quarterly advertising revenue in the last five years. Digital advertising revenues remained robust, up 18% on top of 29% growth in the second quarter of the prior year and accounted for 56% of total advertising revenues. We continue to see strong yield improvement led by direct display. Print advertising continued to surprise on the upside with 29% growth year-over-year, partly due to easy prior year compares but also due to the strength in technology and B2C categories. Dow Jones segment EBITDA for the quarter rose 32% to $144 million despite the 43% growth last year, with EBITDA margins expanding by almost four percentage points to over 28%. That represents the highest margin since News Corp's acquisition in 2007. Total costs increased 8% with approximately half due to the consolidation of IBD. On an adjusted basis, revenues and segment EBITDA for the quarter rose 10% and 29%, respectively. At Book Publishing, HarperCollins posted 13% revenue growth to $617 million and segment EBITDA rose 3% to $107 million. Adjusted revenues rose 4% versus the prior year, while adjusted segment EBITDA declined 7%. We are particularly pleased with these results given the global supply chain pressures, which impacted manufacturing and freight costs during the quarter and the tough prior year compare, which saw 65% segment EBITDA growth last year. Results this quarter benefited from the acquisition of HMH, strong frontlist performance and healthy industry dynamics with consumption levels still significantly higher than pre-pandemic levels. Digital sales rose 8% this quarter and accounted for 17% of consumer sales with growth driven by downloadable audio books. HMH continued to perform according to plan. For the quarter, HMH contributed $50 million in revenues and $10 million in segment EBITDA. Turning to News Media. The momentum in this segment continued during the quarter, revenues were $638 million, up 11% versus the prior year. The biggest driver to the growth was the continued rebound in the advertising market as well as the strong growth in circulation and subscription revenues helped by the contribution from our recent content licensing revenues. Within the segment, revenues at News Corp Australia and News UK increased 14% and 7%, respectively. Wireless Group and the New York Post also continued to show strong top line growth. Adjusted revenues for the segment increased 10% compared to the prior year. Circulation and subscription revenues rose 9%, benefiting from strong digital subscriber growth, incremental revenues from the platform agreements and cover price increases. Advertising revenues increased 17% compared to the prior year with notable strength in digital and a recovery in print advertising across all our key mastheads. Advertising revenues in Australia with the easing of lockdown conditions rose 11% in both reported and local currency. News UK advertising revenues rose 23% or 21% in local currency with impressive digital advertising growth. In fact, at the sum, digital advertising surpassed print for the first time, driven by improved number of page views and higher yields. In the U.S., the trends at the New York Post remained strong with higher yields helping to drive advertising revenue performance 19% higher year-over-year. Segment EBITDA of $111 million increased $45 million or 68% compared to the prior year, reflecting the higher revenues. News Corp Australia contributed $35 million to the segment EBITDA growth, and both News UK and the New York Post were positive contributors to the growth. Segment margins topped 17%, the highest since we have separated in 2013. Adjusted segment EBITDA increased 65%. I would now like to talk about some themes for the upcoming quarter. While we remain very encouraged with our strong year-to-date results and our trajectory thus far, we are clearly mindful of the uncertainty and lack of visibility from the ongoing impacts of the pandemic, including the potential cost impacts from continued supply chain pressures, particularly in Book Publishing and our mastheads as well as wage inflation and talent retention across the company. At Digital Real Estate Services, Australian residential new buy listings for January rose 14%. REA anticipates growth rates to slow in the second half as it cycled strong prior period listing volumes and potential impacts around the upcoming federal election. Please refer to REA for more specific outlook commentary. At Move, we continue to see strong yields despite lower inventory. We expect to continue to reinvest in Move as we drive the core business and expand into relevant adjacencies, particularly in new homes and rentals. We expect the year-over-year growth rate of investment at Move in the second half to be relatively similar to the second quarter, but notably lower than the first quarter rate. In Subscription Video Services, we remain pleased with the ongoing performance of the streaming products and the efforts to improve broadcast ARPU and churn. We continue to expect full year costs in local currency to be relatively flat versus the prior year, and we continue to monitor commercial venue trends given the recent spike in COVID cases in the region. At Dow Jones, overall trends across the business remains strong with advertising and subscription growth continuing to perform well. We expect to continue to reinvest in digital to drive consumer subscriptions and to further enhance our professional information business offerings. And to reiterate, we expect both the OPIS and Base Chemicals acquisitions to close in the first half of calendar 2022, and we will incur onetime transaction costs related to these acquisitions. In Book Publishing, similar to the first half, overall trends remain favorable despite lapping the benefits from COVID-19 and strong growth from the sales of the Bridgeton series in the third quarter last year and the ongoing supply chain pressures. At News Media, overall advertising trends remain favorable, and we remain cautiously optimistic about the second half, albeit recognizing that visibility is limited. We continue to expect incremental revenues into nine figures from the recent platform agreements with the majority of that allocated to News Media. We do expect some reinvestment to the segment in the second half given the strong year-to-date performance focused on new product initiatives, marketing and the News UK TV project. On other, we expect costs in the second half to be slightly higher than the first half due to the phasing of certain costs. And lastly, we continue to expect full year CapEx to be up $100 million versus the prior year, albeit we are trending lower than that in the first half. With that, let me hand it over to the operator for Q&A.

Kane Hannan:

Good morning guys. Just two quick ones for me. Just firstly, Move. The revenue growth did slow down in the quarter despite the improving lead decline. Just talk a little bit about the pricing tailwinds you're seeing so how we think about that into the second half? And then just quickly on News Media. The payments from the tech platforms, were that the full run rate in the second quarter? Or should we expect those to continue to grow into the second half?

Susan Panuccio:

And Kane, I'd just like to add for the phasing of those content cost, with licensing costs that we've got in – so Q2 was slightly higher than Q1, and we would expect the second half of the year to be slightly higher again as they continue to ramp, particularly given showcase hasn't launched in the U.S.

Operator:

We'll go next to Entcho Raykovski with Credit Suisse. Your line is open. Please go ahead.

Robert Thomson:

Well, on the first question around the News Media numbers, clearly, the big digital agreements had an impact. But I think to focus on that alone is to actually not give you credit to the companies with a News UK, News Australia or the New York Post in the way that those businesses have been transformed in recent years. And it has been a heavy lift, as you know, in Australia, we had to close many of our print editions and regions and communities and enhance our digital service. So those are more fundamental to the transform fortunes. And when you look at the increase in EBITDA over the past year – the same quarter last year, 11.5%; most recent quarter, 17.4%; News UK advertising, up 21% in local currency; News Australia advertising, up 11%; New York Post, up 19%. These are fundamental shifts in the businesses. And there's no reason to think that those fundamental shifts won't have an enduring impact. As for streaming, the Australian situation is rather different to the prevailing trends in the U.S. Foxtel really is the village square for video. And we have many partners there in a way that's not common in the U.S., Australia, in that sense is rather like the Galapagos Islands, a unique viewing ecosystem. And the recent rapid growth in BINGE is actually exceeding our expectations. And Kayo is a very different sports streaming service with the most important watchable winter sports, along with the increasingly compelling Formula 1 and supercars, among many others. That complete content package is certainly and consistently are compelling. I mean that's appointment viewing day after day, week after week, month after month. That's not churn data, churn some. [ph]

Mike Florin:

Thank you. And Jess, we will take our next question please.

Craig Huber:

Great. Thank you. What's your general thought here on this inflationary environment we have going on right here as you think across your portfolio, I mean, obviously, your numbers were really good here in the prior quarter. The outlook I hear you talking about here is quite favorable as well. But what's your general thoughts on inflation, what you think it's doing to your top line, but also your revenues – I'm sorry, your revenues as well as your costs. And I do have a nitpick question, Susan. Your overall cost for the company for the quarter, if you adjust for currency and acquisitions, how much was that up placed in the quarter year-over-year? Thank you.

Susan Panuccio:

And Craig, just on your question. So reported costs were up 11% and adjusted costs were up 5%.

Operator:

Our next question comes from Alan Gould at Loop Capital.

Robert Thomson:

Susan, would you like to present?

Mike Florin:

Thank you, Alan. Jess, we will take our next question, please.

Darren Leung:

Thanks for taking the time. Just one question from me. Just a bit of color around the Professional Information Business, 9% growth, please. So it looks like risking appliance is going pretty well, but that would sort of imply that it's affecting the Newswire sort of partners sort of growing a bit slower. Just any color around price or subscribers coming off or anything there, please? Thanks.

Mike Florin:

Thank you, Darren. Jess, we will take our next question, please.

Brian Han:

Hi. Two quick ones, if I may. For your streaming services, can you please talk about any recent trends in the conversion rate of trial subscribers to paying prescribers? And Susan on free cash flows, do you expect that working capital buildup to reverse in the next couple of quarters? Or should we expect free cash flow to remain sort of impressed relative to earnings growth?

Susan Panuccio:

And just in relation to free cash flow, yes, we will expect to see some reversal of that working capital as we work through the year, and we would definitely expect to see the second half have very, very strong free cash flow relative to the first.

Operator:

Our next question comes from Drew Figdor with TIG Advisors. Your line is open. Please go ahead.

Robert Thomson:

Well, Edmonds, obviously, we'd like to get the deals done as quickly as possible because we cherish these companies because we can see how valuable are and what they'll add to Dow Jones and to use core more generally. And you will see in our accounts in coming quarters and years, the value of them. Clearly, we're subject to a regulatory calendar, and there are sometimes variables, unpredictable variables in that. But we're fairly confident that the OPIS deal will close next month and the Base Chemicals will close a couple of months after that.

Mike Florin:

Thank you. Jess, we will take our next question, please.

Mike Florin:

Great. Well, thank you, Jess, and thank you for all participating. Hope to talk to you soon. Have a wonderful day. Take care.

Mike Florin:

Thank you very much, Bobby. Hello, everyone, and welcome to News Corp 's fiscal first quarter 2022 earnings call. We issued our earnings press release about 30 minutes ago, and is 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 will include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to diver 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 will pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. As Robert mentioned, strong operation dimension that, made last year so successful has continued into our first fiscal quarter results. Fiscal 2022, first quarter total revenues, were over $2.5 billion up 18% marked by higher revenue growth across all our key segments, notably at Digital Real Estate Services. Total segment EBITDA, was $410 million up 53% versus the prior year. The highest quarterly growth rate since 2017, despite the challenges from the lockdowns in Australia and comparing against 21% total segment EBITDA growth in the prior year. Excluding acquisitions, currency fluctuations, and other items disclosed in the release, adjusted revenues and adjusted total segment EBITDA, rose 10% and 47% respectively. Reported EPS were $0.33 as compared to $0.06 in the prior year. Adjusted earnings per share were $0.23 in the quarter compared to $0.08 in the prior year. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services, segment revenues were $426 million, an increase of 47% compared to the prior year, on an adjusted basis, revenues increased 29%. Segment EBITDA rose 16% to a $138 million or 21% on an adjusted basis. Despite the higher investment spending at move and REA, and tough comparisons against the prior year cost declines implemented to counter the impact of COVID. Move 's revenues were $180 million, a 30% increase year-over-year, with real estate revenues rising 39% and accounting for 87% of total revenues. Revenue growth was again led by the traditional lead-generation business benefiting from strong agent demand and improved sell-through and yields. We're also seeing early success with the roll-out of Market VIP, a hybrid product offered to Move's top-performing agents. The referral model saw strong revenue growth, and accounted for approximately 32% of revenues driven by record high in values and increased transaction volume. Revenue growth was partially offset by the divestiture of Top Producer in March, negatively impacting revenues by $5 million or 4%. We time prices at record highs and supply limited, lead volumes fell approximately 18% compared to over 40% growth last year, all be it, with lead still around 15% higher than pre -pandemic levels. Encouragingly, new listings are up from their recent lows and we have seen moderation of lead volume declines in September and October. Pricing remains robust given strong agent demand. REA had an exceptional quarter with revenues rising 62% year-over-year to $246 million including $7 million of 3% positive impact from currency fluctuations. Results benefited from $43 million of contribution from the Mortgage choice acquisition and $8 million from the consolidation of Elara, which is being re-branded to REA India. The underlying performance was very encouraging, with Australian residential revenue growth driven by an increasing penetration, price increase, and favorable product mix. The revenue growth was also driven by an 11% increase in new buy listings despite lock-downs across multiple states, including restrictions on physical inspections in Melbourne. Melbourne listings rose 79%, while Sydney fell 7%. Financial services also benefited from highest settlements and submissions. Please refer to REA 's earnings release and their conference call following this call for more details. Turning to the Subscription Video Services segment, revenues for the quarter were $510 million up 3% versus the prior year benefiting from higher streaming revenues and the modest benefit from positive currency fluctuations, partially offset by lower broadcast and commercial subscription revenues. On an adjusted basis, revenues were flat. Total closing paid subscribers across Foxtel reached nearly 3.9 million as the quarter end up 17% year-over-year, with total subscribers including trialists approximately 4 million. The increase was driven by continued growth in paid streaming subscribers, partially offset by a decline in broadcast subscribers and commercial subscriptions, which were exacerbated by the impact of the lockdowns in Australia. [Indiscernible] end of the quarter with approximately 1.1 million and 885,000 total subscribers respectively. In the aggregate, total paying streaming subscribers were up more than 69% to nearly $2.1 million and total streaming subscribers including trialist reached over $2.2 million. Streaming products in the aggregate reached approximately 54% of Foxtel 's total paid subscriber base. Broadcast turn improved declining to 14% from 14.6% last year and 17.1% in the fourth quarter. Broadcast ARPU increased 4% from the prior year to $82 Australian, mitigating subscriber volume declines consistent with Foxtel strategy of focusing on higher ARPU subscribers and fewer low cost offers. Foxtel continues to see an improvement in subscriber mix as a percentage of higher-valued long continued subscribers continue to rise with a corresponding decline in churn rates. Net declines for residential broadcast subscribers moderated sequentially with 1.6 million broadcast subscribers at quarter end, commercial subscribers were down over 30% from the fourth quarter to 162,000. And we do anticipate a recovery for commercial subscribers in the second half with the easing of restrictions. Product innovation continued with the launch of iQ5 and IP-enabled set-top box, the announcement of plans to partner with Comcast and Sky on the launch of Sky Glass, and the launch of a third streaming product slash, a dedicated live news streaming service featuring more than 20 local and global live new services. Segment EBITDA in the quarter was a $114 million, up 46% compared to the prior year. The improvement was primarily driven by $34 million of lower sports costs benefiting from the $36 million of negative impact seen in the First Quarter of fiscal 2021, related to deferred sports costs from the Fourth Quarter of fiscal 2020. Adjusted segment EBITDA increased 42%. Moving onto Dow Jones, Dow Jones delivered revenue of $444 million up 15% compared to the prior year with digital revenues accounting for 75% of total revenues this quarter, up 2% points from the prior year. Adjusted revenues, which notably excludes the impact of IBD, rose 9%. As Robert mentioned, both revenues and profitability with the highest First Quarter results since this acquisition. Circulation and subscription revenues increased 12%, including 13% circulation revenue growth, primarily reflecting the acquisition of IBD and the continued strong volume gains in digital-only subscriptions. Dow Jones subscriptions to its consumer products increased to an average of approximately 4.6 million in the quarter, up 18% from the prior year. Off that, over 3.6 million were digital-only subscriptions, up 24% year-over-year. IBD accounted for 100,000 digital-only subscriptions, and a 128,000 in total subscriptions. Professional information business revenues rose 13% accelerating from the prior quarter. Revenue growth. From Risk & Compliance increased 26% driven by a higher entry rate and strong growth across the Americas, Europe, and Asia. We also saw modest improvement at [Indiscernible]. Advertising revenues, which accounted for 20% of revenues this quarter, grew 29% to $90 million, the highest First Quarter growth rate since acquisition. Digital Advertising trends remained robust, up 38% on top of 14% growth in the First Quarter of the prior year an accounted for 61% of total advertising revenues. All categories performed above expectations, most notably in technology and finance, and we continue to see improving yields. Print advertising revenues were robust, rising 17% year-over-year, partially benefiting from the COVID-19 comparison. Dow Jones segment, EBITDA for the quarter rose 32% to $95 million with EBITDA margins improving by almost 3% points to 21%, despite an 11% increase in total cost, which included IBD and higher employee costs. On an adjusted basis, segment revenues and EBITDA for the quarter rose 9% and 24% respectively. At book publishing, HarperCollins posted 19% revenue growth to $546 million and segment EBITDA rose 20% to $85 million. Adjusted revenue and EBITDA rose 7% and 10% respectively versus the prior year. Despite a difficult prior-year comparison, book consumption levels remain elevated, overall consumption across the industry remains higher than pre -pandemic levels and materially above the historical low single digit type revenue growth. This quarter benefited from a rebound in Christian Publishing, which was more exposed to the closure of retail stores in the prior year and higher sales in the UK. General Books saw healthy growth benefiting from new releases coupled with higher backlist sales from the Bridgerton series by Julia Quinn. Digital sales raised 5% this quarter and accounted for 21% of consumer sales. The Barclays represented 62% of revenues, up 2% points from last year, underscoring the importance of the steady high-margin revenue stream and a key factor behind the acquisition of HMH. HMH integration continue to progress well, and is in the process of being integrated into a full imprint structure within HarperCollins. We remain on track with our savings target of $20 million to be delivered within the first 2 years. Overall, HMH contributed $50 million in revenue, and $6 million in segment EBITDA this quarter. Turning to News Media, revenues for the quarter were $576 million up 18% versus the prior year, benefiting from the continued recovery in the advertising market, strong growth in circulation and subscription revenues, and a $25 million or 5% positive impact from foreign currency fluctuations. Within the segment, revenues at News UK and News Corp Australia increased 18% and 14% respectively. Wireless Group and the New York post also showed strong top-line growth. Adjusted revenues to the segment increased 13% compared to the prior-year. Circulation and subscription revenues rose 16%, which included a $30 million or 5% benefit from currency fluctuations, strong digital subscriber growth, incremental revenues from our platform agreements, and cover price increases. Advertising revenues increased $39 million or 21% compared to the prior year. Benefiting from the COVID-19 comparison with particular strength in digital across our businesses. On a reported basis, advertising revenues in Australia rose 5% or 2% in local currency, despite the negative impacts from the lockdowns. While News U.K. advertising revenues rose 36% or 28% in local currency. In the U.S., the trends remained strong with the New York Post posting 32% advertising revenue growth. Segment EBITDA of $34 million increased $56 million compared to the prior year, reflecting higher revenues, cost savings at News U.K. and News Corp Australia, and a modest positive contribution from the New York Post. Adjusted segment EBITDA increased $52 million to $30 million. I would now like to talk about some themes to the upcoming quarter. Notwithstanding our strong results in the prior year, we remain encouraged by overall trends. Like many companies, we are closely monitoring supply-chain issues, particularly in book publishing in our mastheads as well as the impact of wage inflation on talent and retention. At Digital Real Estate Services, Australian residential listing through October rose 16% and we are encouraged those restrictions on physical inspections, notably Melbourne [Indiscernible] east. At move, we continue to see strong yield improvement despite the neat-term challenge on lead volume given the ongoing supply issues, like the first quarter, we expect to continue to reinvest in Move as we drive the core business and expand into relevant adjacencies. The rate of cost increase year -- one year in the first quarter was exacerbated by the COVID-19 savings initiatives in the prior-year across headcount and marketing, we expect more moderate year-over-year cost increases for the balance of the year. In subscription video services, we remain pleased with the ongoing performance of Kayo and BINGE and the efforts to improve broadcast ARPU and Churn. We do expect seasonality in Kayo given the end of key winter codes, but look forward to our summer schedule with the Ashes and the Cricket World Cup in the second quarter. Costs are expected to be higher in the second quarter, most notably for entertainment and sports rights, as well as some higher marketing to support the launch of Flash, the new streaming offering. Overall, we continue to expect cost for the full year to be relatively stable in local currency. At Dow Jones, overall trends across the business remains strong with advertising and subscriptions growth continuing to perform well. In book publishing, overall trends remained favorable despite lapping the benefits from COVID-19. We have a strong release lineup in the Second Quarter including titles from Ree Drummond [Indiscernible] At News Media, we continue to expect the segment to show profit improvement, partially benefit from the recent content licensing revenues. We do expect some additional costs in the UK as we expand more into video content and leverage our key brands and mastered. CapEx was modestly higher in the first quarter, and we continue to expect full-year CapEx to be up a $100 million versus the prior year. And finally, we remain focused on driving strong and positive free cash flow generation for the year, with the first quarter free cash flow impacted by the timing of working capital payments. With that, let me hand it over to the Operator for Q&A.

Entcho Raykovski :

Hi Robert. Hi Susan. I've got one question, one just very quick follow up. Basically, you comment on maximizing value at Foxtel. Obviously, this has been widely reported in the press, but is an odd [Indiscernible] option you considering. And what's the potential timing on whatever considerations do you have? And then secondly, just, I know Robert you mentioned, [Indiscernible] winding down. They [Indiscernible] model. Do you expect to see any impact on Move? I mean, could that perhaps get [Indiscernible] closer to some agent to perhaps an indecent franchise bio Move, any comments would be helpful.

Mike Florin:

Thank you. And Joe, Bobby, we'll take our next question please.

Alexia Quadrani:

Thank you. In the news Media business, I was wondering if you could sort of pontificate or give us an idea of what you think the overall opportunity is even longer-term from licensing fees, from tech platforms over time. And then just a quick follow-up on Foxtel, with some of the streaming platforms, the S5 players launching their own platforms in Australia. Do you see that as incremental competition or how should we be that?

Susan Panuccio:

And Alexia, on your second question you asked about the SFUAD competition within Australia. And I think the Foxtel team did a great job of talking about this at the strategy day. Around -- basically the great content they have within sports, particularly the AFL and our own quicker contracts that they have. They had long-term relationships with the studios and have developed a very good working relationship with them. And there is great aggregator of the services down there. So, I think, while there is clearly competition that is coming into that marketplace down there, they are operating very well within that current environment.

Mike Florin:

Thank you, Alexia. Bobby, we'll take our next question, please.

Craig Huber:

Yes. Hi. My first question, you talked about, like in relation to a question from one of the guys on the phone that you will -- on the ongoing review of Foxtel from strategic standpoint. I'm just wondering for the rest of the Company is there any other reviews going on and then obviously, a lot of investors view rightly or wrongly that the Company is overly complicated as if I'm wondering if there's any other ongoing reviews going on with the Company? And my other just nitpick question usually tell us what the changes year-over-year in EBITDA at realtor.com, can you provide that for the quarter, please. Thank you.

Susan Panuccio:

And Craig, just on your question in relation to REALTOR, as you know we don't give the EBITDA number but the year-on-year difference was up $6 million negative in relation to REALTOR. And one of the main reasons for that is the continuing investment in growth in that business within marketing and headcount.

Mike Florin:

Thank you, Greg. Thanks, Greg. Bobby, we'll take our next question, please.

Brian Han:

Hi. 2 very quick questions if I may. On capital management, are there any technical or legal impediments to increasing your annual dividend amount, or do you feel that buyback just gives you more flexibility down the track. And secondly, enrolled -- let me try this again. But can you please comment on how much EBITDA was booked in the first quarter from the licensing deals with the big digital platforms.

Susan Panuccio:

And Brian, just in relation to your question on the content licensing, we haven't given out that number apart from saying it was going to be into 9 figures. And just in relation to how that's going to be pacing over the course of the year. We would expect to grow as more products within those particular contracts launched like for instance, showcase over here in the U.S. So, we would expect to see that build as we go throughout the year. And we talked previously in relation to that about a high-level allocation of switching between the News Media segment and Dow Jones.

Operator:

No further questions at this time. I will turn the call back over to you for any closing remarks.

Mike Florin:

Thank you very much, Valerie. Hello, everyone, and welcome to News Corp's fiscal fourth quarter 2021 earnings call. We issued 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 Susan Panuccio, Chief Financial Officer. We'll open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 will pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. Fiscal 2021 fourth quarter total revenues were almost $2.5 billion, up 30%, the highest level since the second quarter of fiscal 2019 when we still owned News America Marketing. Total segment EBITDA was $210 million, up 8% versus the prior year, including record high segment EBITDA at Digital Real Estate Services. Total segment EBITDA included several non-recurring items that depressed year-over-year comparisons this quarter, including $49 million of non-recurring legal settlement and transaction costs. The results also include $11 million of one-off costs at Foxtel, which I'll come back to. Excluding the divestment of News America Marketing, acquisitions, currency fluctuations and the other items disclosed in our release, adjusted revenues increased 20% and adjusted total segment EBITDA increased 26%, driven by a strong performance of Digital Real Estate Services and a big year-over-year improvement in News Media. For the quarter, we reported a net loss per share of $0.02 compared to a loss of $0.67 in the prior year. Last year's loss included $292 million of non-cash impairment charges, primarily related to fixed assets in the UK and Australia. Fiscal 2021 results included a $64 million tax benefit due to an adjustment to valuation allowance in the U.S. and a $54 million non-cash write-down of Foxtel's investment related to the Nickelodeon Australian joint venture, which is now covered through a separate affiliate agreement. Adjusted earnings per share were $0.16 in the quarter compared to a loss per share of $0.03 in the prior year. Importantly, on a full year basis, free cash flow available to News Corp improved to $731 million from $180 million in the prior year, driven by higher total segment EBITDA, improvements in working capital and lower capital spending. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services. Segment revenues were $413 million, an increase of 74% compared to the prior year, a sharp acceleration from the third quarter growth rate of 34%. The performance was driven by another record quarterly performance at Move, together with very strong results at REA and to a lesser extent, a positive impact from foreign currency fluctuations. On an adjusted basis, revenues increased 59%. Segment EBITDA rose 92% to $136 million or 99% on an adjusted basis. Move's revenues were $186 million, a 68% increase year-over-year with real estate revenues rising 77%, a significant acceleration from the 43% growth in the prior quarter. Move contributed $17 million to the segment EBITDA growth this quarter, achieving strong profit improvements despite $30 million of additional marketing expenses consistent with our commentary that the bulk of the expected increase in cost the second half would materialize in the fourth quarter. For the full fiscal 2021 year, Move increased its profit contribution by $100 million and was the single biggest profit driver across News Corp this year. We saw accelerated revenue growth across both the traditional lead generation and referral businesses in the quarter. The traditional lead generation business continued to benefit from strong agent demand, improved retention rates, higher yield and lead volume growth. Revenues from the referral business represented approximately 30% of total Move revenues, up from 25% in the prior quarter, partly due to seasonality with revenue growth driven by an increase in lead volume, record home pricing and higher referral fees. In addition, advertising and rental revenue also showed strength during the quarter with the combined revenues more than doubling versus the prior year, only partially offset by the lower revenues resulting from the sale of top producer in the third quarter. The realtor.com's traffic reached a quarterly record of 106 million average monthly users, reflecting a year-over-year increase of 32%. Lead volume grew 14% year-over-year, a slower growth rate than the prior quarter, as we lapped tougher comparisons with the prior year, which saw growth rates in the mid-30s coupled with ongoing industry supply constraints. Compared to the prior quarter, lead volume grew 8%. REA had an exceptional quarter with revenues rising 79% year-over-year to $227 million, including a $34 million or 27% positive impact from currency fluctuations. REA's results benefited from a material increase in residential premier debt revenues despite the absence of a price increase this fiscal year as part of REA's prior year COVID-19 support initiatives. Australian national residential new buy listings for the quarter rose 54% with Melbourne and Sydney both up 64% as growth rates were somewhat exaggerated by the impacts from COVID-19 last year. Listing volumes were not only higher than the prior year, but also higher than fiscal 2019 and 2018 levels. Traffic remained robust with total visits to realestate.com.au [ph] for June at 123 million, up 8% year-over-year, and the visits multiplier against its nearest competitor reaching a record high of over 3.4 times in June. Please refer to REA's earnings release and their conference call following this call for more details. Turning to the Subscription Video Services segment. Revenues for the quarter were $542 million, up 33% versus the prior year and included an $85 million or 21% positive impact from foreign currency fluctuations. The growth rate also improved sequentially. Adjusted revenues increased 12% with higher revenues from the streaming products more than offsetting the revenue declines from the broadcast product in the quarter, helped by the COVID-19 comparison. Total closing paid subscribers across Foxtel reached nearly 3.9 million as of June 30, with total subscriptions, including trialists, over 4 million and were up 40% versus the prior year, a material acceleration from the third quarter, driven by continued growth in paid streaming subscribers and a year-over-year recovery in commercial, which was hit particularly hard from COVID-19 last year. Sequentially, paid subscribers rose 10%. Kayo total subscribers increased to almost 1.1 million and Binge total subscribers increased to 827,000. In the aggregate, total streaming subscribers reached over 2.1 million with paying subscribers up more than 150% to just over 2 million. Streaming products are now delivering meaningful growth at scale and over 50% at Foxtel's total paid subscribers are now on streaming platforms. Residential broadcast subscribers declined to less than 1.7 million and commercial subscribers, while growing sharply year-over-year, continued to be impacted by COVID-19 restrictions and further lockdowns, notably in the accommodation sector. We saw broadcast churn moderate from the past two quarters to 17.1%, but up from 13.2% in the prior year, with the team continuing their focus on retaining high-value subscribers and driving ARPU growth. ARPU increased 4% to AUD 81 from the prior year, partially offsetting broadcast subscriber volume declines. Segment EBITDA declined 37% to $66 million or 46% on an adjusted basis. As we communicated in our prior call, the decline was largely timing related, driven by $84 million of higher sports programming rights and production costs in the quarter, which we didn't have in the prior year due to COVID-19, together with higher marketing expenses. In addition, Foxtel had approximately $11 million of one-time costs, mainly related to iQ3 and iQ4 promotional activity. Importantly, looking at Subscription Video Services for the full year, segment EBITDA increased 11% and was relatively stable in local currency, which includes the impact of $57 million of sports rights costs that were deferred from last year. The business also generated meaningful free cash flow across the year as increasing scale in streaming is leading to improved financial momentum within the company and lower capital intensity. Moving on to Dow Jones. Dow Jones delivered revenue of $449 million, up 18% compared to the prior year, including two months of revenue from the acquisition of Investor's Business Daily with digital revenues accounting for 72% of total revenues this quarter. Circulation and subscription revenues increased $34 million or 11%, driven by a 12% increase in circulation revenues, reflecting the continued strong growth in digital-only subscription for Dow Jones consumer products and the acquisition of IBD. Dow Jones subscriptions increased to over 4.5 million average subscriptions to its consumer products in the quarter, up 19% from the prior year. Of that, nearly 3.5 million were digital-only subscriptions, up 26% year-over-year. IBD had over 100,000 subscriptions at quarter end with the majority being digital-only. Professional Information business revenues rose 11%, driven primarily by Risk & Compliance. Revenue growth from Risk & Compliance accelerated yet again with a year-over-year increase of 30% and marked the fastest growth in 3 years. For the year, Risk & Compliance reached approximately $195 million of revenues, up 23%. Advertising revenues, which accounted for 23% of revenues this quarter, grew 45% to $103 million, the highest fourth quarter growth rate since News Corp's acquisition and was also higher than the fourth quarter fiscal 2019. Digital advertising posted record growth with revenues up 53%, with all categories performing above expectations. We saw a significant increase in yield, particularly in direct display. Print advertising revenues rose 36% year-over-year, primarily benefiting from the COVID-19 comparison. Dow Jones segment EBITDA for the quarter rose 15% to $69 million. EBITDA margins were relatively stable year-over-year as higher revenue growth was partially offset by the timing of marketing expenses for both brand and conferences, IBD integration costs and higher compensation costs. Costs were also notably depressed in the prior year due to COVID-19-related savings initiatives. As we previously communicated, much of the cost increase this quarter were planned investments with some timing-related items. Dow Jones achieved the highest level of profitability since its acquisition this fiscal year, with margins expanding to nearly 20%, up almost 5 percentage points from the prior year. On an adjusted basis, segment revenues and EBITDA for the quarter rose 14% and 12%, respectively. At Book Publishing, for the fourth quarter, HarperCollins posted 21% revenue growth from the prior year and segment EBITDA rose 2%. Adjusted revenues grew 11% and adjusted segment EBITDA was flat to the prior year. The moderation in growth was impacted by the lapping of COVID-19 benefits in the prior year and mix of titles as last year's results included the Magnolia Table Volume II. Despite a difficult prior year comparison, book consumption levels remain high. Fourth quarter continued to benefit from Bridgeton but to a lesser extent than the prior quarter. While physical sales continued their momentum this quarter, digital revenues declined 3% in the quarter, reflecting a difficult comparison to the prior year when many bricks-and-mortar stores were closed due to COVID-19. E-book sales fell 11% in the quarter, but were partly offset by 11% growth in downloadable audio. This quarter's results also include almost two months of results from the acquisition of the HMH Books & Media segment. We're excited about the acquisition and feel very confident about achieving the cost synergy target of $20 million within 2 years, and the team are actively exploring revenue opportunities, notably in licensing and animation. Turning to News Media. Revenues for the quarter were $595 million, up 21% versus the prior year, driven by the recovery of the advertising market from COVID-19-related weaknesses in the prior year. Growth in circulation and subscription revenues and a $73 million or 14% positive impact from foreign currency fluctuations. Growth was partially offset by a $58 million or 12% negative impact from the divestiture of News America Marketing in May 2020. On an adjusted basis, revenues rose 21% as we cycled the steep declines from COVID-19 last year. Circulation and subscription revenues rose 26%, driven by a $34 million or 15% benefit from currency fluctuations, strong digital paid subscriber growth and cover price increases as well as the recovery of print volumes from COVID-19-related weakness in the prior year. Advertising revenues increased $31 million or 15% compared to the prior year, benefiting from the COVID-19 comparison with strong gains in both print and digital advertising revenues across key mastheads as well as a $29 million or 14% increase from foreign currency. Those gains came despite a $58 million or 28% negative impact related to the divestment of News America Marketing and a $10 million or 5% negative impact related to the closure or transition to digital of certain regional and community newspapers in Australia. On a reported basis, advertising revenues in Australia rose 34% or 14% in local currency, while News UK advertising revenues rose 86% or 65% in local currency. In the US, the trends remained strong with the New York Post posting 60% advertising revenue growth, of which digital advertising grew 65%. Segment EBITDA for the quarter was breakeven compared to a loss of $44 million in the prior year. In the Other segment, fourth quarter results include non-recurring legal settlement costs. Excluding that charge, costs were modestly higher than we had expected, primarily driven by higher equity compensation across both cash and non-cash expenditure. I would now like to talk about some themes for the upcoming quarter and fiscal 2022. Visibility remains limited, especially in Australia due to ongoing COVID-19 lockdowns. That said, we are very encouraged by our July trends and are looking to build on that momentum into fiscal 2022. Our Digital Real Estate Services, as noted in their release, revenue in fiscal 2022 will benefit from a price rise in July for REA, and they also noted that new buy listings declined 3% in the month. Results will also include the acquisition of Mortgage Choice. Please refer to REA's press release for more details. At Move, we continue to see strong pricing in agent demand despite ongoing supply constraints. Like the fourth quarter, we expect to balance reinvestments with revenue growth as we focus on expanding into adjacencies. In Subscription Video Services, we are pleased with the ongoing performance of Kayo and Binge and the efforts to improve broadcast ARPU. We do expect a modest impact in the first quarter due to the current lockdowns in Australia, particularly in commercial venues. For the year, we expect costs in local currency to be stable with fiscal 2021 and revenue trends to continue to improve as the streaming products continue to scale. At Dow Jones, overall trends across the business remains strong. We expect costs to increase as we focus on top line growth, but we will remain focused on margin expansion. Dow Jones will also see incremental content licensing revenues from Google. In Book Publishing, overall trends remain favorable despite lapping the benefits from COVID-19. While publishing faces a difficult comparison given its fiscal 2021 performance, we remain very encouraged by HarperCollins strong release slate and favorable secular trends. We also expect to see additional contribution from the acquisition of HMH. At News Media, we expect the segment to show notable improvement in fiscal 2022, driven by the contributions from the deals with Google and Facebook, improving advertising trends and disciplined cost action. CapEx for the year is expected to be approximately $100 million higher in fiscal 2022, partly driven by higher technology costs and the rollout of the IP-enabled iQ5 set-top box at Foxtel. We will continue to manage spend closely throughout the year as we did during fiscal 2021. And finally, free cash flow generation will remain a priority in the coming year. The company ends the year stronger, better capitalized and with new levers of growth. We're excited about the potential for our recent acquisitions, including our announcement this week on Opus. And as Robert mentioned, we are now actively reviewing our capital allocation policy as we look to balance reinvestment and growth with healthy shareholder returns. With that, let me hand it over to the operator for Q&A.

Kane Hannan:

Good morning, guys. Just two quick ones for me quickly. Just firstly on that comment around the buybacks. Could you just give us a little bit more detail around potential outcomes there? What sort of quantum and timing you should be thinking about? And then on Move, just obviously very strong revenue growth this year. Can you just talk about sort of how we think about the sustainability of that growth into FY '22 and some of those pricing tailwinds that you mentioned?

Susan Panuccio:

And Kane, just in relation to Move as well as we sort of think about the coming year, notwithstanding, obviously, market conditions, we do expect to see yield optimization on the core lead-gen product moving into 2022, and we still see opportunities to improve sell-through within that product. In relation to the referral business, we expect to continue to benefit from record home prices, yield optimization, and we'll continue to focus on improving the close rates. Overall, agent demand remains very robust and existing home sales remain notably higher than pre-COVID levels. So we feel very confident.

Operator:

Thank you. [Operator Instructions] We'll move to our next question from the line of Entcho Raykovski of Credit Suisse. Please go ahead.

Susan Panuccio:

Entcho, I might start in relation to HarperCollins. So look, there's not anything really that's material in one-off. We have had some integration costs for HMH, but they're not material in the context of the overall results. It really rolls down to just the mix of slightly lower digital sales. The backlist mix was a little bit different, 2% difference quarter-on-quarter, year-on-year. But the consumption trends do remain favorable. So we are expecting to see the momentum continue.

Mike Florin:

Thank you, Entcho. Valerie, we'll take our next question please?

Darren Leung:

Hi, guys. Thanks for the time. Just a very quick question, obviously considering a buyback. Can you give us a feel for, I suppose, the other side of capital management, like, obviously, with the Opus acquisition, how we should think about debt levels on a sustainable basis going forward, please?

Susan Panuccio:

And Darren, just to add to that, I mean, as I mentioned, we've got a healthy cash balance of about $2.2 billion at the end of the year. The Opus transaction will be an all-cash transaction, but we still will be retaining a healthy cash balance. And having generated meaningful free cash flow this year, we are continuing to focus on free cash flow generation as we move forward. So at this stage, we're fairly comfortable with what our balance sheet looks like. A - Mike Florin Thank you, Darren. Valerie, we'll take our next question please?

Brian Han:

Robert, you mentioned several times the optionality that's opening up for Foxtel. Can you please elaborate on what that means? And when you will make a decision on which option you're going to take? And Susan, you mentioned the decline in capital intensity for Foxtel. Can you shed some light on how CapEx will change for Foxtel in '22 compared to '21? Thanks.

Susan Panuccio:

And then just a follow on in relation to the CapEx question. So the increasing investment next year is in relation to the iQ5 box, as I mentioned, which really is to focus on IP for that business going forward, which will drive efficiencies going forward. So whilst CapEx will be slightly elevated relative to this financial year, it will then start to come down. And even the forecast for financial year '22 is materially below the financial year '20 numbers. A - Mike Florin Thank you. Valerie we'll take our next question please.

Kane Hannan:

Hi, guys. I know you're not talking to specifics around the Google, Facebook 9-figure earnings number. But just was there any of that benefit in this fourth quarter? And then just any comments, I suppose you can make around the Dow Jones versus the News Media split of that number?

Mike Florin:

Thank you, Kane. Valerie, we’ll take our next question, please?

Mike Florin:

Well, thank you, Valerie, and thank you for all participating today. Have a great day. And as always, we look forward to speaking with you all again in the very near future. Take care. This concludes today's call. Thank you for your participation. You may now disconnect.

Mike Florin:

Thank you very much, Todd. Hello, everyone, and welcome to News Corp.'s fiscal third quarter 2021 earnings call. We issued 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 Susan Panuccio, Chief Financial Officer. We'll open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings 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 will pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. Fiscal 2021 third quarter total revenues were over $2.3 billion, an increase of 3% versus the prior year, while total segment EBITDA was $298 million, up 23% year-over-year, reflecting strong performances across our key segments. Our three core pillars, Dow Jones, Digital Real Estate Services and Book Publishing collectively grew segment EBITDA by 55% versus the prior year. On an adjusted basis, which excludes the impact from acquisitions and divestitures, most notably the sale of News America Marketing in the fourth quarter of fiscal 2020, as well as currency fluctuations and other items disclosed in our release, revenues rose 4%, while total segment EBITDA grew 24%. Net income for the quarter was $96 million compared to a net loss of $1 billion in the prior year, which reflects the absence of a noncash impairment charge related to Foxtel and News America Marketing in the prior period. For the quarter, we reported earnings per share of $0.13 as compared to a net loss per share of $1.24 last year. And our adjusted EPS were $0.09 in the quarter compared to $0.03 in the prior year. Turning now to the operating segments. Digital Real Estate Services segment revenues were $351 million, an increase of 34% compared to the prior year, which was more than double the growth rate we saw in the second quarter. The performance was driven by another record quarterly performance at Move together with improvements at REA as well as the Elara consolidation and positive impact from foreign exchange fluctuations. On an adjusted basis, revenues increased 22%. Segment EBITDA rose 58% to $117 million or 52% on an adjusted basis, the fastest quarterly growth rate in nearly four years. Move's revenues accelerated to $162 million, a 37% increase year-over-year with real estate revenues rising 43%. Move contributed $36 million or 84% of the segment EBITDA growth this quarter the highest contribution to growth to the segment for the fiscal year. Realtor.com's traffic increased to 98 million average monthly unique users in the third quarter reflecting a year-over-year increase of 44%. Notably in March, REALTOR's unique users eclipsed 100 million the first time, reaching over 108 million unique users up 60% compared to the prior year. Monthly average lead volume remained very strong growing over 40%, which was higher than the second quarter rate despite continued inventory constraints across the industry. We saw very strong growth across both the traditional lead generation and referral businesses in the third quarter with a notable acceleration from the second quarter rate in the growth of Connections Plus our traditional lead generation product, which benefited from higher traffic and lead volumes higher retention rates and improved pricing. These results underscore the success of our strategy of choice and flexibility. Revenues from the referral business continued to grow strongly, representing 25% of total Move revenues lower than the first half mainly due to the acceleration in the traditional lead generation business coupled with the seasonality impact. Overall, the drivers behind the performance of the referral model remained similar to the prior quarter with continued strong transaction volumes, higher home pricing and stable to higher referral fees. As we mentioned last quarter, we expect to continue reinvesting in Move primarily in marketing and product development balancing continued improvement in profitability with revenue growth. We are pleased to see strong growth across both as the team accelerates the pace of innovation and new products as we expand into adjacencies. Turning to REA Group. Revenues at REA rose 32% to $189 million, reflecting a $28 million or 19% positive impact from currency fluctuations and a $7 million from the acquisition of Elara. Australian national residential listings for the quarter rose 8% with Melbourne up 13% and Sydney up 5% with growth rates improving throughout the quarter. New developer project launches increased by 14% compared to the prior year. REA's results also benefited from an increase in residential debt revenue despite the absence of a price increase this fiscal year as part of REA's COVID-19 support initiative. Like REALTOR, REA is benefiting from record traffic with realestate.com.au hitting an all-time high of 137 million monthly visits in March, up 60% year-over-year and buyer inquiries are also at record high. Please refer to REA's earnings release and their conference call following this call for more detail. Turning to the Subscription Video Services segment. Revenues for the quarter were $523 million, up 13% versus the prior year and included a $79 million or 17% positive impact from foreign currency fluctuation. Adjusted revenues were down 4% continuing the improving trend through the fiscal year as the expansion of OTT revenues partially offset the declines in broadcast subscription revenue. Total closing paid subscribers across Foxtel were over 3.5 million as of March 31, up 21% versus the prior year as the team focused on maintaining its premium broadcast customers while the Kayo and Binge streaming services delivered subscriber growth at scale. The comparison versus the prior year was helped by the absence of the initial impact of COVID-19 and the launch of Binge in the fourth quarter. Total paying OTT subscribers expanded to nearly 1.6 million paying subscribers, up 120% compared to the prior year with Kayo reaching 851,000 and binge at 516,000 paying subscribers. Including trialists Kayo and Binge reached 914,000 and 679,000 subscribers respectively, which is indicative of the strong consumer interest in each of the product's unique content set. Kayo's growth has been enhanced by the recent agreement with Telstra to replace Telstra's Live Pass with Kayo, accelerating the penetration and adoption of the product. While the revenue impact from the addition of former Live Pass customers will be minimally new one at the agreement due to the pricing promotion, we see this partnership as a unique opportunity and window to introduce Kayo to a new audience. Residential broadcast subscribers declined 12% from the prior year to over 1.7 million and commercial subscribers also declined 12% to 235,000. However, the trend improved sequentially as COVID-19 restrictions continue to ease particularly in pubs and clubs albeit the accommodation sector remains challenged. Broadcast churn was elevated at 20.1% versus 17.5% in the prior year as the team continued to balance churn with revenue optimization. As a result ARPU continued to rise both year-over-year and sequentially, partly mitigating broadcast subscriber volume declines. Broadcast ARPU rose 2% to over AUD 80 or US$62. Segment EBITDA improved 34% to $91 million and was up 13% on an adjusted basis. The improvement was driven by $22 million of lower sports programming rights and production costs, as well as lower transmission marketing and employee costs. Finally, on Foxtel, they refinanced their existing AUD650 million revolving credit and working capital facilities and extended the maturity out 18 months to May 2024 at a slight price improvement. Moving on to Dow Jones, Dow Jones delivered another outstanding quarter with year-over-year growth for both revenue and segment EBITDA accelerating versus the second quarter and the first half rate. Revenues for the quarter were $421 million, up 6% compared to the prior year with digital revenues accounting for 74% of total revenues this quarter, up six percentage points from the prior year. Circulation revenues again rose 8% due to the growth in digital circulation revenues partially offset by lower single coffee and amenity print volume, which is still impacted by COVID-19 restrictions. Dow Jones continue to post record subscriptions with nearly 4.3 million average subscriptions to its consumer products in the quarter, up 19% from the prior year. Of that nearly 3.3 million were digital-only subscriptions reflecting 238,000 sequential net adds and 29% year-over-year growth. For the Wall Street Journal, there were approximately 3.4 million average subscriptions for the quarter, up 21% from the prior year with digital-only subscriptions growing 29% to over 2.6 million. Revenues from, Dow Jones Risk & Compliance grew 24% improving from the Q2 rate and was the fastest growth since the first quarter of fiscal 2020. Overall, Professional Information Business revenues rose 9%. Within Professional Information Business Risk & Compliance was the largest source of revenue this quarter for the first time on record and is now approaching $200 million in revenues for the full year, compared to approximately $160 million in fiscal 2020. Advertising revenues which accounted for 20% of revenues this quarter, grew 1% to $85 million a marked improvement from the 4% decline last quarter and was the first growth since the first quarter of fiscal 2020. As Robert mentioned, digital advertising revenues had the fastest growth in a decade, up 30% and accounting for 61% of advertising revenues for the third quarter. It is worth noting, that this level of growth came despite, a tough prior year comparison of up over 20% which at the time was a record quarterly performance. Encouragingly, the growth was again broad-based with notable gains in the financial services category. We saw growth in both volume and yield particularly in direct display. Print advertising revenues declined 25% year-over-year, which was an improvement from the 29% decline in the second quarter. Dow Jones segment EBITDA for the quarter rose, 61% to $82 million with margins expanding close to seven percentage points versus the prior year. Total costs declined 2% this quarter which was better than we had expected, mostly due to lower print volumes and other discretionary savings partially offset by higher compensation costs. Our Book Publishing HarperCollins posted 19% revenue growth to $490 million and 45% segment EBITDA growth to $80 million, reflecting another very strong quarter and continues to benefit from the industry-wide increase in consumption. Like the second quarter, revenue growth was again broad-based and was led by the general trade, children's U.K. and foreign language categories. The backlist was the key driver this quarter, accounting for 62% of sales, led by very strong sales from the Bridgerton series, by Julia Quinn. Similar to previous quarters, we are continuing to benefit from a strong rebound in e-books with sales up 38% year-over-year and gains in all categories, while downloadable audio books increased 42% year-over-year. Overall digital sales were up 38%. HarperCollins again demonstrated strong operating leverage. Despite a 15% increase in total costs in part, due to royalties and higher production expenses related to the successful top line performance margins improved by three percentage points. Turning to News Media, we continue to remain focused on rightsizing the cost base and moving towards digital within the segment. Revenues for the quarter were $550 million, down 25% versus the prior year of which, the impact from the divestment of News America Marketing accounted for the majority of the decline. On an adjusted basis revenues declined only 7%, which is an improvement from the 9% decline last quarter. Decline also reflects the $28 million or 4% negative impact from the closure or transition to digital and certain regional and community newspapers in Australia. Circulation and subscription revenues rose 13%, driven by a $26 million or 10% benefit from currency fluctuations, strong digital paid subscriber growth and a couple of price increases partially offset by, lower newsstand sales related to COVID-19. Advertising revenues decreased $215 million or 50% compared to the prior year, reflecting a $199 million or 47% negative impact from the divestiture of News America Marketing and a $23 million or 5% negative impact related to the closure or transition to digital of certain regional and community newspapers in Australia. The remainder of the movement was driven by, favorable foreign exchange partly offset by the continued weakness in the print advertising market, exacerbated by COVID-19. Advertising performance was mixed across the regions with Australia showing moderating declines compared to the second quarter rate, particularly driven by increased retail spending. While the U.K.'s year-over-year performance weakened mostly compared to the second quarter impacted by another lockdown which started at the end of 2020. In the U.S., the trends remained robust with the New York Post posting 21% advertising revenue growth of which digital advertising grew 32%. Segment EBITDA for the quarter was $8 million compared to $24 million in the prior year, due primarily to the absence of the contribution from News America Marketing. Adjusted segment EBITDA increased by $5 million. In our other segment, the third quarter costs were higher than we expected, primarily driven by higher equity compensation due to the rising share price and the initial investment spending related to the implementation of our global shared services initiative. I would now like to talk about, some themes for the upcoming quarter. As noted in the past call, forecasting remains challenging given the ongoing global COVID-19 pandemic. At Digital Real Estate Services national residential listings in Australia for April were up 98% compared to the prior year. While the market dynamics are strong these growth rates are exaggerated by the severe COVID-19-related declines experienced in April 2020. Please refer to REA's press release and earnings call for more details. At Move, we remain very encouraged by overall trends and expect the revenue momentum to continue. We continue to expect additional reinvestments at Move in areas such as, brand marketing and product development as we focus on gaining market share and expanding into adjacencies. In Subscription Video Services, we have seen broadcast churn trends moderate during April. And we remain encouraged by strong OTT demand from Kayo and Binge. We expect EBITDA results to be challenged, due in large part to the lapping of the prior year cost savings. As a reminder, the prior year's fourth quarter results included $70 million of lower sports programming costs, mainly due to the suspension of sporting events, as a result of COVID-19. For the current fiscal fourth quarter, we expect to incur those rights which will be impacted by the rising Aussie dollar versus the U.S. dollar as well as some additional costs for further OTT investments. At Dow Jones, overall revenue trends remained favorable compared to the prior year, including strong digital advertising growth. As mentioned last quarter, we expect to reinvest in the business, as we focus on driving revenue growth through its digital assets and expect second half expenses to increase modestly compared to the prior year. In Book Publishing, overall industry trends remain favorable, but we continue to monitor closely the sustainability of recent consumer spending patterns, such as the increasing free time for consumers to read and the increase in the average number of books purchased. We continue to expect performance to moderate in the fourth quarter, in part, due to the strong performance in the prior year, which benefited from increased consumer demand at the onset of COVID-19 lockdowns, and restrictions as well as the successful release of Magnolia Table, Volume 2. At News Media, we expect continued improvement in the fourth quarter, as we lap both the impact from COVID-19 and the sale of News America Marketing in May 2020. Cost decline should moderate, as we lap COVID-19 saving initiatives as well as the divestment of News America Marketing and the closure or digital transition of some of our newspapers in Australia, in the fourth quarter of fiscal 2020. We expect overall profitability trends to improve. And we expect modest revenue impacts from our new licensing agreements. In our Other segment, we expect the fourth quarter cost to increase around $20 million versus the prior year in-part due to the reduction of bonuses in the prior year, higher share price and the costs related to the global shared services initiative. Our year-to-date free cash flow available was $762 million compared to $63 million in the prior year, benefiting from higher EBITDA, improvements in working capital and lower CapEx. Some of the working capital improvement is timing related, but we're very pleased with the progress made to date. Also note that the fourth quarter balance sheet will reflect the proceeds from our recent senior notes offering, together with the three recently announced acquisitions, which will impact our interest expense and cash balance. With that, let me hand it over to the operator for Q&A.

Alan Gould:

Thanks for taking the question. Robert, these results at REALTOR are quite impressive. Can you just look out three, five years and give us some sense of what the opportunity is for Digital Real Estate in the United States?

Alan Gould:

If I can just…

Operator:

Thank you. We'll take our next question from Kane Hannan with Goldman Sachs.

Susan Panuccio:

Kane, I'll take that one. So I think, just at REALTOR, if you think about the cost for Q4, we did guide to an additional $40 million of cost in the second half. You probably could assume the bulk of that $40 million that we quoted will hit in Q4. So if you compare that to the Q3 numbers, we also expect those numbers to scale up from a variable cost perspective, given the revenue growth. In relation to Dow Jones, we would expect to see higher costs in Q4, largely as a consequence of compensation and marketing expenditure. But we have been very encouraged by the ongoing cost focus in that business. And as you could see, they had a pretty good cost result for this quarter as well. So probably more investment coming through at REALTOR than what we would expect to see in Dow Jones.

Operator:

Thank you. Our next question comes from Alexia Quadrani with JPMorgan.

Robert Thomson:

Well, the key factor for us is the quality of the Wall Street Journal, the quality of the journalism, the quality of the leadership. We have a great team at Dow Jones with Almar Latour and Josh Stinchcomb, our Chief Revenue Officer, who've done a sterling job collectively in developing our digital expertise. So we don't have to worry about a Trump bump becoming a Trump slump, as you might see in other places. The Wall Street Journal's journalism obviously rises above the -- sort of gormless rhetoric the pants-tearing [ph], the jaundiced journalism that you see in some other places. And so, the Dow Jones results certainly rise above those of the New York Times, both in circulation now in the news segment and in digital advertising, which was almost double that of the New York Times. And so, it is in essence the enduring quality of the Journal that gives us momentum. And those are very positive wins that we're seeing now and are confident that we'll see in the future.

Robert Thomson:

And to further supplement Susan's wise observation, the acquisition of IBD will give us further opportunity to up-sell to cross-sell across both properties. And that's why we acquired the IBD, which is close to closing. And that's why -- and that investment itself was an indication of our confidence in the sector.

Operator:

Thank you. Our next question comes from Entcho Raykovski with Credit Suisse.

Susan Panuccio:

Yeah. Look in Q4, we obviously had the absence of some bonuses in Q4 of last year and so we obviously wouldn't expect to see that this year. So we've got that movement that's happening. We also had some of the COVID impacts coming through in Q4. So we did have a couple of one-off cost savings that hit in Q4 of last year which we didn't see repeated -- expected to repeat in Q4 of this year. And we also have the scale after some of the news next step transformation project costs that are going to hit in Q4. So I think when we look sort of going forward, we wouldn't expect to see the large movement that we've been seeing in equity comp. I mean, obviously if the share price continues to go up we'll have that natural fluctuation. So we did have a very depressed share price as a consequence of COVID back in Q4 and so we've been seeing those movements come through this year.

Operator:

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

Robert Thomson:

Craig, look I think that's a fair assessment. We certainly have confidence in our teams and their ability to integrate those acquisitions. We certainly have a fundamental faith in the sectors themselves. And you will see that the financial impact of the acquisitions will be almost immediately positive for both revenue and EBITDA. At both Investor’s Business Daily and Houghton Mifflin Harcourt General Book division are highly profitable. And in Australia Mortgage Choice will surely complement the existing mortgage broking business at REA. And as I mentioned earlier with IBD being 90% digital now, it's extremely contemporary. We will be able to cross-sell and upsell and make the most of our existing content. And there's -- at HarperCollins Brian Murray and the team there's no doubt we have a history of successfully integrating businesses. And so we fully expect profits to increase at both HMH and thus at HarperCollins and thus at News Corp.

Operator:

Thank you. Our next question comes from Darren Leung with Macquarie.

Susan Panuccio:

We don't give out the margins actually for Risk & compliance. But what we would say is though that they are high margin and they've been scaled. So we are seeing good growth within that particular segment.

Mike Florin:

Thanks you, Darren. Todd, we will take our next question.

Brian Han:

Hi. For Foxtel in Australia, you are still investing in marketing and retention of Foxtel broadcast subscribers, or is most of the marketing efforts directly towards Kayo and Binge?

Mike Florin:

Thank you, Brian. Todd, we will take our next question please.

Mike Florin:

Great. Well thank you Todd. Thank you for all for participating. Have a great day. And as always, we look forward to speaking with you all in the very near future. Have a great day.

Mike Florin:

Thank you very much, Ally. Hello, everyone, and welcome to News Corp.'s Fiscal Second Quarter 2021 Earnings Call. We issued 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 Susan Panuccio, Chief Financial Officer. We'll open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings 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 will pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. Fiscal 2021 second quarter total revenues were over $2.4 billion, a decline of 3% versus the prior year, while total segment EBITDA was $497 million, up 40% year-over-year, reflecting strong performances across all of our key reportable segments, driven by a combination of improved operating trends and cost reductions. This is the highest quarterly segment EBITDA since the company was formed in 2013. On an adjusted basis, which excludes the impact from acquisitions and divestitures, most notably the sale of News America Marketing in the fourth quarter of fiscal 2020 as well as currency fluctuations and other items disclosed in our release revenues rose 2%, while total segment EBITDA grew 39%. Net income for the quarter was $261 million compared to $103 million in the prior year. For the quarter, we reported diluted earnings per share of $0.39 as compared to $0.14 in the prior year. Adjusted EPS was $0.34 in the quarter compared with $0.18 in the prior year. Turning now to the operating segments. Digital Real Estate Services segment revenues were $339 million, an increase of 15% compared to the prior year, which is more than double the rate in the first quarter, driven by another record quarterly performance for Move. On an adjusted basis, revenues increased 11%. Segment EBITDA rose 20% to $142 million or 19% on an adjusted basis despite higher investment spending, which was in contrast to the first quarter. Results also included $6 million of costs associated with Move's acquisition of Avail and the Elara transaction at REA. Move's operating results accounted for over 75% of segment revenue growth and approximately 80% of segment EBITDA growth this quarter. Move's revenues accelerated to $155 million, a 28% year-over-year increase, with real estate revenues rising 30%. As Robert mentioned, realtor.com traffic reached 80 million average monthly unique users, reflecting an increase of 37% year-over-year with growth in December accelerating to 44%. Monthly average lead volume remained very strong, growing over 30%. Like the first quarter, we saw strong growth in the performance-based referral model, which accounted for approximately 30% of total Move revenues in the quarter, benefiting from the growth in lead volume, higher home prices and real estate transaction closes. Not only did we see an acceleration in the revenue growth of the referral model this quarter compared to the prior quarter but we also saw growth in Connection Plus, our traditional lead generation product, driven by strong customer demand, enabling improved pricing and higher sell through. As our referral revenues are recognized upon transaction closures, only around 20% of the associated revenues from leads generated in this quarter are reflected in the results. This provides a strong pipeline through the balance of the year, assuming continued favorable housing conditions. These results are very encouraging, and we remain focused on expanding our addressable market through the integration of key ancillary services, including our Rocket Mortgage partnership. We've contributed $19 million to the segment EBITDA growth this quarter versus the prior year, driven by the strong top line growth. As we had previously indicated, we are increasing our investment levels in REALTOR, given the rapid performance in lead volume and further expansion into adjacency. Revenues at REA Group rose 6% to $184 million, reflecting a $12 million or 7% benefit from currency fluctuations. COVID-19 restrictions eased during the quarter, including the removal of property inspection restrictions in Melbourne. Residential listings for the quarter rose 10%, including 25% growth in Metro Melbourne and 13% growth in Sydney. A new developer project launches increased 12% on the prior year. REA's results benefited from growth in residential revenues, which was offset by declines in commercial and Asia. It also is worth remembering that as a consequence of COVID, REA did not implement a price increase in July. Please refer to REA's earnings release and their conference call following this call for more detail. Turning to Subscription Video Services segment. Revenues for the quarter were $511 million, up 2% versus the prior year and included a $33 million or 7% positive impact from foreign currency fluctuations. Adjusted revenues were down 5%, an improvement on the Q1 decline of 7%, benefiting from moderating broadcast subscription revenue declines and the expansion of OTT revenues. Foxtel's closing paid subscriber base reached over 3.3 million as of December 31, up 12% year-over-year, with OTT expanding to over 1.3 million paying subscribers, close to double the prior year's number with Kayo reaching 624,000 and Binge at 431,000 paying subscribers. Kayo subscribers declined slightly quarter-over-quarter due to seasonality, but the decline was much less pronounced than last year as the business successfully managed to transition from winter to spring and summer sporting codes, underpinned by the exclusive cricket content. Residential broadcast subscribers declined about 11% to approximately $1.8 million, relatively consistent with last quarter. Commercial subscribers declined 18% year-over-year to 218,000, with the trend improving sequentially, having bottomed out at 86,000 in the fourth quarter of fiscal 2020 as a consequence of the pandemic. Broadcast churn was somewhat elevated at 17.5% versus 16% in the prior year, impacted by a strategy to reduce promotional offers, which resulted in the roll-off of lower ARPU subscribers. The financial benefit is reflected in a 3% increase in ARPU to almost AUD 80. Segment EBITDA improved 77% to $124 million, the continuing cost transformation at Foxtel, desire to rightsize the cost base was the driver of profitability. Total cost declined approximately 10%, including $35 million of lower sports programming rights and production costs, which was primarily driven by savings from renegotiated sports rights partially offset by the $20 million negative impact related to the deferral of these costs from the fourth quarter of fiscal 2020. Expenses also benefited from lower entertainment programming costs and lower overheads. Some of the cost benefits are timing related, which will reverse later in the year, I will touch on these later. Moving on to Dow Jones. Dow Jones delivered its highest revenue quarter since separation in 2013 and its higher segment EBITDA quarter since News Corp's acquisition in 2007. Revenues for the quarter were $446 million, up 4% compared to the prior year, with digital revenues accounting for 70% of total revenues this quarter, up 6 percentage points from the prior year. Circulation revenues rose 8% due to growth in digital circulation revenues, partially offset by lower single copy and amenity print volume still impacted by COVID-19. As Robert mentioned, Dow Jones again achieved record subscriptions in the quarter with average subscriptions to its consumer products for the quarter exceeding $4 million, up 18% from the prior year and off that digital-only subscriptions were over $3 million, up 29% year-over-year. For the Wall Street Journal, there were 3.2 million average subscriptions for the quarter, up nearly 19% from the prior year, with digital-only subscriptions growing 28% to nearly 2.5 million. Revenues from Dow Jones Risk and Compliance grew 21%, which was a faster growth rate than the past 3 quarters. Overall, professional information business revenues rose 4%. Advertising revenues, which accounted for 26% of revenues this quarter declined just 4% to $115 million, a marked improvement from the 17% decline last quarter. As Robert mentioned, we had another record quarter for digital advertising with 29% growth and digital accounting for 58% of advertising revenues for the second quarter. We saw growth in all categories, particularly in technology. Print advertising revenues declined 29% year-over-year, which was an improvement from the 39% decline in the first quarter. Dow Jones segment EBITDA for the quarter rose 43% to $109 million, with margins expanding to over 24% and up almost 7 percentage points versus the prior year. Costs declined almost 5% this quarter due to lower print volumes and other discretionary savings. At Book Publishing, HarperCollins posted 23% revenue growth to $544 million and a 65% segment EBITDA growth to $104 million, marking the best quarterly performance in its history. Revenue growth was strong across all categories with double digit gains. Robert mentioned the depth of the sub list this quarter, which included strong performances from numerous authors, including Rachel Hollis, Rhonda Byrne, Ree Drummond and Joanna Gaines and David Walliams among others. Similar to what we saw in the past 2 quarters, we are continuing to benefit from a strong rebound in e-books with overall digital sales up 15% year-over-year. E-book sales increased 21% year-over-year with gains in all categories, while downloadable audio books increased 10% year-over-year. We have continued to see higher online sales and, in particularly, benefited from strong orders from Amazon and other e-commerce platforms during the holiday season. But perhaps more importantly, we are seeing very strong consumption levels, likely benefiting from stay-at-home measures and a continuous flow of new content. Revenues increased at low double digits across the backlist, notwithstanding, they contributed 55% of sales this quarter, down from 58% last year due to the larger mix of the front list titles. HarperCollins again demonstrated strong operating leverage despite a 16% increase in cost, in part due to royalties and higher production expenses related to the successful top line performance, margins improved by almost 5 percentage points. Turning to News Media. Despite ongoing challenges, we remain focused on rightsizing the cost base and moving towards digital, helped by a moderation in advertising revenue trends. Revenues for the quarter were $573 million, down 29% versus the prior year, of which the impact from the divestment of News America marketing accounted for the majority of the decline. On an adjusted basis, which excludes the impact from the divestment of NAM and Unruly and the other items mentioned in our release, revenues declined 9%, which is an improvement from a 16% decline in the first quarter. The decline also reflects $34 million or 4% negative impact from the closure or transition to digital of certain regional and community newspapers in Australia. Circulation and subscription revenues rose 5%. There's a $9 million or 4% benefit from currency fluctuations, strong digital paid subscriber growth and cover price increases offset lower news stand sales related to COVID-19. Overall, the year-over-year trends in local currency were better in both the U.K. and Australia compared to the first quarter. Circulation revenues accounted for 45% of total segment revenues. And was slightly higher than advertising this quarter as the mix of revenues become more reoccurring and predictable. Advertising revenue fell $231 million or 48% on a reported basis, of which $191 million or 40% was from the sale of News America Marketing, and $28 million or 6% was related to the negative impact from the closure or transition to digital of certain regional community titles in Australia. The remainder of the decline was due to the overall weakness in the print advertising market. On a positive note, the New York Post continued to outperform with advertising revenues up 23%, and as Robert mentioned, digital advertising up 64%. In fact, digital revenues at the New York Post exceeded 50% of total revenues this quarter. And overall, the New York Post had its highest digital revenue since 2013. Segment EBITDA for the quarter was $66 million, flat with the prior year despite the $22 million a onetime benefit in the prior year related to a settlement of certain warranty related claims in the U.K. and the absence of the modest contribution from News America marketing. Adjusted segment EBITDA increased 5%, which included a $5 million positive contribution from the New York Post. I would now like to talk about some things in the upcoming quarter and the second half. Overall, we expect to see some slowdown in the second half results with forecasting remaining particularly challenging given the ongoing global COVID-19 pandemic. At Digital Real Estate Services, as REA noted, National Residential Listings in Australia for January were flat to the prior year. Results will reflect a small loss related to the consolidation of Elara Technologies in the second half. Please refer to REA's press release and earnings call for more detail. At Move, we remain encouraged by the traffic and lead volume trends, which are expected to drive higher revenues in the second half despite the historically low listing volumes across the industry. We expect these higher revenues to fund at least $40 million of additional reinvestments in the second half compared to the prior year in areas such as brand marketing and product development as we focus on gaining market share and expanding into adjacencies. In Subscription Video Services, we have seen broadcast churn continue to increase due to the ongoing focus on ARPU and seasonal trends with the end of winter sports. However, Kayo has remained resilient, and our OTT subscriber growth led by Binge remains strong. We expect EBITDA results in the second half to be more challenged due in part to the lapping of the prior year cost savings. As a reminder, fiscal 2020 fourth quarter results included a $70 million cost benefit due to the deferral of sports rights and production costs related to COVID-19. We now expect full year overall cost declines, given the better-than-expected revenue performance to be more modest than we had initially expected, with a net reduction of less than AUD 100 million. This includes approximately AUD 80 million of higher sports comp in the second half of fiscal 2021, particularly in the fourth quarter compared to the prior year period. At Dow Jones, overall revenue trends remained favorable compared to the prior year, including strong digital advertising growth. As we look to the rest of the year, we continue to expect to reinvest in the business as we focus on driving revenue growth to its digital assets and expect second half expenses to increase modestly compared to the prior year. In addition, third quarter will face a more difficult digital advertising growth comparison. In Book Publishing, overall industry trends remain favorable, we continue to monitor closely the sustainability of recent consumer spending patterns, such as the increasing free time for consumers to read and the increase in the average number of books purchased. The second half comparables will be tougher, particularly in the fourth quarter, given the material outperformance last year and as we lap some of the initial benefits at the outset of COVID-19. At News Media, the ongoing national lockdown in the U.K. and domestic travel restrictions in Australia continue to put pressure on print circulation, especially with daily newsstand and are also creating increased uncertainty on advertising spend across most categories. Cost declines in the second half are expected to moderate from the first half rate as we lap some COVID-19 saving initiatives as well as the divestment of News America Marketing and the closure or digital transition of some of our newspapers in Australia in the fourth quarter. In our other segment, for the second half, we expect at least a $50 million increase in cost, driven by a combination of higher equity comp related to the stock price performance and the absence of the bonus reductions across the senior executive team in the prior year in response to COVID-19 as well as additional costs related to the implementation of the global shared services initiative. With that, let me hand it over to the operator for Q&A.

Zilu Pan:

This is Zilu Pan on for Alexia. Digital advertising at Dow Jones continues to outperform some of your peers. And I'm wondering if there's any further color you can give on why you think you are doing relatively quite well on that front. Is there a vertical SKU or specific advertising products driving the outperformance? And then just some Foxtel with better results at the segment due to the streaming products, what indicators or trends are you looking for to determine the next steps for that asset?

Susan Panuccio:

And I think just to add to Robert's comment, we also, under Josh, who leads the sales team at Dow Jones have been very focused over the past 18 months on improving our ad tech capabilities, upskilling the sales force and improving yield management, which we now believe we're starting to see the benefit of in addition to obviously, the audience growth. And just in relation to the second question for Foxtel. When we think about the trends that we're looking at and the next steps for the assets, well, clearly, OTT will be an ongoing focus for us in that business. As well as the stability in broadcast as the team focus on the management of the base subscribers within broadcast. And they are clearly focused on costs as well. They've done a tremendous job in the first half or really over the last10 months since COVID-19 started in taking out the underlying cost of the business, the renegotiation of sports and entertainment contracts, but we'll be particularly looking forward to the growth within the OTT properties.

Operator:

We'll go ahead and hear from Kane Hannan from Goldman Sachs.

Susan Panuccio:

Thanks. Kane, I might take those questions, and Robert can add and supplement as he will. So just in relation to the sustainability of Move growth, I mean, we remain very confident in the growth of the business and are encouraged by the traffic and the lead volumes, as we talked about in our prepared remarks, notwithstanding the industry listing volumes remain at historically low levels. We do expect with the revenue growth, the cost will increase. And I think the interesting thing to note, when we think about the results for this quarter versus the first quarter, actually, the cost increased this quarter. And so it was really top line revenue growth that was dropping down to the bottom line. So we do think that the revenue growth will continue, and we do want to scale up those costs in the reinvestment areas that I mentioned, marketing and product development. Just in relation to shared services, yes, we did quote $100 million for financial year '22. We're still holding that number at this stage, notwithstanding the cost work that we've done across the business. We do still think that there are enormous opportunities, but it will require, obviously, a lot of work and reconfiguration of our systems in order to unlock those savings. But at this stage, the guidance is still $100 million for financial year '22.

Operator:

Next we'll hear from Entcho Raykovski from Credit Suisse.

Susan Panuccio:

Entcho, maybe if I start with your first question just in relation to News Media. Obviously, there's been a lot of cost work that's been done. And you're right. Some of that is obviously volume related, and some of that will scale up and down depending on how those businesses trade in light of COVID. But there are also significant permanent cost reductions that the teams have been working on. We've had significant reduction in head count that came through in the back end of last fiscal year that is obviously flowing through here. But we do have a lot of costs that have come out in the overhead space as well. Now some of that naturally will come back in as the businesses open up, but we would also hope that some of that may be permanent as we change the way that we work going forward. We also had in the back end of last year significant reduction in marketing expenditure within News Media, we would expect to see some of that start to come back in, but not necessarily the levels that we're seeing. So I think a balance of both as we look forward. And I do think actually that there are still permanent cost reduction opportunities that the businesses are working on within that segment. A lot of that has to do with the restructuring of the business and the reconfiguration, and the teams are actively working on that.

Susan Panuccio:

And I think, Entcho, the only other thing to add to that would be that as we think about this exciting opportunity that Foxtel now have, it will scale clearly more from year 1 given the introductory office. So whilst we would expect subscriber numbers to pick up, we'd expect the actual impact on revenue and EBITDA to be more back-ended from year 1 onwards.

Robert Thomson:

It's relatively small, Entcho. Well below 20%.

Craig Huber:

Susan, I wanted to hear a little bit further about the costs within your subscription video services, just the remaining part of the year and maybe as we think out to the next fiscal year, anything out of the ordinary there you want to call out further you haven't already touched on?

Craig Huber:

And my follow-on question, if I quickly ask, as you think out to the next fiscal year, is there any large sports programming contracts up for renewal that might have a significant jump if taken into account in our models, the next fiscal year?

Operator:

It appears we have no further questions. That does conclude our question-and-answer session for today. I would now like to turn over to our speakers for any additional or closing remarks.

Operator:

And with that, that does conclude today's call. Thank you for your participation. You may now disconnect.

Mike Florin:

Thank you very much, Corey. Hello, everyone, and welcome to News Corp's Fiscal First Quarter 2021 Earnings Call. We issued our earnings press release about an hour ago, and it's now posted on our website at, newscorp.com. On the call today are Robert Thomson, Chief Executive, and Susan Panuccio, Chief Financial Officer. We'll open with some prepared remarks. And then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements, regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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.

Susan Panuccio:

Thank you, Robert. As Robert mentioned, we are pleased with the start to the new fiscal year, particularly in an environment which has clearly been marked by unpredictability and uncertainty. Our businesses have responded well to the challenges as evidenced by these results. Fiscal 2021, first quarter total revenues were over $2.1 billion, down 10% versus the prior year while total segment EBITDA was $268 million, up 21% year-over-year led by very strong growth at the Digital Real Estate Services, Dow Jones and Book Publishing segments. On an adjusted basis, which excludes the impact from acquisitions and divestitures, most notably the sale of News America Marketing in the fourth quarter of last fiscal year, as well as currency fluctuations and other items disclosed in our release revenues were down by only 3% while total segment EBITDA increased by 23%. Net income for the quarter was $47 million compared to a net loss of $211 million in the prior year reflecting the absence of impairment charges and higher total segment EBITDA, partially offset by higher tax expense. The prior year figure reflected $273 million of non-cash impairment charges, primarily at News America Marketing. For the quarter, we reported earnings per share of $0.06 as compared to a loss of $0.39 in the prior year. Adjusted EPS were $0.08 in the quarter versus $0.04 in the prior year. Turning now to the operating segments. At the Digital Real Estate Services segment, revenues increased 7% to $290 million, a big improvement from the fourth quarter, primarily due to the strength of Move. On an adjusted basis revenues increased 4%. Segment EBITDA rose 45% to $119 million or 40% on an adjusted basis, primarily driven by a meaningful increase in profit contribution from Move, due to a combination of higher revenues and cost reduction measures. The results at Move accounted for over 80% of segment revenue growth and over 70% of segment EBITDA growth this quarter. REA group revenues rose 2%, reflecting a $6 million or 4% benefit from currency fluctuations. National residential listing volumes declined 2% for the quarter impacted by stage four government restrictions in Melbourne, which included a ban on physical inspections. To put that in perspective, Metro Melbourne listings in the quarter declined 44% versus the prior year while the listings in Metro Sydney grew 23%. REA's results benefited from positive FX movements as well as modest residential revenue and financial services growth driven by higher refinancing activity, but the growth was mostly offset by declines in commercial developer and Asia. Please refer to REA's earnings release and their conference call following this call for more details. At Move, we are extremely pleased with our progress during the first quarter. Move revenues rose 12% to $138 million, representing an all-time high with real estate revenues rising 13%. As Robert mentioned, traffic reached record levels with an average of 90 million unique users for the first quarter, an increase of 26% year-over-year. Monthly average lead volume for the quarter grew at an even faster rate at over 40%. We saw material growth in the performance-based referral model which accounted for approximately 30% of total Move revenues in the quarter, benefiting from the growth in lead volume, higher home prices and real estate transaction closes. As I've mentioned in the past, there is a delay in recognizing the revenue from the referral model due to the timing of transaction closes, which in addition to natural real estate seasonal patterns can lead to some volatility quarter-to-quarter as we shift more leads to that model. These results are very encouraging as we further progress towards increasing our addressable market through the integration of key ancillary services like our Rocket Mortgage partnership. While we continue to transition to the referral model the combination of strong lead volume and price increases for our more traditional lead generation business, resulted in a more stable revenue performance this quarter than the prior quarters. Move increased its profit contribution by $28 million versus the prior year driven by the scaling of the referral model, cost efficiencies resulting from the restructuring of the organization last quarter, including completing the integration of REALTOR and Opcity and the deferral of marketing spend. Turning to the Subscription Video Services segment. Revenues for the quarter were $496 million, down 4% versus the prior year and included a $20 million or 3% positive impact from foreign currency fluctuations. The revenue decline moderated from the prior quarter a strong growth at Kayo driven by the return of live sports as well as the expansion of Binge partially offset the declines in residential and commercial subscriptions. Foxtel's closing paid subscriber base reached a record high at nearly 3.3 million as of September 30, up 7% year-over-year led by meaningful growth of paying OTT subscriptions, which reached over 1.2 million at quarter end. Broadcast subscribers declined about 10% to 1.85 million. Commercial subscribers declined 23% to 205,000 but marked a big improvement from the fourth quarter due to the reopening of licensed venues in most parts of the country. Foxtel is continuing to work with impacted customers in the pubs clubs and accommodation sectors particularly in Victoria and New South Wales. Broadcast churn was relatively stable at 14.6% versus 14.4% in the prior year, partly impacted by the roll-off of some of the churn mitigation initiatives, but were still below the financial year 2019 and financial year 2020 averages. Broadcast ARPU increased 1% from the prior year to AUD 79, which was also modestly higher than the fourth quarter. Segment EBITDA declined 4% to $78 million and declined 9% on an adjusted basis. Total cost declined approximately 3% or $15 million with a $16 million or 4% adverse impact due to currency fluctuations. Underlying savings were $31 million or AUD 50 million. These savings came despite an increasing sports rights and production costs, partly due to the $36 million or AUD 51 million impact from the timing of some sporting events deferred from the fourth quarter. Foxtel also benefited in the quarter from lower entertainment programming costs as well as declines in transmission and overhead expenses as we see the flow-through from the cost actions taken last year. Moving on to Dow Jones, revenues for the quarter were $386 million, up 1% compared to the prior year with digital revenues accounting for a record 73% of total revenues this quarter, up 8 percentage points from the prior year. Circulation revenues rose 7% due to robust growth in digital circulation revenues, partially offset by lower-single copy and amenity print volume, and marked the meaningful improvement from the fourth quarter rate of 2%. As Robert mentioned, Dow Jones again achieved record subscriptions in the quarter with the year-over-year growth rate slightly higher than the fourth quarter. Dow Jones average subscriptions to its consumer product for the quarter were nearly 3.9 million, up 18% from the prior year. And of that digital-only subscriptions were 2.9 million, up 29% year-over-year. For The Wall Street Journal, there were 3.1 million average subscriptions for the quarter, up nearly 19% from the prior year with digital-only subscriptions growing 27% to more than 2.3 million. Revenues from Dow Jones Professional Information business rose 2% year-over-year, which included 16% growth in risk and compliance. As mentioned at the Dow Jones Investor Day, long-term contracts are 95% of risk and compliance revenues, providing us with a more predictable and reoccurring revenue base. Advertising revenues, which accounted for only 18% of revenues this quarter, declined 17% to $70 million, an improvement from a 28% decline last quarter. Digital advertising revenues again exceeded print advertising revenues, accounting for 57% of total advertising and increased 14%, benefiting from growth in direct display, programmatic and sponsored link revenues. Interestingly, we saw digital revenue growth in every industry category. Print and other advertising fell 39% a more modest improvement from the fourth quarter rate. Dow Jones segment EBITDA for the quarter rose 47% to $72 million with margins expanding to almost 19% and up almost 6 percentage points versus the prior year. Overall costs for the segment declined approximately 6%, which combined with the top line growth led to the material margin expansion this quarter. At Book Publishing, HarperCollins had a very strong quarter building on the momentum from the fourth quarter, with revenues up 13% year-over-year to $458 million and segment EBITDA up 45% to $71 million. Revenue growth was driven by general trade and the children's books as well as modest revenue contribution from the Egmont acquisition in the U.K. Adjusted revenues and adjusted segment EBITDA grew 10% and 41% respectively. We saw strong digital growth with digital sales up 20% year-over-year to represent 23% of consumer revenues, up from 22%. E-book sales increased 18% year-over-year with gains in all genres while downloadable audio books increased 26% year-over-year. As Robert noted HarperCollins benefited from a strong release slate, which included Daniel Silva's The Order, Lucy Foley's The Guest List, Ben Shapiro's How to Destroy America in Three Easy Steps, Jenna Bush Hager's Everything Beautiful in Its Time as well as LeBron James' I Promise in children's books. The backlist contributed 61% of sales this quarter, down from 64% last year, which was due to the larger mix of front-list titles this quarter. Turning to News Media. We saw moderation in revenue declines this quarter compared to the fourth quarter. Revenues for the quarter were $487 million down 37% versus the prior year of which the impact from the divestment of News America Marketing accounted for the majority of the decline. On an adjusted basis which excludes the impact from the divestment of NAM and Unruly and the other items mentioned in our release, revenues declined 16% which is an improvement from the 22% decline in the fourth quarter. The decline also reflects a $35 million or 5% negative impact from the closure or transition to digital of certain regional and community newspapers in Australia. Circulation and subscription revenues were flat, as a $10 million or 4% benefit from currency fluctuations strong digital paid subscriber growth and cover price increases in the U.K. offset lower news stand sales related to COVID-19. We have seen print volumes beginning to improve particularly at the weekend papers. Advertising revenue fell $262 million or 59% on a reported basis of which $200 million or 45% was from the sale of News America Marketing, $29 million or a 7% negative impact related to the closure or transition to digital of certain regional and community titles in Australia with the rest of the decline relating to the overall weakness in the print advertising market. Advertising revenues at News U.K. fell 21% or 24% in local currency, while News Australia declined 35% or 38% in local currency which includes the $29 million negative impact or 20% related to the regional and community titles. Advertising revenues at the New York Post increased 6%, which includes 22% digital advertising growth. Segment EBITDA for the quarter was a loss of $22 million compared to a positive $7 million in the prior year or a decline of $29 million. The results reflect lower revenues and the absence of a net $12 million contribution from News America Marketing and Unruly partially offset by higher cost savings across the businesses. I would now like to talk about some of the themes in the upcoming quarter. Needless to say, forecasting continues to remain challenging. At Digital Real Estate Services as REA noted national residential listings in Australia for October were down 1% to the prior year with increases in Melbourne and Sydney. REA has also agreed to take a controlling interest in India's Elara Technologies. And as a result we expect to fully consolidate their results assuming completion on November 30. Please refer to REA's press release for more details. At REALTOR, we remain very encouraged by traffic and lead volumes. We are planning higher reinvestment spending in Q1 given our focus on expanding into adjacencies and growing the addressable market. In Subscription Video Services with the conclusion of Australia's two Tier One winter football seasons the AFL and NRL we expect to see seasonality in Kayo's subscriber numbers as we transition to the summer sports most notably Cricket. For Q2 we expect about $18 million or AUD 26 million of sports rights that were deferred due to COVID-19, but expect offsetting savings due to the ongoing benefit of the cost reduction measures taken in Q4 last year and the continued cost focus within the business. At Dow Jones overall year-over-year trends thus far are similar including strong digital advertising growth. As we look to the rest of the year, we expect modest reinvestment in the business as we focus on driving revenue growth through subscriptions and in risk and compliance. In Book Publishing as Robert mentioned, the key titles in the second quarter include Ree Drummond's Frontier Follies and Rhonda Byrne's, The Greatest Secret. We have continued to see higher online sales. At News Media, overall year-over-year revenue and cost trends remained similar to the prior quarter absent currency although visibility remains limited. As a reminder the prior year included a $22 million onetime benefit to segment EBITDA from the settlement of certain warranty claims at News U.K.'s printing business. We also expect some investment as we ramp our global shared service initiative over the course of the year. The COVID-19 crisis has presented challenges across all of our businesses and they have responded in a balanced and measured way. They will continue to focus on finding the right balance between permanent cost reduction and investment in growth opportunities, while keeping a close eye on the macroeconomic conditions and government responses to the virus within their own markets. We believe, we are well positioned as we move forward with a greater focus on digital across the company and a more disciplined approach to costs. With that let me hand it over to the operator for Q&A.

Kane Hannan:

Good morning guys. Two for me please. Firstly just on Move, very pleasing to see that revenue growth get back into the double digits. Just talk a bit more about how sustainable you think that growth is? And then the reinvestment you commented on Susan what sort of quantum we should be thinking about there? And then secondly just more broadly you've obviously seen the Elara investment come through. But just interested in your thoughts around how you should be capitalizing on your balance sheet strength which obviously have thus progressing the simplification agenda and then trying to realize the value in some of the parts in the current environment?

Susan Panuccio:

And just in relation to the reinvestment question that you asked, look we don't obviously give guidance -- specific guidance in relation to the cost. But broadly speaking, we could probably think about the cost reductions that happened this quarter in buckets of headcount-related savings and marketing-related savings and probably half of those savings a little bit more related to marketing. So we would expect to see that scale up as we go throughout the year, obviously depending on audience and revenue growth. And we also will have some reinvestment in product innovation as we look to scale out the platforms. So without sort of giving guidance that's sort ofbroadly speaking how we're thinking about it.

Operator:

Thank you. We'll take our next question from Entcho Raykovski with Crédit Suisse.

Robert Thomson:

Entcho look, we're always open-minded. We're constantly institutionally introspective. But the priority at the moment is to do what we're doing, which is to maximize growth in the past quarter, to maximize profitability, to take advantage of opportunities. And I'm just very proud of what Tracey and David and Owen in Australia are doing at the moment in very difficult circumstances. And as I said in particular with realtor.com, and I'm sure you recall the time of the acquisition where people wondered what we were going to do with that business and whether it had indeed seen better days. And it's very clear from those results last quarter that our best days are ahead.

Michael Florin:

Thank you, Entcho. Corey, we’ll take our next question, please.

Craig Huber:

Yes. Hi. I've got a few questions here. Has your thoughts changed at all on the large cash balance that you guys carry every quarter every year in terms of what to do with that going forward?

Craig Huber:

Okay. Also want to ask…

Craig Huber:

Yes I did. Yes if I could please just real quick. And I guess just in the spirit of transparency here was the EBITDA for realtor.com can you disclose that? Was it roughly $20 million in the quarter?

Craig Huber:

Okay. Thank you, guys.

Operator:

Thank you. [Operator Instructions] Our next question comes from Brian Han with Morningstar.

Susan Panuccio:

Brian actually it wasn't cost-cutting programs within HarperCollins given their revenue growth. So, they have actually been scaling their costs in accordance with their revenue growth. But they do have clearly a different mix. So, there's a different mix between the front list and the back list quarter-on-quarter. And also it depends on the types of front list mastheads titles that we sell. So, it's a combination of those not necessarily cost-driven more revenue-driven this quarter.

Operator:

[Operator Instructions] We do have a follow-up question from Kane Hannan with Goldman Sachs.

Susan Panuccio:

No worries, Kane. So, just in relation to the cost it was a net underlying saving of AUD50 million. So, I think that's important. And that does include the deferral of the sports rights in there. So, that gives you a sense as to the scale of the reduction that we're seeing within Foxtel. We are expecting for underlying costs to be significant for the full year. The team is still very, very focused on that. But as we mentioned last time there will be a net impact of the deferral of sports costs AUD78 million for the year both programming and then production costs included within that number. But the underlying savings will be significantly higher than that. In relation to the commercial revenue impact of about $14 million this year quarter-on-quarter, you'll see from the subs numbers that we quoted that we have picked up a considerable amount since Q4. We're hoping actually with the opening up of Victoria that we'll actually start to pick that number up again as we move forward. So, they will continue to work on that as we look to build that base back up.

Mike Florin:

Thank you, Kane. Corey, we'll take our next question please.

Craig Huber:

Thank you. Just a couple of quick follow-ups here. On the divestiture front, do you think you're largely done with that? That's my first question. And then secondly is there anything else Susan, you'd want to call out within at Foxtel in terms of timing of costs things that are moving around related to the sports programming costs and anything else that we should be aware of here as we try to model it?

Susan Panuccio:

And Craig just in relation to the Foxtel costs so just on phasing we had deferral of sports rights which we quoted at $51 million in this quarter. We've said we'll have another $26 million in Q2. So that sort of picks up the bulk of that deferral. But then of course, when you think forward to Q4, you won't have costs in Q4 in the last year in relation to sports rights which you will have next year. So, you almost have a double-up of those costs as we go through this year. In relation to the other cost savings the team actually did a really good job in Q4 of looking at that cost base and getting heads out of the business which sort of continued into the first month of this quarter. So, the actual underlying cost savings that they delivered in Q4 in relation to the heads and a lot of the overhead costs we expect that are in play now and they'll continue throughout the year.

Operator:

There are no further questions in queue at this time sir.

Operator:

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.

Michael Florin:

Thank you very much, Nicole. Hello, everyone, and welcome to News Corp’s Fiscal Fourth Quarter 2020 Earnings Call. We issued our earnings press release about an hour ago, and it’s now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We’ll open with some prepared remarks, and then we’ll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp’s business and strategy. Actual results could differ materially from what is said. News Corp’s Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial measurements such as total segment EBITDA, adjusted segment EBITDA and adjusted EPS. 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.

Susan Panuccio:

Thank you, Robert. Before talking through our fiscal 20 results, I would like to recap on the actions we’ve taken this past year to better position News Corp for long-term success with a focus on increasing shareholder value and transparency. Firstly, the company has taken significant action on our cost base. Our publishing business in Australia has been significantly restructured with 112 of our regional and community markets transitioning to digital or closed. The cost base at Foxtel has been restructured with savings across programming and support functions. With increasing OTT scale and a lower cost base, Foxtel is better positioned for success, and I would like to reiterate that we have no plans to provide additional funding. Our digital real estate businesses have also been proactive in reducing headcount to confront the challenges of COVID-19. In addition, we took quick and decisive action to reduce OpEx and CapEx in the fourth quarter with CapEx reducing by 1/3 year-on-year and total costs decreasing 21% year-on-year, partially due to divestments in FX, but primarily due to active cost management. We are also close to finalizing our savings opportunities for global shared services across the company as we look to leverage our global scale and reduce duplication. These collective actions resulted in a 7% reduction in headcount this year across the businesses, excluding the NAM and Unruly sales. Secondly, Dow Jones results are now reported as a separate segment, which better highlights its performance and provides a more complete comparison with its peers. The business saw record subscriptions and achieved growth in both revenue and EBITDA for the year. Thirdly, we are taking tangible steps to stabilize our newly formed News Media segment through digital subscriber growth, cover price increases and aggressive cost targets, which will be further enhanced by our global shared service initiative. In relation to liquidity, the only debt exposures we have are at our non 100% owned subsidiaries, Foxtel and REA, and these are non-recourse to News Corp. Finally, as part of our simplification efforts, we continue to reshape News Corp’s portfolio this year with the divestments of News America Marketing and Unruly. With that as a backdrop, I will now discuss our latest financial results. Fiscal 2020 fourth quarter total revenues were approximately $1.9 billion, down 22% versus the prior year, reflecting the impacts of COVID-19 and the divestment of News America Marketing in early May. Total segment EBITDA was $195 million, down 28% versus the prior year. Excluding the divestment of NAM, acquisitions, currency fluctuations and the other items disclosed in our release, adjusted revenues fell 13% and adjusted total segment EBITDA decreased 10% as growth in segment EBITDA at the Dow Jones, book Publishing and subscription video services segments were outweighed by the negative impact of COVID-19. Our best estimate for the revenue impact of COVID-19 for the quarter was negative $330 million or 13%, together with a negative impact on total segment EBITDA estimated to be between $40 million to $55 million or 15% to 20%. For the quarter, we reported a net loss per share of $0.67 as compared to a net loss per share of $0.09 in the prior year. The loss includes $292 million of non-cash impairment charges primarily related to fixed assets in the UK and Australia. Adjusted earnings per share were negative $0.03 in the quarter compared to positive $0.07 in the prior year. Moving on to the quarterly results for the individual reporting segments, starting with Dow Jones. Revenues for the quarter were $381 million, down 4% compared to the prior year, with digital revenues accounting for a record 71% of total revenues this quarter. Circulation revenues rose 2% due to robust growth in digital circulation revenues, partially offset by lower print circulation revenues, which were impacted by the decline in newsstand sales and fewer amenity copies primarily related to COVID-19. As Robert mentioned, Dow Jones again achieved record subscriptions in the quarter and saw an acceleration in year-over-year growth compared to the prior quarter. Dow Jones average subscriptions for the quarter were almost 3.8 million, up 15% from the prior year. And of that, digital-only subscriptions were 2.8 million, up 28% year-over-year. For the Wall Street Journal, there were approximately 3 million total subscriptions for the quarter, up 15% from the prior year, with digital-only subscriptions growing 23% to more than 2.2 million, improving from the 15% year-over-year growth rate in the prior quarter. To frame the improvement, we added 203,000 Wall Street Journal digital-only subscriptions this quarter compared to 112,000 in the third quarter and 43,000 in the prior year. Revenues from Dow Jones Professional Information business rose 6% year-over-year, slightly higher than the third quarter rate, driven by 14% revenue growth at Risk & Compliance. Consistent with our expectations, Risk & Compliance revenues reached approximately $160 million for fiscal 2020. As we mentioned last quarter, advertising revenues, which accounted for only 19% of revenues this quarter were impacted by COVID-19 and declined 28% to $71 million. For the first time, digital advertising revenue was greater than print, accounting for 54% of total advertising revenues for the quarter. Digital advertising revenues fell 7%, helped by strong growth in programmatic while print advertising was down 43%, which included the impact from the cancellation of live events. Total unique visitors across our Dow Jones Digital platforms more than doubled in the quarter versus the prior year. Dow Jones segment EBITDA for the quarter rose 13% to $60 million. Turning to our other news segment, News Media, which primarily includes News Australia, News UK and the New York Post and the News America Marketing and Unruly companies prior to their disposal. Revenues for the quarter were $490 million, down 41% versus the prior year, of which the impact from the divestment of News America Marketing accounted for over half of the total revenue decline. On an adjusted basis, which excludes NAM, Unruly and the other items mentioned in our release, revenues declined 22%. Advertising revenue fell 58% on a reported basis, of which $179 million or 36% of the decline was from the sale of News America Marketing, and the rest of the decline was driven by the negative impact from COVID-19, weaknesses in the print advertising market and a $20 million or 4% negative impact related to the suspension of certain community titles in Australia. Advertising revenues at News UK fell 46% on a reported basis and 45% in local currency, relatively consistent with our April commentary, with lower print trends, partially offset by strong digital advertising growth at The Sun. Performance was similar in Australia, with advertising down 46% on a reported basis and 42% in local currency, which includes the negative impact related to the suspension of certain community titles. Circulation and subscription revenues declined 9%, impacted by lower news stand sales related to COVID-19, partially offset by strong digital paid subscriber growth and cover price increases in Australia. Segment EBITDA for the quarter was a loss of $44 million, down $95 million from the prior year. The divestment of News America Marketing accounted for $43 million of the year-over-year decline. Also included in the results are approximately $8 million of additional cost related to the decommissioning of print operations in Australia. It is important to note that we do not expect this to be the new normal, and we are taking significant and decisive steps to improve the trajectory of the segment, including better monetizing our growing and global audience and further cost reductions. These include leveraging existing content to source incremental licensing revenues. We believe that we are very well positioned to benefit from incremental licensing revenues as early as this fiscal year, which should have a meaningful impact on EBITDA. Our biggest source of revenues in the News Media segment is now circulation and subscription. We expect continued growth in our digital subscriptions, and we will be looking at cover and subscription prices to help offset print advertising declines. Our global shared service initiative, which we expect to centralize many of our back-office functions and remove duplication. We’ll also continue to work on newsroom transformation and the ongoing review of our printing sites and office space. We have reduced our total headcount within the segment by 12% in fiscal 2020, which will lower our cost base going forward, and we expect additional reductions in fiscal 2021. The impact of COVID-19 remains uncertain, and we do expect continued advertising challenges. However, we will continue to focus on the digital transformation of this segment, new ways to monetize our content and continue to take aggressive cost measures as we look to provide a more stable outlook. At the Digital Real Estate Services segment, revenues decreased 16% to $238 million, primarily due to a decline in listings in Australia and the U.S. related to COVID-19 and associated customer support measures. On an adjusted basis, revenues declined 13%. Segment EBITDA fell 10% to $71 million or 5% on an adjusted basis. REA Group revenues fell 21%, primarily reflecting FX, lower developer revenues and a 14% decline in residential listing volumes for the quarter. REA saw improvements in listings as the quarter progressed, with 11% listing volume growth in June, combined with record traffic. The volume growth was partly related to easier year-on-year comparisons which included the impact from the federal election in the prior year. Please refer to REA’s earnings release and their conference call immediately following this call for more details. Move revenues declined 10% to $111 million, with real estate revenues down 5%. However, the decline in real estate revenues was almost entirely due to an estimated $13 million impact related to the customer billing relief initiative. Move is also still being impacted by the transition to the referral model, given the longer time period by which revenues are recognized. Despite the transition, we remain very confident in the long-term growth potential of the referral model, including upside through incremental ancillary services. Similar to REA, we are also seeing record traffic at REALTOR with June achieving 86 million monthly unique users, up 18% year-over-year, combined with a greater than 50% year-on-year increase in core real estate lead volumes in June. Despite the revenue impact from COVID-19 for both the quarter and the full year, Move increased its contribution to segment EBITDA year-on-year, benefiting from the restructuring of the organization, including the integration of the teams at REALTOR and Opcity. Turning to the subscription Video Services segment. Revenues for the quarter were $407 million, down 24% versus $536 million in the prior year, which included a negative 5% impact from FX. The revenue decline was driven by fewer residential subscribers, a reduction in commercial subscribers related to the suspension of billings due to the closing of licensed venues and a decline in advertising revenues. Approximately half of the year-over-year revenue decline in the quarter was due to commercial and advertising revenues, which we believe was mostly a function of the impact from COVID-19. Foxtel’s closing paid subscriber base was approximately 2.8 million as of June 30, down 12%, which reflects the decline in commercial subscribers, which fell to 86,000 from 264,000 in the prior year, primarily associated with COVID-19 restrictions. We expect improvements as licensed commercial venues begin to reopen, although timing is still uncertain given the recent spikes in infections in Victoria. Foxtel Now subscribers were also impacted by a difficult year ago comparison as the prior year benefited from the final season of Game of Thrones, but the number was stable sequentially. Pleasingly, we saw a significant decline in broadcast churn down to 13.2% compared to 14.7% in the prior year, which was the lowest in seven quarters. The improvement was supported by the implementation of several COVID-19 mitigation measures, including opening up content tiers and offer extensions and favorable impacts from a slowdown in Telstra’s NBN migration activity. Broadcast ARPU was relatively stable at AUD 78. Segment EBITDA in the quarter was $104 million, up 24% from the prior year, driven by lower costs. Overall expenses declined about $145 million, which includes approximately $70 million of lower sports rights costs, primarily related to the suspension of live sports. Results include 1 month of expense related to the NRL and AFL, and the majority of the deferred sports costs will be recognized in fiscal 2021. I will discuss this further in the outlook commentary. Foxtel also benefited from lower entertainment costs from renegotiated affiliate and output deals, lower transmission costs and lower overheads due to staff reductions. As Robert mentioned, we are pleased with the resilience of Kayo and the early progress and level of engagement for Binge, Foxtel’s new entertainment streaming service. We look forward to building on Foxtel’s expanding OTT subscriber base in the year ahead. During the quarter, Foxtel also accelerated its cost transformation plan for the business, reducing its headcount by approximately 17%. This action, together with other operational efficiencies and content renegotiations will help put Foxtel in a better position longer term. At book publishing, HarperCollins had a strong quarter with revenues down only 3% to $407 million and segment EBITDA up 9% to $47 million despite significant bricks-and-mortar store closures, which was a far better performance than we had anticipated. We saw the strongest digital growth in recent years with total digital sales up 26% to represent 29% of consumer revenues. With the shelter in place orders related to COVID-19, e-book sales returned to robust growth, increasing 31% year-over-year with downloadable audio books also growing at a healthy 17%, despite an initial dip due to the falling individuals commuting to work. As Robert noted, HarperCollins benefited from a strong release slate, which included Joanna Gaines’ Magnolia Table Volume 2 and a great performance from our Children’s division. I would now like to talk about some themes in the upcoming quarter. Forecasting remains challenging, so I will discuss the trends we have seen in July. At Digital Real Estate services, as noted in their release, July new buy listings at REA were up 16%. However, residential revenue growth is expected to be offset by a reduction in development projects, listing declines in Commercial and Asia businesses and the recent government restrictions in Victoria. Please refer to REA’s press release for more details. REALTOR is facing lower industry-wide real estate transactions, but encouragingly, lead volume and unique users remained strong, similar to June. In Subscription Video Services, advertising in July improved modestly with the return of live sports. We expect gradual recovery of commercial subscribers but timing will largely be dictated by government restrictions and the broader impact from COVID-19. Broadcast churn is modestly higher versus the prior year and the fourth quarter. On sports costs, assuming no further disruption of play, we will recognize approximately $55 million or AUD 78 million of additional sports programming rights costs, the majority of which is related to the NRL and AFL rights costs that were deferred from fiscal 2020 to fiscal 2021 due to the temporary sport suspension. However, we expect at least $100 million or AUD 160 million of overall savings, net of the increase in sports cost for the full year in fiscal 2021 as a result of the cost-out initiatives taken during fiscal 2020. At Dow Jones, subscription trends in July continued to be strong with over 25% growth in digital-only subscriptions at The Wall Street Journal. Advertising trends improved modestly in July, but with digital up very strongly. In book publishing, similar to the fourth quarter, HarperCollins continued to see strong growth in online sales in July. Retail stores are slowly reopening, albeit likely at a reduced foot traffic and continued risk from any recurrence of COVID. At News Media, we continue to expect advertising and single copy sales revenues to be adversely affected due to COVID-19. Advertising revenues in July at the newspaper mastheads in the segment declined 25% to 30% in total compared to the prior year. As a reminder, advertising revenues in the prior year included the results from News America Marketing. Overall decline in circulation volumes for July improved from the lows experienced early in the fourth quarter, particularly for the weekend papers. Pleasingly, we have continued to see strong digital subscriber growth at the Australian mastheads and at The Times and The Sunday Times, and we will continue to focus on cost transformation to mitigate the revenue headwinds. CapEx for the year is expected to be approximately $400 million compared to $434 million in fiscal 2020, subject to foreign currency fluctuations. We will be monitoring this number very closely throughout the year and will take necessary actions to reduce this amount as needed. And as a reminder, we have a strong balance sheet with over $1.5 billion of cash and access to a $750 million revolving credit facility. The COVID-19 crisis has presented challenges across all of our businesses, and we are very pleased with the actions that our businesses have taken to ensure they are well positioned to withstand the ongoing volatility as we move through the next 12 months. With that, let me hand it over to the operator for Q&A.

Kane Hannan:

Robert, Susan, just two for me on the cost program for Foxtel. So just around those $100 million in savings you’re talking to next year. Does that have all of the sports rights savings that you think you can get across the various codes in that number? And are they all confirmed? And then how should we be thinking about the cost of Binge and the launch of some of your OTT platforms into 2021? And then secondly, just around the simplification agenda. Should we be thinking that’s roughly on hold through this crisis? Or how do we think about the next steps from here and things like the Foxtel IPO that you’ve spoken about previously?

Susan Panuccio:

And Kane, just in relation to the cost program. So the $100 million net number, yes, it does include – it’s net of the sports cost increase, so that’s approximately $55 million. And so we have factored the savings into that number. And when we think about the OTT cost, in relation to Binge and Kayo, again, that number is net of any investment that we would expect to see within those products. I’m largely, clearly it would be marketing because we scale given we’ve got the content.

Operator:

We’ll take our next question from Entcho Raykovski with Crédit Suisse.

Susan Panuccio:

So just in relation to the first question. So the impact in relation to COVID is net of all the potential costs and revenue impacts that we could see across the business. So yes, it does include the impact from Foxtel. In relation to going forward, clearly, we’ll have a double up of costs for a period of two months in the next financial year in relation to Foxtel for those sport rates, as I’ve outlined. But the overarching and underlying cost base will decrease, notwithstanding that. And we expect to see within sports rights as well as right across the organization. So it’s in relation to the first question. And maybe if you could just repeat the second question. It’s quite lengthy.

Robert Thomson:

Entcho, what you saw in particular was the onset of the COVID crisis in May. So May was a tough month, June was better and July better again. And so we are, in particular, seeing strong digital advertising. Clearly, as in many countries around the world, print is affected. But generally speaking, the trend has been positive since May.

Alexia Quadrani:

My question actually following up on your comments on digital advertising trends at Dow Jones. It has remarkably outperformed some of your peers. And I’m curious, is it the vertical SKU? Or if there’s any color you can give on why you think you’re relatively doing quite well on the digital advertising front. And then just sort of staying on Dow Jones. Would love to hear more if you can tell us about the strong digital subscriber growth we’re seeing at The Wall Street Journal, how much it you think is driven by the elevated news cycle and sort of what promotional strategies you might have in place.

Susan Panuccio:

And just in relation to the actual advertising question on what was driving the digital growth. So we actually did see much stronger-than-expected performance in programmatic, largely as a consequence of increased volume, and we had higher display CPMs. And just in relation to, I guess, our competitors, we’re less exposed to luxury entertainment. So we have more dependency on tech, finance, B2C, B2B, and that’s been driving the performance.

Craig Huber:

My first question, you mentioned – Susan, you guys took 112-year mastheads at the smaller papers down in Australia, either shut them down or transitioned them to digital. I was just wondering, what percent of revenues did that represent down there in the Australian newspapers? The first question. About 5% to 10%?

Craig Huber:

You closed in mid-4Q, okay. And my other question or maybe request. I was very happy to see you guys are breaking out the Dow Jones numbers, the revenues and obviously, the EBITDA here, the detail, obviously, for the fourth quarter and maybe for this year, a year ago, fourth quarter, to the full year as well. I was wondering, would it be possible – would you seriously consider doing it for all three quarters so we would have it for all eight quarters? And I could sort of estimate it, but it would very helpful if you’re going this far to take one more step here, the last 5%, just put it together for the other three quarters and they put out an 8-K or something. Is that fair to ask you?

Operator:

Fraser McLeish from MST Marquee has our next question.

Susan Panuccio:

If Telstra are providing the sales channel, yes, we do include those numbers within the Binge numbers, yes. So yes, I can confirm that.

Susan Panuccio:

Correct. Correct.

Alan Gould:

Robert, I noticed that The New York Times dropped Apple News. I was wondering if you can help us frame of how we should think about how big the opportunity could be of getting paid premium payments for premium content?

Alan Gould:

Yes. If I can just follow up. When we think of just broader than just Apple, when we look at the whole digital universe and getting paid premium – getting paid for your premium content, how should we frame that? How should we be thinking about what the potential is there?

Operator:

Our next question comes from Brian Han from Morningstar.

Susan Panuccio:

No, it was because of the COVID impact for the quarter. Clearly, a very disruptive quarter for that segment.

Susan Panuccio:

I think maybe just to add just some further context. So if you look even at the year-on-year decline, which we’re talking about, the sort of the $95 million movement, probably 75% of that comes from NAM and the closure of the regional communities or the suspension of the mastheads down there. So actually a really big bulk of that number. Does come from that. And then clearly, you’ve got the impact of advertising and print circulation on that, which we will expect to pick up as we move through the coming year.

Andrew Levy:

If I could sneak in three. The first one is, Robert, I’d just be interested in your thoughts on the digital platforms review in Australia, and particularly on the structure of the News Media bargaining code, if that’s a structure that News is supportive of and works for you guys in its current form. The second was also you made a reference to licensing news media content globally. Is that a discussion around extracting dollars from the digital platforms? Or is there a broader sort of mandate or avenues that you think you can license from the news media content. Any thoughts would be helpful on that one. And the third one, Susan, just sorry to come back to it, but just on the COVID impacts on the quarter, if I wrote it down correctly, you’re saying $330 million revenues and $40 million to $50 million of EBITDA. And obviously, a large chunk of the cost impacts of COVID are the sporting rights. So I was wondering if you could give us some color on what else is in the cost offsets for the period and how we should think about outside of sports, which you’ve obviously discussed, what’s sustainable? Or what sort of bounces back into the cost base in 2021?

Susan Panuccio:

I’ll just jump in on the cost side. So if I have a look at the expenses for the quarter on an adjusted basis, they were down $273 million or 14%. So the bulk of that reduction between reported and adjusted was due to NAM and FX. The COVID impact we’re predicting in about $270 million odd, $280 odd million in order to get you to that EBITDA impact. We were expecting costs to increase slightly for the quarter because we did have increased revenue at Dow Jones and HarperCollins and some of our businesses. And what I would say in relation to the COVID impact cost is, clearly, there’s a lot that are related to volume, so particularly on our mastheads around the globe. And we would expect to see those scale obviously, as those businesses scale back up. But we have also reduced headcount by 7% across the business, excluding NAM and Unruly, and that’s savings that we would certainly expect to continue into the next year. We’ve made significant cuts on marketing. We clearly will have a look at what we think is an appropriate level for marketing going forward, and it may never be back to the level that we had pre COVID. Likewise, with most companies, we’ve got a lot of cost cuts coming through on TNE and other discretionary spend, which, again, when we think forward, we will review exactly what we think we need as a business in order to continue spending within that area. We’ve clearly got compensation cost reductions as well as a result of lower bonuses. And outside of the OpEx impact, we’ve got the cuts that came through in CapEx. I think I mentioned that we’ve cut that by third year-on-year. So clearly, as we move forward into next year, it’s difficult to predict exactly that cost base is going to look like because it will all depend on the revenue trends. But we are confident that there’s a significant amount of reoccurring costs that will go into next year from a cost reduction perspective. And we do actually believe that we can continue to take costs out, as we’ve mentioned.

Operator:

And once again, ladies and gentlemen, that concludes today’s conference. We appreciate your participation today.

Michael Florin:

Thank you very much, Clowey Hello, everyone, and welcome to News Corp’s fiscal third quarter 2020 earnings call. We issued our earnings press release about half an hour ago, and it’s now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We’ll open with some prepared remarks, and then we’ll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp’s business and strategy. Actual results could differ materially from what is said. News Corp’s Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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.

Susan Panuccio:

Thank you, Robert. Turning to the financials. Fiscal 2020 third quarter total revenues were approximately $2.3 billion, down 8% versus the prior year and total segment EBITDA was $242 million, down 2% versus the prior year. Currency headwinds negatively impacted revenues and total segment EBITDA by 3% and 6%, respectively. On an adjusted basis, which excludes the impact of acquisitions, divestitures and currency fluctuations and the other items disclosed in our release, revenues fell 4% and total segment EBITDA increased 1%. For the quarter, we reported losses per share of $1.24, as compared to earnings per share of $0.02 in the prior year. The loss includes $1.1 billion of non-cash impairment charges, primarily related to a write-down of goodwill intangible assets of Foxtel and the reclassification of News America Marketing to assets held for sale. Adjusted earnings per share were $0.03 in the quarter compared to $0.04 in the prior year. Before going into the quarterly detail, I will add to Robert’s comments on the COVID-19 pandemic, which is expected to have a significant impact on near-term operating results. Immediate cost actions are under way. Variable costs have obviously been reduced with a heightened focus on the reduction of discretionary spend and non-essential CapEx, together with a thorough review of all headcount requirements. We are accelerating plans to reduce costs across the business in the medium-term, particularly at our News and Information Services segment. These initiatives include, but are not limited to, global shared services to centralize our back-office functions, a thorough review of our property and office footprint and reviewing our printing operations around the globe, whereby we have already announced the printing suspension of 60 community newspapers in Australia. Finally, in relation to companywide liquidity, it is important to note the only debt exposures we have are at our non-100%-owned subsidiaries, Foxtel and REA, and these are non-recalls to News Corp. We are not anticipating any covenant issues at Foxtel over the next 12 months, and we have no plans to provide any additional shareholder funding. With that as a backdrop, I will now discuss the quarterly results for the individual operating segments. In News and Information Services, revenues for the quarter were over $1.1 billion, down 8% versus the prior year. On an adjusted basis, revenues declined 5%. Advertising revenues fell 14%, with declines most notably at News America Marketing and in News Australia, while circulation and subscription revenue grew 1%. Currency negatively impacted segment revenues by 2%. Results were also impacted by $14 million from the outbreak of COVID-19. Digital revenues for Dow Jones and the newspaper mastheads represented 42% of their combined revenues, up from 36% in the prior year. Segment EBITDA for the quarter was $75 million, up 15% from $65 million in the prior year, benefiting from increased contributions at Dow Jones, improvements at the New York Post and the absence of losses from unruly, partially offset by lower contribution from NAM. At Dow Jones, consumer circulation revenues grew a healthy 4%, reflecting a 20% growth in digital paid subscribers across Dow Jones consumer products, including a 15% growth in digital-only paid subscribers at the Wall Street Journal. Total Wall Street Journal subscribers exceeded 2.8 million in the quarter, an 8% increase from the prior year, which is an acceleration from the second quarter’s growth rate. Professional Information Business revenues accounted for 29% of Dow Jones revenues this quarter, growing 5% to $114 million, reflecting an 18% growth in risk and compliance revenues. Advertising revenues at Dow Jones fell 2% this quarter. But as Robert mentioned, we saw a sharp acceleration in digital advertising revenues, posting 25% year-over-year growth. Digital advertising represented 47% of Dow Jones advertising revenues. Overall, Dow Jones had revenue growth of 5% and another quarter of positive contribution to segment EBITDA growth. Elsewhere, advertising revenues at News UK fell 10% on a reported basis and 8% in local currency, weaker than the past two quarters, despite strength in digital. Trends at News Australia have remained very challenging, with advertising revenues down 20% on a reported basis and 30% down in local currency. Finally, at News America Marketing, revenues fell 16%. Turning to the Subscription Video Services segment. Revenues for the quarter were $462 million, down 14% versus $539 million in the prior year, or down 7% in local currency. The revenue decline was primarily driven by lower broadcast subscribers. Broadcast subscriber trends were relatively similar to the prior quarter, with COVID-19 restrictions in Australia coming into place in the last week of the quarter. Foxtel also faced lower advertising revenues, reflective of the overall TV marketplace. Segment EBITDA in the quarter was $68 million, down 31% from the prior year, driven by the revenue decline, partially offset by renegotiated license fees and the timing of sports rights and the production costs due to COVID-19-related suspensions. Overall costs were down 11% on a reported basis. Foxtel’s closing paid subscriber base was approximately 2.93 million as of March 31, reflecting a 1% year-over-year growth, driven by Kayo subscribers. Through quarter-end, Kayo’s total subscriber base, including trialists, increased 444,000, up from 199,000 last year. In fact, we reached over 470,000 total Kayo subscribers by March 22, the start of the Winter Sports season. However, subscribers have declined in recent weeks with the suspension of the NRL and AFL seasons, as well as Rugby, motor sports and other international sporting codes, like the NBA. Kayo viewers remained highly engaged during the quarter and we expect an uptick in subscribers that will clearly depend on the quality and quantity of NRL and AFL games once they have resumed. As of May 2, there were more than 272,000 paying Kayo subscribers. We have been beta testing Foxtel’s new drama and entertainment streaming service, and we expect to launch commercially in the coming weeks, and we’re very pleased to announce the WarnerMedia deal to support the launch. In the third quarter, broadcast churn improved for the first time in almost two years to 17.5%, which was 20 basis points lower versus the prior year. Broadcast ARPU remained relatively stable at A$79. At Book Publishing, HarperCollins had a strong quarter, with revenues down 2% to $412 million and segment EBITDA up 4% to $55 million, despite a very tough comparison against the prior year, which had segment EBITDA growth of 29%. We saw improvement performance in general books, children’s and in the UK. Digital sales grew 3% year-over-year to 23% of consumer revenue, which included improvements in downloadable audio books. At the Digital Real Estate Services segment, revenues decreased 4% to $261 million due to the negative impact from foreign currency fluctuations. On an adjusted basis, revenues were flat. Segment EBITDA rose 1% to $74 million, or 9% on an adjusted basis. REA Group revenues fell 5%. However, without the $12 million foreign currency impact, REA grew modestly in local currency. This is an improvement from the first-half performance, benefiting from renewed growth in financial services. Australian listing volume declines moderated to down 7%, which reflects mid single-digit growth in metro Melbourne and Sydney. REA also saw strong traffic metrics achieving record levels in visits and audience during the quarter. However, COVID-19-related government policies and restrictions, including bans on open home inspections and in-person auctions have led to reduced listing volumes in recent weeks. In response to the impacts from the pandemic, REA has implemented a number of relief packages to support its customers, including short-term pricing concessions and changes to listing products to provide greater flexibility for customers. Please refer to REA’s earnings release and their conference call immediately following this call for more details. Move revenues declined 2% to $118 million, with real estate revenues relatively flat. Traffic remains strong with unique users in the quarter, up 6% to $68 million. Prior to the COVID-19 pandemic, Move was on a solid growth trajectory in January and February, with improved growth in traffic and leads and was on pace to deliver strong second-half revenue. However, by mid-March, similar to REA and other digital real estate portals, both trends reversed. In response to the pandemic, Realtor instituted billing relief initiative in late March for its customers, which was subsequently extended into May with some modification to the offer. The initiative, together with other COVID-19-related impacts, reduced third quarter revenues by an estimated $6 million. I would now like to talk about some of the themes in the upcoming quarter. Forecasting has been challenging, so I will discuss what we have seen in April and frame the relevant risks. At News and Information Services, we expect advertising and single copy sale revenues in the segment to be adversely affected as a result of widespread business closures and social distancing measures. For a framework, advertising revenues, excluding News America Marketing, represented approximately 34% of segment revenues in the third quarter. In April, advertising revenues at Dow Jones was down more than 20% with digital down modestly. Advertising revenues at Australia and the UK were down more than 45% on a reported basis, or around 40% in local currency. As I mentioned earlier, we are taking aggressive cost action to mitigate these revenue declines within the segment. At the same time, we have also continued to see strong growth in digital subscribers across the key properties in April, including over 20% year-on-year growth in digital-only subscribers of the Wall Street Journal. In the third quarter, approximately 75% of Dow Jones revenues were subscription-based, providing much more visibility and stability. Digital revenues accounted for 68% of Dow Jones revenues and digital paid subscribers accounted for 73% of the Wall Street General subscriber base. In Subscription Video Services, we anticipate an increase in broadcast churn with the suspension of the NRL and AFL seasons. For April, broadcast churn has been fairly stable, although we have seen lower sports tier and Kayo subscribers, as you would expect. Closures of pubs and clubs and lower occupancy at hotels throughout Australia are also expected to adversely impact commercial subscription revenues, together with the downturn in advertising revenue. The team at Foxtel has implemented several initiatives, including opening up additional entertainment content to all subscribers and providing Foxtel broadband customers with unlimited data allowances for streaming. As for sports rights accounting, Foxtel amortizes event-based sports like Formula 1, which have no dedicated channels upon the occurrence of the events. Consequently, the third quarter included about US$9 million of costs, that were deferred due to events canceled or postponed. Channel-based sports rights, such as the AFL, NRL and domestic crickets are expensed on a straight-line basis over the year. The third quarter included a full amount of rights fees for all three of those sports. In the event that the NRL and AFL do not resume this season in the fourth quarter, we would plan to defer those costs until the sports regime. All the sports-based contracts have different terms and conditions, and we are currently in discussions with the leagues around the best way to move forward and to value the season that remains. As a framework, the quarterly cost between the AFL and NRL prior to the suspensions were A$95 million, or approximately US$60 million. In addition, we also expect an approximately $10 million impact from the accelerated entertainment amortization in the fourth quarter. In Book Publishing, as the retail market adjusted to stay-at-home restrictions by closing a number of bricks-and-mortar stores, HarperCollins saw strong growth in online sales with e-books returning to growth. Our release slate is largely intact, and as Robert mentioned, one of our top books for the year, Joanna Gaines, Magnolia Table, Volume 2 is selling very well. At Digital Real Estate Services, as noted in their release, REA anticipates a challenging listing environment, given the government social distancing measures with April, new buy listings falling 33%. Realtor is facing lower real estate transactions, but encouragingly, lead volume and unique users have shown improvements in recent weeks. Both companies have taken proactive relief measures to extend credit to their respective customers with discounts or other similar measures, which will have an adverse impact on revenues. CapEx for the year is expected to come down significantly to around $435 million, compared to $572 million last year, which includes a 35% to 40% decline at Foxtel. An update on our initial guidance of approximately 20% year-on-year reduction. Finally, a word about our tax rate. From a P&L perspective, we expect an unusually high tax rate for the full-year due to certain operating losses in foreign jurisdictions that we are unable to take deductions against. This is a P&L impact, not a cash impact. As I mentioned, these are unique times, but we believe with our strong liquidity position, market-leading brands, our emphasis on digital transformation, as well as a more aggressive focus on cost measures, News Corp is well positioned to weather the current crisis. With that, let me hand it over to the operator for Q&A.

Alexia Quadrani:

Thank you very much. Can you elaborate on the strength in the digital advertising you highlighted in the quarter at the Wall Street Journal? It sounded like in April, it softened a little bit, but still seems like it’s coming in probably better than what we’re seeing in the industry. I’m wondering if it was specific to certain verticals that continue to be strength in your product mix. And then just a follow-up on the makeup of the strong growth in digital subscribers also at The Journal. Is it international, domestic? Anything different, maybe younger? Or is it pretty much just more of everything that you’ve been seeing for a while?

Susan Panuccio:

Look, Alexia, the only other thing that I would add to that is the other pleasing thing that we’ve seen is the average age is broadening out. And so we did have an average age of around 60, and it’s now around 47 as a consequence of those subscribers coming in to that space in 2020.

Michael Florin:

Thank you, Alexia. Clowey, we’ll take our next question, please.

Entcho Raykovski:

Hi, Robert. Hi, Susan. A couple for me. Just the first one, you’ve obviously mentioned the sports rights deals and you’ve given us a good framework on what happens on a quarterly basis. But just interested whether you see this is an opportunity to renegotiate some of those sports rights deals longer-term? Do you think they can genuinely be any longer-term savings? And yes, I mean, do you think that’s warranted, given some of the fairly high costs? So interested giving your thoughts on that issue? And secondly, are you able to quantify the potential impact of the relief measures that move in Q4? And do you expect that, that’ll continue to remain in place beyond that? Thank you.

Susan Panuccio:

And Entcho, just in relation to your question on Move, we haven’t given that for Q4. But what I can say is, we implemented the measures on the 19th of March in relation to Move and the impact of that in Q3 was $6 million. So you can use that as a proxy for your run rate, and we haven’t made any announcement as to any further extension in Malaysia.

Operator:

Absolutely. The next question comes from Craig Huber from Huber Research Partners.

Robert Thomson:

Well, I’ll take the second question first, Craig. Clearly, we’re constantly reviewing costs. And that is cost in headquarters where there have been significant reductions in recent days. And right through where we’re looking for efficiencies in tax spend. We’re looking for the efficiencies that come from the closer coordination that really has been under way in recent years, it’s not a new phenomenon. But it gives us an opportunity to look across businesses very, very closely, measured at different cost levels and respond appropriately. What we’re not going to do is cut cost in a way that undermines the editorial integrity of the leading news organization in the world.

Michael Florin:

Thank you, Craig. Clowey, we’ll take our next question, please.

Brian Han:

Hi, Robert. Does the current environment help the simplification program that you have going for News Corp? And – or does it make it actually more complicated, especially for asset sales? And also, Susan, the impairment charge taken at Foxtel, was that more driven by changes in assumptions related to the traditional Foxtel business, or have your views for Kayo and Foxtel now also changed?

Susan Panuccio:

And then Brian, just in relation to your question on Foxtel and the impairment. We do look at this from a DCF perspective and also from a market multiple perspective. And clearly, there has been an impact that’s adversely affected our trends resulting in lower expected forecast subscribers. And the impact of COVID-19 is expected to have clearly an adverse impact on advertising OTT to customers and commercial subscription revenues in the near-term. So when we combine all those, we thought it was appropriate to take an impairment on Foxtel.

Operator:

There are no further questions at this time. And I’d like to turn the conference back over to you. Thank you.

Operator:

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

Michael Florin:

Thank you very much, Eduardo. Hello, everyone, and welcome to News Corp’s Fiscal Second Quarter 2020 Earnings Call. We issued our earnings press release about an hour ago, and it’s now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We’ll open with some prepared remarks, and then we’ll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp’s business and strategy. Actual results could differ materially from what is said. News Corp’s Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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.

Susan Panuccio:

Thank you, Robert. turning to the financials, fiscal 2020 second quarter total revenues were approximately $2.5 billion, down 6% versus the prior year and total segment EBITDA was $355 million down 4% versus the prior year. On an adjusted basis, which excludes the impact of acquisitions and divestitures, currency fluctuations, and the other items disclosed in our release, revenues fell 4% and total segment EBITDA decreased 3%, a notable improvement from the prior quarters EBITDA performance. For the quarter, diluted earnings per share were $0.14 as compared to $0.16 in the prior year. Adjusted earnings per share were $0.18 in the quarter flat with the prior year. Turning now to the individual operating segments. in News and Information Services, revenues for the quarter were over $1.2 billion, down 1% versus the prior year. on an adjusted basis, revenues were flat reflecting a material improvement from the prior quarter. Advertising fell 5% while circulation and subscriptions grew 3% despite currency headwinds, digital revenues for Dow Jones and the newspaper mastheads represented 39% of their combined revenues, up from 35% in the prior year. Segment EBITDA for the quarter was $142 million, up 27% from $112 million, benefiting from the growth at News UK and Dow Jones. There was a one-time benefit of approximately $22 million due to the settlement of certain warranty-related claims in the UK. However, even absent that benefit, we saw growth in segment EBITDA. This was driven by the UK, Dow Jones and the narrowing losses at the New York post, partially offset by lower contributions from news Australia and news America Marketing. Similar to the first quarter, we reclassified approximately $8 million of cost in the second quarter of fiscal 2019 from the other segment, the News and Information Services segment. These reallocated costs are related to various initiatives including news IQ, our global programmatic effort and certain shared technology services that directly benefit the News and Information Services segment, as part of our ongoing efforts to leverage our global scale to lower cost. Turning now to the segment highlights. at Dow Jones, consumer circulation revenues grew at a healthy 5%, reflecting 17% growth in digital-paid subscribers across Dow Jones consumer products. This includes 13% growth in digital-only paid subscribers at The Wall Street Journal. In the aggregate, The Wall Street Journal subscriber base reached approximately $2.6 million. professional Information Business revenues accounted for 27% of Dow Jones revenues this quarter, growing 8% to $115 million maintaining momentum from the first quarter. As Robert mentioned, the key growth engine continues to be in risk and compliance, which grew a healthy 21% this quarter. This is a highly profitable and scalable business and is on track to approach $160 million of revenues this fiscal year. The Newswires product also showed growth benefiting from licensing deals with Bloomberg and FactSet, while Factiva was stable. advertising at Dow Jones was weaker this quarter, falling about 5% compared to the prior year. Digital accounted for 43% of advertising revenues. digital advertising was lower in the second quarter, primarily due to tough comparatives from the prior year, which showed significant programmatic growth from MarketWatch. However, we have seen a strong start so far this quarter although visibility remains limited. while it is very early days, we are making progress on monetizing valuable third-party partnerships, which is our key strategic focus as we expand the reach of Dow Jones and the Wall Street Journal across digital platforms and markets. These include deals with Twitter from WSJ; watch now videos our week-day podcast, the journal with Spotify and our recent content partnerships with Apple and Facebook. Overall, Dow Jones posted 4% revenue growth and another quarter of increased segment EBITDA contribution. elsewhere across our news portfolio, advertising conditions were mixed. News UK’s advertising revenues rose 5% on both the reported and local currency basis representing the second consecutive quarter of year-over-year growth on a local currency basis, led by digital advertising growth at The Sun and moderating print declines. Advertising conditions in Australia remained challenging, but improved slightly from the prior quarter rate with revenues down 11% on a reported basis and down 7% in local currency. for circulation revenues, the increase in cover prices and digital subscribers that both news Australia and New UK helped mitigate print volume declines and Australian currency headwinds. Finally, at News America Marketing, revenue fell 4%, an improvement from quarter one. Turning to the Subscription Video Services segment. Revenues for the quarter were $501 million, down 11% versus $562 million in the prior year, of which $25 million or 5% was due to the negative impact from foreign currency. on an adjusted basis, revenues declined 6%. Broadcast subscriber trends were relatively similar to the prior quarter with the revenue decline, driven by a lower broadcast subscriber base and changes to the broadcast subscriber package mix as well as modestly lower pay-per-view revenues. Revenue declines were partially offset by expanding OTT revenues. As a reminder, we lacked a price increase from last year, which also impacted the year-over-year comparison. Segment EBITDA in the quarter was $70 million, down 17% from the prior year driven by the revenue decline, partially offset by lower total costs including programming and transmission costs as the team at Foxtel continues to focus on streamlining business. Turning to the KPIs. Foxtel’s closing paid subscriber base was approximately $3 million as of December 31, reflecting a 3% growth with 96,000 subscribers versus the prior year driven by the launch of Kayo in November 2018. total paying OTT subscribers reached 684,000, up 73% versus last year. We have seen over the past year that Kayo’s paid customers will increase around key exclusive events with the conclusion of Australia’s popular winter sports and the Rugby World Cup. The number of paid subscribers in Kayo fell from the prior quarter. notwithstanding Kayo viewer engagement continues to be strong to the subscribers watching an average of 5.3 weekly hours with the average customer watching seven of the 50 different sports available on Kayo each week. We’ve also been pleased with increasing brand awareness, the stability of the platform and more importantly, customer feedback in relation to the user experience. Kayo’s solid subscriber base gives us optimism as it enters its second year ahead of the prime winter sports selling season. The team continues to work on a new OTT entertainment product built on the Kayo technology platform with the commercial launch anticipation in the fourth quarter. in the second quarter, broadcast churn is 16%, which is slightly higher than the 15.6% in the prior year. Foxtel direct channel churn of 14% with 2.5 points lower than the prior year, which was the lowest second quarter rating for year. like last quarter, the main driver behind the higher churn is coming from the lower ARPU Telstra wholesale customers on the expiring contracts from the past 12 to 24 months. broadcast ARPU declined about 1% to over AUD 77 per month. In November, we completed the refinancing of a significant portion of Foxtel debt, which extended maturities for at least three years. more details will be available in the 10-Q filing. At Book Publishing, HarperCollins revenues for the quarter fell 11%, $442 million and segment EBITDA fell 28% to $63 million. As we have previously indicated, the revenue decline this quarter was primarily due to a tough comparison with the prior year, which included Homebody by Joanna Gaines, Girl, Wash Your Face by Rachel Hollis, The Hate U Give by Angie Thomas and hired back with sales from the subtle art by Mark Manson. The declines were partially offset by new releases, which includes the Pioneer Woman Cooks

Kane Hannan:

Good morning. Just two from me please. Firstly, to ease up those around the expected timing on that NAM final negotiations. And also your latest thoughts around the use of these proceeds. Now, the Foxtel debt financing has been finalized? And then secondly, just on the entertainment OTT plans. What should we read into the HBO max trademark that was recently filed in Australia? And can you comment on how you think about the importance of HBO OTT or Foxtel’s entertainment offering? Thanks.

Michael Florin:

Thank you, Kane. Eduardo, we’ll take our next question please.

Entcho Raykovski:

Hi, Robert. Hi, Susan. My question is around Kayo, obviously subs the client in the quarter, you’ve pointed to some states and all factors driving these. I’m just interested in how is that decline is compared to your expectations. Are you a little bit surprised that that subs it down over the period? And I mean do you feel that we have now reached close to full penetration for Kayo. It’s fairly – fairly seems to launch. And then just related to that, I mean, do you think pricing speaks to the right level? Do you feel like you need additional content? Any comments would be helpful.

Michael Florin:

Thank you, Entcho. Eduardo, we’ll take our next question.

Alan Gould:

Thank you. I have just two questions please. First for Susan, can you just talk where the Foxtel debt stands now, including this Telstra debt and what kind of covenants it has and how it stands relative to its covenants? And Robert, for marked philosophical question. Warren Buffett has given up on local newspapers in the U.S. in the U.S., you have a national newspaper without local newspapers. How important are the local newspapers in Australia to your national newspapers and the rest of your Australian business? Thank you.

Robert Thomson:

And as for papers, Alan, I think yours was a philosophical question and I’ll give you an even more philosophical answer. Is it the ecosystem generally can use content is in the midst of two levels of transition. We have to change the ecosystem for news content. It is digitally dysfunction, which affects national and local papers. And then our papers, whether local or national, have to transform themselves within that challenging landscape. Unless fundamental changes take place at both levels, the havens will not be, cannot be in equilibrium. And let’s be clear, we are literally dealing with fundamental changes in the character and valued content, and it is absolutely fair to say that with Rupert and Lachlan Murdoch’s leadership, no company has been as influential on this issue as News Corp.

Operator:

So our next question comes from Craig Huber at Huber Research Partners. Please go ahead.

Robert Thomson:

Craig, obviously, that’s an evolving relationship and not just with Facebook, but with the other digital platforms, where – I can’t obviously go into specific details about the agreement, but it is a substantial agreement, it creates new precedents. We host the content, we sell the advertising, and Facebook pays a premium for premium journalism and up until that point, that kind of precedent hasn’t been established and it is a precedent that will resonate.

Robert Thomson:

I couldn’t possibly comment on other platforms other than the observation I made about the real appreciation of Sundar Pichai for the importance of high-quality journalism for society.

Michael Florin:

Eduardo, we’ll take our next question please.

Brian Han:

Robert, now that you’ve sold the Unruly and put NAM on the sales book, would it be fair to say that assets, such as the Wireless Group, storyful and SkyNews are also being looked at? And also Susan, in News and Information, did you guys change the prior quarter’s EBITDA number from 120 to 112? And if so, why?

Susan Panuccio:

And Brian, just in relation to your question around the News and Information Services EBITDA, as I mentioned in my prepared remarks, we – this is similar to what we did last quarter. We had about $8 million of costs that we reallocated into that segment from the other segments and those costs related to various initiatives including news IQ, which is our global programmatic effort, and shared technology services that directly impact on that particular segment, which we continually look at as we look to leverage our global scale.

Michael Florin:

Thank you, Brian. Eduardo, we’ll take our next question please.

Michael Florin:

Thank you, Eduardo and thank you for all participating. We look forward to talking to you soon. Have a great day. Take care.

Michael Florin:

Thank you very much, Eduardo. Hello, everyone, and welcome to News Corp's Fiscal First Quarter 2020 Earnings Call. We issued our earnings press release about an hour ago, and it's now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We'll open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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.

Susan Panuccio:

Thank you, Robert. Turning to the financials. Fiscal 2020 first quarter total revenues were approximately $2.3 billion, down 7% versus the prior year, and total segment EBITDA was $221 million, down 38% versus the prior year. The results were impacted by last year's onetime benefit related to the exit of the partnership for Sun Bets in the U.K., coupled with continued currency headwinds and challenging prior year comparisons at HarperCollins. On an adjusted basis, which excludes the impact of acquisitions and divestitures, currency fluctuations and the other items disclosed in our release, revenues fell 4%, and total segment EBITDA decreased 30%. Net loss for the quarter was $211 million compared to net income of $128 million in the prior year, reflecting a $273 million of noncash impairment charges, primarily at News America Marketing. For the quarter, we reported a loss per share of $0.39 as compared to earnings per share of $0.17 in the prior year. Adjusted earnings per share were $0.04 in the quarter versus $0.17 in the prior year. Turning now to the individual operating segments. In News and Information Services, revenues for the quarter were over $1.1 billion, down approximately 8% versus the prior year. Currency had a $35 million or 3% negative impact. Digital revenues for Dow Jones and the newspaper mastheads represented 38% of the combined revenues. Approximately 34% of the segment's revenues were digital, up from 33% in the prior year, which included the onetime Tabcorp payment. Advertising revenues for the segment were down 8% in the quarter versus the prior year, with approximately $15 million or 3% due to negative currency fluctuations. Performance was stable versus the prior quarter rate. Improvements at Dow Jones and News U.K., absent currency impacts, were offset by declines at News America Marketing and News Australia. Circulation and subscription revenues rose 1% versus the prior year despite a $15 million or 3% negative impact from foreign currency. Growth was again led by Dow Jones. Segment EBITDA for the quarter was $56 million, down from $109 million, with the decline due primarily to the absence of the net benefit related to the exit of the partnerships with Sun Bets in the U.K. last year. We reclassified approximately $7 million of costs in the first quarter of fiscal 2019 from the other segment to the News and Information Services segment. The costs are mainly related to initiatives, including News IQ, our global programmatic asset and some shared technology services to directly benefit the News and Information Services segment as part of our ongoing efforts to leverage our global scale to lower costs. I will now talk through some segment highlights. At Dow Jones, consumer circulation revenues in the first quarter remained very healthy, growing 6%, benefiting from 17% growth in digital-only paid subscribers at The Wall Street Journal to approximately 1.9 million as well as subscription price increases. Digital paid subscribers accounted for 71% of the total subscriber base at The Wall Street Journal, up from 65% last year. We see a big opportunity to scale The Wall Street Journal, both directly and through valuable third-party relationships, as Robert mentioned. As a result, we expect to see incremental revenues from these partnerships this year. Total subscribers in the quarter for Dow Jones consumer products, which also includes Barron's and financial news in the U.K., reached approximately 3.3 million, again posting record levels. Of that digital-only, subscribers rose 20% versus the prior year to almost 2.3 million subscribers. We remain optimistic about our Professional Information Business, which accounted for 29% of Dow Jones revenues this quarter. The key growth engine continues to be in Risk and Compliance, which accelerated its revenue growth to 25% in the quarter compared to the prior quarter. Overall, our Professional Information Business grew a robust 8% this quarter. Advertising revenues at Dow Jones in the quarter rose 2%, an improvement from the fiscal fourth quarter rate. It's led by digital growth with a relatively stable print performance. Digital advertising accounted for 42% of total Dow Jones advertising compared to 37% last year. We continue to balance healthy revenue growth at Dow Jones with reinvestment, which is leading to ongoing profit growth. Elsewhere across our news portfolio, advertising conditions were mixed. News UK's advertising revenues were flat on a reported basis and up 6% in local currency, representing the first year-over-year increase in local currencies since the third quarter of fiscal 2018. The U.K. showed notable growth in digital, particularly at The Sun, which is growing in both audience and engagement. Advertising conditions in Australia were more challenged, notably in print, with advertising revenues down 13% on a reported basis and down 8% in local currency. Digital growth helped mitigate print declines with continued growth from music stand, small medium business initiatives and news.com.au. On circulation, our digital paid subscribers again grew at an impressive rate. Digital subscribers rose 19% at The Times and The Sunday Times and 22% at News Australia. The increase in digital subscribers, along with cover price increases at both News UK and News Australia, helped mitigate print volume declines and currency headwinds. Finally, at News America Marketing, revenues fell 10% driven by weakness in freestanding insert products given the ongoing digital migration, but partially offset by growth in in-store product revenue, which accounted for roughly half of the overall revenue. Turning to the Subscription Video Services segment. Revenues for the quarter were $514 million, down 9% versus $565 million in the prior year, of which $34 million or 6% was due to the negative impact from foreign currency. Broadcast revenue trends were relatively similar to the prior quarter, with the revenue decline driven by a lower broadcast subscriber base and changes to the broadcast subscriber package mix. The revenue decline was partially offset by increased revenue contributions from Kayo and Foxtel Now. Importantly, as we look at a core driver of the business, TV subscription revenue, which includes both broadcast and OTT revenue, excluding the impact of currency, revenue growth from OTT products almost offset broadcast declines in the quarter, which will be key to the stability of the business. Segment EBITDA in the quarter was $81 million, down 28% with the prior year, which, in addition to the revenue trends, was also impacted by $16 million of costs related to domestic cricket rights, which we didn't have in the prior year and $14 million related to the noncash accelerated amortization of certain of our entertaining -- entertainment programming costs, as we highlighted last quarter. We continue to expect approximately $30 million to $35 million impact from the accelerated amortization for the full year with a greater impact in the first half of the year. Other costs notably in overheads were lower this quarter as the team is focused on rightsizing the cost base. We continue to expect full year capital expenditures to be approximately 20% lower than the prior year and for the cash flow generation to improve. Turning to the KPIs. Foxtel's closing paid subscriber base was approximately 3.1 million as of September 30, with volume growing 6% versus the prior year driven by the launch of Kayo last November. Of that subscriber base, over 2.3 million of the total closing subscribers were broadcast and commercial subscribers, and the remainder consisted of Kayo and Foxtel Now. Kayo paying subscribers grew to 364,000, up from 331,000 last quarter or 12% of the total Foxtel subscriber base, including trial list Kayo rose 430,000 subscribers. We are seeing that customer activations are more pronounced around big events. The first quarter had less exclusive content, particularly following the Cricket World Cup, but we have seen notably stronger ads with the start of the Rugby World Cup, which began in late September. As of November 5, Kayo paying subscribers have increased to approximately 402,000. We continue to see that Kayo subscribers are incremental to the subscriber base with very little cannibalization from the core broadcast business. Paying subscribers for Foxtel Now were approximately 375,000, down from 446,000 last quarter following the conclusion of the Game of Thrones, but still up from the prior year and have seen an improvement in ARPU from both the last quarter and the prior year. In addition, Foxtel is also planning a new entertainment product, which will leverage the Kayo platform with the commercial launch anticipated later in this fiscal year. In the first quarter, broadcast churn was 14.4% versus 12.9% in the prior year, but down from 14.7% in Q4, reflecting continued focus on churn management in the Foxtel direct channel and higher penetration of the iQ4 set-top boxes. As a reminder, lower ARPU customers on expiring contracts from the past 12 to 24 months compounded by a price rise is resulting in higher churn versus the prior year. Churn from platinum and sports teams remain materially lower than the base. Broadcast ARPU grew 2% to about AUD 78 per month. We expect to complete the refinancing of a significant portion of Foxtel debt in the coming weeks, which will include a package of bank refinancing, third-party financing and additional shareholder funding. As part of the refinancing, News Corp has contributed an additional AUD 200 million loan, and the new financing that will extend maturities for at least 3 years and, importantly, provide Foxtel with ample liquidity and flexibility to execute on its strategy. At Book Publishing, HarperCollins faced an unusually difficult comparison to the prior year due to the success of Rachel Hollis' Girl, Wash Your Face, Angie Thoma's The Hate U Give and Mark Manson's Subtle Art. As a result, revenues for the quarter fell 3% to $405 million and segment EBITDA fell to $49 million. Notable releases this quarter include Daniel Silva's New Girl, Ann Patchett's, The Dutch House, Karin Slaughter's The Last Widow, Demi Moore's Inside Out and Ant Middleton's The Fear Bubble. Digital revenues declined 5% and represented 20% -- 22% of consumer revenues also impacted by the year ago comparison. At the Digital Real Estate Services segment, revenues were down 7% to $272 million, of which $10 million or 3% was due to the negative impact from foreign currency. On an adjusted basis, revenues declined 5%. REA Group revenues were down 14% and down 8% in local currency as higher yield and improved product mix was more than offset by an overall 15% year-over-year decline in new listing volume during the quarter. Developer revenues were also down on the back of a 26% decline in new project development. Revenue decline was also impacted by the extended duration of premier all listings from 45 to 60 days, which increased the revenue deferral for the period. Please refer to REA's earnings release and their conference call that just concluded for additional details and comments on the outlook. Group revenues rose 4% to $123 million versus the prior year, with real estate revenues growing 11%, which is an improvement from the fourth quarter rate. The increase in real estate revenues, which represented 80% of total revenues, was led by a higher contribution from Opcity, combined with an improvement in lead volume and audience. This is in the context of the U.S. housing market showing signs of improvement, with existing home sales up low single digits in the quarter compared to the prior year. As I mentioned last quarter, we began live testing a performance-based-only model in over a dozen markets starting on May 1 to analyze the impact and scalability of the platform. The test also allows us to better control the consumer experience and the transaction. Although it is still relatively early in the testing, every single one of the core metrics has gone up materially. Leads, meeting rates, home values and close rates are all trending in the right direction. We are very encouraged by the results and have continued to allocate more leads to the Opcity model, which will allow greater opportunities to further extend into ancillary revenues. On audience, we saw an acceleration in audience growth versus the fourth quarter growth rate with average monthly unique users at realtor.com reaching over 71 million, rising 18% versus the prior year, together with a notable pickup in both page views and time spent. Segment EBITDA fell 22% to $82 million due to REA revenue declines and investment at Move due to Opcity. Adjusted segment EBITDA declined just 2%. Other costs increased to $47 million from $37 million. The majority of the increase is related to higher equity comp due to the performance, existing schemes and the stock appreciation since the grant date as well as the phasing of certain strategic initiatives. Most importantly, we do not expect this increase to be reflective of the full year. I would now like to talk about some themes in the upcoming quarter. In News and Information services, advertising trends thus far remains similar to the prior quarter levels, although visibility remains limited. We continue to seek cost efficiencies, particularly in both the U.K. and Australia. Comparisons should ease now that we have moved past the Sun Bets benefit, and we expect to show improvements, particularly at our news brands. In Subscription Video Services, we will anniversary the acquisition of the domestic cricket rights, and cost trends should be more favorable. We will also lap the price increase from October last year. In Book Publishing, as Robert mentioned, we're excited about the recent launch of Ree Drummond's Pioneer Woman The New Frontier, although we'll continue to face difficult comparisons as the prior year included Joanna Gaine's Homebody and strong backlist sales. Given the timing of the release schedule, we expect performance will be more second half weighted. At Digital Real Estate Services, we anticipate improvements at Move as we lap the Opcity acquisition, particularly in the second half. As noted on their release, REA expects revenue growth to be skewed towards the second half of the fiscal year. Please see the release for more detail. With that, let me hand it over to the operator for Q&A.

Kane Hannan:

Just at Dow Jones revenue growth of 6%., can you give a bit more color around the level of cost growth during the quarter to drive that growth? And then I suppose, some comments around the revenue quantum we should be expecting from those digital partnerships this year, sort of next year? I -- should we expect them to be material?

Susan Panuccio:

And Kane, just in relation to the costs, we saw about a 4% increase in cost for the quarter for Dow Jones. So you should use that number as your proxy.

Operator:

[Operator Instructions]. We'll now take the next question from Eric Pan at JPMorgan.

Robert Thomson:

Eric, simplification is indeed an ongoing process, and it doesn't stop at News America Marketing and Unruly. But we're very cognizant that the company trades at a discounted to some of the parts. We're seeking to rectify that situation and maximize value for all our shareholders. So it's fair to say that the institutional introspection will continue apace.

Operator:

Our next question comes from Entcho Raykovski at Crédit Suisse.

Susan Panuccio:

I'll take maybe the first two, and Robert can take the last one Entcho, if that's okay. So just in relation to cricket, we would expect to see very, very modest increases over the course of the year. So the bulk of those costs have come through in Q1. But I think it's important to note when we think about the cost base, the largest increase that's come through is because of the noncash amortization in relation to those entertainment expenses. So over the full year, absent those costs, we would expect the whole cost base to be relatively stable. But it is important to note that the team down in Australia are continuing to focus on rightsizing their cost base and are continuing to look for opportunities as they move forward. In relation to Aeries [ph], we are looking to launch that towards the back half of this particular fiscal year. We're not expecting to see significant incremental costs to your point. We do have a lot of the content covered within existing deals. We will, of course, have marketing costs as we scale up that product, but the actual incremental cost that we'd expect to see within the year is going to be minimal.

Michael Florin:

Thank you, Entcho. Eduardo, we'll take our next question, please.

Unidentified Analyst:

Robert, I'm just interested in your comments upfront that you were talking about giving us a clear view of the assets and the value, you're willing to just give us a little bit more insight to what you mean there. I assume you're talking about The Wall Street Journal and timing of that. I mean do we now have to wait until the next financial year for that? And that's my first question. And then just secondly, just on Move, which the margins -- you've got to do a little bit of work obviously to back them out because you don't report them, but look later around about that sort of 10% level and have sort of been stubbornly at that level for a little while. Is it structurally just a low-margin industry in the U.S. because they're obviously very low margins relative to similar businesses around the world? Or do you think you can really see some margin improvement there over the next few years?

Susan Panuccio:

And Fraser, I think I'll just add to that, that part of the reason and the rationale for acquiring Opcity was to accelerate that revenue growth going forward and provide an opportunity for margin expansion via ancillary revenues and different services. And so we would expect to see for the balance of this year and over the full year that revenue and EBITDA will continue to grow within that business.

Operator:

All right, we'll now take the next question from Craig Huber at Huber Research Partners once again.

Susan Panuccio:

We can hear you.

Craig Huber:

I have no idea what happened there. Look, I have two questions. Housekeeping question, circulation revenue across Dow Jones, Australia and the U.K. with and without currency. Did you give that? Maybe I missed it, but that's my first question. And my second question, Robert, you mentioned, I think a lot of people agree with you on this, that there's two large monopolies out there on the digital advertising front. I'd like to hear from you if you could just expand upon this, what do you think the solution is on that front?

Robert Thomson:

Craig, obviously, the tech topography is evolving very quickly. If you think back even 12 months ago, the prospects of Facebook paying for content, a carriage fee, as we called it, in fact, Rupert was the first to cite that as a need, the prospects seem remote. It's now real. And what we're finding generally in our discussion with the digital platforms is that, that they have indeed adopted a new approach. They realize that for various reasons that their past policies were unsustainable. But as I made clear to you, it's not just about paying a premium for premium journalism. It is also about sorting out what is an opaque advertising market, and there's no doubt that the regulatory pressure in that area is only going to increase. And a consequence of that, well, I suspect, be that as we're already seeing, more advertisers understand how dysfunctional that market is and seek association with high-quality content, and we will undoubtedly be a beneficiary of that given the excellent journalism that we have, not only in this country, but around the world.

Operator:

[Operator Instructions]. It appears there are no further questions at this time. I'd like to turn the conference back to Michael Florin for any additional closing remarks.

Operator:

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

Mike Florin:

Thank you very much, Karina. Hello, everyone, and welcome to News Corp's fiscal fourth quarter 2019 earnings call. We issued our earnings press release about an hour ago, and it's now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We'll open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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.

Susan Panuccio:

Thank you, Robert. Before I review this year’s end quarter financial results, I wanted to highlight five themes from this past fiscal year where we’ve made significant progress. Firstly, we’re making notable progress in stabilizing the News and Information Services segment and entered our fiscal year on a positive note. Our digital paid subscriber base continues to grow while we continue to focus on streamlining our critical space and investing in new revenue streams. Importantly, the segment posted a higher profitability this year with improvement across our key news publishing business units. The first time we’ve seen this improvement since the Company’s separated. We will remain focused on these areas in the coming year, and we are optimistic we can build on the current use of this. Secondly, the team at Foxtel have made steady progress on its over-the-top offering, including a successful launch of Kayo in November and further improvement to its premium broadcast product. Foxtel returned to volume growth, ending the year at the highest closing paid subscriber base since separation. And now with the core platforms in hub, they are focused on improving a path to revenue and profit growth. The performance in our Book Publishing segment this year underscores the value of premium content and the advantage of a global distribution network, posting record profitability even when facing a very challenging prior year comparable. Given the rapid rise of downloadable audiobooks and the explosion in demand for premium content globally, we continue to explore ways that HarperCollins can see the leverage its highly valued content into other media. As Robert mentioned, recent examples of these efforts are our announced partnership with Sony Pictures Entertainment and also with media in Canada our Harlequin division. These are deals with minimum capital outlay which have the potential to monetize content more broadly. Our businesses in the Digital Real Estate Services segment made strategic acquisitions, expanded their product offering and continue to capture audience share amid a challenging global healthy market. We feel positive about our pace of innovation and investment and believe this segment is well-positioned going into fiscal 2020. And finally, we continue to actively look at our portfolio. In June, we announced that News America Marketing is undergoing a strategic review, including actively exploring sale, and that process is ongoing. With that, I would now like to discuss our financial results. For the full-year fiscal 2019, total revenues were $10.1 billion, a 12% increase compared to the prior year. Reported results for fiscal 2019 include the consolidation of Foxtel. On an adjusted basis, which excludes the impact of the Foxtel consolidation, significant currency headwinds and other items as disclosed in the press release, revenues rose 1%. Total segment EBITDA for the year was $1.24 billion compared to $1.1 billion in the prior year, a 16% increase over the prior-year period. Adjusted total segment EBITDA for the year rose 4%. Full-year dilution in earnings per share were $0.26 compared to a loss of $2.60 in the prior year, primarily driven by the absence of the non-cash impairment charges and writedowns of $1.2 billion recognized in fiscal 2018. Adjusted earnings per share for the year were $0.46 versus $0.44 in the prior year. Free cash flow available to the company for the year were $213 million, which included a step up in capital expenditures related to the consolidation of Foxtel. And now to the quarterly financial detail. We reported fiscal 2019 fourth quarter total revenues of approximately $2.5 billion, down 8% versus the prior year, due in part to the $105 million impact from continued currency headwind. Adjusted revenues declined 5%. Total segment EBITDA for the quarter was $269 million compared to $314 million in the prior year, down 14%. Adjusted segment EBITDA declined 8%. For the quarter, loss per share was $0.09 compared to a loss of $0.64 a year ago with the improvement mainly due to the absence of the write-off of the FOX SPORTS Australia channel distribution agreement last year. Adjusted earnings per share were $0.07 compared to $0.08 in the prior year. Turning now to the individual operating segments. In News and Information Services, revenues for the quarter were over $1.2 billion, down approximately 5% versus the prior year. Currency had a $40 million or 3% negative impact and was responsible for the majority of the decline. Digital revenues to Dow Jones and the newspaper markets represented 37% of combined revenue, approximately 33% of the segments revenue were digital, up from 30% in the prior year. Advertising revenues for the segment were down 8% in the quarter versus the prior year with approximately $18 million or 2% due to negative currency fluctuations. Circulation and subscription revenues were flat versus the prior year despite $17 million or 3% negative impact from foreign currency. Segment EBITDA for the quarter was $108 million, up 14% over the prior year and a very strong improvement from the last two quarters, primarily driven by News America Marketing, but also benefiting positive contribution from Dow Jones and News UK. I will now talk through some segment highlights. At Dow Jones, the consumer circulation revenues in the fourth quarter remained robust, growing 7% for the fourth consecutive quarter, benefiting from 14% growth in digital-only paid subscribers at The Wall Street Journal to over 1.8 million as well a subscription price increases. Digital paid subscribers accounted for over 69% of total subscriber of The Wall Street Journal, which is up from over 64% last year. Total subscribers in the quarter for Dow Jones consumer products, which also includes Financial News in the UK, reached approximately 3.3 million, again posting record level. Of that, the digital-only subscribers rose 20% versus the prior year to 2.2 million subscribers. Over the same period, Barron’s expanded its total subscriber base to 579,000, a 16% year-over-year increase. Within the professional information business, Risk and Compliance grew 23% in the quarter compared to the prior year and as expected, exceeded $139 million in revenues this year. We continue to expect significant growth ahead as we expand our product range. Overall, our professional information business grew 2% this quarter. Advertising revenues at Dow Jones in the quarters was flat, a notable improvement from last quarter led by an improvement in digital advertising as we had anticipated. For the quarter, digital advertising accounted for 40% of total Dow Jones advertising compared to 39% last year. Elsewhere across our news portfolio, advertising conditions were overall relatively stable with last quarter. Advertising revenues at News Australia and News UK declined 8% and 7%, respectively, yet both were down only 1% in local currency compared to the prior year, benefiting from higher digital advertising revenues. Pleasingly, The Times in the UK grew fleet advertising revenue in local currency for the seventh consecutive quarter. On circulation, our digital subscribers around the globe are growing at an impressive rate. Digital subscribers rose 19% to 304,000 at The Times and the Sunday Times. And they also have approximately 5 million registered users, which is both a source of subscriber acquisitions and an advertising opportunity as we continue to leverage our increasing audience scale. At News Australia, paid digital subscribers rose over 24% year-over-year to more than 517,000, which include 146,000 digital and bundled subscribed at The Australian. The increase in digital subscription along with cover price increases at News U.K. and News Australia allowed both markets to mitigate print volume decline and currency headwind. Finally, at News America Marketing, revenues fell 6% driven by continued weakness in free-standing insert products but partially offset by in-store product growth. Cost initiatives help NAM contribute high profitability in the quarter. Turning to the Subscription Video Services segment, revenues for the quarter was $536 million, down the 12% versus $610 million a year ago, of which $44 million or 7% was due to the negative impact from foreign currency. Broadcast revenue trends were relatively similar to the prior quarter with the revenue decline driven by a lower broadcast subscriber base and changes to the broadcast subscriber package mix. The revenue decline was partially offset by increased revenue contributions from Foxtel Now and Kayo. Segment EBITDA in the quarter was $85 million, down 12% with the prior year. From the fourth quarter, we are now comparing like-for-like as we completed the Foxtel consolidation in the fourth quarter of fiscal 2018. Turning to the KPIs, Foxtel's closing paid subscriber base rose to over 3.1 million as of June 30, with volume growing 12% versus the prior year. Growth was driven by Kayo, strong adoption of Foxtel Now and the inclusion of commercial subscribers at Foxtel Australia. Of that subscriber base, approximately 2.4 million of the total closing subscribers were broadcast and commercial subscribers and remain consistent of Kayo and Foxtel Now subscription. We are making steady progress in our OTT strategy, with Kayo claiming subscribers at 331,000 as of June 30, up by over 120,000 since our last update on May 8 and more than doubled since the third quarter, driven by the Cricket World Cup and the expansion of our distribution channel. Including trials, the total paid subscriber base reached approximately 382,000. Pleasingly thus far, Kayo is not forming a material chain in Foxtel broadcast customer base with an estimated 5% of Foxtel disconnection since Kayo's launch being driven by customers moving to Kayo. Foxtel Now also performed strongly with total paying subscribers reaching over 446,000 as of June 30, up 36% from last year. While this is down from the May 8 update to due to the conclusion of the Game of Thrones, Foxtel has been focused on retention, and overall, the product has exceeded our expectations. In the aggregate, Foxtel had a strong and growing base of OTT subscribers, which in total reached 842,000 subscribers at June 30, of which approximately 777,000 were paying subscribers, accounting for 25% of Foxtel's total paying subscriber base and is reflective of Foxtel strategy to monetize existing rights of a multiple platform. In the fourth quarter, broadcast churn was 14.7% versus 12.5% in the prior year, reflective of a 300 basis points improvement from the third quarter. The outcome in the fourth quarter reflects early successes from leveraging data and analytics to reduce churn despite the price increases. In addition, the team is focused on stabilizing broadcast ARPU, which is more than AUD78 in the fourth quarter, down 1% versus last year. Capital expenditures related to Foxtel were approximately $300 million for fiscal 2019 which is lower than what we had anticipated, and we expect sizable declines in fiscal 2020. Approximately 65% of the CapEx was subscriber related. Finally, we issued Foxtel AUD200 million shareholder vote in May at a variable rate of approximately 9% as we continue to work with banks on refinancing upcoming maturity. At Book Publishing, as expected, we faced an unusually strong prior year comparison with the prior year including a one-time revenue contribution of $28 million for the Tolkien sublicense to Amazon and the release of Magnolia Table by Joanna Gaines. Revenues for the quarter decreased 14% to $419 million due to the fact that I just noted as well as approximately $18 million of negative impact from the new revenue recognition standard. Segment EBITDA fell to $44 million from $72 million, with the biggest factor impacting profitability being the absence of the Tolkien deal from the prior year. Notwithstanding the fourth quarter results, HarperCollins have had a very strong year and outperformed our expectations. HarperCollins posted high digital revenues for the quarter and a fiscal year lead by the continued expansion of downloadable audio, which accounts for approximately 1/3 of digital sales today. They will also move to fairly capitalize our momentum and the depth of their backlist to generate longer-term incremental revenues as they have done via the new deals with Sony and Bell Media. At the Digital Real Estate Services segment, revenues were down 5% to $283 million, primarily related to currency headwinds of $13 million. On an adjusted basis, revenues were flat. REA Group’s revenues were down 6% and up 1% in local currency as higher yield and increased debt penetration was offset by an overall 19% year-over-year decline in the existing volume during the quarter, which was notably weaker than the third quarter and full year rate of 9% and 8% declines respectively. Please refer to REA's earnings release and the conference call following this call for additional detail and comments on the outlook. News revenues rose 3% to $123 million versus the prior year with real estate revenues growing 8%. The increase in real estate revenues, which represents 77% of total revenue, reflect higher yield per lease, a slight improvement in buyer lead volume and the acquisition of Opcity. While lead volumes remain subdued, the business did see an improvement in run rates in June, which should build momentum to this coming fiscal year. As I mentioned last quarter, we began live testing of performance-based early model in over a dozen markets starting on May 1 to analyze the impact on scalability of this platform. Early results have been promising, with improvements in engagement and leasing rates, which we expect to drive higher conversion rates. During fiscal 2020, we will continue to allocate lead flow to Opcity, although we expect that in most markets, we will be offering both our existing connection SaaS products along with the Opcity concierge model. We have, as mentioned last quarter, began to reallocate resources within the realtor.com team to better position and streamline the business to this year and beyond. On audience, we saw an acceleration versus the third quarter growth rate and average monthly unique users at realtor.com to a record 72 million for the quarter, rising 14% versus the prior year together with notable pickup in engagement. Segment EBITDA fell 15% to $84 million similar to the third quarter rate. The decline was driven by higher investment in Opcity and the $5 million negative impact from currency. On an adjusted basis, segment EBITDA decreased 7%. I would now like to mention a few things to the fiscal 2020 here. At News and Information Services, while advertising visibility remains limited, the revenue mix is becoming less dependent on print, and we are encouraged by the pace of global uptake of paid digital subscribers. In fact, excluding NAM, the majority of segment's revenue will be circulation and subscription revenues. So far, the advertising trends are similar to slightly better in the current quarter, and we continue to remain digital while reinvesting in our digital offerings. Overall, our expectation is a show further stability in this segment and it is pleasing that we finish the year with some strength. We do note the first quarter will face a challenging comparisons due to the $48 million benefit in the prior year related to News U.K.'s exit of the gaining partnership with Tabcorp. In Subscription Video Services, overall cost increases should be modest in fiscal 2020 absent currency fluctuation. We will have one additional quarter of domestic Cricket rights approximately $20 million before locking the rights and some additional OTT expenses as we drive further penetration. This will be in conjunction with our continued efforts to seek cost efficiencies. We also expect a non cash impact of approximately $30 million to $35 million in fiscal 2020 related to a change in amortization methodologies the sports and entertainment programming. We expect CapEx in the Foxtel to decline by approximately 20% compared to fiscal 2019 and overall expect higher cash generation from the business. In Book Publishing, we will face tougher comparison to the fiscal year given the outperformance in fiscal 2019. However, we are confident with our slice of tussle, which will be headlined a new releases from Regent Raymond, Ajay Sims, Daniel Silver and David Dwellings in the UK among others, along with expected continued growth in downloadable audiobooks. Fiscal third quarter releases include Daniel Silva's The New Girl and Ann Patchett’s The Dutch House as well as the tie-in edition of Garth Stein's The Art of Racing in the Rain, which will hit the movie theaters this weekend. At Digital Real Estate Services, despite a challenging housing market in Australia, REA should benefit from higher debt penetration and higher pricing. Please refer to REA's call for a more detailed outlook. At realtor's fiscal 2020, we anticipate both higher revenue and higher profit contribution by further expanding the Opcity concierge model, returning the non-listing base advertising back to growth and leveraging the recent cost initiatives. With that, let me hand it over to your operator for Q&A.

Entcho Raykovski:

Hi, Robert. Hi, Susan. A couple of brief questions for me. First one is around costs within news and insight services. So in the quarter, you had the same market, pretty good cost performance given that the EBITDA grow on revenues. Can you talk to the extent to which that was cost reductions within News America Marketing as opposed to the other segment within news and insight services? I'm just interested particularly in extent to which of those cost reductions can continue into FY 2020. And then on News America Marketing, you've given us a brief update on the sale process. Can you give us an indication of likely timing that you're looking at? And are you looking at mainly tied to financial bias?

Robert Thomson:

Entcho, obviously at this moment it is a little difficult to be absently specific about the identity of the bidders other than to say there's quite a few. But more broadly, we understand when it comes to the new score, that this is complex, it's not properly valued. And so we have begun a process of simplification that will be ongoing. The first, most tangible sign of that is the sale process at NAM. That company itself would change characters over the past few years and become more value because there was in-store and digital growth and a little less relevant into News Corp's core business. So it made sense to do that strategic review and that is materially interesting becoming.

Operator:

Thank you. We'll next hear from Kane Hannan with global – I'm sorry, Goldman Sachs. Please go ahead.

Robert Thomson:

Kane, again a little difficult to be specific, but the fundamental principle applies that if we thought Kayo was successful, then we would proceed with the new products. What we are seeing is Kayo is success, and fundamentally what we're seeing is a real growth in a number of Australians prepared to pay for premium programming. And there is little more premium than exclusive sports runs. So the old story about Foxtel was it had maxed out on subscribers that they were strictly limited number of Australians prepared to pay for content, and we heard that limit. Frankly, that's clearly not the case, and the doubling of Kayo subscribers has actually been accompanied by a fall during the same period by the rate of churn among sports users, subscribers on broadcast. That is a significant trend and an indication of the success of Kayo.

Robert Thomson:

Thank you, Kane. Karine, we’ll take our next question, please.

Craig Huber:

Yes. Hi. Thank you. I guess two quick questions. Robert, Susan, what's changing your mind and your Board's mind to actually potentially put News America Marketing for sale now? I mean why now for that? And also, Susan, can you give us more clarity about how we should think about the cost for Foxtel for fiscal 2020 above and beyond what you've already said? Thank you.

Susan Panuccio:

I think Craig, I'll just also add to that, that one of the things that we've been thinking about is how to allow greater focus on News Corp's primary pillars including the creation and distribution of premium content in the digital segment. So just in addition to the comments that Robert said. Just in relation to your second question, in relation to Foxtel cost base, in relation to next year, clearly the current year, fiscal 2019 is the investment year for Foxtel. We are very clear about that and transparent particularly in relation to the Cricket rights. If we cast our lines forward to the next financial year, we would expect to have a one additional quarter of Cricket right so that. US$20 million, we will, no doubt, have some continued investment in OTT as we scale this product and depending on the marketing activities around that. But more importantly as I mentioned in my comment, we'll have this non-cash impact related to the programming amortization change, which is about $30 million to $35 million. So that will impact on the result. Outside of that, we expect that cost base will be relatively notwithstanding the variable nature of it due to subscribers.

Operator:

Thank you. We'll next hear from Brian Han with Morningstar. Please go ahead.

Robert Thomson:

Brian, we look after News Corp. [indiscernible] saying about that Fox acquisition is that clearly, the Fox news and Fox Business news, great plasticizers of products. And that particular company has a very broad range of financial products aimed at consumers. So I wouldn't be surprised at all that it was a Fox acquisition. But we are separate companies and we ourselves are always reviewing our portfolio. Operator, we’ll – any more questions, Karina.

Mike Florin:

Great. Thank you, Karina, and thank you for all participating. We look forward talking to you soon. Have a great rest of the day. Take care.

Michael Florin:

Thank you very much, Todd. Hello, everyone, and welcome to News Corp’s fiscal third quarter of 2019 earnings call. We issued our earnings press release about an hour ago, and it’s now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We’ll open with some prepared remarks, and then we’ll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp’s business and strategy. Actual results could differ materially from what is said. News Corp’s Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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.

Susan Panuccio:

Thank you, Robert. Turning to the financials. Fiscal 2019 third quarter revenues were nearly $2.5 billion, up 17% versus the prior year and total segment EBITDA was $247 million, up 36% versus the prior year. Results reflect the impact of the consolidation of Foxtel. On an adjusted basis, which excludes the impact of the Foxtel consolidation, currency fluctuations and the other items disclosed in our release, revenues rose 2% and EBITDA decreased 4%. For the quarter, earnings per share were $0.02, as compared to a loss of $1.94 in the prior year, which included a non-cash write-down related to Foxtel, as well as non-cash impairment charges at News America Marketing and FOX SPORTS Australia. Adjusted earnings per share were $0.04 in the quarter versus $0.06 in the prior year. Turning now to the Individual Operating segments. In News and Information Services, revenues for the quarter were over $1.2 billion, down 5% versus the prior year. Currency had a $52 million, or 4% negative impact and was responsible for most of the decline. Approximately 31% of the segment’s revenues were digital, up from 29% in the prior year. Advertising revenues for the segment accounted to 48% of segment revenues and were down 9% versus the prior year, with approximately $23 million, or 4% due to negative currency fluctuations. Circulation and subscription revenues, which accounted for 44% of segment revenues were relatively flat versus the prior year, this despite foreign currency negatively impacting these revenues by $22 million, or 4%. Within the segment, revenues at Dow Jones rose 1%, News UK and News America Marketing declined 8% News Australia declined 7%. I will now talk through some segment highlights. At Dow Jones, 73% of revenues are reoccurring and subscription-based, relating to either consumer products, primarily for The Wall Street Journal and Barron’s or business-to-business through our Professional Information Business, or PIB, which includes risk and compliance, Factiva and Dow Jones Newswires. Consumer circulation revenues again grew 7%, benefiting from 19% growth in digital-only paid subscribers of The Wall Street Journal to nearly $1.8 million, as well as the benefit of highest subscription pricing ranging from an additional $2 to $6 per month. Digital paid subscribers accounted for 68% of total subscribers at The Wall Street Journal, up from 62% last year. This quarter we added net 66,000 new subscribers. In addition, subscribers for Barron’s, the financial news in the UK, grew 28% from the prior year, resulting in an overall subscriber – subscription for Dow Jones consumer products reaching almost 3.3 million, achieving record levels. Of that, over 2.1 million is digital-only. We also saw stable low single-digit revenue growth at PIB, despite currency headwinds, led by 22% revenue growth from risk and compliance, which remains its growth engine, as Robert mentioned, and a core differentiator versus the industry. Advertising revenues at Dow Jones fell approximately 8% compared to the prior year, which was weaker than the prior quarter, with the variance versus the second quarter mostly due to digital advertising, although, we expect to show an improvement in the fourth quarter rate. Elsewhere across our news portfolio, at News Australia, advertising declined 9% compared to the prior year, but rose 1% in local currency, due to the acquisition of Medium Rare and Integrated Content Agency business and digital advertising growth. We saw further weakness in the print advertising market. In the UK, advertising fell 11% versus the prior year, or down 5% in local currency, due mostly to soft print trends at The Sun, which had a challenging prior year comparison, partially offset by a sequential improvement in digital advertising growth at both The Sun and The Times. Now as Robert mentioned, modest improvement in print advertising revenues at The Times. Importantly, we saw accelerating year-over-year digital subscription growth at The Times & The Sunday Times, up 24% year-over-year to 286,000 and at News Australia up 21% year-over-year to 493,000. That along with cover price increases allowed both markets to post modest gains in circulation and subscription revenues, excluding currency headwinds. Finally, revenues at News America Marketing fell 8%, as growth in U.S. in-store advertising, which is the biggest contributor to NAM revenues, was more than offset by continued weakness in freestanding insert products. Turning to segment EBITDA. News and Information Services segment EBITDA was $73 million, down approximately 16%, due primarily to News America Marketing, mostly a function of the top line weakness. Turning to the Subscription Video Services segment. Revenues were $539 million versus $129 million a year ago. Segment EBITDA in the quarter was $98 million versus $16 million in the prior year. These results reflect the consolidation of Foxtel. On a pro forma basis, reflecting the Foxtel transaction, segment revenues in the quarter decreased $84 million, or 13% compared with the prior year. $53 million of the decline, or 9% was due to the negative impact from foreign currency fluctuations. Broadcast revenue trends were relatively similar to the prior quarter, with the revenue decline driven by lower broadcast subscriber base and changes to the broadcast subscriber package mix. The revenue decline was partially offset by increased contributions from Foxtel Now and Kayo Sports. Broadcast ARPU was over A$79, or down 1% versus the prior year, as the impact of the price increase was more than offset by the impact from the new revenue recognition standards. Compared to the second quarter, broadcast ARPU rose nearly 2%, reflecting a price increase last quarter. We also saw a sequential and year-over-year improvement in Foxtel Now ARPU due to a price increase last quarter. Pro forma segment EBITDA in the quarter decreased $29 million, down 23% compared to the prior year and a moderation from last quarter. The year-over-year decline reflects highest sports programming and production costs, including approximately $25 million of costs related to Cricket Australia, lower revenues and $10 – $10 million for marketing related to Kayo Sports. These were partially offset by lower overhead and other corporate expenses, as well as lower entertainment programming costs. On key operating metrics, Foxtel’s total closing subscribers were approximately 2.9 million as of March 31, up over 5% against the prior year, driven by higher Kayo Sports and Foxtel Now subscriptions and the inclusion of commercial subscribers of FOX SPORTS Australia. Compared to the second quarter, we had a modest increase in sequential subscriber growth as higher Kayo subscriptions more than offset broadcast declines. We are making good progress in our OTT strategy, which is helping drive volume growth of Foxtel. As Robert mentioned, as of May 8, we had over 239,000 total Kayo Sports subscribers, of which 209,000 were paying, more than double our last update. We also had over 567,000 Foxtel Now subscribers as of May 8, of which more than 505,000 are paying, which is an increase of 45% in paying subscribers from quarter-end, driven by the demand for Game of Thrones. In the third quarter, broadcast churn was 17.7% versus 15.3% in the prior year, higher than we had anticipated. Although the majority of churn is coming from lower-value, shorter tenured customers, many without contract. Importantly, sports customer churn on broadcast has been relatively stable at only 6%. As we mentioned last quarter, Foxtel has launched proactive churn management initiatives focused on customized solutions for retention and win back and we are seeing real progress in recent weeks. March churn was down to 16.2% and to around 15.1% in April. Moreover, unlike in recent periods, promotions and new broadcast sales are predominantly with 12-month contracts, which would also help with churn reduction moving forward. Capital expenditures related to the new Foxtel was $223 million in the first nine months. We now expect full-year CapEx to be higher than the prior year’s level by $25 million or less, which is lower than our previous expectations. Stepping back, as we have previously indicated, this year was always going to be a big transition year for the new Foxtel, and segment EBITDA performance has been impacted by reinvestments, which have a longer payback period. On this, there are a few points I’d like to make. We see OTT as a big revenue driver that will have higher contribution margins, given we are leveraging mostly fixed costs for previously acquired rights and we are encouraged by the recent performance of Kayo and Foxtel Now. We believe we can stabilize broadcast churn via proactive churn management and a higher penetration of next-generation boxes, which materially reduce churn. Approximately 43% of households now have either the iQ3 or iQ4 box, up 400 basis points from last quarter. As mentioned, we are seeing good progress on that front. As we lap the cricket investment, we would expect programming cost to grow at a much more modest rate after this year and we will continue to thoroughly review our content lineup for additional savings. We see an opportunity to reduce non-programming costs, including the ability to flex the variable components of the cost base, like marketing and broader overhead costs. Finally, on the Foxtel debt structure. We continue to evaluate numerous options to provide Foxtel with more financial flexibility and an optimal capital structure. So that end, we have contributed A$300 million via shareholder loans, which covered the repayment of April maturities. At Book Publishing, we posted another very solid quarter, driven by a strong release slate, which included in Christian Publishing; Girl, Stop Apologizing by Rachel Hollis; and We are the Gardeners by Joanna Gaines. UK revenues were also higher helped by Fing, a new release from David Walliams. Revenues for the quarter increased 6% to $421 million and would have been notably higher, excluding negative impacts from revenue recognition and currency. Segment EBITDA increased 29% to $53 million, despite a much more challenging prior year comparison than the second quarter. At the Digital Real Estate Services segment, revenues were down 3% to $272 million. This growth was more than offset by currency headwinds. Currency had a $16 million negative impact to revenues in the quarter. On an adjusted basis, revenues rose 3%. REA Group revenues were down 4%, but up 6% in local currency due to residential debt growth in Australia, driven by increased yield and higher penetration for Premiere All. This growth was partially offset by an overall 9% year-over-year decline in new listing volume during the quarter, which included pronounced declines in both Sydney and Melbourne down 18 and 12%, respectively. Please refer to REA’s earnings release and their conference call following this call for additional details and comments on their outlook. Move revenues rose 5% to $121 million versus the prior year, with real estate revenues growing 14%, resulting from higher yield and growth in buy-side lead volume, albeit at a slower rate due to a more challenging U.S. housing market place, as well as the transfer of leads to Opcity. It is worth noting that Opcity is performance-based. And as we migrate leads to that model, we monetize differently and this does delay revenue recognition with early data indicating an average delay of four months from an initial lead inquiry. As Robert alluded to earlier, we have been live testing in a handful of small markets converting to performance-only model and last week, we expanded to over dozen markets, big and small, as we test the scalability of the platform. These markets include, among others, Chicago, Minneapolis, Portland and Nashville. We expect to reallocate resources primarily within realtor.com teams in order to be more streamlined and much better positioned for financial year 2020. Revenue this quarter was also negatively impacted by the continued reduction of non-listed advertising inventory, similar to the first-half as part of an initiative to improve the consumer experience and engagement. Average monthly unique users at realtor.com were approximately $65 million for the quarter, rising 7% versus the prior year. Segment EBITDA fell 16% to $74 million. The quarter reflected additional costs related to the Opcity acquisition, including deferred compensation. On an adjusted basis, segment EBITDA grew 9%. I would now like to mention a few themes for the fiscal fourth quarter. At News and Information Services, we expect advertising performance to remain relatively similar to the third quarter rate and we expect to continue to expand our digital subscribers, while seeking further cost efficiencies. In Subscription Video Services, overall cost increases should be more modest in the fourth quarter and we expect to see increased contribution from OTT revenues. On a reported basis, we will be lapping the consolidation of Foxtel. In Book Publishing, we will face particularly tough comps as in the prior year we recognized $28 million in revenue and $21 million in EBITDA due to the sublicensing agreement for The Lord of the Rings trilogy with Amazon. At Digital Real Estate Services, listing volumes in Australia remain challenged, impacted by Easter and Anzac Day and in anticipation of the federal election in May. In the U.S., we expect continued reinvestment as we continue to test and monitor the scalability of Opcity. With that, let me hand it over to the operator for Q&A.

Alexia Quadrani:

Thank you very much. I was just going to ask you about your opportunity you see with Apple News. I know that that Journal has agreed to have a partnership with them, The Wall Street Journal. I’m curious about how you envision this relationship to go? And do you have maybe anymore plans to funnel more subscribers to The Wall Street Journal?

Michael Florin:

Thank you, Alexia. Todd, we’ll take our next question, please.

Robert Thomson:

Hi, Entcho.

Susan Panuccio:

Hi, Entcho. Thanks for the question. I think – look at – you’re right, there’s no real FX impact coming through in those particular subscribers. I mean, what I would say is that the subscribers quarter-on-quarter do ebb and flow. We are happy actually with the growth that we’ve seen with Wall Street this quarter and we do expect it actually to pick up into the next quarter as well. But in addition to that, we have seen strong growth across our quality masthead around – within the UK and also within Australia. So I think overall, we are very comfortable with the level of growth that we’ve got and we do expect that to continue.

Michael Florin:

Thank you, Entcho. Todd, we will take our next question, please.

Kane Hannan:

Good morning, Robert and Susan. Just on that revenue slowdown at Move. Can you just comment on how much of that I suppose relates to the U.S. housing market and sort of macro weakness versus how much is coming from the four month delay in Opcity?

Michael Florin:

Thank you, Kane. Todd, we’ll take our next question, please.

Alan Gould:

Thank you. I’ve got a question for Robert and a question for Susan. Susan, first, the Foxtel debt, so you’ve financed with some parent company loan. Just wondering why that wasn’t just done as rolled over with some more non-recourse debt from Foxtel? And then Robert, a bigger picture question. I was at the Fox meeting earlier this morning, and they’ve really simplified that company. I mean, it took years in the making chase Carey Price talked about that five to 10 years ago. What is the process for News Corp to simplify itself?

Robert Thomson:

Yes. Look, we’re very happy with our asset mix. But it’s fair to say that we’re constantly reviewing that. And one thing that’s not appreciated at times is the complementarity between those assets, for example, between realtor and our digital media properties which have played a crucial role in generating traffic for realtor. And you can see from the two most significant investments we’ve made, Move, realtor.com as it’s better known, and Harlequin now a crucial part of HarperCollins that they have been transformative for both digital real estate and Book Publishing and have made us much more a digital company and much more a global company to the benefit of all investors. But we’re constantly reviewing that portfolio to ensure that both in the medium and long-term that investor interest are taken care of.

Operator:

Thank you. The next question comes from Craig Huber of Huber Research Partners.

Susan Panuccio:

Yes, just in relation to circulation, so in local currency, Dow Jones was up 7%. Australia was up 3%. News UK was up 2%. So overall circulation revenues were up 4% in local currency.

Susan Panuccio:

In currency, they were in my recorded remarks, which I shall just find. I can – why don’t you ask your second question while the guys get that for me?

Robert Thomson:

Well, what you have is The Wall Street Journal is obviously through a different prism, different configuration and it’s designed for a general reader. And at the same time, we’ve clearly enhanced the business experience on professional app. So that if you look now, for example, at the financial sector or the tech sector, that there are many more articles than there were a month ago. So we’re very conscious that it’s a different audience and audience that may not have thought of itself as a Wall Street Journal audience. But we firmly believe that the number of people who will appreciate, benefit from and buy The Wall Street Journal will be enhanced by that partnership.

Susan Panuccio:

And Craig, just in relation to the reported numbers, so UK down 4% and Australia down 7%, obviously, Down Jones in line.

Michael Florin:

Thank you, Craig Todd, we’ll take our next question, please.

Eric Pan:

Good afternoon, guys. Thanks for taking my questions. Congrats on a strong quarter. Two if I can. As the Game of Thrones comes to an end, does it make sense for you to renew your partnership with HBO when it comes due in a couple of years? And with regards to Kayo, it seems that you’re adding subs at an annual pace of about 400,000. What percentage of households in Australia do you estimate are willing to pay for a sports-only OTT product? Is the ceiling the same as Foxtel or potentially lower?

Susan Panuccio:

Eric, just to follow-up to that just in relation to the market size. We obviously are looking at the market, the 70% of subscribers that don’t take sports, and we know that our penetration has been for the 30% or just below that for quite sometime on the core broadcast product. We also know from our research that there are about 6 million to 8 million Australians who are very passionate about sports. 70% of that group do not subscribe to Foxtel. And our research also estimates that 4 million of that group are willing to pay for content in some way, shape or form. So that’s really the audience that we’re aiming at.

Robert Thomson:

Okay. Thank you.

Operator:

Thank you. Next question comes from Brian Han of Morningstar.

Robert Thomson:

Well, obviously, we can’t go into the details of the commercial arrangement. But conceptually, we want Foxtel to be a broad platform to provide the services that Australian consumers want to use. And this particular deal is even – is indicative of that strategy.

Brian Han:

[Multiple Speakers]

Brian Han:

[Multiple Speakers]

Michael Florin:

Thank you. Thank you very much. Thank you, Todd, and thank you for all participating and we look forward to speaking with you soon. Have a great day.

Michael Florin:

Thank you very much, Aaron. Hello, everyone, and welcome to News Corp’s fiscal second quarter 2019 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 identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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.

Susan Panuccio:

Thank you, Robert. Turning to the financials. Fiscal 2019 second quarter total revenues were over $2.6 billion, up 21% versus the prior year and total segment EBITDA was $370 million, up 13% versus the prior year. Results reflect the impact of the consolidation of Foxtel. On an adjusted basis, which excludes the impact of the Foxtel consolidation, currency fluctuations and the other items disclosed in our release, revenues increased 3% and EBITDA increased 2%. For the quarter, earnings per share were $0.16, as compared to a loss of $0.14 in the prior year, which included a charge related to the U.S. tax reform. Adjusted earnings per share were $0.18 in the quarter versus $0.24 in the prior year. Turning now to the Individual Operating segment. In News and Information Services, revenues for the quarter were $1.3 billion, down 3% versus the prior year. Currency had a $34 million negative impact accounting for more than half the decline. Within the segment, reported revenues at Dow Jones rose to 4%; News UK declined 10%; News Australia declined 5%, although it was relatively stable in local currency; and News America Marketing fell 7%. Approximately 32% of the segment’s revenues were digital, up from 29% in the prior year. Moving on to the segment highlights. Advertising revenues accounted for 50% of segment revenues and were down 5% versus the prior year, with approximately $18 million, or 2% being due to currency fluctuations. Second quarter advertising trends across our new businesses improved modestly from the prior quarter ratio. At Dow Jones, advertising revenues were flat with the prior year. Digital advertising revenues improved significantly, both year-over-year and sequentially, offsetting print declines. The improvement was driven by strong programmatic growth, resulting from audience going to MarketWatch. At News Australia, advertising declined 7%, but down just 1% in local currency, again, showing moderating declines versus the prior quarter, with improvements in the rate of print declines and strong year-over-year gains in digital. On the digital front, we saw further expansion of news.com.au, a national news portal and news extend a small to medium business offering. News UK advertising fell 8% versus the prior year, or down 4% in local currency, due mostly to soft print trends at the Sun, which had challenging prior year comparisons. We saw modestly higher print advertising revenues at the time. Finally, at News America Marketing, advertising revenues fell 7% due to weak home delivered revenues, which included FSI products and lower install advertising revenues, which were partly impacted by the timing of product campaigns. Turning now to circulation and subscription revenues, which accounted for 42% of segment revenues. We saw an increase of 1%, with foreign currency negatively impacting these revenues by $12 million, or 2%. We are continuing to see very healthy digital paid subscriber growth, which has been a core strategic focus and key to improved performance. At Dow Jones, circulation revenues grew 7%, benefiting from strong pay digital-only subscriber growth at The Wall Street Journal, which were up 23% year-over-year to over $1.7 million, and an increase of 125,000 subscribers from the first quarter. Digital paid subscribers accounted for 67% of total subscribers at The Wall Street Journal, up from 60% last year. In addition, we again saw healthy year-over-year digital subscriber growth at The Times and The Sunday Times, up 22% to 269,000 and at News Australia, up 18% to over 460,000. In Australia, cover price increases and rising digital sales offset print volume declines, while circulation revenues were down modestly in the UK. Turning to segment EBITDA. News and Information Services segment EBITDA was $120 million, down 15%, mainly driven by the clients in the UK from lower revenues, including the exit of Sun Bets and higher expenses related to newsprint prices. However, we again had increased contribution at both Dow Jones and News Australia. Turning to the Subscription Video Services segment, revenues were $562 million versus $120 million a year ago. Segment EBITDA in the quarter was $84 million versus $33 million in the prior year. On a pro forma basis, reflecting the Foxtel transaction, segment revenues in the quarter decreased $69 million, or 11% compared with the prior year, an improvement from the first quarter decrease of 17%. $39 million of the decline, or 6% was due to the negative impact from foreign currency fluctuations. Broadcast trends were relatively similar to the prior quarter, with the revenue decline driven by a lower broadcast subscriber base, higher ARPU costs and mix shift to lower. The subscription revenue decline was partially offset by an increase in Foxtel Now revenues. Broadcast ARPU was A$78, down about 3% versus the prior year, reflecting a 2% negative impact from the new revenue standard. Compared to the first quarter, broadcast ARPU was up over 2%, reflecting a price increase implemented on October 1. Pro forma segment EBITDA in the quarter decreased $71 million, or 46% compared to the prior year. The year-over-year decline reflects the lower revenues, higher sports programming and production costs, including approximately $26 million of costs related to Cricket Australia and about $9 million for marketing related to the commercial launch of Kayo Sports. This level of reinvestment was consistent with our expectations, as we focus on better positioning Foxtel for future growth. On operating metrics, Foxtel’s total closing subscribers were approximately 2.9 million as of December 31, up 4% against the prior year, driven by higher Foxtel Now and Kayo Sports subscriptions and the inclusion of commercial subscribers of Fox Sports Australia. In terms of the subscriber mix, about 2.5 million subscribers were broadcast and commercial, the remainder were Foxtel Now and Kayo Sports subscribers. We launched Kayo Sports in late November and are very pleased with the early adoption. As Robert mentioned, we had 115,000 subscribers as of February 5, of which approximately 100,000 were paid subscribers and expect to see it scale into the important winter sports selling season. Pleasingly, the Kayo Sports user base is engaged with average viewing time per active user currently at 69 minutes per day, with over 70% watching live video and smartphone being the primary device. In the second quarter, broadcast churn was 15.6% versus 14.5% in the prior year, which was mainly impacted by the October price rise. Churn management is a major focus for the team in Australia, and we’re investing to better utilize data and advanced analytics to predict churn going forward in order for the business to be much more proactive with customized solution through attention and win back. Capital expenditures related to new Foxtel was $139 million in the first-half, which would have been down modestly had we consolidated Foxtel in the prior year. At Book Publishing, we posted another very solid quarter, driven by strong sales in general books with the release of Joanna Gaines Homebody and The Next Person You Meet in Heaven by Mitch Albom; as well as Rachel Hollis, Girl, Wash Your Face in Christian publishing. Revenues for the quarter increased 6% to $496 million and segment EBITDA increased 13% to $88 million, and both achieved record levels for HarperCollins. This growth came despite recent tighter supply conditions of both paper and bookbinding across the industry. Total digital revenues for the quarter grew 12%, consistent with the previous quarter, and represented 17% of consumer revenues, up from 16% last year. Downloadable audio again grew over 50%. At the Digital Real Estate Services segment, revenues increased 7% to $311 million, which was driven by strong organic growth and the impact of acquisitions, partially offset by currency headwinds. Acquisitions contributed $7 million to revenues, while currency had $13 million offset. On an adjusted basis, revenues grew 10%. REA Group revenues grew 6%, or 13% in local currency, due to residential debt revenue growth in Australia, reflecting higher penetration for premium all and increased yield and modest contribution from the Hometrack acquisition. We also saw an improvement in developer revenues. Revenue growth was partially offset by an overall 2% decline in new listing volume, which included a more pronounced decline in Sydney and lower media revenues. Please refer to REA’s earnings release and their conference call, following this call for additional details and comments on their outlook. Move revenues rose 11% to $122 million versus the prior year, helped by growth of its connection plus product and the inclusion of the Opcity acquisition. Real estate revenues increased 23%, including Opcity. Revenue growth was partially offset by reduced display advertising to drive user experience and engagements, similar to last quarter. We also saw moderating growth in connection plus lead volume, partly impacted by the transferring of leads to Opcity, as well as a more challenging U.S. housing market, including declines in existing home sales in the second quarter. Average monthly unique users at realtor.com were approximately 53 million for the quarter, rising 6% versus the prior year. On Opcity, we are very pleased with how the integration is going. The team at realtor is focused on leveraging their extensive industry relationships to expand adoption of the new platform. We are using advanced AI machine learning and algorithms to better match consumers with agents. We are taking advantage of the Opcity platform to monetize consumer leads that in the past have gone unsold or underutilized. Segment EBITDA rose 2% to $121 million. The quarter reflected additional cost move related to the Opcity acquisition, including deferred compensation combined with continued reinvestment in product development. And on an adjusted basis, segment EBITDA grew 12%. I would now like to mention a few things for the fiscal third quarter. At News and Information Services, we expect higher cost at Dow Jones in the third quarter to drive execution growth initiatives, including expansion into live events. In addition, we expect continued challenges at News America Marketing, mostly related to the FSI advertising. We will continue to seek cost efficiency to streamline the business. In Subscription Video Services, similar to the second quarter, when comparing with the prior year, we will have additional costs related to cricket of US$25 million to US$30 million, an incremental marketing for Kayo Sports of US$10 million to US$15 million. In Book Publishing, overall trends remain favorable and we are encouraged by our upcoming releases together with the ongoing strong performance of our backlist. Some key titles this quarter includes Girl, Stop Apologizing by Rachel Hollis, On the Come Up by Angie Thomas and We Are the Gardeners by Joanna Gaines. At Digital Real Estate Services, similar to Q2, we expect continued reinvestment to drive revenue growth at realtor.com and Opcity, including high marketing and product development. With that, let me hand it over to the operator for Q&A.

Unidentified Analyst:

Hi, this is [indiscernible] for Alexia. Thank you for taking our question. And just New York Times reported another strong quarter of digital subscriber growth yesterday. And from your numbers, The Wall Street Journal is also growing really nicely. Do you believe that longer-term, both The Wall Street Journal and New York Times can grow at this pace? And that – is there room for two meaningful paid digital properties longer-term?

Michael Florin:

Aaron, we’ll…

Michael Florin:

Thanks. Aaron, we’ll take our next question, please.

Entcho Raykovski:

Hi, Robert. Hi, Susan. My question is around Subscription Video Services and particularly Kayo Sports given you’ve launched over the quarter, very useful that you provided us some stats around the subscribers. Just interesting whether you expect the sort of right of net adds to continue over the next couple of quarters? And where do you view the addressable market to be suffering, just interestingly high-level thoughts there? And then more broadly, if we’re looking at the churn rate we just stepped up and I pointed to the higher pricing, but do you think there’s a level of cannibalization taking place as well, given you’ve watched Kayo? Thank you.

Susan Panuccio:

I think, Entcho, I’d also add. Just in relation to your question on the addressable market, obviously, our penetration has been sort of sub-30% for some years and there’s old past audience out there within Australia, the other 70% that we haven’t managed to reach that our research has been very clear are open to paying for proposition if it’s at the right price point. So that would be the addressable market that we’re having a look at. And just in relation to churn, I did mention it in the release. But the team in Australia are very focused on churn management and they are – and we are investing a lot of money in data capabilities in order to effectively manage that churn going forward. And as Robert said, we really have seen very little spin down as a consequence of Kayo, but it is early days and we will continue to focus on that metric as we move forward.

Operator:

Certainly. Our next question comes from Kane Hannan with Goldman Sachs. Your line is now open.

Robert Thomson:

Well, Tracey has just settled into the job and it’s a task obviously to increase the corporation among our various properties around the world, and that will be the first priority. Beyond that one, of course, can’t speculate. It’s interesting, the U.S. real estate market is a tad sluggish. And obviously, listings are down in Australia and yet digital property revenue growth remains real. You could indeed say that these are testing times and model and investment is definitely passing that test. And it shows the value of the Opcity purchase, because we’re providing a higher level of market intelligence and analysis and value-added services, in the case of Opcity. And that is appreciated by our clients who know that there are both quantity leads and quality leads and quality leads mean revenue for our customers.

Michael Florin:

Thank you, Kane. Aaron, we’ll take our next question, please.

Craig Huber:

Great. Thank you. I have some quick housekeeping questions. What should we expect for CapEx for Foxtel for the full fiscal year and also for the entire company? And also curious if you could just tell us how the circulation of revenues did with or without currency in the UK and Australia in the quarter? And my last one, if I could, give a comment on how you think the Australian economy is doing, given all your media assets down there? Do you think it’s about stable, or you think it’s getting worse, [indiscernible] I’m asking? Thank you.

Craig Huber:

Yes, CapEx for the whole company, please, and also Australian economy comment?

Robert Thomson:

Craig, for the macro economics, it’s obviously a little difficult to tell, there are two events upcoming as state election in New South Wales and federal election locked [ph] to be held in May in Australia. Both of those events could have some impact on business activity. But the underlying macro trends in Australia are positive. There has been something of the decline in the housing market. But that – in some respects, welcome, because it means that the rapid increases in property prices, which many analysts were unsustainable have indeed come to an end. And as in many countries, ensuring that there is enough excessively priced property is not just an economic issue, but a political issue, and one which is generating a lot of debate. So that trend of itself is efficacious. And News Australia and the team, led by Mike Miller, is performing very well. EBITDA is growing, the digital transformation of the company is continuing at pace and we’re particularly optimistic about the potential for the business.

Operator:

Certainly. And our next question comes from Brian Han with Morningstar. Your line is open.

Robert Thomson:

Hypothetically, you shouldn’t answer hypothetical questions. But The Wall Street Journal not only is a powerful platform for us. That the network effect that you have, for example, and the relationship between realtor and The Wall Street Journal, the ability to cross promote for us increasingly to get sophisticated permission data on those platforms and right around to HarperCollins and the New York Post Digital Network. It is truly more than some of the pause at the very center, but is The Wall Street Journal.

Michael Florin:

Thank you. Aaron, we’ll take our next question, please.

Michael Florin:

Great. Aaron, thank you very much. Thank you all for participating. And have a great day, and we’ll talk to you soon. Take care.

Analysts:

Entcho Raykovski - Deutsche Bank Alexia Quadrani - JPMorgan Chase & Co. Kane Hannan - Goldman Sachs Group Timothy Nollen - Macquarie Research Alan Gould - Loop Capital Markets Eric Pan - JPMorgan Chase & Co. Craig Huber - Huber Research Partners Brian Han - Morningstar Inc.

Michael Florin:

Thank you very much, Carrie. Hello, everyone, and welcome to News Corp's Fiscal First Quarter 2019 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 identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 will pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. Before I review the results, I wanted to highlight a few things from this quarter. We continue to take steps to stabilize News and Information Services. We are seeing strong growth in digital paid sales while balancing that with ongoing cost efficiencies, including industry solutions. There's still plenty of work to do, but I'm pleased with our progress in the start to the fiscal year. Our revenue mix within the segment is also improving with advertising now making up less than 50% of revenue. In Digital Real Estate Services, we completed the acquisition of Opcity to Move last month for approximately $210 million, including certain deferred payments and stock bonds. As Robert mentioned, this is a leading best-in-breed real estate tech platform that expands realtor.com's offerings to include a success-based concierge model for prequalified transaction-ready leads. Realtor has made significant progress and remains an area we continue to believe is important to both capital reinvestment and to value creation. We are making progress at Foxtel. The team is working hard on the launch of its sports-only OTT product while making significant improvements to our core broadcast offerings. We have restructured the management team, adding key expertise and that team is now heavily focused on further improvements to reinvigorate the new Foxtel. The performance of HarperCollins this quarter again underscores the value of premium content and global scale, posting another quarter of robust EBITDA growth despite more challenging prior year comparables. With that, I would now like to discuss our financial results in more detail. We reported fiscal 2019 first quarter total revenues of over $2.5 billion, up 23% versus the prior year, which reflects the impact of the consolidation of Foxtel. On an adjusted basis, which excludes the impact of the Foxtel consolidation, unfavorable currency impact and the other items disclosed in our release, revenues grew 4%. Reported total segment EBITDA was $358 million, up 44% versus the prior year. As a reminder, last year included a benefit of $46 million from the reversal of accrued net liabilities relating to certain employment taxes in the U.K. Whilst this year, our results include the consolidation of Foxtel and a $48 million benefit from Tabcorp related to the exit of the partnership for Sun Bets in the U.K. Adjusted EBITDA for the quarter, which excludes the Foxtel impact and other items as disclosed in the press release, rose 37%. For the quarter, earnings per share were $0.17 as compared to $0.12 in the prior year. Adjusted earnings per share were also $0.17 in the quarter versus $0.07 in the prior year. Turning now to the individual operating segments. In News and Information Services, revenues for the quarter were $1.2 billion, up 1% versus the prior year. The quarter included the settlement payment to Sun Bets but also a $28 million negative impact related to currency. Within the segment, reported revenues at Dow Jones rose 3%; News UK rose 12%; News Australia declined 7%; and News America Marketing fell 6%. More details will be disclosed in the 10-Q tomorrow. Moving on to the segment highlights. Advertising revenues accounted for 46% of segment revenues and were down 7% versus the prior year with approximately $15 million or 1/3 of the decline due to currency fluctuations. Across our portfolio, advertising trends were mixed. While print advertising trends remain under pressure, we saw improvements at Dow Jones combined with continued healthy digital advertising growth in Australia and the U.K. At Dow Jones, advertising revenues were relatively flat with the prior year, excluding the impact of the closure of the Wall Street International print editions in the second quarter of fiscal 2018. It is worth highlighting that this was the best advertising performance by Dow Jones in recent quarters. At News Australia, advertising declined 11% or down just 4% in local currency, a slight improvement versus the fourth quarter rate. The decrease was due to ongoing weakness in the print advertising market, which was partially offset by digital advertising growth notably at news.com.au. News UK was weaker this quarter with advertising down 10% versus the prior year in both reported and local currency due mostly to softer print trends at The Sun. News America Marketing fell 6% due to weak home-delivered revenues, which include free-standing inserts, partially offset by modest domestic in-store revenue growth and improving digital revenues. This quarter, domestic in-store was the biggest contributor to revenues within News America Marketing. Turning now to circulation and subscription revenues, which accounted for 42% of segment revenues. We saw an increase of 2%, with foreign currency negatively impacting these revenues by $10 million or 1%. We are continuing to see healthy digital subscriber growth, which is helping to underpin our improved performance. At Dow Jones, circulation revenues grew 7%. And at The Wall Street Journal they grew 9%, benefiting from strong growth in its digital-only subscribers, which were up 20% year-over-year. We raised subscription prices this quarter ranging from $2 to $6 per month, which will be phased in to existing members throughout the year. In addition, we again saw healthy year-over-year digital subscription growth at The Times and The Sunday Times, up 24% to 263,000 and also at News Australia up 18% to over 442,000. In the U.K. and Australia, cover price increases and rising digital sales mostly offset print volume decline. The segment is continuing to transition to digital with total digital revenues up to 33% of revenues from 27% in the prior year, partially due to the payment related to Sun Bets in the U.K. For Dow Jones and our mastheads, digital revenues were 37%. Turning to segment EBITDA. News and Information Services segment EBITDA was $116 million, up 57%, which included higher contributions from Dow Jones and News Australia, along with the onetime impact at News UK. At Book Publishing, we posted another very solid quarter, driven by strong frontlist and backlist performances, as Robert mentioned, notably in the U.S., which exceeded our expectations. Revenues for the quarter increased approximately 4% to $418 million and segment EBITDA increased 42% to $68 million. Overall, the backlist contributed approximately 55% of consumer revenues in the quarter. Total digital revenues for the quarter grew 12%, consistent with the previous quarter and represented 22% of consumer revenues, up from 21% last year. Digital audio continues to drive robust results, up over 50% and accounting for over 30% of digital revenues. At the Digital Real Estate Services segment, revenues increased 8% to $293 million, partially impacted by unfavorable foreign exchange. REA Group revenues grew 9% or 18% in local currency due to strong residential debt revenue growth in Australia, including high penetration for premier or an increased yield, the expansion of financial services and modest contribution from the Home Track acquisition. Revenue growth was partially impacted by a 3% decline in listing volume. Please refer to REA's earnings release and their conference call, which just concluded, for additional detail. Move revenues rose 10% to $118 million versus the prior year, driven by the continued growth of its Connections for Buyers product. As Robert noted, real estate revenues, which include listing and lead-based product and accounts for approximately 75% of revenues, grew 19% this quarter. This was partially offset by reduced display advertising as part of a broader initiative to enhance the user experience and drive engagement and listing. Early results have been promising with Connections for Buyers' lead volume growth rates improving versus the fourth quarter while continuing to maintain higher yield per customer. Average monthly unique users at realtor.com were approximately 60 million for the quarter, rising 9% versus the prior year. Reported segment EBITDA was up 11% to $105 million. And on an adjusted basis, EBITDA grew 16%. The team at realtor are focused on the integration and operation of Opcity, which closed on the 11th of October. Expanding broker and agent adoption, improving lead volume and using data machine learning to improve conversion rates will be a key focus. We will be managing the transition of leads from Connections for Buyers to Opcity, pending customer demand. Finally, it is important to note that Opcity is a referral model and we recognize revenues on transaction closing. Turning to the Subscription Video Services segment, which as you may recall, includes new Foxtel and Sky News. Revenues were $565 million versus the reported $145 million a year ago. Segment EBITDA in the quarter was $113 million versus $27 million in the prior year. On a pro forma basis, reflecting the Foxtel transaction, revenues in the quarter declined 17% compared to revenues of $680 million in the prior year, with foreign currency impacting revenues by $45 million or 7% of the decline. Operationally, the revenue decline was driven by lower subscription revenues; including a mix shift to lower-priced packages; lower advertising revenue; and a difficult year-on-year comparison in pay-per-view, which last year included the Macgregor-Mayweather fight. In addition, the adoption of the new revenue recognition standard reduced revenues by $4 million. It is also worth noting that the revenue trends for TV subscriptions, which make up the bulk of the revenues, were relatively stable with the fourth quarter. On a pro forma basis, segment EBITDA declined 27% compared to the $154 million in the prior year. The year-over-year decline reflects the lower revenues, partially offset by a 19% decrease in operating expenses, which includes lower nonsports programming costs and a $6 million benefit related to the adoption of the new revenue recognition standard. On operating metrics, Foxtel's total closing subscribers were over 2.9 million as of September 30, which is up versus the prior year, driven by Foxtel Now subscriptions and the inclusion of commercial subscribers from Fox Sports Australia, offset by lower broadcast subscribers and the closure and wind-down of T-Box and Optus subscription. In the first quarter, broadcast churn was 12.9% versus 12.7% in the prior year. ARPU was AUD 76, down about 6%. However, excluding the new revenue standard, ARPU would have been about AUD 2 higher per month and down about 4% versus the prior year, similar to recent trends. The next 12 months will see the new Foxtel business focusing on three key priorities

Entcho Raykovski:

My question is around Subscription Video Services. Firstly, could you let us know how much was spent in Q1 on investment into the OTT products? Obviously, that's a focus that you've mentioned. So just interested in how much was spent and how that investment is then expected to be phased over the remainder of the year. And as a follow-on to that question, following the launch of the packages, how do you think about the addressable market? Where do you think penetration can get to? Obviously, you've been sitting around that 2.8 million, 2.9 million mark so just interested about how you're thinking about additional subs.

Susan Panuccio:

And Entcho, just in relation to OTT, we haven't given out the investment numbers in relation to that. But what we have said, and we said this on the last call, we spent about $285 million in CapEx last financial year at Foxtel. And we expect the investment to be at least $50 million higher than that in the current year. And at this stage, we're currently expecting that, that will come in line. We, obviously, when we launched the product, we will have marketing costs that will be associated with the OTT program. So that will come in, in the first quarter -- or in the second quarter and obviously will continue somewhat through the balance of the year. And just as a note, we spent about $69 million of CapEx in relation to Q1, which is flat, relatively speaking, year-on-year.

Alexia Quadrani:

My question's on the News and Information Services segment and the strong growth you're seeing in digital subscribers. I guess, any color can you give us on the opportunity for further growth, really sort of how big is the potential opportunity in your opinion, how that may differ by market obviously? And then just my follow-up would be a quick question on HarperCollins. When you look at the pipeline of books out there going into the next calendar year and even the fourth quarter, any sense on how those skew physical versus digital?

Susan Panuccio:

And I think if we just focus on Dow Jones, obviously, the size of the market within the U.S. is very large as well as internationally. And just to give you sort of a sense, we had about 93 million nonsubscriber website visitors in Q1 made up of first-time repeats and even former subscription visitors. So there is a big opportunity, obviously, within that pool of people to drive conversions. And The Wall Street Journal customer base is only 11% made up of international subscription. And given the brand and the strength of that brand on a global scale, we do expect to see growth within international going forward.

Operator:

Our next question will be from Kane Hannan with Goldman Sachs.

Susan Panuccio:

So just in relation to Sun Bets, yes, it is. We obviously got net offset for coming to that, but yes, the gross payment was $48 million and it dropped to EBITDA.

Susan Panuccio:

And I think the other thing that's important to note in relation to that is that realtor will be managing the conversion from leads coming in into Opcity to make sure that the customer experience is optimal. And so that may fluctuate as we go throughout the year.

Timothy Nollen:

I have a question about costs, particularly in Australia. I may have missed the News [indiscernible] side how you manage to get some nice EBITDA expansion, I think you mentioned in Australia, despite some revenue declines there. I know you've been doing some cost-out efforts for a while there and maybe that's all that was, a better base. And then similarly on the Subscription Video Side, it looks like some good operating cost cuts. Despite the fact that a lot of those costs are sports-related, I wouldn't think you'd have to adjust to put cost out. Wondering if you could help us maybe quantify a bit more how much the pay-per-view fight contributed to the revenue and the cost differential or how else you managed to save costs in that business.

Timothy Nollen:

Yes, it's kind of a two part thing. Just trying to understand with the fight and the revenue recognition, I think you gave some comments on that. I just wondered if possible to quantify what the revenue and cost differential was there on the fight and any other item. What I'm trying to understand is how you managed to save a fair amount of operating costs, given a lot of sports rights generally in the mix.

Operator:

Our next question will be from Alan Gould with Loop Capital.

Robert Thomson:

Well, clearly, we're at an early stage. We're early in the season, we're early in the cricket season in Australia. We're early in the season of renaissance at Foxtel. I would look, really, over the next 12 months, particularly the takeout of the OTT in coming months, then ahead of the next winter sports season in Australia, so the selling season there is sort of in the February, March, April peak selling season, and keep an eye both on the number of new customers and obviously the ARPU. But to be very clear, benchmarks over the coming year, it'll be obvious to you, and we're going to make it obvious to you how we're faring. But we have full confidence in Patrick Delany and the new team and it is an overhauled team. And the early indications are that they have both an understanding of the opportunity, empathy with potential customers and kind of real energy that has brought new life to Foxtel. And so one, it's a great opportunity for the company; and two, the metrics will be very clear.

Eric Pan:

So just a little bit more on realtor.com, visitor growth there seems to be slowing. Can you talk a little bit about your strategy there to try to boost the visitorship, where you're focusing your energy? And then [indiscernible] you're saying you acquired a mortgage business. Do you foresee either Move or realtor going to the ancillary businesses as well?

Operator:

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

Susan Panuccio:

So just in relation to the Sun Bets, it was actually partly operational in nature because the settlement of that was effectively the payout of a contract, bringing forward effectively the minimum revenue guarantee that we had within that contract. So obviously, there's the termination payments in there as well, but the bulk of it was operational. And as a consequence that's why we reported it the way we did. In relation to Subscription Video Services and the costs, we did see cost reductions coming through from nonprogramming as well as some of the program. We didn't have some of the year-on-year costs that we talked about on the pay-per-view, which was $12 million. We didn't have sports, some of the sports costs that came in relative to Q1 of the previous year, but they also are working hard on some of the overhead costs in the background. So they have been looking at driving costs out in the back office, as we said, in order to provide a runway for investment going forward.

Brian Han:

In the books division, can you please explain the big margin improvement in the quarter despite just a 4% revenue increase? I mean, the big growth in digital audio can make up for all that, can it?

Brian Han:

Susan -- and what was the increase in the backlist revenue during the quarter versus B2P?

Operator:

I'm showing no further questions in the queue at this time. I'd like to turn it back to Mr. Mike Florin.

Operator:

Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.

Analysts:

Kane Hannan - Goldman Sachs Eric Pan - JPMorgan Brian Han - Morningstar Raymond Tong - Evans and Partners Craig Huber - Huber Research Partners Andy Levy - Macquarie Securities

Mike Florin:

Thank you very much, Carrie. Hello, everyone and welcome to News Corp’s fiscal fourth quarter 2018 earnings call. We issued our earnings press release about an hour ago and it’s now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive and Susan Panuccio, Chief Financial Officer. We 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 News Corp’s business and strategy. Actual results could differ materially from what is said. News Corp’s Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 will pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. Before I review the financial results, I wanted to highlight five themes from this past year and the quarter, where we have made significant progress. We have taken steps to stabilize the News and Information Services segment and this year showed tangible improvement through a combination of cost initiatives and digital investments. We are seeing strong digital paid subscriber growth across many of our key properties, where digital subscribers now exceed print. Revenues were stable for the quarter and the fiscal year and the segment EBITDA reflected moderation in declines, a material improvement from recent trends. In addition, we continued to focus on potential industry solutions, which include our recently announced printing agreement with Fairfax in Australia. We have focused on strengthening our digital real estate services platform this year, which we have done by expanding into relevant adjacencies, investing in new businesses and products and growing our core audiences. This segment was our biggest EBITDA contributor and annual revenues now exceed well over $1 billion and have more than tripled separation. The performance at our book publishing segment this year underscores the value of premium content in global scale pasting record revenues since the company separated. We completed the Foxtel and Fox Sports Australia combination, which gives operational control to News Corp, reshapes our revenue base and provides more flexibility for News Corp moving forward and we continue to actively look at our portfolio. This year, we sold several non-core investments, including our stake in SEEK Asia and magazines in Australia and continue to evaluate our options with respect to our regional and community newspapers. With that, I would now like to discuss our financial results. For the full year fiscal 2018, total revenues were over $9 billion, an 11% increase compared to the prior year. This includes the consolidation of Foxtel in the fourth quarter. On an adjusted basis, which excludes the impact from acquisitions and divestments and currency fluctuations as disclosed in the press release, revenues rose 2%. Reported total segment EBITDA for the year was nearly $1.1 billion compared to $885 million in the prior year, a 21% increase over the prior year period. Adjusted EBITDA for the year, which excludes the Foxtel impact and other items as disclosed in the press release, rose 6%. During the full year, we had several non-recurring items impacting EPS. Those items included pre-tax non-cash write-downs of $1.2 billion primarily related to Foxtel and Fox Sports Australia and use American marketing, which we reported in the third quarter and a $237 million charge reflecting certain one-time adjustments as a consequence of the U.S. Tax Act. Finally, the fourth quarter included a loss of $337 million related to the Foxtel transaction, primarily resulting from the write-off of the Fox Sports Australia channel distribution agreement as a result of the transaction, which is reflected under other net. Reported EPS from continuing operations were negative $2.60 compared to negative $1.27 in the prior year. Adjusted EPS from continuing operations were $0.44 versus $0.36 in the prior year. And now to the quarterly financial data, we reported fiscal 2018 fourth quarter total revenues of $2.7 billion, up 29% versus the prior year. On an adjusted basis which excludes the impact of the Foxtel consolidation and the other items disclosed in our release, revenues rose 5%. Reported total segment EBITDA was $312 million compared to $215 million in the prior year. Adjusted segment EBITDA, which excludes the Foxtel in fact rose 13%. For the quarter, our reported EPS were negative $0.64 compared to negative $0.74 a year ago. Adjusted EPS from continuing operations were $0.08 versus $0.11 in the prior year. Turning now to the individual operating segments. In news and information services, revenues for the quarter were $1.3 billion and rose 1% versus the prior year. Within segment revenues, advertising revenues were down 2% and circulation and subscription revenues increased 5% with foreign currency benefiting advertising by 1% and circulation and subscription revenues by 2%. Within the segment reported revenues at Dow Jones rose 3%, News UK rose 4%, News Australia declined 3% and News American marketing fell 2%. News and information services segment EBITDA this quarter was $94 million, down 9% versus the prior year, which is a notable improvement on the declines we experienced in the third quarter. There are few highlights, which I would like to mention from a segment. We again saw strong digital subscriber growth across our news businesses. At Dow Jones, circulation revenues grew 9% and at the Wall Street Journal, they grew 10% benefiting from strong growth in the Wall Street Journal digital-only subscribers, which were up 25% year-over-year and up 7% versus our fiscal third quarter. In addition, we again saw healthy year-over-year digital subscription growth at The Times and The Sunday Times up 27% and also at News Australia, up 14%. The Professional Information Business, or PIB, at Dow Jones posted 6% revenue growth, led again by risk and compliance, which grew 35% in the quarter versus the prior year and as expected exceeded $100 million in total sales this year. We remain very encouraged by the pipeline and trajectory of growth. Just to frame the size, our PIB products in fiscal 2018 generated 27% of Dow Jones revenues. Fourth quarter advertising trends across our news portfolio improved modestly from the fiscal third quarter rate, the UK was again a solid performer, with advertising up 6% versus the prior year or flat in local currency led by digital advertising growth and higher year-on-year performances at both The Sun and The Times. News Australia advertising declined 6% versus the prior year in reported and local currency showing further moderation as print advertising declined. Dow Jones advertising was down 10%, also reflecting an improvement in print declines at the Wall Street Journal. The closure of the Wall Street Journal international print editions in Q2 impacted Dow Jones advertising revenues by $5 million accounting for nearly half of the advertising declines this quarter. We remain very focused on cost initiatives, particularly at News Australia. While much work is due to be done, pleasingly News Australia showed some stability and profitability, helped by ongoing cost initiatives, which have exceeded our initial expectations and also higher digital revenues. As we mentioned last quarter, we have been working with industry participants about potentially shaping or sharing printing and distribution facilities to drive further operating efficiencies across our key markets. News Corp Australia entered into a commercial printing arrangement with Fairfax Media to provide printing services in New South Wales and Queensland. We expect to realize approximately AUD10 million of cost savings on an annualized basis from this agreement and continue to explore other opportunities to increase efficiencies. Finally, News America marketing revenues were relatively stable as weakness in inset products were mostly offset by mid single-digit growth in in-store advertising products. Profit contribution improved due to effective cost management. Turning to our book publishing segments, we posted very solid quarter driven by strong frontlist and backlist performances, combined with the contribution from the previously announced sublicensing agreement of Tolkien’s Lord of the Rings Trilogy with Amazon. Revenues for the quarter increased approximately 20% to $490 million and segment EBITDA increased 82% to $71 million. The Tolkien agreement, which highlights the value of intellectual property impacted revenues by $28 million or 7%. This quarter also benefited from several successful new releases, including Magnolia Table by Joanna Gaines, I’ll Be Gone in the Dark by Michelle McNamara and Girl Wash Your Face by Rachel Hollis, as well as the continued strength of backlist titles such as The Subtle Art by Mark Manson. Overall, the backlist contributed approximately 49% of consumer revenues in the quarter, down 54% last year. While revenue this quarter was driven by the success of the frontlist, backlist revenue still grew at a healthy rate on an absolute basis. Total digital revenues for the quarter grew 12%, the highest growth in recent periods due to the strength of the downloadable audio books and represented 20% of consumer revenues in line with the prior year. In the digital real estate services segment, revenues increased 19% to $299 million. Reported segment EBITDA was up 14% to $99 million. REA Group revenues grew 27% due to very strong residential depth revenue growth in Australia, including higher penetration for Premier Oil and increased yield, the integration of the Smartline acquisition and benefit from currency. Revenue growth was partially offset by lower listing volume. As always, please refer to REA’s earnings release in their conference call which will commence shortly after this call for additional details. News revenues rose 11% to $120 million versus the prior year driven by continued success of its Connections for Buyers product. Connections for Buyers benefited from higher customer flow and yield as well as increased lead volume albeit at a slower pace in the prior year. Core real estate revenues, which includes listing and lead-based products, grew 17%. As I mentioned last quarter, we have been reducing our non-listing advertising modes as part of the site redesign, initially within select market to improve engagement and lead volume with encouraging early signs. Average monthly unique users at realtor.com were approximately 63 million for the quarter rising 9% versus the prior year. As expected, Move’s expenses were higher this quarter due to planned brand marketing and traffic acquisition cost to drive revenue growth and partly to increase our traction in New York City. We are also re-branding our core suite of professional services and tools ahead of the commercial launch in the coming months. Turning to subscription video services, which include the newly combined Foxtel and Fox Sports Australia businesses and Sky News, you will see that we have attached the press release, the pro forma statements for the past few years. Revenues were $610 million versus $140 million a year ago on a pro forma basis reflecting the Foxtel transaction last year’s revenues were $643 million. Segment EBITDA in the quarter was $97 versus $24 million in the prior year. As I alluded to last quarter, reported results for the segment includes one-time transaction cost of $12 million. On a pro forma basis, segment EBITDA declined to $109 million from $178 million in the prior year, primarily due to the revenue impact I just noted, higher programming costs, which reflect increased NRL and FSA rights cost as well as $10 million of transition cost. On operating metrics, Foxtel’s total closing subscribers were over 2.8 million as of June 30, up nearly 2% versus the prior year and prior quarter driven by Foxtel Now subscriptions offset by lower cable and satellite subscribers and the termination of the wind down of the TV box subscribers. In the fourth quarter, cable and satellite residential churn was 12.5%, down from the 13.3% and ARPU was down 3% to AUD80 per month. In the segment, subscription revenues totaled $523 million for the quarter, accounting for over 85% of segment revenues. Subscription revenues were down 4% year-on-year on a pro forma basis resulting from the subscriber mix. Advertising revenues totaled $67 million for the quarter accounting for over 10% of segment revenues. Advertising was down 12% year-on-year on a pro forma basis primarily due to lower advertising at the Foxtel Network channels. As I mentioned last quarter, there will be some short-term reinvestment required at Foxtel to drive volume and improve the subscriber trajectory. I will briefly describe what these are. Firstly, beginning in the second quarter of fiscal 2019, we will start to incur the cost associated with the recently acquired Cricket Australia rights. We also faced full year of NRL costs related to the step up from the new rights contract which will likely be in the region of AUD20 million or $15 million. Secondly, we anticipate the launch of an IP-only sports offering in the second quarter and are also actively considering other non-sports IP-only products targeted at specific demographics. Thirdly, the incremental depreciation and amortization as a consequence of the consolidation was approximately $75 million in the quarter. Finally, our full year results include approximately $60 million of CapEx related to the consolidation of Foxtel in the fourth quarter. For fiscal 2018, Foxtel CapEx was approximately $285 million. At this point, we expect Foxtel’s fiscal 2019 CapEx to increase by at least $50 million to reflect expenditures related to high penetration of next-generation set-top boxes, including 4K upgrade and some additional project spend relating to improving its IP platform. It is important to note that a significant amount of Foxtel’s CapEx is subscriber related, which includes set-top-boxes and capitalized installation cost and will be driven by sales volume. As Robert mentioned, our goal continues to be driving towards an IPO and believe that improving subscription volumes will be key to our long-term value creation. Over-the-top will be a key growth initiative and our goal will be to maintain the broadcast subscriber base and manage churn effectively. Finally, I would like to mention a few other themes as we enter into fiscal 2019. At news and information services, while pre-advertising trends continue downwards, they have been relatively stable, but visibility remains limited. As a consequence, we are very focused on driving higher penetration of digital paid subscription rolling out new digital advertising solutions and delivering ongoing cost initiatives, particularly in Australia and at News UK. The segment achieved some stability this year and we remain focused on continued improvement. At subscription video services, we expect reinvestment this year as I mentioned focusing on launching new OTT products, 4K, the next generation of the IQ Box and managing our valuable broadcast base. In book publishing, overall, we are very pleased with the performance of HarperCollins. Underlying trends seem relatively stable and we remain focused on expanding our foreign language penetration. We will cycle some challenging comparisons in the coming year that we are excited about our new releases, including the recent release of Daniel Silva’s, The Other Woman and the November release of Home Body by Joanne Gaines. At digital real estate services, we expect continued revenue growth at both REA and Move and for the segment to continue to play an important role in our revenue and EBITDA mix. With that, let me hand it over to the operator for Q&A.

Kane Hannan:

Good morning, Robert and Susan. Just on the Foxtel that you mentioned, could you just comment on what you say is I suppose the key hurdles this business would need to achieve on before you would be willing to go ahead and with such a transaction is adjusted subscriber growth that you are mentioning at the end?

Susan Panuccio:

I think Kane I probably just add that we obviously have done a lot of investment in the business as it stands anyway and we have got the cricket rights as well you know and other sports contracts that we now have looked out for a significant period of time and it is important that we monetize those and start to push subscriber growth and that will be by a combination of broadcast and these new OTT propositions that we launched. So, we are focused on both of those and we are focused also on cost reductions out there as well. So, there is a major transformation going on across that business. And as Robert alluded to the management team down there that have hit the ground running and doing a great job so far.

Operator:

Thank you. Our next question will be from Eric Pan with JPMorgan.

Robert Thomson:

I would say we are a focused operator. Susan just mentioned Foxtel and Fox Sports, in that combination we want to make more than the sum of the parts. Their consolidation has given us control of the company in tandem with our partner, Telstra and that will be our absolute focus.

Operator:

Thank you. Our next question will be from Brian Han with Morningstar.

Susan Panuccio:

No, that’s not 100% margin. So, I think we have said $28 million was the revenue increase and we netted about $21 million.

Mike Florin:

Thank you. Carrie, we will take our next question please.

Raymond Tong:

Good morning, Robert and Susan. Just a couple of questions. Firstly, just on the Move revenue, growth has moderated a bit in the quarter, just wanted – can you talk to some of the key areas of investments and how you are sort of thinking in terms of revenue growth going forward? And just on the subscription video services, there is a bit of investment coming up that you have outlined and just wondering how you think about the EBITDA trajectory into the medium-term for that business?

Susan Panuccio:

And Raymond, I think just in relation to your second question on Foxtel and our expectations around EBITDA for the coming year, we obviously don’t give our guidance in relation to that, but I think it would be fair to say we have talked about the reinvestment activities that we are planning to do there and we obviously have got the cricket rights that have come in with the cost associated with that. We clearly are going to be launching some new products and platforms that will come out into the marketplace which will start to grow subscribers and push that through. So, we are expecting going forward that there will be a balance of obviously investment with growth coming through and then we would be expecting lesser years to pickup.

Operator:

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

Susan Panuccio:

Maybe Craig I might handle those if I will. So, in relation to Dow Jones, circulation revenues were up 9% growth in local currency as well, News UK circulation revenues were down 1% and in News Australia, circulation revenues were flat, but in relation to that first question. The second question you are right, if you adjust for M&A and other matters, then the costs were flat across news and information services and I think it’s fair to say we have probably got businesses at different growth rates than different parts of the cycle, but Dow Jones will probably see more of an investment going forward. They have got revenue growth obviously they have had revenue growth this year, we are expecting to continue to invest in marketing and acquisition cost as I continue to push those digital subscribers. I think it would be fair to say that News Australia were balancing cost reinvestments with cost out and we do believe that there is work that can be gunned down there and the team is very focused on that. And at News UK, there is indeed still opportunities around cost out there. We would expect those probably to be lesser than the ones we would see in Australia as they continue to reinvest in their digital products over there. So I think it’s a mixed bag across the group that we certainly see more opportunities in front of us.

Mike Florin:

Thanks, Craig. Carrie, we will take our next question please.

Andy Levy:

Hi, guys. Thanks. Just one for me on the Foxtel IPO, I was wondering if you can just talk to the license wanting the IPO, Foxtel down the track and what News Corp would be looking to do which its holding in terms of reduce it through their prices, would you be looking at your partner exiting through that process? Thanks.

Mike Florin:

Thanks, Andrew. Carrie, we will take our next question.

Mike Florin:

Great. Well, thank you Carrie and thank you all for participating today. Have a great day and we will talk to you soon. Take care.

Analysts:

Alexia Quadrani - JPMorgan Kane Hannan - Goldman Sachs John Janedis - Jefferies Eric Katz - Wells Fargo Craig Huber - Huber Research Partners Brian Han - Morningstar

Michael Florin:

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'll open with some prepared remarks and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 will pass it over to Robert Thomson for some opening comments.

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 $1 in the prior year. The loss was primarily driven by the pretax non-cash write downs of $998 million related to Foxtel and Fox Sports Australia. As we communicated in March, an impairment 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 close the Foxtel transaction at the beginning of the fourth quarter and those results will be consolidated with Fox Sports Australia during quarter four which I will discuss in a few moments. Twenty now to the individual operating segments. In news and information services, revenues for the quarter were $1.3 billion, up 2% versus the prior year, slightly improved rate over the previous quarter. Foreign exchange contributed $50 million this quarter to revenues. 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 American 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 are 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 Down Jones. In addition, we again saw strong year-over-year digital subscription growth at the Time, and 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 overall quarter 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 from last quarter. The UK 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 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 have been centered around Australia, given the reliance on print advertising in that market. We have already significantly exceeded last year's AUD40 million in cost savings during the first nine months of the year and continue to look for additional efficiencies. We're also continuing to review our portfolio in Australia as we focus on improving our profitability. And globally as we have done in the UK, 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 result were lower, but saw a sequential improvement from the second quarter, benefiting from one additional insertion and higher digital growth as we expected in communication on the last earnings call. Turning to our book publishing segment, we posted a very solid quarter led by strong front list and back list performance. Revenue for the quarter increased approximately 6% to $398 million and segment EBITDA increased 16% to $43 million. Strong 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 AJ Finn and strong performances from the backlist. Overall, the backlist contributed approximately 58% of revenues in the quarter, up from 52% last year, helping to drive higher margins. Total digital revenue 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 revenues. 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 revenue growth in Australia, including higher penetration for premium all. The integration of the smart line acquisition and benefit from currency. While listing volumes were down modestly, partly due to an early start, 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. News revenue rose 15% to $115 million versus the prior year, driven by a 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 right from the base growth rate, we saw slower growth in non-listing advertising revenues this quarter. Part of the 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. News operating expenses were higher this quarter, driven by planned incremental marketing to drive revenue growth and partly to increase 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, revenue increased $7 million or 6% to $129 million. Segment EBITDA in the quarter soured $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 cost 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 non-cash 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 $18 million, primarily related to the Australian Football League rights and carriage fees of 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 TV box subscribers as part of the planned wind down in the quarter. In the third quarter, cable and satellite churn was 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 will 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 reinvestments 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’ 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 one quarter of our broadcast base. We expect to continue to expand penetration of new set top boxes and also to develop a next generation box, including half customer features. Over the top will be a key growth initiative. This past fiscal year, our product development was focused on launching an IP version of our broadcast offering, which has helped to extend our reach and capture more of the affordable segment. 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 operations to deal further efficiencies and to ensure the business is right sized to deliver the new initiatives. Looking to the fourth quarter, there are a few comments I would like to make. 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 cost 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 JRR 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 hiring investment spending it move to drive traffic and support new products. While we are in the process of completing our purchase price allocation of Foxtel and evaluating the related impact from a 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 nine months totaled $187 million, including $69 million for the quarter. In addition, we have also advertised an additional $49 million and $17 million for the first nine months 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.

Alexia Quadrani:

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 peers, has it influenced your longer term strategic outlook for your business? Do you think you are in the right size, right asset mix? I know you've got a lot of different things planned at different parts of your business, but it's sort of a bigger picture question.

Operator:

Next question comes from Kane Hannan with Goldman Sachs.

Robert Thomson:

Certainly, we’re rare making genuine inroads it 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 a 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 US. So listing volumes down about 7.2% year-on-year at present. But when you look at the broader trends in the US economy, we're clearly going through a phase or at least I would argue on route to significantly more liquidity. The March seasonally adjusted annualized figures for sales around 5.6 million, the median sales price was up 5.8% to around 250,400. And significantly, the number of homes in the US seriously underwater in Q2 2012, that was 28.6 of US homes seriously underwater, that's down to 9.5% of homes. And given the issue with the market at the moment is not a problem of the demand, but a problem with supply and a compounding factor in the past has been a lack of job security, what -- with the strength in the US job market, you will see more people more confident about moving homes to a better job, job really means mobility, mobility means people moving and that will be good for business.

John Janedis:

I was hoping you could give a little bit more detail on digital subscription growth at the journal, where you’re incrementally more promotional during the quarter to drive subs, where are you sourcing them from and bigger picture, you have obviously been vocal on Google and Facebook, any thoughts there on movement in terms of monetization of news content on digital platforms?

Susan Panuccio:

I think I’d just also add to your question as well, we are obviously looking to expand the offering internationally in the education with students as well, but what is pleasing is the ARPU is holding up so I think that's important even as we go to this broader base. I think the other part to your question was about our office and I think it's important to note that we haven't changed our intro office in the US. So I have to remain consistent with starting that obviously that digital growth and the ARPU growth.

Unidentified Analyst:

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 FY19, 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 in a dedicated cricket channel but just interested in whether you think you can regroup those costs?

Susan Panuccio:

And I think I’ll 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 an important of that as Robert mentioned, particularly over the summer months to have a look at churn and the portfolio going forward. We are looking to expand the rollout of the [indiscernible] and invest in the new box 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 to get more customers in. We’ve also mention that we're looking to expand the OTT propositions and we want to look at sports as well as non-sports genre, but we also are right sizing the cost base. So, there's been a lot of cost work actually done today, so even before the merger happened and the pain down there is still heavily focused on looking at getting costs out, so they can balance that 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 it always in the quest to drive subscribers at a higher value going forward.

Q - Eric Katz:

You mentioned earlier potentially reviewing the portfolio in Australia. Have you identified assets at this point? Can you size it? What's the timeline and why now?

Operator:

Next question comes from Craig Huber with Huber Research Partners.

Susan Panuccio:

Thanks, Craig. I think so in relation to your first question, in relation to the circulation, so in local currency, we are expecting Dow Jones to be up about 12%, Wall Street Journal up about 12%. We’re expecting local currency to be down 5% and these, we're expecting to be relatively stable. In relation -- what was your question in relation to the D&A sorry?

Susan Panuccio:

We don't comment on obviously Craig, on the forward looking projections, but obviously as they become clearer, we will communicate those.

Susan Panuccio:

We have that in the prepared comments actually. We read that out. We had D&A for the first nine 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.

Brian Han:

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 in Fox.

Operator:

[Operator Instructions] And our next question comes from Raymond Tong with Evans and Partners.

Susan Panuccio:

So the team in Australia continue to remain focused on how they can drive those efficiencies down 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 said globally we’re actively looking at whether they are opportunities from a press side facility as well as the distribution facilities and we will continue to explore those options. Obviously, they need to make sense for both book parties and they can be quite detailed and join our commercial negotiations, but we have had tremendous success with those negotiations over in the UK 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 draw I think efficiencies by those means and we believe that there's still opportunities where they can continue to get cost out going forward.

Michael Florin:

Thank you for all participating. Thank you for your help Sophie. Have a great day and we'll talk to you soon.

Analysts:

Entcho Raykovski - Deutsche Bank Craig Huber - Huber Research Partners Brian Han - Morningstar Eric Katz - Wells Fargo

Mike Florin:

Thank you very much, Justin. Hello everyone and welcome to News Corp's fiscal second quarter 2018 earnings call. We issued our earnings press release about an hour ago and it's now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We'll open with some prepared remarks and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 will pass it over to Robert Thomson for some opening comments.

Susan Panuccio:

Thank you, Robert. Turning to the financials, we delivered another quarter of strong operating results. Fiscal 2018 second quarter total revenues were around $2.2 billion, an increase of $64 million or 3% compared to the prior year, led by our Digital Real Estate Services segment. Reported total segment EBITDA was $329 million, up from $325 million in the prior year. For the quarter, earnings per share were a loss of $0.14 compared to a loss of $0.50 in the prior year. This quarter's results include a charge related to the remission of deferred tax asset due to the lowering of the U.S. corporate tax rate. I'll discuss in a few moments the expected impact from the U.S. tax reform going forward. You may recall the prior year period included a pretax non-cash impairment charge of $310 million related to The Australian publishing division fixed assets and a $227 million pretax non-cash write-down related to the adjustment of the carrying value of the company's investment in Foxtel. Adjusted earnings per share, which excludes both items and the other items shown in the press release reconciliation table, were $0.24 compared to $0.19 in the prior year. Turning now to the individual operating segments. In News and Information Services, revenues for the quarter were $1.3 billion, relatively flat with the prior year. The acquisition of Australian Regional Media or ARM and foreign exchange contributed $30 million and $33 million, respectively, this quarter. Within segment revenues, advertising was down 6% and circulation and subscription revenues increased 6%. Within our core news businesses, Dow Jones revenues rose 1%, News U.K. grew by 7%, and News Australia grew by 4%. These increases were offset by a 16% decline at News America Marketing as we flagged during the last earnings call. More revenue details will be provided in the 10-Q filing tomorrow. Segment EBITDA this quarter was $140 million, down $2 million versus the prior year as year-over-year improvements at News U.K. and News Australia were more than offset by weaknesses at News America Marketing and higher marketing costs at Dow Jones. A few highlights to mention from the segment. We saw digital subscription growth across our News businesses. At Dow Jones, circulation revenues grew 10%, the third consecutive quarter of double-digit growth, benefiting from 29 percentage points growth in WSJ digital-only subscribers and higher subscription ARPU. Digital now accounts for over 50% of Dow Jones circulation revenue. We also saw strong digital subscriber growth at The Times and The Sunday Times, up 20% from Q2 2017 and at News Australia up 26%, including a contribution from ARM. At Dow Jones, we are also building on the renewed momentum at our Professional Information business, which posted eight percentage points revenue growth, thanks to the continued strong performance from risk and compliance as Robert mentioned. We posted the highest revenue levels since the fourth quarter of fiscal 2014. Advertising continues to be mixed across the respective divisions. Within the businesses, we saw advertising growth in the U.K. of 9% or 2% in local currency, the first increase in 27 quarters, driven by digital advertising growth from The Sun with a global audience that reached over 90 million monthly unique users in the second quarter as well as moderating print advertising decline. While at News Australia, advertising revenues improved three percentage points, but still had an overall decline of 10% versus the prior year after excluding the impact of currency and acquisitions and divestitures, which was consistent with the previous quarter. And at Dow Jones, advertising was down mid-teens, a slight acceleration on the trend from the first quarter. The closure of The Wall Street Journal international print edition impacted Dow Jones advertising revenues by $6 million or four percentage points for the quarter. International expansion continues to be a strategic focus for Dow Jones. And despite the print closure, our total Wall Street Journal international subscriber base still grew 28% versus the prior year. We continue to push very hard on our cost transformation program, notably in Australia with savings expected to be well ahead of the AUD40 million realized last year. The program extends across every area from overheads to advertising sales consolidation to newsprint and production and photography. This quarter, as Robert mentioned, News Australia's profitability improved and increased its contribution to segment EBITDA. With the integration of ARM, we continue to actively look at optimizing the broader Australian portfolio with a focus on profitable growth. We had a similar story in the U.K. which also drove higher profitability this quarter. Finally, at News America Marketing, revenues were impacted by ongoing weakness in free standing insert revenues, which had two fewer inserts versus the prior year and lower custom publishing as well as slightly lower revenues from in-store products, impacted by fewer new consumer product launches this year. Part of the decline was timing-related, and we should see a sequential improvement this coming quarter. Turning to our Book Publishing segment, we posted a solid quarter despite facing a difficult prior year comparable quarter. Revenues for the quarter increased approximately 1% to $469 million and segment EBITDA increased 7% to $80 million. Titles to highlight this quarter included Bad Dad by David Walliams in the U.K. and Pioneer Woman Cooks

Entcho Raykovski:

Hi Robert, hi Susan. My question is around Foxtel and Fox Sports. And I just wanted to get your perspective on the combined entities appetite to bid for cricket rights in Australia, given they're coming up for tender very shortly. And is there any change in strategy for the entity under Patrick Delaney as CEO which, Robert, you've obviously spoken about?

Mike Florin:

Thank you, Entcho. Justin we'll take our next question please.

Craig Huber:

Yes, hi. Thanks for taking the question. Just what's the updated thoughts of you whether -- you have upwards of $2 billion of cash on your balance sheet. Just investors are always wondering what the plan is for that, please. Thanks.

Craig Huber:

Thank you.

Operator:

Certainly. That question will come from Brian Han with Morningstar.

Susan Panuccio:

So, I think the actual -- when you look at the numbers, it looks like the costs are relatively flat, but if you exclude M&A and currency, the costs are actually down 5% quarter-on-quarter, year-on-year. So, I think we remain very pleased with the cost reduction work that those businesses are doing, particularly in Australia and across the U.K. As far as focusing on whether it impacts on our product, we continue to look at back office, overheads, corporate functions. We look at platform consolidation, production and manufacturing, which we constantly can continue to find cost savings with as the businesses rationalize. So, I think we remain very comfortable that we're getting the balance right between cost reduction and reinvestment in our digital properties and, in fact, our print properties going forward.

Operator:

[Operator Instructions] Our next question will come from Eric Katz with Wells Fargo.

Robert Thomson:

Well, we're still in the midst of obviously a transition from print. Print, which remains a strong platform, and we're seeing that with a new real estate magazine that we're launching in coming months, which is oversubscribed by advertisers. So, don't discount print. But the digital market itself really is in the midst of our people where you have both advertisers and ad agencies reviewing their role in the market. A great deal of concern about the sort of environments in which famous prestigious advertisers find themselves. And I think what we are gradually going to see, and I think we have little doubt about this, is that there will be a migration to premium and that's where we have a comparative advantage because titles around the world are the leading titles in their markets. And to supplement that, we are creating News IQ, which is our own in-house based advertising platform, taking advantage of the great inventory we have and the authenticated audiences we have and being able to offer advertisers an opportunity to project their image and their wares in a space that won't be detrimental to their image, but brand enhancing.

Operator:

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

Operator:

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

Analysts:

Entcho Raykovski - Deutsche Bank Craig Huber - Huber Research Partners Brian Han - Morningstar Raymond Tong - Evans and Partners Brian Han - Morningstar

Mike Florin:

Thank you very much Janet. Hello, everyone. And welcome to News Corp.’s fiscal first quarter 2018 earnings call. We issued our earnings press release about an hour ago and it is 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 will be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp.’s business and strategy. Actual results could differ materially from what is said. News Corp.’s Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 will pass it over to Robert Thomson, for some opening comments.

Susan Panuccio:

Thank you, Robert. Turning to the financials, we delivered very strong operating results for the first fiscal quarter of 2018. We reported fiscal 2018 first quarter total revenues of around $2.1 billion, an increase of $93 million or 5% compared to the prior year. Of that increase, acquisitions and divestments accounted for $51 million and currency added $26 million, with the balance being operational, excluding those items adjusted revenues grew 1%. Reported total segment EBITDA was $249 million, compared to $130 million in the prior year, up 92% versus the prior year. Reported results include a benefit of $46 million from the reversal of previously accrued net liabilities related to certain employment taxes in the U.K. Excluding the net impact of acquisitions, divestments, foreign currency and the U.K. newspaper matters, adjusted total segment EBITDA this quarter grew 46%. For the quarter, earnings per share were $0.12, compared to a loss of $0.03 in the prior year and adjusted earnings per share were $0.07, compared to a loss of $0.01 in the prior year. Turning now to the individual operating segments, in News and Information Services, revenues for the quarter were $1.2 billion, up 2% compared to the prior year. The Wireless Group and the Australian Regional Media or ARM acquisitions contributed $54 million and FX contributed $14 million this quarter. Within segment revenues, advertising was flat and circulation and subscription revenues increased 3%. News and Information Services reported segment EBITDA this quarter was $73 million or up 59% versus the prior year, led by an improvement at Dow Jones, ongoing cost initiatives, lower investment spending at Checkout 51 and the absence of transaction costs related to the acquisition of Wireless Group in the prior year. I will now look at the performance for the quarter across our key operation divisions. At Dow Jones total revenues rose 2%. Within that advertising revenue declined 10% versus the prior year and saw a modest improvement from the fourth quarter decline due to a slight uplift in financial spending, while the business to consumer and technology categories remained challenging. Digital accounted for approximately 38% of Dow Jones advertising revenues this quarter, the highest percentage in its history, up from 33% in financial year ‘17. Total subscriber volumes at The Wall Street Journal across all formats was over 2.2 million, a 13% year-over-year increase, driven by higher digital only subscriptions, which rose approximately 36% versus the prior year to $1.3 million and represented 58% of the total subscribers versus 48% in the prior year. Year-over-year circulation revenue growth at Dow Jones was 11% for the quarter, driven by the digital volume gains and higher subscription pricing. As mentioned by Robert, professional information business revenues grew 5% in the first quarter, continuing to accelerate from prior quarter levels led by risk and compliance, which grew 35% marking strongest year-over-year performance since 2014. In Q1, professional information business revenues represented slightly less than one-third of Dow Jones revenues. The Wall Street Journal 2020 program, as previously discussed is not only about cost transformation but also focuses on The Wall Street Journal becoming a digital first organization, including more aggressively expanding our digital offerings internationally. Over the past year, Wall Street Journal digital subscriptions have nearly doubled in Europe and have grown by almost 70% in Asia. Our international footprint is being further expanded by the global reach of our conferences, including the launch of the Tokyo CEO Council and the WSJ D.Live in Hong Kong. At News Australia, total revenues rose 4%, helped by the integration of the ARM acquisition and foreign currency benefits. Advertising revenues for the quarter increased 3% or declined 1% in local currency, helped by the acquisition of ARM. Excluding acquisitions and divestitures, advertising revenues declined approximately 10% in local currency, relatively similar to the prior quarter. Circulation revenues at News Australia increased 6% or up 2% in local currency as the acquisition of ARM, cover price increases and higher paid digital subscriptions were partially offset by print volume declines in the sale of the Sunday Times last year. Regarding our ongoing cost transformation, we remain particularly focused on News Australia, given its reliance on print and higher exposure to advertising revenues. While we are currently targeting at least AUD40 million in cost reductions this year. The team in Australia are already pacing well ahead of that as they continue to be cost focused, together with continuing their review of the broader regional and community newspaper portfolio, following the acquisition of ARM. The team’s focus in Australia is not just to remove legacy costs, but to ensure the cost structure is right-sized for the business moving forward. Australia is also making steady progress in the digital conversion, with digital subscribers across the News Australia mastheads now reaching more than 375,000 paid subscribers, including the ARM properties, which is over 30% higher than the prior year. At News U.K., total revenues were down 6%. Advertising revenues declined 9%, which is an improvement from the fourth quarter rate due to continued but moderating print advertising declines at The Times and The Sun, and an acceleration in digital advertising at The Sun, driven by higher audience and improved engagement. Circulation revenues at News U.K. were down 5% as volume declines at The Sun more than offset cover price increases. Finally, at News America Marketing, revenues fell 4% due to ongoing weakness in free-standing insert revenues, which had two fewer inserts versus the prior year. Turning to the Book Publishing segment, revenues for the quarter increased 3% to $401 million and segment EBITDA increased to 4% to $50 million. Titles to highlight this quarter included Daniel Silva’s House of Spies and Karin Slaughter’s The Good Daughter, as well as carryover sales from J.D. Vance’s Hillbilly Elegy. Total digital revenues for the quarter grew 6% to represent 21% of consumer revenues, compared to 20% in the prior year, due to strength in downloadable audiobooks. In Digital Real Estate Services, segment revenues increased 20% to $271 million and adjusted revenues increased 19%. Reported segment EBITDA was $95 million versus $67 million last year, up 42%. REA Group revenues grew 22% due to very strong residential debt revenue growth in Australia, including higher penetration for Premiere All, the integration of the Smartline acquisition and modest benefit from currency, partially offset by the divestment of the European businesses last year. Listing volume was stable this quarter, but importantly saw a pickup in New South Wales and Victoria. Please refer to REA’s earnings release and their conference call, which will commence shortly after this call for additional details. Move revenues rose approximately 15% to $107 million versus the prior year, driven by a very strong performance from connection suppliers, which is benefiting from strong growth in lead volume, as well as improved pricing optimization in inventory management. TigerLead, which was divested in November 2016, contributed $3 million of revenues in the prior period. Excluding that, revenue growth would have been approximately 19%. Average monthly unique users at Realtor.com grew to 55 million for the quarter, rising mid-single digits from the prior year. In Cable Network Programming, revenues increased $17 million or 13% to $145 million compared to the prior year quarter, driven by the inclusion of Sky News, which added $11 million to revenues and higher affiliate fees from Foxtel. Segment EBITDA in the quarter rose to $27 million from $14 million due to the phasing of programming amortization related to the rollout of the FOX LEAGUE Channel, a network dedicated to the NRL, which led to a benefit of approximately $10 million this quarter. The results also reflect lower other sports programming rights costs, including impact from the absence of Australia versus Sri Lanka cricket tour in the prior year. With respect to equity losses earnings from affiliates, equity losses were $10 million this quarter, compared to $15 million in last quarter. Foxtel revenues for the quarter rose 2% to $263 million, but declined 2% in local currency. EBITDA decreased 15% to $122 million and was down 18% in local currency due to planned increases in sports rights costs of approximately $24 million, primarily related to the new AFL contract, partially offset by lower transmission and sales and marketing costs. Regarding its operating metrics, Foxtel ended the quarter with over 2.8 million subscribers, up 2% versus the fourth quarter driven by the rollout of Foxtel Now. In the first quarter, cable and satellite churn improved to 12.7%, down from 15.5% last year. Cable and satellite ARPU for the quarter was down approximately 2% to around AUD86. For the quarter, capital expenditures were $62 million, compared to $49 million in the prior year, with increases driven by higher IT spending. However, overall CapEx in fiscal 2018 should be in line with the prior year. Looking forward to the second quarter, there are few points I would like to make. At News and Information Services, print advertising trading conditions remain challenging and visibility is limited. We expect ongoing print advertising headwinds and we will continue to focus on cost efficiencies accordingly. In addition, News America Marketing will again have two less free-standing inserts in the quarter, similar to the first quarter. We expect FOX SPORTS Australia to face higher costs in the second quarter, a reversal from quarter one due to the amortization of NRL rights throughout the year. We expect over AUD25 million in higher costs for the second quarter compared to the prior year period. For the full year, we continue to expect AUD30 million to AUD40 million in higher costs, mostly related to the NRL, much of which should be offset by higher affiliate revenues and production cost initiatives. In Book Publishing, overall trends remain favorable with digital contribution rising modestly. As Robert mentioned, notable new releases this quarter include Ree Drummond’s Pioneer Woman Cooks

Entcho Raykovski:

Hi, Robert. Hello, Susan. My question is around the digital subs within News and Info Services, and I mean, you’re obviously seeing some very strong growth rates year-on-year, but there has been some slight slowdown in net digital ads for the quarter. Is there any seasonality not those numbers that’s impacting those ads and if we look, say, a couple of years out, given you are still seeing strong year-on-year growth rates, where do you expect the digital subs to be for The Journal in Australia in particular?

Mike Florin:

Operator, we will take our next question, please.

Craig Huber:

Yes. Hi. I was curious to hear, you’ve done very strong performance at Realtor.com since you bought it a few years ago. Could you just tell us what you’ve -- generally what you have done there to improve the operations there dramatically, frankly, versus the prior ownership?

Mike Florin:

Thanks, Craig. Operator, we will take our next question please.

Brian Han:

Oh! Hi. On the Foxtel, FOX SPORTS merger, have you done any work on areas where you can expect synergies and will M&A be a focus of the combined entity?

Susan Panuccio:

Yes. Thanks, Robert. I think, Brian, one of the benefits of doing this combination will be the flexibility we have to launch new products, particularly when we move into consolidate its position where we can control it, particularly in the sports area. And of course, part of the exercise that we’re looking at the moment is where we do exact synergies between the two companies, so that’s going to be an important path going forward as well.

Operator:

That will come from Raymond Tong from Evans and Partners.

Robert Thomson:

Raymond, it’s not opportune to reveal the details of those negotiations at the moment other than to say that they are ongoing at a very senior level. But it is reflective of a fundamental change in the approach to content, the content landscape, which clearly was not beneficial to producers of great journalism as we do across the world with our mastheads and has become more conducive to us being able to extract a reasonable price and increase elasticity for those mastheads. So all I can say is that it’s still early days, but it’s also fair to say that there has been a fundamental change in the attitude to content by both Google and Facebook and we are still at an early phase of that evolution of the relationship between us and those companies.

Operator:

We’ll take a follow-up from Brian Han from Morningstar.

Susan Panuccio:

That’s a very good question. I mean, I don’t think we expect actually to increase massively at the moment. We are looking to keep it relatively consistently going forward, as you can see our CapEx spend is going to be relatively in line for the full year, so we’re not expecting to see significant changes in that line.

Mike Florin:

Thank you. Operator, we will take our next question.

Mike Florin:

Great. Well, thank you all very much for participating. Have a great day.

Analysts:

John Janedis - Jefferies Kane Hannan - Goldman Sachs Entcho Raykovski - Deutsche Bank Alan Gould - Rosenblatt Securities Tim Nollen - Macquarie Brian Han - Morningstar Craig Huber - Huber Research Partners Raymond Tong - Evans and Partners

Mike Florin:

Thank you very much Kevin. Hello everyone and welcome to News Corp's fiscal fourth quarter 2017 earnings call. We issued our earnings press release about an hour ago and it is now posted on our website at newscorp.com. On the call today are Robert Thompson, Chief Executive and Susan Panuccio, 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 News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial 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 will pass it over to Robert Thomson, for some opening comments.

Susan Panuccio:

Thank you Robert. Before I review the financial results, I wanted to highlight a few themes from this past year and the quarter. News Corp's expansion into digital real estate is poised to reshape our long-term growth. We posted very strong operating results this quarter at both REA and at Move. In this quarter, the segment accounted for 40% of total segment EBITDA even while investing in developing markets. And as a point of reference, our revenue of this segment has nearly tripled since separation and is approaching $1 billion annually. We think there is a good long term tailwind to the segment and see further revenue opportunity beyond the core property search. We are making progress transitioning news and information services to digital. We have seen increased evidence that our quality newspapers, The Wall Street Journal, The Times of London and The Australian have a clear digital path. All three now have digital paid subscribers that are approaching or are, in the case of The Wall Street Journal, beyond 50% of total subscribers and they are showing solid growth in paid volumes and improving circulation revenues. We are continuing to right size the cost base by removing legacy costs at news and information services. However, I believe there is more we can do, as I mentioned last quarter, which I will discuss shortly. With that, I would like to now discuss our financial results. For the full year fiscal 2017, total revenues were $8.1 billion, a 2% decline compared to the prior year. You will recall that the prior year had the 5third week, which positively impacted fiscal 2016 revenues by $112 million. Reported total segment EBITDA for the year was $885 million compared to $684 million in the prior year. As a reminder, the prior year included a one-time charge of $280 million for the settlement at News America Marketing and the one-time gain of $122 million related to the Zillow settlement. Adjusted EBITDA for the year, which excludes the settlements, the impact of currency, the legal costs related to the U.K. newspaper matters as well as acquisitions and divestments, rose 5%. During the full year, we had significant nonrecurring items impacting earnings per share. These included pretax noncash impairment charges of $785 million, principally related to the fixed asset write-down at the Australian and the U.K. publishing businesses. In addition, equity earnings of affiliates included a pretax write-down of $227 million to reduce our carrying value of Foxtel. These were offset in part by a pretax gain of $107 million at REA from the sale of their European businesses and an improvement in the full year operating results. As a result of these items, earnings per share from continuing operations were negative $1.27 compared to $0.28 in the prior year. Again as a reminder, earnings per share in the prior year benefited from a lower tax expense due in large part to the release of U.S. tax asset valuation allowances associated with the divestment of Amplify. Adjusted earnings per share from continuing operations were $0.36 versus $0.40 in the prior year. And now to the quarterly financial detail. We reported fiscal 2017 fourth quarter total revenues of $2.1 billion, down approximately 7% versus the prior year. Again, prior year revenues included the $112 million impact from the 5third week. Reported total segment EBITDA was $215 million, compared to $361 million in the prior year, which included the $122 million gain related to the Zillow settlement and the benefit of the extra week. Excluding the Zillow settlement gain, last year's EBITDA would have been $239 million. For the quarter, earnings per share from continuing operations were negative $0.74 compared to $0.16 in the prior year, with the prior year benefiting from the Zillow settlement gain. Results this quarter include a noncash impairment charge of $464 million primarily related to the write-down of fixed assets of the U.K. newspaper group. Taking these into account, adjusted earnings per share from continuing operations were $0.11 versus $0.10 in the prior year. Turning now to the individual operating segments. In news and information services, revenues for the quarter declined 10% compared to the prior year to $1.3 billion. Over half of the revenue shortfall this quarter of $77 million was related to the 5third week in the prior year. Within the segment revenues, advertising declined around 12% or down 11% in local currency. The 5third week impacted advertising by $33 million. Excluding the 5third week and currency impact, advertising fell 6%. Circulation and subscription revenues decreased 9% or 6% in local currency. The 5third week contributed $39 million and accounted for the vast majority of decline this quarter. Excluding the 5third week and currency impact, circulation revenues rose 1%. News and information services' reported segment EBITDA this quarter was $103 million, down 36% versus the prior period. The decline was primarily driven by lower print advertising revenues, a timing shift at News America Marketing between Q3 and Q4 of this year, which I highlighted last quarter and the impact of the 5third week. I will now look at the performance for the quarter across our key operating divisions and excluding the 5third week. At Dow Jones, total advertising revenue declined 14% versus the prior year period, fairly similar to the third quarter rate but better than the first half rate. Digital accounted for approximately 37% of Dow Jones advertising revenues this quarter. We again saw strong paid volume growth at The Wall Street Journal where total subscriber volume across all formats reached 2.3 million, a 12% year-over-year increase driven by higher digital-only subscriptions, which rose 34% versus the prior year. Year-over-year circulation revenue growth at Dow Jones accelerated to 10%, up from mid single digits last quarter, driven by volume gains and higher subscription pricing at The Wall Street Journal. Importantly, the growth rate this quarter was the highest level achieved since fiscal 2011. In July, The Wall Street Journal increased subscription prices to new customers by $2 to $5 per month depending on the bundle and also increased cover prices by $1 for both the Monday to Friday and the weekend edition. Professional information business revenues were flat in the fourth quarter but grew modestly excluding foreign currency, as the year-over-year growth at risk and compliance accelerated to around 30%. Importantly, the pipelines for new business at the professional information business is encouraging, giving us increased confidence that growth can be sustained into fiscal 2018. On cost initiatives, Dow Jones realized about $60 million of cost savings in fiscal 2017 related to The Wall Street Journal 2020 initiative and is on track to achieve at least $100 million in underlying cost savings on an annualized basis by the end of fiscal 2018. Cost reductions are across operations, advertising and the newsroom, which is being streamlined to be digital and mobile-first. At News Australia, advertising revenues for the quarter declined 1% or 2% in local currency, helped by the acquisition of ARM. Excluding that and the sale of The Sunday Times in Perth, advertising declined approximately 10% in local currency, similar to the prior quarter. Circulation revenues at News Australia increased 1% or were flat in local currency as the acquisition of ARM, cover price increases and higher paid digital subscribers were offset by print volume declines and the sale of The Sunday Times. We are making progress with digital subscriptions in Australia as well. Robert mentioned the turnaround at The Australian, partly due to the success of its digital subscription offering which now has over 95,000 subscribers. Across the News Australia mastheads, we now have approximately 360,000 paid subscribers including the ARM properties, over 30% higher from the prior year. We are continuing our assessment of the cost structure at News Australia. While we achieved approximately $40 million of cost savings in fiscal 2017, it is clear that more work needs to be done particularly given our reliance on print in that market. We expect ongoing cost reductions in fiscal 2018 while continuing to drive our digital transition. Additionally, with the integration of ARM, we continue to look at our broader regional community newspapers to ensure the optimal operational and cost structure exists. At News U.K., advertising revenue trends are similar to last quarter as the results were likely impacted by the general election and the Euro championships last year. Circulation revenues at News U.K. were down 14% or modestly year-over-year in local currency, primarily due to the lower print volume and no newsstand price increase at The Sun this year as compared to the prior year, partially offset by growth at The Times. Trends at The Times remain positive with print volumes up low single digits this quarter. As Robert mentioned, digital subscribers at The Times and The Sunday Times is up over 10% this quarter versus the last year to 201,000. At The Sun, the average monthly unique users reached 81 million in the fourth quarter, more than doubling versus the prior year and hitting a record of 85 million in June, as we continue to build audience to drive and improve monetization. Finally, at News America Marketing, revenues were down 8%, partially related to the shift in timing of in-store products, as mentioned last quarter and two fewer inserts versus the prior year. Turning to the book publishing segment. Revenues for the quarter decreased 6% to $407 million, mostly due to the 5third week, negative impact from foreign currency fluctuations and declines in the children's division which faced a difficult prior year comparative. Segment EBITDA decreased 22% to $39 million due to lower revenues, higher compensation expense and write-off related to a few new releases this year. Titles to highlight this quarter include Michael Crichton's Dragon Teeth as well as carryover sales from J. D. Vance's Hillbilly Elegy and Sarah Young's Jesus Always. Total digital revenues for the quarter were 20% of consumer revenues compared to 19% in the prior year due to strength in digital audio. In digital real estate services, total segment revenues increased $22 million or 10% to $251 million and adjusted revenues increased 16%, which excludes the impact from the divestment of REA's European business and Move's TigerLead as well as currency impacts and acquisitions. Total reported segment EBITDA was $87 million versus $175 million last year with last year reflecting the gain from the settlement of Zillow. Excluding the Zillow settlement, acquisitions, divestments and currency movements, adjusted segment EBITDA growth was 67%. REA Group revenue grew 7% due to improved product mix including higher penetration for Premier All and higher yields. The growth was partially offset by a $10 million or 8% decline in revenue resulting from the divestment of the European businesses. Similar to last quarter, REA will report results that present Europe as discontinued operations. So you will see a larger than usual variance this quarter between our reported revenue growth than in the past. Their call will commence shortly after the conclusion of this call. REA recently acquired a majority stake in Smartline, one of the leading mortgage brokers in Australia and entered into a strategic partnership with the National Australia Bank. Part of REA's strategy is to integrate property and finance search to better capture value for lead volume. Move revenues rose approximately 10% to $108 million versus the prior year, again driven by a very strong performance from connection suppliers, which is benefiting from higher lead volume and improved pricing optimization and higher non-listing media revenues. TigerLead, which was divested in November, contributed $4 million in the prior year and the 5third week revenue contribution was $6 million. Excluding those items, revenue growth would have been approximately 23%. We also grew customers and yields while also posting accelerated lead volume. As expected, Realtor contributed to segment EBITDA this quarter and for the full year and we expect to build on that momentum in fiscal 2018. Average monthly unique user growth at Realtor.com remains strong, up 9% year-over-year to 58 million in the quarter. In cable network programming, revenues decreased $7 million or 5% compared to the prior year quarter due to the $10 million impact from the 5third week in the prior year and lower subscriber revenues, mostly offset by the addition of the Australian News channel, the operator of Australia's Sky News networks and favorable foreign currency fluctuations. Segment EBITDA in the quarter rose 4% to $24 million driven by lower programming costs. With respect to earnings from affiliates, equity losses were $19 million this quarter compared to equity income of $5 million last year. Our equity loss pickup this quarter included an $11 million negative impact related to a change in the fair value of Foxtel's investment in the Ten Network, which has moved into voluntary administration and a further $3 million loss related to Foxtel's Presto wind down. Both numbers reflect our 50% share. Foxtel revenues for the quarter declined 3% to $600 million. EBITDA decreased 9% to $150 million and was down 10% in local currency due to the decrease in revenue and higher programming costs, principally related to the new AFL contract. Regarding its operating metrics, Foxtel ended the quarter with 2.8 million total subscribers, which was lower than the prior year primarily due to the shutdown of Presto. In the fourth quarter, Foxtel Play was relaunched as Foxtel Now, which was supported by a new marketing campaign alongside the relaunch of the Foxtel brand. Including Foxtel Now, total subscribers increased modestly versus the third quarter. In the coming months, Foxtel plans to launch an IP dedicated box, which will include a tuner for access to free-to-air along with enhanced guide and user interface. In the fourth quarter, cable and satellite churn improved to 13.3% from 14% last year, the first year-over-year improvement since the second quarter of last year. Cable and satellite ARPU for the quarter was down approximately 3% to around AUD86. And finally, for the full year fiscal 2017, capital expenditures from continuing operations were flat at $256 million. Heading into the new fiscal year, there are a few points that I would like to note. At news and information services, overall ad trends at this point for our key mastheads remained stable with the fourth quarter, although we had seen a slight improvement at Dow Jones. The first quarter should benefit from the increased subscription prices at Dow Jones that I mentioned earlier as well as increased cover prices in the U.K. and Australia. We assume continued print declines into fiscal 2018 that will aggressively seek out cost reductions. Dow Jones will continue with their 2020 program and the Australian business continues to transform its cost base as it reinvests for digital growth. Fox Sports Australia will face an incremental AUD30 million to AUD40 million in higher rights costs mostly related to the new NRL contract. We expect to offset much of that from operating efficiencies and a higher affiliates revenue. On Book Publishing, overall trends remain favorable with digital contribution relatively stable. The pipeline for the year looks strong with releases from key authors such as Ree Drummond, Daniel Silva, Karin Slaughter, Chip and Joanna Gaines, Bernard Cornwell, Victoria Aveyard, Erin Hunter and Donna Hay. At digital real estate services, we continue to expect strong revenue and EBITDA contribution from both REA and Move. At Move, we are pleased with the progress at Realtor.com, particularly the revenue improvement in the second half of fiscal 2017 and want to build on that momentum this year. We will continue to roll out our Advantage product, our listing agent offering, to the balance of our customers in the first half of the year and remain focused on further site enhancements to drive audience growth. REA should benefit from higher pricing, continued penetration of listing depth products and increased revenue from the expansion into mortgage brokering for which the company has provided some guidance. Given these trends, we expect to see improvement in the first quarter versus the prior year. With that, let me hand it over to the operator for Q&A.

John Janedis:

Hi. Thank you. Can you talk a little bit more about digital service in The Wall Street Journal? As you anniversary the new cycle from the election and the price increases kick in, do you expect continued growth? Or are you seeing a slowdown? I know it's early. And with the increased engagement, to what extent are you seeing incremental demand from advertisers?

Mike Florin:

Thanks John. Operator, we will take our next question please.

Kane Hannan:

Good morning Robert. Good morning Susan. Just on Move performance in the quarter and heading into FY 2018, I am wondering if you could give us a sense of the level of investment in that business into 2018? And then a sense of the EBITDA contribution you made in the fourth quarter, please?

Mike Florin:

Thank you Kane. Operator, we will take our next question.

Entcho Raykovski:

Hi Robert. Hi Susan. My question is for Susan. Given that you have been in the role now for a number of months, just interested in your perspective on capital management within the business? And whether you feel that there are further opportunities to deploy that capital to acquire further assets.

Mike Florin:

Thank you Entcho. Operator, we will take our next question.

Alan Gould:

Hi. Thank you. Robert, I have got a question for you regarding the comments Jeff Bezos made at the recent Newspaper conference talking about the strength of the paper business, that if you invested in it, you could grow the businesses. Is that only for the big national papers? What can we do to, in a quicker way, stop the newspaper EBITDA from its continual declines?

Mike Florin:

Thanks Alan. Operator, we will take our next question, please.

TimNollen:

Hi. Thanks. I wonder, Robert, if you could please comment on the underlying ad market. I think you did give a mention that it seems to be improving a little bit into the second half of the calendar year here. But any comments on advertisers thinking in terms of perhaps putting a little bit more money into, let's call it, traditional media versus digital media, if it can be stated that way? Just because we have had a lot of mixed results from a lot of media companies and ad agencies in their Q2 calendar years, I am just curious what your underlying sentiment is on ad spending, please?

Susan Panuccio:

And I think, Tim, just to add something from me as well. The Australian newspaper, given the great growth that it had seen from a subscriber perspective as well, it's actually seeing print advertising increase year-over-year, which is quite unusual in this particular environment. But I think notwithstanding that, it is still very poor visibility and it remains very difficult to predict exactly what those trends will be going forward.