News Corporation
Q3 2016 Earnings Call Transcript

Published: 8 Nov 2016

[Operator:]

Please standby. We’re about to begin. Good day, and welcome to the News Corp’s first quarter fiscal 2017 earnings call. Today’s call is being recorded. Media is allowed to join today's conference in a listen-only basis. At this time for opening remarks and introductions, I would like to the call over to Mr. Michael Florin, Senior Vice President and Head of Investor Relations. Please go ahead, sir.

[Michael Florin:]

Thank you very much, Matt. Hello everyone and welcome to News Corp’s fiscal first quarter of 2017 earnings call. We issued our earning’s press release about 30 minutes ago and it’s now posted on our website at newscorp.com. On the call today, Robert Thomson, Chief Executive, and Bedi Singh, Chief Financial Officer. We’ll open with some prepared remarks, and then we’ll be happy to take questions from the investment community. This called 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 for 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 gap [indiscernible]gap reconciliation of such measures can be found in our earnings release. With that, I'll pass over to Robert Thomson for some opening comments.

[Robert Thomson:]

Thank you, Mike. The most recent quarter has highlighted the continuing digital development at New Corp at a time of great transition for media companies. Many of which are struggling to cope with devolution. Our growing portfolio of digital products and global character have enabled us not only to weather those profound changes but to build a firm foundation for a profitable future. There is no doubt the two of our core markets, the U.S. and U.K., have been characterized by a certain amount of uncertainty in the economic and political environment. But we have remained focused on developing long-term and robust sources of revenue while curtailing costs without undermining the quality about uniquely valuable content. Collaboration among our businesses has increased, but the sharing of lessons software and data to provide more valuable insights for our clients, readers, and advertisers. During the first quarter of financial year2017, despite a distinctly soft-print advertising market and patent weakness in the British pound, our revenues were down only slightly. It is thus clear that our emphasis on digital real estate has given the company more resilience in even difficult training periods. We are still at the early stages of that real-estate development particularly in the U.S. where we are renovating realtor.com while living in the house. We expect the rates of growth at Realtor.com will increase later in the year as new products and pricing take hold in a U.S. property market that is itself still recovering from the extreme dislocation of the financial crisis. For the most recent quarter our total segment EBITDA declined 21% versus the prior year, but half of that decrease was due to planned investments and one-time transaction cost. And we do not expect the quarterly performance to be reflective of the full-year results. In fact, we expect to see EBITDA improvements in the remainder of the year largely driven by growth in digital real estate at HarperCollins. As our real estate business continues to evolve and expand, we are now highlighting listing-based revenues separately in the digital real estate services segment to better reflect our performance and provide a clearer indication of the trajectory in that increasingly important sector. Significantly, this highlights are reduced reliance on traditional advertising, which today accounts for only a third of our total revenues. In addition to the strength of digital real estate, we are also pleased with the trends in book publishing at News American Marketing, which showed continuing growth in its in-store product revenues and is ahead of schedule in achieving its year-end goal of ten million downloads of the Check Out 51 app, which provides incentives for shoppers and unique marketing opportunities for consumer goods producers and retailers. As mentioned, one of the more profound changes at New Corps since its reincarnation in 2013 is the burgeoning of the digital real estate business building on our early success with R.E.I. in Australia and complementing that with investments in the U.S. East Asia and India. R.E.I. performed well again in the quarter despite some weakness in listing volume. Pricing improved and services provided to agents were enhanced. Revenues expanded by 16% in local currency including sales of the recently acquired I property. R.E.I. is the clear market leader in Australia and has proven the robustness of its business by expanding reach and revenue despite macroeconomics Australia. Move which operates Realtor.com experienced 9% revenue growth in the first quarter as we revamped the site and retooled its products. With the rollout of Showcase 2.0 in December and deeper penetration from the recently launched Seller Leads [indiscernible] products, we are confident revenue momentum will build in coming months. We firmly believe Realtor.com will make a meaningful contribution to segment revenue and EBITDA growth this year. We are investing for the long-term, but not at the expense of returns for investors. According to comScore engagement with Realtor.com leads the competition by a significant margin. Since our acquisition of move two years ago this month, Realtor.com’s audience has grown more than 60% and brand awareness at Realtor.com is at 87%, which is up more than 25% in the last 18 months In book publishing, HarperCollins reported a 14% increase in EBITDA despite a 5% decline in revenues, which was largely the result of the impact of the comparison with last year's sales of Go Set a Watchman the To Kill a Mockingbird prequel sequel. The HarperCollins’ team is increasingly focused on books which resonate beyond the traditional elites. That is evident from the popularity of such titles as J.D. Vance's Hillbilly Elegy and Sarah Young’s books including the new Jesus Always, which builds on the success of her Jesus Calling. Also performing well, The Black Widow by Daniel Silva, The Magnolia Story by Joanna and Chip Gaines and Commonwealth by Ann Patchett. While a consolidation of our international operations in tandem with the Harlequin acquisition has given as I significantly more powerful global platform. We are also able to use our trade assets to market crossover successes from the Harlequin’s stable of writers, which is increasing by the sales and margins to select titles. In coming weeks, we will see the release of the highly anticipated Settle For More by Megyn Kelly. That title Settle For More will be our [indiscernible] incoming quarters. We also have optimistic expectations for Veronica Roth’s next book, Carve the Mark. Veronica wrote the extremely successful Divergent trilogy, and for Chaos by Patricia Cornwall. In using information across our masthead, we saw a more challenging print advertising marketplace as has already been articulated by other companies in the sector. While digital advertising increased that growth was not enough to offset the decline in print. There is no doubt that the advertising market is in upheaval and that the renewed advertiser focus on view-ability and measure-ability to naturally benefit trusted brands with accurate metrics. Hype and hip are not alternatives to quality and integrity. In the middle of this commercial commotion, it is appropriate that ad agencies are under scrutiny as too much ad tech is bad tech. Advertising of the Wall Street Journal was down 21% but our circulation revenue rose 6% and the number of paid digital subscribers at The Wall Street Journal crossed the 1 million mark in September. The transition at the W.S.J. was highlighted by the fact that digital accounted for a record 55% percent of revenues this quarter. Obviously, some of that change is due to the decline in print advertising, but it also reflects the emphasis on broadening the digital subscriber base and the long term strategy of upselling higher yielding specialist products to those subscribers. Historically, advertising accounted for about half the revenues at Dow Jones, but that ratio is now closer to 1/3. Clearly, there is a renewed emphasis on cost control including a reduction in [inaudible] at Dow Jones and a redesign of the journal itself. You'll be able to see the results of that redesign in coming weeks and it will be obvious that print remains a very powerful platform and that the journal has an audience of unique influence and affluence. At News Corp Australia, we continue to confront the cost space while broadening our range of digital offerings. We experienced strong digital paid subscriber growth in the first quarter and an expanded number of [indiscernible] with a premium hybrid model allowing limited free access along with a paid for premium subscription. That model builds on the success we have seen at The Australian. Meanwhile at News.com.au Australia’s leading news website advertising revenue rose more than 30% in local currency compared to the same period last year. Sports is a vital part of our offering in Australia, which is why we announced the acquisition of the Punters Paradise website in October offering news, analysis, and comparative odds for horse racing and other sport. At the same time, we are keen to dispose of known core assets to sharpen the focus of our operations. To that end we've sold our stake in New Zealand Media and Entertainment and hope to complete the sale of CarsGuide and The Sunday Times in Perth by the end of fiscal Q2. At News UK, The Times continues to gain market share and drive higher volume growth, experienced a 13% gain in [indiscernible] in the first quarter in a sector that is too often defined by decline. At The Sun, while advertising revenues have fallen the digital audience has expanded dramatically since the pay was lifted late last year. We are seeking to attract loyal readers with quality content and not digital drive-bys distracted by vacuous contentious click back. In September, there were almost 46 million monthly visitors to The Sun compared to fifteen million units in September 2015 before the lifting of the pay indiscernible] News UK also benefits from cover price increases for its [indiscernible] market and from the launch of Sun [indiscernible] in August. With the acquisition of Wireless Group, the team at New UK is working on the integration of this valuable asset, leveraging talent across platforms fashioning new ad packages to take advantage of multimedia opportunities, and cross promoting our brands including [indiscernible], which would be a powerful generator of future revenue for the company. And speaking of successful popular titles Digital Ad revenue for Q1 grew 42% year over year at the New York Post where the broader Post Digital Network had a record 65.1 million unique visitors in September. An increase of 109% year over year based on internal metrics. At News America Marketing in-store price continue to post strong revenue growth driven by the creation of innovative avenues. Points of purchase persuasion is a powerful asset that we have at News America Marketing, which also has valuable direct links to advertisers who rely on a unique market intelligence. In the past Digital has been a rather modest part of News America Marketing’s offering, but the acquisition of Checkout 51 has changed that outlook dramatically. We had targeted the acquisition of ten million members this calendar year for Checkout 51, but could top that total this month if not this week. The larger the audience, the better quality offerings, the [indiscernible] the experience. That virtuous cycle is clearly in motion at Checkout 51 where we’ve had an influx of new deals of companies such Proctor and Gamble, Mandalay, and General Mills. We have just launched a Spanish language version of the app to appeal to the large and growing Latino audience in the U.S while we are able to get a rich permission data from users that is of supreme value to advertisers want to get inside in the shopping habits. And we're looking forward to the integration of Pay Pal into Checkout 51 expected by December, which will make it even easier for consumers to receive rebates for their purchases. Foxtel posted modest year over year growth in cable satellite subscribers, although there was [indiscernible] partially related to Remotional non-contract offers last fiscal year. Foxtel remains keenly focused on improving the quality of experience for subscribers and providing more product focus hence the decision to unwind the Presto the joint venture with Seven West. The executive team led by Peter Turner is determined to convey to potential subscribers the clear relative merits of Foxtel Play. His offering is vastly superior to that of competitors. Foxtel Play’s streaming service will roll out next month. It will present consumers with greater choice and flexible packages as well as much easier access to Foxtel’s premium content including Fox Sports whose viewer numbers have repeatedly said records in recent months. To ensure that subscribers have an unparalleled experience, Foxtel announced this quarter a new agreement with HBO that will give Foxtel even more extensive rights to HBO’s lobby of content through 2021. Despite the focus on product enhancement and infrastructure investment, we're encouraged to see relatively stable EBITDA this quarter. As for Fox Sports, the record ratings were particularly pronounced for NRL, while there are also strong performances by Aussie Rules Football and motor racing. NRL viewership was up 11% for all games and those exclusive to Fox Sports were up 15%. For AFL total viewership was up 8%while the preliminary final between the Giants and the Western Bulldogs with an ultimate match of the year with the number one subscription T.V. program so far in calendar year 2016 in Australia. That increased viewership as well as expanding digital advertising what catalyst for advertising growth of low double digits in local currency in the first quarter, which compares rather favorably to listless levels elsewhere in the industry. Costs were higher in the first quarter as was expected reflecting the timing sports expenses about which Bedi will have further details. Thankfully these quarterly costs are not reflective of the full-year exposure. Globally, we continue to integrate our Storyful and Unruly acquisitions into our existing brand. News UK now brings Storyful and Unruly into joint pitches for digital advertising. Storyful which has a unique ability to define meaningful moments on social media has become a part of the pitch for our Dow Jones risk and compliance business. If the consumer has a problem with a product and uploads a video or a comment Storyful’s unique access to social platforms globally allows it to track the virility of the incident. It also remains the world's leading authenticator of social video for news agencies and broadcasters around the world. In conclusion, New Corp is not just a news company. We are a digital real estate company and a global and information company. We are proud of our prominence, but also leading the way in defining a digital future for media, whether it be to the strengths of our mastheads, on mobile, or the rapid growth of innovative news and commercial apps, that focus on long term growth is complemented by a rigorous monitoring of costs in the here and now. We are extremely conscious of our responsibility shareholders to create products that will prosper. While ensuring that we are custodians of our traditional businesses in transition. Speaking of canny, I now pass you over to our CFO, Bedi Singh.

[Bedi Singh:]

Thanks, Robert. We reported fiscal 2017 first quarter total revenues of 1.97 billion down 2% compared to the prior year. Currency had a 36 million unfavorable impact to revenues with modest year over year improvement in the Australian dollar more than offset by continued weakness in the British pound. Total segment EBITDA was a 130 million including five million in transaction related costs for the Wireless Group acquisition compared to a 165 million in the prior year. For the quarter EPS from continuing operation were negative $0.03 compared to positive $0.22 in the prior year. Adjusted EPS from continuing operations were negative $0.01 versus positive $0.05 in the prior year. Before discussing segment performance as Robert noted listing based revenues from our digital real estate businesses are now captured in a new real estate line on our income statement to better highlight that growth. Prior to this change those revenues were reflected within advertising revenues, we have also adjusted price comparatives for this. This real estate revenue line represented 9% of total revenue this quarter and grew 19% compared to the prior year. Turning to the individual operating segment, in news and information services revenue for the quarter decreased 5% from the prior year to approximately 1.2 billion and within segment revenues advertising which accounted for just under 50% of revenues decreased around 11% or 10% in local currencies driven by weaker global print ad trends. Circulation and subscription revenues decreased 4% but were up 1% in local currency which is relatively stable with last quarter and the prior year driven by higher paid digital volume and price increases. News and information services segment EBITDA this quarter was $46 million down from $83 million in the prior period. This decrease was driven by lower print advertising revenues combined with $12 million and additional investment spending at Checkout 51 and the $5 million in wireless transaction cost partially offset by cost savings initiatives. Looking at performance across our key units, at Dow Jones domestic advertising declined 21% versus the prior year quarter which is greater than last fiscal fourth quarter rate reflecting a weaker print marketplace most notably in the finance and technology categories. On a positive note Wall Street Journal Circulation revenues grew over 6% this quarter due to higher subscription pricing and higher digital paid subscribers with digital only subs surpassing the one million mark during the quarter as Robert noted. At the Professional Information business revenues were literally stable. And as Robert mentioned Dow Jones announced a series of initiatives focused on modernizing the news room and rationalizing print circulation and pagination while shifting resources to digital. As part of the plan we are targeting approximately 8% or $100 million reduction of the cost structure on an annualized basis by the end of fiscal '18. The restructuring program will begin implementation and Q2 this year and is expected to continue into Q3 with an anticipated restructuring charge of between $50 million to $60 million pretax during fiscal 2017 and benefit starting to phase in over the remainder of the fiscal year. We believe this timely response for the secular print advertising declines will leave the business well positioned to maximize the digital growth opportunity. At News Australia, advertising revenues for the quarter declined 7% approximately 11% in local currency relatively be similar to the last fiscal fourth quarter. Circulation revenues at News Australia increased modestly for both reported and on the local currency basis as a result of cover price increases and higher paid digital subs are setting print volume declines. While we continue to benefit from the cost reduction program with News Australia announced in the second half of fiscal 2016 which totaled around 5% of the cost base. We are now embarking on further cost initiatives. We expect an additional AUD40 million in cost savings this fiscal year while we continue to push digital initiatives more broadly. At News U.K. while reported advertising revenue decrease 28%. Ad revenues were down midteens in local currency primarily due to print declines. Circulation revenues at News UK declined mid-teens versus the prior quarter but were relatively flat in local currency as cover price increases at the both the Sun and the Times were offset by single copy volume declines. News UK also benefited this quarter from previously announced cost savings initiatives as well as lower production cost and remains focused on identifying further cost reduction. At News America Marketing, the business overall performed well with revenues relatively flat versus the prior year driven by mid-teens growth in domestic in-store revenues. Domestic FSI revenue was down mid-teens due to lower volume. At Checkout 51 we achieved over 9 million members adding approximately 3 million this quarter and well on place to achieve 10 million by the end of this calendar year which I would mention is a key initiative to accelerating the digital transition of News America Marketing. Turning to the book publishing segment, revenue decreased 5% but segment EBITDA improved 14% versus the prior year which included the release of Go Set a Watchman that accounted for 32 million in revenues in the prior quarter. EBITDA margins improved by 12.3% from 10.3% in the prior year driven by the mix of titles. And this quarter benefited from a strong new release slate including Black Widow by Daniel Silva, Hill Billy by JD Vance of Sarah Young Jesus Always. Total digital revenues were approximately 20% of consumers revenue similar to the prior year. In digital real estate services total segment revenues increased 35 million or 18%, 226 million, segment EBITDA was 67 million up from 57 million in the prior year. ARIA's revenues grew 22% or approximately 16% in local currency due to an increase in Australian residential debt revenue benefiting from favorable product mix combined with modest revenue contributions from my iProperty. Results were partially offset by softer listings in Australia declining approximately 8% versus the prior year. ARIA's reported fiscal first quarter earnings today and just concluded the conference call which provided more quality delay. Move revenues rose 9% to $93 million versus the prior year reflecting continued strong performance Co-Broke after more than doubling the Q1 Fiscal '16 as well as growth in software services revenue albeit at a slower rate. The Move team is focused on the next generation showcase product as we expect to roll out later this quarter and further penetration of recently launched new products including turbo and seller leads [ph], we therefore expect revenue growth to accelerate in the second half of the year and are on track to deliver increasingly positive contributions to the segue EBITDA this fiscal year. Average monthly unique user growth at Realtor.com related strong up 15% year-over-year to 53 million in the quarter. In cable network programming revenues increased by 3% compared to the prior quarter primarily due to advertising growing midteens benefiting from higher ratings across the board as well as higher contributions from digital advertising. Segment EBITDA in the quarter was $14 million which was $14 million lower than the prior year quarter here today as expected cost related to the similar cost of additional NRL matches from Channel Nine and the airing of the Sri Lanka Australia cricket partially offset by the absence of the EPL rights cost. We do expect EBITDA improve in Q2 due to the absence of the cost from the English Premier League and Rugby World Cup which we had in the prior year. With respect to earnings from affiliates, Foxtel ended the quarter with more than 2.9 million total subscribers with cable and satellite subscribers increasing approximately 1% compared to the prior year period. Last month Foxtel announced that it had bought out Seven West media share in the Presto joint venture and the Presto service will be subsequently closed and Foxtel will shift its IP efforts to Foxtel Play. Existing Presto customers will be invited to the move to the new Foxtel play and Presto seize operations on January 31, 2017. Foxtel recorded a $21 million loss as a result of the decision to seize Presto operations and our equity income was $11 million lower principally as a result of this. Foxtel revenues for the quarter increased 5% and they are up 1% in local currency, and EBITDA increased 2% but was down 2% in local currency due to higher programming costs and marketing. Sales as expected remained above prior year at 15.5% as we cycle through some historical no contracts offers. Importantly underlining year on year churn data when adjusting for the impact of new customer office has been more stable. ARPU for the quarter was down approximately 3% TO around AUD88. Capital expenditures from continuing operations for the quarter were $49 million lower than $63 million in the prior year and turning to the balance sheet net cash of September 30th was 1.1 billion including 377 million of debt related to iProperty. Cash on the balance sheet is down from fourth quarter 2016 principally reflecting the payout of the News America Marketing settlement of $250 million. So in summary while the quarter faced some obvious challenges as we had noted we expect to see improvements for the remainder versus the year. A few points to highlight while print advertising remained very volatile and visibility continues to be limited we have stepped up our cost savings initiatives particularly at cost at Dow Jones and expect improved EBITDA performance in the current quarter and the balance of the year. We will also be including the contribution from wireless group within the news and information services segment from October 1st. Book publishing should see favorable comparisons and we look forward to the release of Settle for More by Megyn Kelly, Chaos by Patricia Cornwell and the Magnolia Stories by Chip and Joanna Gaines as well as carry over sales of Jesus Always by Sarah Young with debuted last quarter. We have a strong roaster of titles this year and expect to see a return to growth in digital which bodes well for the year ahead. Fox Sports Australia as I mentioned could benefit from lower rights cost in the second quarter and should see an improvement in EBITDA versus the prior year. For all the full year cost should be down modestly in local currency with no major [indiscernible] impacting this fiscal year. For digital real estate we expect continued revenue and EBITDA growth for the segment. While [indiscernible] volumes in Australia for the second quarter remained lower than the prior year we expect continued growth benefiting from favorable pricing and increased penetration. Realtor is expected to roll out showcase 2.0 later this quarter and the revenue lift is expected to be more second half weighted reflecting the timing of contract renewals. We expect to see strong improvement in EBITDA contributions from Realtor this year. With that let me hand it over to operator for Q&A.

[Operator:]

[Operator Instructions].We will take our first question, this will be from Entcho Raykovski - Deutsche Bank Entcho Raykovski with Deutsche Bank.

[Entcho Raykovski:]

My question is around using information services and your speaking about digital advertising revenue offsetting some of the print declines, can you give us an idea of some of the quantum graph within digital ad revenues and also any background you could give us by jurisdiction as well as what sort of trends you’re seeing within digital ad revenue growth would be appreciated. Thank you.

[Robert Thomson:]

That’s for the future itself, unfortunately I don't have [indiscernible] powers so it's difficult to define. At Dow Jones we are seeing some improvement in October but beyond that I don't have the confidence to give you a forecast just more broadly before we get into the granular details what we are seeing at the moment is some mayhem in the ad market. Avatar is having ads placed on sites we seen almost to have contempt for profit companies or they have their products bobbing around in buildings [ph] and that ad apostasy simply can't continue [indiscernible]. So at heart we’re very confident about our quality content, our quality audiences and the quality campus we have for advertising. At News Australia we saw advertising down about a 11% excluding FX in the quarter. News UK advertising title was down mid-teens, Print was down high teens digital up low teens and Dow Jones advertising is down 21% but we have experienced double digit growth in the digital News UK and Australia where emphasizing the quality of [indiscernible] and our audiences and we’re building out more segmented products for advertisers so that we will be able to target those quality audiences in a meaningful way and I think what we're talking about is a longer term strategy but one that should have results in the short term.

[Operator:]

We will move along to Craig Huber with Huber Research Partners.

[Craig Huber:]

Yes a question the Wall Street Journal just what's your thoughts on why the decline has accelerated in negative 21% at the print Wall Street Journal last quarter and what's your outlook there for the upcoming quarter.

[Robert Thomson:]

I think there is a broader issue about advertising, generally there is definitely mayhem in the market, some advertising is driven more by trend than by substance and when you have that amount of volatility in a broader market you are going to have for certain [indiscernible] and certain quarters a fair amount of volatility and that that was certainly the of the general. Tech advertising was down to a degree, financial also. On the NWSA magazine we had a record issue in September. So it's not as if advertisers have abandoned print as a sector and print is a very powerful platform. It's is that there is a lot of content out there. Frankly a significant amount of that content is less meritorious and more meretricious.

[Bedi Singh:]

The only thing I would add is that advertisers pretty much week by week and we are seeing those when we look at October but there are some temporary rate of decline that we saw in the first quarter and whether that continues for the rest of the quarter it's difficult to say but certainly the Wall Street Journal and in News Australia at News UK we’re seeing some tampering of the declines so I think visibility is limited but at least we’re seeing some improvement a little bit.

[Operator:]

We will now move to Brian Han with Morningstar.

[Brian Han:]

Just one question, you’ve had $500 million buyback program in place for a little while now and yet you’ve bought back a freshen up that to-date just wondering how the board thinks about all this specially during times when the stock price is depressed?

[Robert Thomson:]

Well we've a $500 million provision. We had bought back a modest amount of stuff but clearly when we think in terms of a couple of allocation it's a broad based strategy which includes internal investment and certainly includes returns to investors and we have also and modest dividend in place and -- but it has to be based on an understanding of the long term value of the company and that is what guides all of our decisions and the board's decision about the buying back of the stock. Thus far we've bought back $71 million but that will be any further moves will be in the context of that goal or strategy.

[Operator:]

[Operator Instructions]. We will move to [indiscernible].

[Unidentified Analyst:]

I was hoping you could provide some color around free cash operations for the business, obviously there are $300 million for the quarter and what the expectations are going forward and how fast can we track EBITDA and what can we expect the round up conversation of free cash flow? Thank you.

[Bedi Singh:]

So free cash flow obviously we reported negative for this quarter. As I mentioned its namely driven the fact that we had a payment to make for settling the News America Marketing which was $250 million, was accrued for the last year and now we paid it out this quarter. We also have slightly higher working capital this quarter some of it was due to the acquisitions of iProperty and obviously we have lower EBITDA. So all of those factors contributed to that. You shouldn't take the first quarter as being indicative of the rest of the year, we're very focused on generating healthy positive free cash flow and I would say mainly it's all timing things this quarter. So without giving a specific number though, I think we are striving to make sure still we are very healthy for the remainder of the year.

[Robert Thomson:]

Thanks, Peter. Operator, we'll take our next question.

[Operator:]

At this time we have no questions in the queue. [Operator Instructions] Okay, we'll take a follow-up question from Craig Huber with Huber Research Partners.

[Craig Huber:]

Yes, I'd be curious to hear what the margins were like at Move.com versus a year ago, how about the profits there?

[Bedi Singh:]

We don't give out specific margin information. As your know Craig, we have started giving out obviously revenue information based on your last requests. I would say that margins are growing and if you exclude stock based compensation, EBITDA was higher when we've had the whole, and it's ramping -- it's ramping up, even I would say. And so we're not giving the specific number but they're on-track to be very meaningfully profitable for next quarter onwards.

[Robert Thomson:]

Thanks, Craig. Operator, are there any other questions?

[Operator:]

We have a follow-up question from Brian Han with Morningstar.

[Brian Han:]

Thanks, gentlemen. Just one more on; in your other division I appreciate rather that you want to continue to canvas new businesses to in but the $180 million costs in the other divisions still seems quite substantial. Do you think there is any room to reduce that cost base?

[Bedi Singh:]

We're continue to be striving to reduce the -- as you call the other, which is principally our sort of copper and other head costs and it's come down a lot since we started showing our results two to three years ago. So we've been constantly bringing that down and I think you'd expect to see some improvement on that as we go forward. And UK newspaper matter which was included in that obviously coming down as we've reported.

[Robert Thomson:]

Operator, are there any other questions?

[Operator:]

Yes, we'll take a follow-up from Entcho Raykovski from Deutsche Bank.

[Entcho Raykovski:]

Hi, just a follow-up from around the new agreement; we'd like to be -- would you mention that Foxtel has entered into -- could you give us any more indication of the terms of that agreement and that sort of uplifting costs which results in and if -- I mean if it was a significant -- I appreciate you might not give us the exact numbers but has significant that uplift [ph]?

[Robert Thomson:]

I'm sure your instinct is correct, we're not going to give you the exact numbers. But look, I think the key word at Foxtel is high [ph]. The rights you're talking about are exclusive to subscription TV. As you know we have taken the decision to close down Presto, frankly, we thought that was a distraction from the core brand and core proposition which has by far the best way to programs in Australia as I'm sure you will know from your personal experience.

[Operator:]

Okay, we have one more question in the queue, it's from Eric Katz with Wells Fargo.

[Eric Katz:]

Hi, good afternoon. So you mentioned looking through the balance of the year, several segments talking about improvements, particularly in EBITDA, I was also wondering if you can give a little bit more color on that because it sounds overall that you expect improvements but I don't know if that means for instance some news, EBITDA would be higher or growth rates would be better? Any particular quarters or back half of the year that you point out in any particular segment.

[Robert Thomson:]

I'll start and then Bedi will no doubt compliment my comments but -- individual real estate as Bedi has indicated, we expect a momentum as the year unfolds with new products and new pricing; and it will be strongly EBITDA positive, that is a certainly a growing business. At Harper Collins you need only to look at the best seller list at the moment to get a sense of the impact about the titles and we are very pleased with the focus on books like the Magnolia Story, like Sally. And no doubt like Megan Kelly's sort of a more; there will have been broad impact on society and a positive impact on our accounts. And we think Fox News as we get into the Spring selling season in Australia for sports given the record audiences of last year, and the buzz around by its Rugby League and Aussie Rules next year; that will be efficacious also.

[Michael Florin:]

Thank you, Eric. Well, thank you all for participating. Have a great day and we'll talk to you soon.

[Operator:]

Once again, this does conclude today's quick conference call. Thank you all for your participation.