| | Bedi Ajay Singh, Chief Financial Officer Thank you, Robert, and good afternoon, everyone. First, I’d like to share with you some high-level financial highlights and then we will discuss each segment in further detail. We reported fiscal 2014 first quarter total revenues of $2.07 billion, a 3% decrease versus the prior year period revenues of $2.13 billion. Excluding the impact of acquisitions, divestitures, and adjusting for foreign exchange fluctuations, total revenue declined 4%. The earnings release you will see includes a reconciliation to reflect these adjustments. Turning to EBITDA, we reported total segment EBITDA of $141 million, which was a 58% increase versus the prior year period. Again, excluding all acquisitions and divestitures, most notably FOX SPORTS Australia, which we acquired last November, and the Dow Jones Local Media Group, which we sold in September of this year, all costs related to the U.K. Newspaper Matters, which were $17 million this quarter, and excluding foreign exchange fluctuations, total EBITDA declined this year by 5%. Reported diluted EPS were a positive $0.05 versus negative $0.16 in the prior period. Excluding restructuring charges, the U.K. Newspaper Matters costs and other one-time items, adjusted EPS was $0.03, down from $0.06 from the prior period. But importantly, free cash flow available to News Corp. improved by $145 million compared to the prior year. Now let’s turn to the individual operating segments. In News and Information Services revenues declined $171 million, or 10%, versus the prior year. Australia accounted for $121 million, or around 70% of the segment decline, of which almost half was due to foreign exchange. Within segment revenues, total advertising declined 12%, of which FX was 4%, and looking at advertising performance across our key units, at News Corp. Australia, newspaper advertising revenues declined around 25%, including a 10% negative impact from foreign currency. News UK advertising declined 7%, with the majority of the decline being due to incremental Olympic spending last year. Wall Street Journal advertising domestically was virtually flat with the prior year, and overall Dow Jones advertising was down low single digits, impacted by some weakness in Asia and Europe. We haven’t seen so far any inflection points in advertising in either direction. Australia remains very challenged, while the UK and U.S. have been more stable, but we recognize that visibility is still somewhat limited. Circulation and subscription revenues declined 6%, of which FX was 3%. We were hurt this quarter by lower print volumes, a decline in institutional sales at Dow Jones, which were partially offset by cover price increases in the UK and Australia, and growth at the Wall Street Journal and WSJ.com. As Robert mentioned, this past quarter we launched Sun+, our paywall in the UK, bundled with English Premier League highlight clips and have put all of our major mastheads in Australia behind the paywall. We’ve also relaunched the New York Post website and we are also in the early phases of rolling out DJX, our bundled institutional offering at Dow Jones. And the conversion to this single product offering had a modest negative impact this quarter to revenues. At News America Marketing, sales improved 3% versus last year, led by strong double-digit growth in the in-store business, consistent with our comments at the Investor Day, and importantly, we saw margin expansion there this quarter. We saw growth in Canada and growth in several food and drug categories. Operating costs for News and Information Services were down 12% this quarter. That was due mainly to lower head count as we realized some savings from prior year restructurings, lower newsprint costs and production costs, and lower marketing expenses. |
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