NWSA - Earnings call transcript Q2 2019

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Operator

Good day, and welcome to the News Corp Second Quarter Fiscal 2019 Conference Call. Today’s conference is being recorded. Media will be on a listen-only basis. At this time, I’d like to turn the conference over to Mr. Michael Florin, Senior Vice President and Head of Investor Relations.

sir. begin, may You

Michael Florin

it’s much, second everyone, We quarter release ago, earnings very at our News newscorp.com. issued welcome Corp’s press and hour an fiscal XXXX about posted Aaron. you on and website Hello, to our now Thank earnings call.

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

to This is be News materially information questions from take We with prepared some to strategy. forward-looking and will business from certain remarks, investment Corp’s happy call community. Actual open with differ include respect and said. then we’ll could may the results what

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

as The EBITDA, adjusted With it measures earnings this Robert EBITDA and that, and segment definitions can total our pass segment comments. reconciliations Additionally, include be measurements will call of EPS. adjusted release. I’ll to certain Thomson opening GAAP non-GAAP non-GAAP in such for some to found such over financial

Robert Thomson

Mike. Thanks,

News during XXXX, the audiences craves and a premium of fact-challenged first-half revenue and in content credibility. growth Corp the power fiscal world highlighting of that profitability reported increased authenticated

somewhat to the advertising mitigated diligent subscriptions digital been though, remains digital at declines revenue teams growth Even paid second in and and of segment company revenue. where the pursuing the and XX% print our in a News we HarperCollins, Dow trends in world of and saw at a total Group. dysfunctional positive intensifying of revenues For opportunities, rise generally, XX% Information in a REA the in EBITDA, revenue Australia subject continuation More U.S., consolidation quarter, the expansion scrutiny. reflecting growth and Foxtel healthy and and saw digital have Jones Services,

and players hoping much sectors. ambiguity companies some its their clear We do to own the products that no U.S. reckoning. There company is at audiobook not the time potential markets fully a regulatory the arbitraging products, limitless. of almost a in its regulatory dominant It define which algorithmic have there one appreciate and world are and been that the certain of exponential is manipulate algorithm are these for advertising, market ideas. or in has data, is news evolution, in controls will, doubt consumer come abuse When that regulators of potential in market has tweak for for awakening can that and and has a dominance

Sun digital channels more up users efficiencies. certainly digital was subscription the with FOX on Elsewhere subscriber the risk December million at according approximately their journalistic the put of the total base, the case with that for now changes $X.X up FOX family, to total listening potential Australia, the and paid as day Jones PLS Australia, Turning the reporting digital show last clear legendary to editorial Meanwhile, according reaching and profitability UK, are over we media year-over-year. own in SPORTS allow Dow Dow been want is saw Times the model to independence perspective, SPORTS resources. that Nielsen. The continued has It boosting than the continues viewership Radio X.X already quarters. Times up a be The Jones At digital Dow an the overall saw its companies across are very is Times. XX Group’s Many relatively million. custodians competitors, has website, grew Times of Sunday live than proven made growth The customer technology. flow rose show, the these efficacious. cost roster. and significantly XX% up is subscribers which addition resources The now Foxtel to Sunday where protected, that XX% grew XX% in of the UK paid the higher not been continues revenue while At businesses, unique transformation The improved. this Professional cost in Chris’ the print the Virgin for XX% one the almost consecutive broadcaster has with XXXX. brand XX% ongoing number responsibilities for revenues. progress, radio program publications and growth and conscious revenues the of total quarter, sponsorship half portfolio so saw year-over-year growth fifth in deployed survey. The Street MarketWatch in and print likely joined a seven is and replicated latest Wall quarter, Since news.com.au. and times Jones also audience To all downloads of has Dow million together That gifted digital not digital of acquisition. to again advertising entertainment quarter. the Journal, ahead for duplication enhanced to XX% to during in News conventional with ensure brought news visits government across saw as Chris of extensive we to year-over-year. while quiet reduction year-over-year. and to the use but we financial UK’s month clearly combined subscribers, one period our will ailing, cricket Barron’s breakfast be consecutive PAMCO increase where also management, according Sky, was number There radio and customer more certainly of data. sharing The by in month, news growth the [indiscernible], digital excess the of sensible over remarkable. cost Evans, of Virgin advertising partnership strong Information month subscribers, in compliance account worth Thanks our our ad elsewhere growth of XX% Australia The but year-over-year, during audiences Jones first and digital and there of upgraded disrupted solid areas are application subscribers of traditionally uniqueness traditional business in the this we best its subscriptions Last year-over-year gains sports Australian, summer, breaks. impact to the to unique of and Wireless with made of are have its we the strong XX% Average Radio and across the and

traditional product, streaming has changed the trend. Our certainly Kayo, sports new

the Corp Services into content. peak without a X, success segment the Tracey that XXX,XXX results, XXX,XXX will was segment new It competition, is The world have our Since the tripled of role in sport In News global growth passion selling environment, more Real creation services that inclusion listings competitive increasing REA over segment, of News Australia and number for As attracted at content been clear our than of new the by in the strong would of XXXX, markedly driven revenues had winter her She has Global possible leadership Digital seeking of underscores business, expansion for challenging Service has continues than Estate and far EBITDA the sports, commitment be of Corp. Fellows. not we Digital which that the as of the fastest comparative expect doubled. And February data Estate and popular of we of robust the REA in Kayo residential as increase rugby have and approximately which despite opportunities not Foxtel new growth by appointment users, revenue-growing President posting of were to subscription head the drives a continued sector. for driving prior Group cherished best period. Tracey more the collection Real in season Australian outperform in The Digital paid. Real the football Estate our league. to to and more

of where Owen the is We have of pleased strategy, has Chief all and become he overseeing M&A Executive which thrived. REA, are that operations, particularly new Wilson

optimism somewhat market the trading Turning is to undiminished, in real even been property estate, our long-term U.S. has sluggish. as shorter-term

our As are revenues we’re importance estate the of revenues realtor.com, not clients. Its certain acquisition which strategic of in quarter, strength covertly successfully is of Unlike higher-quality we with up October. business the with leads in competing it includes provides evident business, value-added evidence in Moving, XX% total our at real we clients. the in operator brokers this the the houses sector, enduring other closed with the up Opcity, of XX%. or flipping flagrantly company potential about a This

HarperCollins delivered by are by Hollis, to The increase of new grew such outstanding by audiobooks. also a publish UK, in And and the the buyers, prior successful quarter. current in provide Monster titles to in the Joanna sellers sales year, driven quarter. with in realtors. Digital to Ice this and Wash In sales Homebody the Rachel very Publishing, possible aim bestselling Our David the service Book by Face whom irrepressible Your XX% also Walliams. set is by of Girl Fostered performance titles, as Gaines, both best another the XX%

investors. for which results our muscular digital the the is year the our premium and transformation, of first-half of demonstrate quarter and this and a reflect for Our power future products for platform our the fiscal ongoing building

provide insights the into our details will incisive accounts. finer Susan Now of

Susan Panuccio

Robert. you, Thank

the to financials. segment XX% versus Foxtel. $XXX versus X%. and excludes year the revenues Turning increased Fiscal billion, over an and the consolidation, the million, items and the up of disclosed fluctuations $X.X EBITDA On XX% the of EBITDA X% quarter the impact Results our was total adjusted prior XXXX which revenues Foxtel release, were in reflect total up impact year. currency of consolidation prior increased other basis, the second

per prior a in For the $X.XX, which a in $X.XX prior tax reform. earnings the earnings $X.XX the year. charge in to $X.XX loss related year, were share included quarter compared of to share quarter, U.S. were the versus Adjusted as the per

billion, to In the $XX segment. than the Currency had prior were Information News half a Services, and revenues year. Turning X% the for versus negative Operating now more quarter impact million Individual the for accounting $X.X down decline.

XX% News reported declined the the in were declined although prior Approximately X%, relatively it the revenues Australia revenues of and digital, Marketing segment’s Dow XX%; local fell currency; UK Jones year. News to up was News in stable Within X%. XX% from X%; segment, at America rose

the accounted XX% were of on to Advertising versus currency the X% approximately down X% and due fluctuations. segment $XX to highlights. revenues Moving for being segment prior or year, with revenues million,

strong quarter MarketWatch. flat significantly, improved to revenues with both from currency, versus the The driven declined At Dow declines. our X%, new print going across offsetting audience revenues ratio. X% trends advertising and and again, Digital quarter, moderating just the from year-over-year advertising Jones, improvement showing improved print was down advertising quarter year. At by News in resulting prior Second digital. businesses were modestly prior local year-over-year rate in of prior Australia, with growth, improvements programmatic strong gains advertising in but declines declines the sequentially, the

national we a a offering. news to front, news.com.au, further saw news of digital portal the and business On expansion medium extend small

fell local the News currency, X% at had at to due or mostly year UK prior the in versus X% year, revenues down time. We higher trends print challenging advertising saw prior modestly advertising Sun, print comparisons. which the soft

Marketing, by included and advertising partly X% of due campaigns. at delivered revenues install to Finally, revenues, fell which were the News product lower home impacted timing weak which America revenues, products FSI advertising

XX% subscription of saw or impacting and with circulation by revenues. currency million, negatively which foreign revenues, to X%. these increase for X%, an $XX accounted now segment of revenues Turning We

XXX,XXX Street over The Street first paid year. up We year-over-year revenues XX% paid At $X.X the accounted subscribers Wall growth, strategic Wall subscriber of and are for core up Dow performance. million, a been which an of strong and were continuing growth subscriber which The circulation total at pay quarter. digital from XX% grew to Digital Journal, see Journal, focus very key X%, from from increase healthy benefiting to Jones, improved at to has subscribers digital-only last subscribers XX%

at print Sunday UK. Australia, News growth offset we up while cover Times, In and healthy at and revenues price and up increases XXX,XXX. In year-over-year Australia, were saw subscriber sales modestly to XX% XXX,XXX circulation the in addition, over Times The to declines, volume The XX% down rising digital again digital

EBITDA. Turning to segment

higher EBITDA was Information down the the exit mainly revenues, to lower Services newsprint the by Sun expenses clients in and million, of from segment including and UK Bets related $XXX News driven XX%, prices.

increased again Jones Australia. contribution both Dow at However, we and had News

positioning or was to in Broadcast impact an offset the X% ARPU to due about to broadcast standard. in The increase million million quarter October $XX from lower XX% Turning the Foxtel decline the commercial revenue Australia costs forma reflecting total launch X. to million revenue first commercial versus in reflecting On reinvestment was reflects X% the or similar The year. segment, lower. relatively basis, was or the the our Subscription closing the and expectations, on as of of broadcast Now the X.X year, Fox to the prior the forma higher X% level the focus currency million as inclusion the and decline, Services and million was X%, Sports. revenues prior marketing over year of $XX to Australia. Segment Cricket in increase for versus a million was partially a with decrease in million, $X year, ARPU December Foxtel negative higher foreign by compared $XX subscribers quarter, fluctuations. implemented on mix related quarter shift related from year, with improvement and EBITDA new the million were down ago. revenues, compared segment base, year-over-year Pro operating up $XX of sports decline of better $XXX subscriptions This of driven the including Sports Kayo prior driven decreased to a Foxtel’s Now against quarter XX%. XX% and the decreased versus X% by Video pro from XX, first the revenues were prior revenues. revenue $XX costs of reflecting we subscribers metrics, growth. the million costs, subscription future was an a prior the production transaction, trends Foxtel up were A$XX, price Broadcast the about Sports by for of $XX On $XXX prior negative impact Kayo lower decline consistent with approximately million, quarter a approximately to EBITDA programming year. Foxtel segment ARPU quarter, Compared the subscriber higher

Kayo Sports and of million were very Now with early subscriber terms subscribers the adoption. late X.X about mix, November and Sports were the and Foxtel Kayo We the pleased remainder commercial, In are in subscribers. broadcast launched

to winter utilize smartphone the paid Christian in Rachel the data season. to Sports quarter, much XX% supply Albom; into scale X, million and At As last had for partially publishing. million of contribution Robert expect which business $XXX related be the from The Foxtel currency was user growth $XXX quarter the to and grew base for sales conditions going mentioned, we minutes million, user while as management engaged driven and as HarperCollins. $XXX the mainly Joanna contributed Estate we Homebody revenues see with Capital over REA the is both strong with and Wash by in the solution for Your sports grew of October have At X% to X% as a all well approximately by live basis, both and analytics modest been versus XX% XX.X% which yield over Face again $X churn release which driven impact proactive viewing and in the adjusted for year. bookbinding XX.X% an very revenues prior per levels Publishing, in by selling Total and had Pleasingly, better another with for XX%. Kayo win with This with On of Revenues currently XX%, Australia, XX% the XXX,XXX back. predict at segment is books growth were customized day, of Gaines offset million year, currency to device. to by XX we in to consolidated increased price organic up to Services Girl, XX% revenue and through came modestly Book major Downloadable was increased Hometrack Meet by from XXX,XXX record general revenues, February subscribers offset. revenues it XX%. subscribers the quarter, higher posted Foxtel solid would increased to new time watching year. the which the expenditures In the acquisitions, the tighter strong forward Acquisitions audio the and focus grew growth team previous in digital impacted had XX% industry. to primary X%, Heaven Mitch and quarter, first-half, important headwinds. despite attention represented the revenues investing average was consistent Group per prior million being recent million, segment, consumer order we’re second penetration Australia, Digital advanced due more down was the paper for quarter achieved Real active the Person of churn video or Churn of rise. grew local premium acquisition. revenues, Hollis, $XX across currency, increased EBITDA You and Next and in residential in in and $XX debt in reflecting broadcast

last XX%, drive We of their to following user display decline more by offset including the partially listing growth year, this Real an helped was reduced advertising by of and call, X% Opcity Opcity. revenues. engagements, and million also quarter. offset additional partially by to and their similar inclusion comments on the was Move Please improvement experience the Revenue a refer in connection estate growth increased and product outlook. for details $XXX developer revenues rose to media call decline growth release revenues. overall volume, plus an Sydney pronounced in to XX% Revenue in earnings new prior its which acquisition. and REA’s revenues saw included lower conference versus

lead We to in second transferring unique impacted were versus expand we platform. going. the on prior in the more to sales home relationships of users Opcity, realtor leveraging challenging how approximately integration focused at also Opcity, leads saw existing their volume, the monthly as is plus is by moderating U.S. are growth the XX realtor.com the Average in very team partly year. X% as housing with market, a quarter. new for the million declines industry including connection pleased of quarter, well The extensive at adoption rising On

learning agents. AI using match We better and algorithms are machine advanced to consumers with

adjusted We Services, leads growth Opcity on consumer XX%. quarter third million. the mention now to have quarter. are higher taking with combined in like a cost third segment an deferred Segment underutilized. events. I fiscal Opcity EBITDA advantage development. move Information EBITDA the And including we News monetize basis, grew of drive in for past to live initiatives, reinvestment things unsold into platform at gone additional quarter Jones expansion Dow The cost including At would in and that expect the the to to rose the continued X% related to or product reflected compensation acquisition, few execution $XXX

addition, to America In FSI challenges News related advertising. mostly continued the we at expect Marketing,

by Kayo comparing We cost overall to to million. releases the year, performance related remain similar Publishing, Services, marketing continue In to the In together backlist. the US$XX are we of US$XX strong Video million to US$XX our have quarter, incremental we our for and Book will business. million additional costs trends of upcoming encouraged with an ongoing will to million, US$XX when efficiency Sports streamline Subscription to favorable seek the cricket of prior with second

by by realtor.com hand to me Stop Up Gardeners key Hollis, similar expect to Services, product drive Gaines. revenue quarter and With Opcity, We Estate Girl, it the operator and At On that, development. at over includes Real the continued including QX, titles Angie this to Digital and we growth high marketing Q&A. by reinvestment Thomas for let Joanna Come Some Apologizing the Are Rachel

Operator

first Quadrani Alexia Instructions] from will take our question We with [Operator JPMorgan.

line open. Your is

Unidentified Analyst

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

Robert Thomson

for New the Times. Well, listen, York I can’t speak

wsj.com, much In At The of potential which course, fact, we’re That’s Journal. couscous sector. business you Dow the performing the Jones, seeing newspaper, And closely, is speak rent if can elsewhere Wall meaningful is and were prime well I low – for revenues not the or the subscription has see is, for look up recipes, in Street growth. not XX%. up obviously, crosswords you’ll circulation

companies needed As at network be content and pace. clustered a in Jones To is incorporate for world, professional work. want happening Dow honest, to that content advertising

at simply any team maximize a We not, have if were for up free certainly Jones to team there fastest then growing Jones, compliance, difference. new If compliance, Dow ad knocking. and risk Dow have must a Jones risk business is you Dow the minimize comes the when positive regulator that and you making Dow feel as ads contract. at Digital And at out of Jones out want a and XX%.

Michael Florin

we’ll… Aaron,

Unidentified Analyst

Thank right. you very much. All

Michael Florin

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

Operator

Suisse. question comes Entcho with Credit Certainly. Raykovski the from And next

open. is line Your

Entcho Raykovski

that provided Services Hi, over Subscription some us Video subscribers. Hi, around particularly the stats My quarter, very Robert. you’ve question launched is useful and Sports around Susan. the given Kayo you

cannibalization taking we I do Kayo? we’re if you. up quarters? you a thoughts you’ve do just level given where as over the And churn then rate of right Just And of the the broadly, place there? next view well, of to interestingly interesting pointed the addressable expect Thank stepped think pricing, and higher just be market at continue to couple suffering, watched the high-level sort there’s whether you you to of more but adds looking net

Robert Thomson

cusp week baseball definitively In we have paying XXX,XXX that, in or was it number One we has week innings. been would XXX,XXX after and the in that innings. customers, second cricket, And of indeed was the the events around Kayo early Rules an in I selling an are that on nine is months say in rising of matter And we which age say, Australia for can innings the concocted four Aussie launched. in we indeed, events clear beyond is so since are first asset. is extraordinary and that of two Entcho, four of It important sports years. the the Rugby That’s incontrovertible you content. as confected, in League, the sports next and season, crucially fact or know. have peak an

can content be you So in ideastick platform agnostic, [ph]. but be you can’t

Of prices, not and spin more subscribers. earlier versions we massive from inadequate, course, of better. there to that year. much the is the last churn we’re you what fact is is late more higher as did go when increase But seeing premium The satisfying. show absolutely down sophisticated does the version that were The the IQ iQX the is iQ, to current and the really Box Kayo

Susan Panuccio

Entcho, add. also think, I I’d

penetration our very question right Just been research sort has audience some obviously, there’s our market, to price at it’s the for haven’t other that been that open sub-XX% Australia, out past of XX% years addressable to managed we to reach if within on your in paying for has proposition old there are relation point. clear the and the

churn and mention effectively lot we’re are focus going have that but they forward. team And we we churn, at. continue will data as to very we So relation would early in Australia that order investing the really churn in of that Robert And days metric management is as a little to forward. in the in a we the capabilities it did and of release. move I be – as But having are market down spin are in very Kayo, focused and on manage that a consequence said, seen to addressable just on it look money

Michael Florin

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

Operator

Certainly.

Kane with next Our Sachs. Hannan Goldman from comes question

now Your is open. line

Kane Hannan

Good morning, Susan. Robert and

couple taking brief just Tracey you opportunities the then Just the of following [indiscernible] of following comment elaborate And on comment? that what just seeing that you comments opportunity be made meant on traction around new and that the you’re Could completion? that appointment. and model a by ground around only what

Robert Thomson

has our job first task priority. Well, and Tracey among various increase settled the a properties world, and that corporation the will the it’s the just into to obviously be around

U.S. remains course, Beyond property And real. interesting, can’t speculate. sluggish. market a that growth down yet digital one, Australia real obviously, listings the It’s and tad estate of in revenue are is

services, and could these And that testing we’re both know indeed that investment value-added by leads times say customers. And quality a definitely and it You test. appreciated the and higher is who that level there clients case Opcity of of providing the model Opcity. are intelligence that analysis and our is revenue purchase, market shows value our and passing quantity are mean in and for leads because leads of the quality

Susan Panuccio

which access rate higher consequence high-quality to that which leads into higher as what will look a into is gives a the as conversion leads better offering data the And the we moving, best-in-class just also adjacencies at their at out revenue can will bedding the realtor Opcity, I building leads, to think, other will which we looking us that we’re It evolve forward monetize of company, [indiscernible] to continually be it which now. Kane, mortgage we by et to add the is currently out type branch cetera, on for we better and closed provide of revenue. enable of sort agents, use reported of enable leads move insurance, way the will this quality

results and drive those think of what will we is with combination the think I Opcity the comments realtor. So the

Michael Florin

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

Operator

Certainly.

Our next question Huber comes from Craig Huber with Research.

now open. line Your is

Craig Huber

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

Susan Panuccio

question we’ve before. given So CapEx, first on in to relation just this guidance I your on think,

$XXX million number be So Foxtel to for we’re U.S. for and that the was expecting higher. million we last dollars year, $XX it quoted

We obviously to progress as to we relation the that, we haven’t in monitor CapEx changed through our but that expectations year. continue

question next I think, relation your to local currency. circulation in was in

News [What So were revenues News part question?] Jones up the circulation were down Dow [ph] third in was I from X%; circulation and from Australia, a perspective, revenues up X%; think, X%. were circulation UK, your revenues

Craig Huber

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

Susan Panuccio

We But say Craig. Video in can we’re last out to is, with that given broadly excluding be Services roughly Subscription expecting it, what year. haven’t I before, line

Robert Thomson

priced an analysts economic that which that the many political as ensuring debate. in in the is in a something some There Craig, are lot a respects, events a there which not it’s rapid trends – two prices, there macro in as that generating in Wales end. property macro the New to been many because tell, Both on indeed increases of for housing [ph] election welcome, of some could little unsustainable upcoming May an impact in has activity. excessively issue, held is decline economics, have enough and election Australia. in but But are come state difficult and were is to market. in South countries, one federal of to it the property locked positive. have issue, the underlying Australia those events obviously be business And just But means

EBITDA is that efficacious. team, growing, transformation at the itself potential of and and the performing digital well. is we’re particularly Australia News pace continuing So business. company about the trend optimistic the Mike the of is led And Miller, by is for very

Michael Florin

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

Operator

our Brian next And Certainly. from with question Morningstar. comes Han

Your is line open.

Brian Han

you Board? if the buyer Board for Hypothetically, journal is across Journal, or that master part and digitization consider your selling integral an you interest a the would absolutely strong that of strategy had Street the is Wall

Robert Thomson

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

Brian Han

Okay.

Michael Florin

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

Operator

program this over At time, like to turn are any comments. I’d there back the additional no additional presenters questions. the for to

Michael Florin

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

Operator

today’s program. you participation. This Thank conclude for does your

time. You any may at disconnect

News (NWS) 7 Feb 192019 Q2 Earnings call transcript