Q2 2021 News Corp Earnings Call
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Good day.
And welcome to the News Corp, one Q fiscal 'twenty 'twenty One conference call.
Today's conference is being recorded.
Media will be on a listen only basis at this time I would like to turn the conference over to Mike Florin Senior Vice President and head of Investor Relations. Please go ahead.
Thank you very much Ali Hello, everyone and welcome to the news Corp's fiscal second quarter 2021 earnings call.
Our earnings press release about 30 minutes ago, and now posted on our website at news Corp. Dot com on the call today are Robert Thomson, Chief Executive and Susan <unk>, Chief Financial Officer, Robert with the 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 of news Corp business and strategy actual results could differ materially from what is sad news.
Corp's form 10-K, and form 10-Q filings identifies risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward looking information.
Additionally, this call will include certain non-GAAP financial measurements, such as total segment EBITDA adjusted segment EBITDA and adjusted EPS, the definitions and GAAP to non-GAAP reconciliations of such measures can be found in our earnings release with that I'll pass it over to Robert Thomson for some opening comments.
Thank you Mike.
Of course, this country and around the world and so many places for so many people. These past few months have been characterized by considerable upheaval and social.
The political financial and health of that accumulations and turmoil deeply profoundly affecting many families of economies and the communities are trusted all of this call and your families.
Could be and weathering the storm safely and sorry true.
And in the midst of this true.
Which has been the severe stress test for individuals and businesses and countries I'm Gratified to report the news Corp has navigated the tier of Goodman and to be candid significantly very significantly increased profitability. We now for three months. The guys at the first quarter was particularly robust and so I am pleased to report that our second.
The results were even more robust and this burgeoning is a tribute to the efforts and the commitment and the professionalism of all of our employees and to the enduring value.
The company's culture created by repaying debt.
In fact the state.
And the cool water and fiscal year 2021 was the most profitable quarter since I've been here to hear the school was low income more than seven years ago and.
Well the other significant break once established we had the largest profit for Dow Jones and since the acquisition of the company in December 2007, while we reported a 77% rise and EBITDA and subscription video services and Fox health screening customers.
Historic High and we also benefited from lower costs.
Digital real estate services.
The accounted for approximately 83% and does that segments EBITDA and.
The history was made and when the New York price reported a profit for the quarter ending for the year to date that is the first profit and button times at the very least for what was a chronic lossmaking master and founded the Daiichi no one by Alexander Hamilton and <unk>.
Sure and digital real estate services book publishing of Dow Jones all of them.
And for powerful and.
Q2, collectively generating segment EBITDA growth of close to 40% debt continuing expansion highlights the profound potential of the company to increase profits and generate value for our shareholders.
And to the future.
These resilient results are founded on the long term strategic shift and the company's assets the chairman Digitization and all of your relentless discipline on costs.
We were adamant that we would not be victims of digital historic.
We would contribute to fractionate more for fuel future for content creators and we are seeing the results of that resolve it is fair to say the regulators globally have joined the digital docs.
In the second quarter.
For each segment and Newschool share is marked operating improvements and contributed meaningfully to our profitability. We continue to see increased cooperation across the company with valuable and digital lessons and inside of that each business rigorously applied for the benefit of role and.
For the benefit of shareholders.
Well the overall revenues I talked about $2 4 billion declined three three percentage year on year that was fundamentally true to the size of the news American marketing and 'twenty and 'twenty on an adjusted basis.
The genuine like for like comparison revenues rose, 2%, despite the pernicious consequences of COVID-19.
Segment EBITDA for the quarter.
$497 million, the highest of any quarter since our reincarnation and 2000 and Tennessee.
Yeah, all of a year.
That represents profitability and growth of 40%, while our free cash flow available to news Corp for the half rose by $373 million.
And I make these indeed of stress test and used for is surely the passing that test.
And the digital real estate services segment, and then there's revenue growth was 28% and that kind of the spike restrictions in certain states for inspections and the sales.
Having been in all of the support of the acquisition of move it is worth noting that we believe the net cost of this company, including the substantial settlement. We ultimately received for the Zillow and get out trade secret rule of law suit against them is the only a fraction of its current value net net we paid considerably less than $1 billion for moving 2014, we built.
And it is worth of vast LIBOR today, and how much will it be whereas in five years, the digitization of styles and the world's largest property market continues apace.
At the time of our acquisition of real the dotcom was the struggling for a price.
Platform with modest profitability and fewer of the 30 million monthly users. There were some try kind of thinking about the acquisition, but we were absolutely clear that our media platforms and grabbing and digital expertise plus our experience with the already in Australia and.
The last of transform the company.
And the first half of this fiscal year real day has contributed to our profit growth and the brilliant basics and there is a reality in Australia, so all of them.
As for LTE, whereas now how much the same school work well I will make for you do the math.
To help you do that math, a few specifics relative traffic is now our price scenario for 19 of the past 21 months, according to comscore, including the loss of 11 months and Iraq.
Moving to our total metrics average unique monthly users and the second quarter were 37% higher than the prior year and we reached each month on average 80 million people.
Just to give you a sense of besides scale and loyalty, we had $8 7 billion.
And page views in the second quarter more than one of the page for every person on our planet and that number does not include side of the galleries of houses multiply the number of visitors by the images and those galleries and you get a sense of the scale of the intense interaction by users and traffic has continued to grow since of the quarters and with.
The unique users, reaching a record 19 4 million for the month of January.
During Q2.
Many of the expanded and the rental market through its acquisition of mobile and online property management platform that focuses on do it yourself landlords and tenants. This is significant given the fact that DIY landlords own and manage about three quarters of rentals and the U S and the rental market. According to the U S Census Bureau data is a 500 billion.
Yeah.
The business so the addressable market is appreciable I'd appreciate it.
And also in Q2, realtor Dot com launched and advertising partnership with rocket mortgage while continuing to build and even more seamless process for consumers wishing to qualified for mortgages to purchase.
And January Rio Tinto announced the partnership with quality of to provide simplified digital home closings, allowing for greater online collaboration between agents and their clients.
Let us be very clear line of Hermes is by far the largest investment that the most families will bank and the purchase of around debt acquisition, whether it be securing of mortgage or Saudi with electricity of a broadband provider unnecessary and valuable adjacencies the other.
And I just is at the very center of that.
Mr of Commerce, and Realtors are at the very center of that purchase.
From a macro perspective.
Overall housing market in the U S. Not only has proven to be resilient during a time of crisis. It is.
The strategy of tangible strength with many positive signs of activity, even with listing volumes at historic lows.
With mortgage rates at the minimum and families and expanding their search for better and larger high ends of news locations. There is reason to be optimistic about the trajectory of the sector.
Resilience of the optimism Ost and characterize the housing market and in Australia, where the emergence from Lockdowns and the quarter has led to significant signs of recovery, Australia is still a growing economy and it will continue to benefit from its location in the world's fastest growing region. The deep charged with any share, including India, giving us a distinct advantage along.
And with its reliable legal procedures and stable adherent courage and political system.
We believe it is still a country that is far from maximizing its potential and the growth opportunities are pronounced.
In the second quarter RTI acquired a controlling interest and a lot of our technology is making it the majority of aren't out of the large and growing Indian digital real estate portal, including housing Dot com and profit target All Corp.
And as measured by audience, allowing around the indias fastest growing digital real estate business and India itself is one of the world's fastest growing economies. So the possibilities of profound way.
And the Tracey Fellows leadership by many measures the world's largest digital property company and we are acutely focused on the countries that we believe have the largest digital property potentials.
Yes.
And.
Meanwhile, Harper Collins has one of its price look pretty quarters with double digit growth across every category.
Many successful and even releases as well and the backwards bolstered both revenue and profitability and do the out of continued growth and digital.
Ryan Murray and the team.
Relatively early stage of the development of the order books and the proliferation of audio devices for the home.
And the increased the demand for our content.
Not sure that all the investors have yet comprehend the full value of that digital opportunity.
As for the resin and titles and the successful catalog. There was didn't you say that coming by Rachel Hollis the happy and you know how recoup book, Steve do you see the Greg the secret by rendezvous and frontier Forlese, Redrum, and and the continuing strong demand for the Magnolia table volume two by July of the guidance and.
And then in January there was Brexit, we have the series of non Richardson book, Spigelia, Quinn, which of our cross brand given the popularity of the of part of the series for which are you serious has recently been announced and all revenues at Harpercollins and the 23% in the quarter and segment EBITDA surged, 65%.
Out of the prior year.
Dow Jones also set records this quarter, including having its highest absolute EBITDA since news Corp acquired the company in light of 2007 with segment EBITDA of 43%.
The New York Times, eight out of eight 1% increase digital advertising expanded 29% the highest quarter and Dow Jones history, well digital advertising at the New York Times fell by 2%.
Print was challenged during the pandemic period English distribution was compromised, but I hope of all advertising was down just 4% comparing dramatically with the New York times, where it slumped 19%.
And our professional information business risk and compliance continues its record of extraordinary expansion with year over year revenue growth accelerating to 21% she going to Mark's risk and compliance 22nd consecutive quarter of double digit revenue growth year over year.
And the international tension with both the U S and China and pricing controls on companies and we didn't know it.
And the stretching and the U S and kind of tougher regulation, how Brian the other prospects for the risk and compliance if anyone on this call works for a company that has not yet of client I suggest that you remedy that day or eviction.
Traffic and subscribers across Dow Jones properties are surging and Elba and the team and determined to make the most of the opportunity.
WSJ digital only subscriptions were up 28 per cent and market watch also had a successful digital subscription launch in Q2, we have always insisted that our strategy is to up sell at Dow Jones, given the known for a portfolio and so I just wanted to the other thing that more than 70% of those market watch subscribers charters.
And all of that included the subscriptions of Barron's.
And as for traffic and.
Each months of unique users across the Dow Jones digital network around 48% and the quarter, reaching $127 million driven by 64% growth at both of the Wall Street Journal and.
Aaron's.
In subscription video services and our strategy to reshape the Fox Tao group as the next generation subscription business is clearly gaining traction with total closing paid subscriptions, increasing 12% and setting a new record of over 3.31 billion.
And now accounts for 40% of sales paying subscriber base with more than $1 3 million the streaming subscribers the app.
The growth rate and streaming subscribers was the other 90% driven by the strength of bench, which launched last may and the continued expansion of carrier.
In the past there's been skepticism about whether we could transition from our reliance on traditional broadcast but those concerns of proven and final founded and folks tell is now of a company with a diverse portfolio and much momentum.
I would like to repeat the EBITDA at the subscription video services segment for the quarter Rose, 77% from the same quarter last year and for the first half segment EBITDA was 34% higher.
Gross has been crucial for the success, but.
But we have of leadership team at Fox sales did I believe buys you won't makena and Patrick Delany and Theres been absolutely focused on reviewing every aspect of the company's performance and diligently reducing cost where appropriate the idea inside force the Ida and discipline has contributed to the transformation of the company and giving us a powerful.
And much optionality for the future.
We have now secured long term rights to the three most popular sports and the country Aussie rules Rugby league and cricket, which had extended the success in the summer with the two of the trial for the Indian team.
Record after record was state of the cricket pitch and all of interest rate, whether the traditional screened for a digital device and.
And that's the multi platform future is now secured with both Australia and rules and rugby.
Two of our partners at Telstra eye of a 3 million lifestyles customers will have the opportunity to transition to care for the coming months. So that they can watch the air James when they want to watch how they want to watch where they want to watch and on whatever device. They want the launch this is a monumental and violent for far eastone.
Our news media segment also contributed meaningfully to news Corps profitability this quarter with digital AD growth in the U K and at the New York priced.
We had indeed indicated that the new oil price was on a path towards profitability and it certainly achieved that goal and the second quarter. Our challenge now is to ensure its long term profitability given the challenges in that sector.
There's a lot of growth at the Paris with 64%.
Youre right of every year for the course of digital advertising accounted for nearly 90% of the total page views of the parents were up 37%.
It was also a quarter and which the post reported a significant victory for all media for the freedom of the price by standard Resolute and principled against censorship have caused by Twitter.
Ultimately towards I realize it is made and egregious mistakes and frankly reversed its decision.
And unless I'm not lap dogs with laptops and journalists the logs and all of US as jealous about one out of journalists are weighted to the profound and responsibilities.
And Australia, we were Fortunately ahead of the curve and transitioning many of our local and regional print properties to digital platforms, which helped the weather the storm of Lockdown, and Australia and leadership and the Michael Miller was disciplined and reducing costs and yet remain ambitious for our news platforms. During this time of the transition for journalism and Rebecca.
Brooks share real leadership, and the UK across the half of our states like the size of the times.
Average industrial businesses and it was I right at a net flow, which reached nearly 5 million business and.
Both Australia and the UK, we are using our skills and video and audio and to enhance our traditional platforms and that is clear of times radio which is an extension of the newspaper founded in London, and 70 and 95.
On these calls I've often referenced the ongoing debate with what is loosely called big digital.
And I personally I've got that moniker as the euphemism.
We are at a pivotal moment of the as discussions and Australia, where new regulations and new terms of trade will be introduced the debt debate now extends across the globe. There is not a single series digital regulate of anywhere in the world who is not examining the opacity of algorithms the integrity of personal data the social value of professional journalism and the dysfunctional digital ads.
Market.
This has been an imperative for the new school for far more than a decade I gave evidence of the house of Lords and London and all these various object in 2007.
And it has been and imperative because we truly care about the social value of journalism, and we believe that the social value is and commercial value.
This engineering, often solid free cash guide would not have been successful without the effort and support of Rupert and Lachlan Murdoch and the news Gulfport.
We expect that the U K topography of will benefit our company's financial for shoes that is for certain.
And it will also have a material impact and not only the countries and which we operate but in every country.
And the ambitious inspire young woman and starting additional news sites, and Nigeria or a building of England.
Alabama now has a far better and you far far better chance of sustainable success.
Finally, I want to thank all who have contributed to the singular success of news Corp. This historic quarter.
That was the all our employees of contributed and each day and courageous compassionate of weddings isolate those individuals for what they have done and for what they continue to do for the company and for their communities. Thank you.
While the macro environment remains unpredictable alcohol is to ensure the new school is best positioned for long term success and that add value is absolutely appreciated by investors and now and you just Susan fiduciary for some wise words.
Thank you Robert.
Fiscal 'twenty 'twenty, one and second quarter total revenues for the $2 $4 billion the decline of 3% versus the prior year, well occasional segment EBITDA was $497 million up 14% year over year.
Reflecting strong performance across all of that he reported.
Driven by a combination of increased operating trend and cost reductions. This.
And this is the highest quarterly segment EBITDA for the company was formed in 2000 and finishing.
And adjusted basis, which excludes the impact of acquisitions and divestitures, most notably the sale of Newsmax and marketing and the fourth of course I fiscal 2020, if all of those currency fluctuations and other items as disclosed in our release revenues rise chips and while total segment EBITDA free cash of 9%.
Net income for the quarter was $261 million compared to $103 million and the pie here for the course that we reported diluted earnings per share of 39.
On page 14 states and the prior year.
The adjusted EPS for the 34 cents and of course, the compared with 18 cents from the pie.
Yeah.
Turning now to the operating segments digital real estate services segment revenue of $339 million and increase of 15% compared to the prior year, which is more than double the rise from the first quarter driven by another record quarterly performance for news on an adjusted basis revenues increased 11%.
Segment, EBITDA rose, 20%, so hunting and $42 million or 19% on an adjusted basis, the spot Hyatt and spending which was in contrast for the first quarter.
Results also included $6 million of costs associated with the lease acquisition of the style and the lira transaction and Rei.
And these operating results accounted for over 75% of segments revenue Christ at approximately 80% of segment EBITDA growth this quarter.
And the east revenues accelerated to $165 million at 28% year, IV and case with real estate revenues rising station defense.
As Robert mentioned, we also start contrast, the great Stacey million average monthly unique users, reflecting an increase of 37% year ITE requires he just said the acceleration to 44%.
Non fleet average lead flow, you've remained very strong and growing ifas Asian descent.
Like the first quarter, we saw strong growth and the performance based for tariff auto which accounted for approximately 50% of types of lease revenues and the quarter benefiting from the growth and lead volume and higher home prices and real estate transaction places.
And I and we did we see an acceleration and the revenue right. If they're of Ferro model. These courthouse and pay to the prior quarter and we all face full price and connection and our traditional lead generation products driven by strong customer demand, enabling of precautions and highest cell free.
And that referral revenue the recognized upon the transaction <unk> only around 20% of the associated revenues from leads generated in this quarter and reflected in the results.
This provides a strong pipeline through the balance of the year Shimon and 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 a rocket mortgage partnership.
And these contributed $19 million for the segment EBITDA quite this course of versus the prior year driven by the strong top line right.
And we had previously indicated we are increasing and like I said like real true given the rapid performance and lead volume and further expansion into Adjacencies.
Revenue that alright, great price takes the same $284 million, reflecting of $12 million of 7% benefit from currency fluctuations.
19 restrictions ease during the course of including the removal of the company infection restrictions and belden.
Residential listings for the course of rose, 10%, including 25% Crazy Metro and all of them and especially the St correct and Sydney.
And you develop a project launches increased 12% on the price.
<unk> results benefited from quirky and residential get price, which was offset by declines in conventional and Asia.
Also it's worth remembering that as a consequence of Covid already I, just not implemented price increase and July please.
Please refer to our earnings release and the conference call. Following this call for more details.
Turning to subscription video services segment revenue for the course of almost $511 million up 2% versus the prior year and included the Stacy trade.
Millions of 7% positive impact from foreign currency fluctuations.
The adjusted revenues were down 5% and increasing on the Q1 decline of 7% benefiting from the motor rising per cost subscription revenue declines and the expansion of OTT revenue.
Fox tells closing tight subscribed the dice reached I of the trade point $3 million as of to set the stage he wants of 12% year over year.
And expanding slide the $1 3 million paying subscribers close to double the price number.
Okay, reaching 624000, and <unk> at 400, and sushi 1000 paying subscribers.
The subscribers declined slightly quarter Ive of course due to seasonality of the decline was much less pronounced for last year as the piece of successfully manage the transition from winter to spring and fall of sports and kite.
For the exclusive exclusive cricket content.
Residential broadcast subscribers declined about 11% for approximately $1 8 million.
Relatively consistent with last quarter commercial subscribers declined 18% year, I think the 218000 and with the trend and creating sequentially, having bottomed out at 86000, and the fourth quarter of fiscal 'twenty and 'twenty as a consequence of of the pandemic.
But what kind of Chad was somewhat elevated at 17, 5% of 16% from the prior year impacted by a strategy to reduce promotional losses, which resulted in the roll off of lower ought to subscribers.
The financial benefit and is reflected of 3% increasing our total mice.
Australia and dollars.
Segment, EBITDA increased 77% to $124 million, the continuing cost transformation of the Fox tower designed to rightsize the cost base with the drive for profitability total cost declined approximately 10%, including $35 million a flow of sports programming rights and production costs, which was primarily driven by savings from reading.
And she added sports rights, partially offset by the $20 million negative impact relationship and the deferral of phase cost from the fourth quarter of fiscal 'twenty and 'twenty.
Expenses also benefited from low and it's time that programming costs and lower overheads some.
Some of the cost benefit and the timing related which where was the reverse later in the EBITDA I will touch on the lifestyle.
Maybe I'll, just add shy and stature and still is at its highest revenue quarter since separation and 2000 and campaign and highest segment EBITDA quarter. Since news Corp acquisition in 2007.
And you said of course with 446 million total is up 4% compared to the prior use of digital revenues accounting for 70% of title revenues this quarter up six percentage points from the prior year.
Circulation revenues rose, 8% change of credit and digital circulation revenue was partially offset by lower single copy and print volume still impacted by COVID-19.
As Robert mentioned, Dow Jones of Guyana, Chief Rankled subscriptions in the course of the average subscription. So it's consumer products for the course of exceeding 4 million up 18% from the price and all of that digital only subscriptions like of $3 million up 29% and you're right here.
For the Wall Street Journal day, with $3 2 million average subscription for the course of up nearly 19% from the prior year, the 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 and the path straight courses I for all professional information business revenues rose 4%.
Advertising revenues, which accounted for 26 percentage of revenues this quarter declines of for the center of $158 million a marked improvement from the 17% decline last quarter as Robert mentioned, we had another record quarter for the digital advertising and 29% and digital accounting for 58% of advertising revenue for the second.
Water, we saw growth from old categories, particularly in technology.
Print advertising revenues declined 29% year over year, which was an improvement from the 39% decline and the first quarter.
Dow Jones and segment EBITDA for the quarter rose, 43% of $109 million with margins expanding two of the 24% and I pull my seven percentage points versus the prior year cost declined almost 5% this quarter due to lower print volumes and other discretionary savings.
And book publishing Harpercollins posted 23% revenue growth of $544 million and a 65% segment EBITDA grew 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 debt of the sublease This quarter, which included strong performances from numerous office, including Rachel Hollis, Rhonda and free drama and Joanna Gaines and David following among other.
Similar to what we saw in the past two quarters, we are continuing to benefit from a strong rebound in April because April of digital sales up 15% year over year E book sales increased 21% year over year with gains in all categories. All the time.
And label ODI book has increased 10% year over year.
And we've continued to see higher online sales and and particularly benefited from strong orders from Amazon and other E commerce platforms during the holiday season.
Perhaps more importantly, we are seeing very strong consumption levels likely benefiting from stay at home missions and the continuous flow of new content.
Revenues increased low double digits across the Barclays and notwithstanding they contributed 65 per cent of styles of course shut down from 58% last year and you said the larger mix of the front list titles.
Harper Collins, the Guy and demonstrated strong operating leverage despite of 60% increasing cost in part due to royalties and higher production expenses related to the successful top line performance margins improved by almost five percentage points.
Turning to news media. Despite ongoing challenges we remained focused on the right sizing the cost base and moving towards digital and helped by a moderation in advertising revenue trends.
Revenues for the course of over $573 million down 29% versus the prior year of which the impacts from the divestment of news American marketing of couch. It for the majority of the decline of.
And adjusted basis, which excludes the impact from the divestment of man and unruly and the other items mentioned in our release revenues declined 9%, which is an improvement from the 6% to 8% decline from the first quarter.
The decline also reflects the $34 million of 4% negative impact from the equation or transition to digital obsession regional and community newspapers in Australia.
Circulation and subscription revenues rose, 5% and the $9 million for 4% benefit from currency fluctuations strong digital paid subscriber growth and cover price increases offset lower newsstand sales related to COVID-19.
And for all of the year I V E trade and seem like currency with necessary price, the UK and Australia compared to the first quarter.
Circulation revenues accounted for 45% of total segment revenues.
And was slightly higher but not surprising this quarter and so it makes of revenues become more recurring and predictable.
Advertising revenue fell 200, and sushi $1 million of 48% total reported basis of which of $191 million of 40% was from the sale of news America marketing and $28 million of 6% was related to the negative impact from the closure or transition to digital assertion regional and community torsion of Australia.
The remainder of the decline was due to the eye for weakness in the print advertising market.
Positive Tonight, and the New York price continue to outperform and with advertising revenues up 23% and as Robert mentioned digital advertising up 64% and fast digital revenues of the New York High-stick saved 50% of title revenues this quarter and over all of the New York price had its highest digital revenue since 2002 of Shang.
Segment EBITDA for the quarter was $66 million flat with the prior year. Despite the 22 million fell of one time benefit and the prior year related to especially when the obsession warranty related claims and the U K and the absence of the modest contribution from news American marketing.
Adjusted segment EBITDA increased 5%, which included the $5 million positive contribution from the New York Post.
I would now of what to talk about some themes and the upcoming quarter and the second half over all we expect to see some slowdown and the second half results with forecasting remaining particularly challenging given the ongoing global COVID-19 pandemic.
And at digital real estate services as already I know you said national residential listings and Australia for January were flat to the prior year.
The results will reflect the small love's relationship the consolidation of of Lora technologies and the second half. Please refer to <unk> press release and earnings call for more details.
At news and we remain encouraged by the traffic and lead volume trends, which are expected to drive higher revenues and the second half. Despite the historically light the steam volumes across the industry. We expect these higher revenues to fund at least $40 million of additional reinvestments and the second half compared to the prior year in areas, such as brand marketing and product develop.
And as we fight for some gaining market share and expanding into Adjacencies.
And subscription video services and we've seen broadcast churn continue to increase juice of the ongoing type of an optics and seasonal trends with the end of each of sports how of the kayak has remained resilient and now OTT subscriber growth like for like the.
And should remain strong.
And we expect EBITDA results for the second half of the more challenged in parts of the lapping of the prior year cost savings as a reminder, fiscal 2024th quarter results included a 17 million dollar cost benefit due to the deferral of sports rights and production costs related to COVID-19.
We now expect for your 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 100 million. Australian dollars. This includes approximately 80 million of Australian dollars of higher sports cost for the second half of fiscal 2021, particularly in the fourth quarter of compared to the price peer.
<unk>.
At Dow Jones overall revenue trends remain favorable compared to the prior year, including strong digital advertising growth.
As we look for the rest of the year, we continue to expect to reinvest in the business as we fight the self driving revenue growth through its digital assets and expect second half expenses second half expenses to increase modestly compared to the prior year. In addition, third quarter will face a more difficult digital advertising price comparison.
And book publishing overall industry trends remain favorable and we continue to monitor closely the sustainability of recent consumer spending passions, such as the increasing free time to can choose to rate and the increase in the average number of books purchased.
The second half comparable for be tougher, particularly in the fourth quarter of keeping the material outperformance last year and as we lap some of the initial benefits of the outfit of COVID-19.
At news media of the ongoing national Lockdown, and the U K and domestic travel restrictions and Australia continue to put pressure on print circulation, especially weekday and Easter and sales and are also creating increased uncertainty on advertising spend across the nice cash increase cost declines and the second half are expected to moderate from the first half rate as we lap some.
Private 19 saving initiatives as well as the divestment of news America marketing and the closure of all digital transition of some of that and he has tightened and Australia in the fourth quarter.
All of the segment for the second half, we expect at least of $50 million, increasing 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 and the price in response to COVID-19, as well as additional costs related to the implementation of the global shared service initiative with the.
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Thank you.
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And we'll go ahead and take our first question from Alexia <unk> from Jpmorgan. Please go ahead.
Hi, This is the only pan on for Alexia Thanks for kids.
Gotcha.
And it all advertising of Dow Jones continues to outperform some of your peers and I'm wondering if there's any part of the college and Gabe on why do you think of doing relatively quite well on that front is there a vertical for you or specific advertising products driving the outperformance.
And then just from Fox.
Part of it resolved at the segment can you just give them and sleep and caught up what indicators of the trends that you're looking for determining the next steps for that out of that thank you.
Well first of all of that debt.
And so we have a great team of Dow Jones led volume a literal to draw students come out of the Chief revenue Officer has.
Done a sterling job of developing a digital AD expertise and thats across WSJ, the I'll call market share balance and beyond.
And the the increases and across categories, but also in new categories and custom advertising and.
And it's clear the if you won't know just the safe space, but the space that is the brand enhancing that and audience. It's the most influential in the world and Dare I say it around the world yield and Dow Jones has comparative advantages just of one broader point to bear in mind and with the even though the depths of the core.
Keith about the audience and the U S. For example will be particularly valuable and Dow Jones is a significant component of it and the when you add together the uniques of cross out U S businesses and this is not true drooping as you can tell from the numbers, but we have a close to 350 million monthly and eggs. So that's and the advertising audience. That's it.
And for Dow Jones, but for all of our properties and.
And I think just to add to Robert's comments, we all say the.
And Josh he leads the sales team at Dod shy and for being very focused over the past I see from funding proving out and take capabilities and Upskilling, the sales force and improving yield management, which we now believe we're starting to see the benefit all the addition twice from the audience.
And just in relation to the second question for Fox.
When we think about the trends that we're looking at home and the next steps for the assets clearly OTT will be and ongoing cycle for us and that business.
And as well as the stability and broadcast of the cadence like us on the management of the Bes subscribers they didn't broadcast and.
And they are clearly focused on costs as well and they've done a tremendous job in the first half for really the last 10 months since kind of the stoppage and taking out some of the.
The line cost of the business written and renegotiation of sports and entertainment contracts.
But we'll be particularly looking forward to the price.
The OTT properties.
And to complement Susan's comments, let's consider the other folks still narrative as Jonathan just to the questions. We have behind US the couple of quarters ago, where do we with the need to put extra capital in the Fox sale and then were asked where the some spec wanted the bod more speculation than the speculation and and the truth is that the successful development of the businesses.
Israel options.
And the immediate task and the team's task is to keep driving the business the keeps driving.
You've obviously made a fairly successful migration to streaming up 90% year on year, and we obviously have it's with cargo and binge and we obviously have more work ahead, but the path to the future of certainly pays the possibility.
Thanks.
Hello.
The low Alley, and we'll take our next question. Please.
You bet, we'll go ahead and hear from Kane Hannan from Goldman Sachs. Please go ahead.
Good morning, guys and congratulations on the result, just two for me Firstly, just the move revenue outlook, you're talking about 40 million Bucks for the incremental investment and seeing strong traffic growth you won't have the agent concessions and the fourth quarter and do you think it's possible that that revenue growth continues to accelerate in the second half or just how should we think about of the revenue trends and then secondly.
Just one of the global shared services initiative I think of the 100 million of bucket you were talking about at the full year result, just given some of these increasing investment and you were talking to and the second half just interested how we should be thinking about that program in FY 'twenty, two and whether there's any change to those folks of targets.
Thanks, Kai and all that.
Two questions and real bad [laughter] outlets and supplements as he will so just in relation to the sustainability of me right. I mean, we remain very confident and the price of the business and are encouraged by the traffic and the lead volume since we talked about and our free prepared remarks, notwithstanding the industry listing volumes from mine is historically high levels.
We do expect with the revenue Christ the costs will increase I think the interesting thing Tonight. When we think about the results for this quarter the since the first quarter and actually the cost increase this quarter and so it was really top line revenue price that was dropping down to sort of off line.
So we do think that the revenue growth will continue and we didn't want to scale up the cough and the reinvestment areas that I mentioned marketing and product development.
And just in relation to shared services, Yeah, we did quite a $100 million. The fund actually 22 is still holding that number at the stage notwithstanding the conflict with some close of the business. We do still think that there are and all of those opportunities, but it will require obviously a lot of work and reconfiguration of off system sales.
All of those savings, but at this stage of the guidance and still have a few million financials attention too.
And just to supplement and Susan sources, particularly on the move clearly we have to be somewhat cautious.
And the second half of the year simply because of the complications of Covid theirs.
Lack of visibility of.
And for many of the businesses and and you can see that reflected in the once today of Sydney, taking nothing for granted the spud of the excellence of the Q2 results.
The thought of.
The move the size.
Positive for at least in January of the David and the team and real time.
With the January normally the slower amount of and they use.
The as rose, 37% to 94 million and the lead volume remained robust.
The indicators that we are taking nothing for granted.
Thanks Scott.
Thank you again.
How long it will take our next question. Please.
Yes, the next well hear from and true Rykowski from Credit Suisse. Please go ahead.
Okay.
Hi, Robert Hi, Susan.
And I've got a couple of firstly within news media, obviously significant cost reductions and the quarter just interested and whether you can make any comments about the extent to which the ice cost reductions of the eminent.
You, obviously indicated the print circulation might be challenged in future quarters saw that and I always thought of just resulting lower operating costs, which my might come back down the track.
And and whether you are in fact say for the opportunities for cost reductions, we didnt within that division.
And then second question is around and <unk>.
Yes.
Following the announcement of the Telstra La Paz uses and transitioning to Cai.
Do you have a sense for how many of the how many of those cigarettes.
So I guess for a meal and uses do you expect for a transition and do you have any projections you're willing to share around and many of the dollars you would expect to hold on until after the promotional period the fiber.
And you and maybe if I start with your first question just in relation to news media.
So there's been a lot of cost with the St.
Got it and you Raj and some of that and you've obviously volume related and some of that will scale up and down depending on how they see since the stride and lot of Covid, but there are all sorts of became the contentment force reductions and the teams have been working on and with had significant reduction in headcount that came through and the backend of last fiscal EBIT has obviously fallen trees yeah.
But we do have a loaded all sort of come out in the idea of a head space as well now some of that naturally will come back even as the businesses open up but we would also types of thoughts that might be 10 minute and as we change the way for the book going forward.
We also hired and the backend of last year and significant reductions in marketing expenditure. We think news media, we would expect to see some of that and start to come back in but not necessarily at the levels of like saying, So I think the balance of thought because we went forward and I do think actually that there are still permanent cost reduction opportunities of the businesses of working all of them within that segment of a lot of.
That has to do with the restructuring of the business and the reconfiguration and.
The teams are actively working on that.
And as for the transition from a lot of cross the kind of it isn't the Gulf obviously of an extraordinary opportunity for box Hill and partner.
And as it tells true will be doing everything they can to encourage their uses to make that migration down the road around the title of $3 2 million lives pass members of for those who are interested and Aussie rules of rugby.
And any of the many sports on the Okay. This is an extraordinary opportunity to be able to watch.
World class of streaming.
[noise] operations at work and the.
Those who've used guy out of a out of experienced.
The ability to.
Not only short of one day, but many guy and simultaneously.
And that experience is definitely compelling and sort of.
We believe that a very large number of large Pos subscribers roommate that migration, but it's so early in the process.
And at the moment, we done.
And I'll put numbers out there, but with the imminent the start of the winter sports seasons, and Australia, I think you'll soon see the metrics and in coming months and we'll be able to update you next quarter and.
Thank you and Joe the only other thing to add to that with me that as we think about the SEC flashing opportunity. The Fox till now have even scale clearly more from the one given the introduction of golf as well three weeks. They saw the numbers to pick up we expect the actual impact on revenue and EBITDA to be more back ended from you want them.
Got it that's very useful it might be just the very quick follow up do you know if there's much of a lap at the moment between the existing categories sub space and and the last seasons.
But it's relatively small true.
Okay.
Well the right. Thank you any per se.
Thank you and Joe the Alley, and we'll take our next question. Please.
Thank you we will now hear from Craig Huber from Huber Research partners. Please go ahead.
Thank you Susan and I wanted to hear a little bit further about the costs within your subscription video services and they're making part of the year because you have to go to the next fiscal year anything out of the ordinary there you want to call up for any other already touched on.
I guess, the probably the easiest way to maybe frame the cost and the second half and so I expect them to the broadly in line with the cost for the first half which is net of any of the movements that we've obviously talked about with the deferral of the sports rights.
But the remainder.
And at the four week hospital and sold approximately $156 million, Australia and dollars of additional costs here on the change of the deferral of sports cough. So I think the the underlying coursework and as I've said, the Fox Hill team is down and starting to pay dividends, but clearly with all of these top of lots of sports rights in the in the current news, but it's a frame of I would say broadly speaking.
In line with the first half.
And then my follow on question for you quickly ask if you think of the next fiscal year is there any large sports programming contracts up for renewal day by day of a significant jump in and take into account in our models.
The next fiscal year, no I always caution with obviously just executed the.
The the renewals of the iPhone and or else, we have for us to set up now 'twenty 'twenty four and touch of 27 and were not expecting and ex financially significant step ups from the overall basis of course cost.
Yeah.
Great. Thank you.
Thank you Craig Alley, and we'll take our next question. Please.
It appears we have no further question and that does conclude our question and answer session for today I would now like to turn it over to our speakers for any additional or closing remarks.
Well. Thank you very much the alley and thank you all for participating and we look forward to talking to you soon and have a great day and stay safe take care.
And with that that does conclude today's call. Thank you for your participation you may now disconnect.
Okay.
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