Q2 2022 News Corp Earnings Call

February 3, 2022

Thank you for holding ladies and gentlemen, you are online for this news Corp Conference call. At this time, we are still gathering additional participants and we'll get started momentarily. We thank you for your patience and ask that you. Please continue to hold.

[music].

Please standby we're about to begin.

Good day and welcome to the News Corp, second quarter fiscal 2022 Conference call. Today's conference is being recorded media will be allowed 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 Sir.

Thank you very much Jeff Hello, everyone and welcome to news Corp's fiscal second quarter of 2002 earnings call. We issued our earnings press release about 30 minutes ago, and it's now posted on our website at Newscorp Dot com.

On the call today are Robert Thomson, Chief Executive and Susan Penuche out Chief Financial Officer.

We will open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward looking information with respect to news corp's business and strategy actual results could differ materially from what is said news corp's Form 10-K , and Form 10-Q filings identify risks and uncertainties that could cause actual results.

To differ and contain cautionary statements regarding forward looking information. Additionally, this call will include certain non-GAAP financial measurements, such as total segment EBITDA adjusted segment EBITDA and adjusted EPS, the definitions and GAAP to non-GAAP reconciliations of such measures can be found in our earnings release with that.

I'll pass it over to Robert Thomson for some opening comments.

Thank you Mike we are delighted that the considerable momentum showing over the past two years has continued unabated in the most recent quarter, while the first quarter was the most profitable first quarter since our rebirth in 2013, the second quarter was the most profitable of any core.

With record revenues and record profitability.

Florida, I, certainly deserved by our employees for their collective and unstinting effort energy and creativity. We are all proud to be furthering the tradition of purpose and principle created by and curated by Rupert and Lachlan Murdoch.

Credit too must go to a board that has provided thoughtful prescient gardens during a particularly challenging period for most media companies in most countries.

Revenues for the quarter exceeded $2 $7 billion, a 13% increase year over year, while profitability rose, 18% to $586 million and net income reached $262 million.

In the first half of this fiscal year Newschool amassed nearly $1 billion of total segment EBITDA of 30% surge while reported net income was $529 million compared to $308 million in the previous year.

The platform agreements with Big Tech continued to benefit our bottom line. In addition to our substantial deals with Google and Facebook, we have extended and expanded multi year global agreement with Apple, which is expected to be an important source of subscriptions and advertising revenue for our new sites around the world. There is no doubt.

Out the Timko and Eddy cue have a visceral enlightened understanding of the importance of professional journalism and we genuinely appreciate their personal and corporate commitment.

Our businesses are flourishing there was again strong performance at digital real estate services, Dow Jones, and book publishing and a rapid expansion of profitability at unused media segment.

We are delighted that agreement has been reached to acquire the opus and base chemicals businesses. After the required sale for antitrust reasons. They will surely add to the left of the already lucrative Dow Jones professional information business those acquisitions should formally close in the first half of calendar 2022.

We had indicated that the strength of our cash position and a robust growth would enable us to make opportunistic purchases and that has come through fruition and at reasonable prices that we believe will benefit all our shareholders.

Studied strategic expansion has been complemented by a $1 billion share buyback program already well underway and which we expect will provide ongoing value to our investors.

Turning first to digital real estate services.

It is manifest that there is a global shift in the housing market with families wanting more space, a higher quality of life and the opportunity work from home, which is simply not feasible without a hub unsurprisingly.

Unsurprisingly, there was 6.12 million existing home sales in the U S last year, the highest figure in 15 years and that total came despite the disruption of COVID-19 in viewing and reviewing homes.

We see much macro strength ahead in a market that is still far from being fully digitized and should benefit from rising employment and from interest rates debt, while on an incline remain close to historic lows.

In the second quarter digital real estate services reported 35% revenue growth and 25% segment EBITA growth listing volume improved noticeably at Rei, while realtor dot com reinvested invaluable adjacencies and continued to generate strong revenue growth despite relatively low you.

Housing inventory levels.

As of December According to Comscore realtor traffic growth exceeded that of Zillow trulia for 23 straight months.

Which is vindication of our resolute focus on our core mission and customers, we were not mired in the capricious cul-de-sac of house flipping.

In Australia, our EIA reported revenue growth of 56%, which includes the integration of mortgage choice.

The tapering of rapid house price rises has been accompanied by a flurry of new listings, even though the COVID-19 situation remained somewhat unpredictable and one side Western Australia has chosen not so splendid isolation.

The Australian government is expecting an economic Renaissance so over the next year or so and that should benefit our AI and all of our businesses in that country.

Dow Jones had a superb quarter with 14% revenue growth at a 32% increase in segment EBITDA at $144 million.

Bear in mind that these outstanding numbers come on top of a particularly strong quarter a year ago underscoring the scale of Dow Jones achievements, we are successfully building upon success.

Subscriptions expanded across the Dow Jones portfolio, and there was 23% advertising revenue growth in the quarter risk and compliance reported a revenue increase of 17% to 26 successive quarter of double digit revenue growth to emphasize 26 successive quarters of double digit revenue growth.

Total Dow Jones subscriptions, including IBD rose, 17% in the quarter, reaching approximately $4 7 million.

And the Wall Street journal's total subs exceeded $3 6 million with nearly 3 million of them being digital only an increase of 19% year over year to be clear.

These are core subscribers, who are signing up to a premium product at a premium retail price.

Our ability to offer high margin professional products will certainly be enhanced by the integration of Opus and base chemicals, both of which have still growing traditional businesses and rapidly expanding offerings in renewables.

We plan to use Dow Jones expertise to create truly verifiable carbon products and prices in a market that has tightened the immature and lacking in transparency and veracity and.

And we expect the pressure for credible disclosure to be an additional source of revenue for our risk and compliance business.

For clarity. These two new businesses have revenue basis that are close to 100% digital and recurring they're highly profitable with healthy revenue growth and modest capex requirements. We expect that investors will be able to see clearly they have a positive impact in coming quarters that these deals were done at <unk>.

Are there attractive multiples is self evidently a bonus for our investors.

Book publishing posted record numbers, a year ago and the growth continued in extra Billy in Q2. This continuing success is thanks to the diverse frontlist and deep backlist at Harper Collins augmented over the past year by the opportunistic acquisition of the Houghton Mifflin Harcourt books and media segment.

Yeah.

Notable success, we've seen with <unk> drummonds, the pioneer woman cooks Super easy and Dave Grohl Storyteller. Looking ahead, we have high hopes for the Paris apartment by Lucy faulty another David Walliams installment in a superlative best selling world's worst series and what may well be the most telling.

Book of the Trump administration, one damn thing after another by Bill Barr, who was attorney general and had a remarkable career before that service having read the text I can report that this is a brilliantly written profoundly important work, which will shed thoughtful lot on a turbulent period in the country's history.

Also of note in the second quarter, Harlequin launched Harlequin plus a direct to consumer digital subscription service that will appeal to romantics or round the world. The App and website will give subscribe as an opportunity to have literally Lehigh is all with book bundles ebooks.

These in games. This multimedia offering is yet. Another example of the clever contemporary leveraging of our world class content.

News media had a particularly strong quarter with segment EBITDA up 68% that outstanding performance reflected growth in advertising the benefits of the deals with the big Tech platforms sensible sustained cost discipline and the benefit of savvy product and technology investments made in recent years.

Yes.

The robust advertising results up 17% in the quarter were evident at all major milestones across both print and digital our digital trends, particularly pleasing, which speaks to the value of our global network and improvements in our understanding of permission data.

It also reflects the sides leadership of Michael Miller in Australia, Rebekah Brooks in the UK and boat show on Genco and Keith pool at the New York Post.

News Corp, Australia showed a highly noteworthy improvement in profit contribution with digital paid subscription scaling to nearly 910000 and the intelligent expansion into digital Adjacencies. The New York Post had an especially successful Q2 with an appreciable contribution to segment EBITA.

Thanks to a resounding advertising performance and its vast and growing digital audience we recorded.

160 million unique users in the month of December the post increasing profit contribution has it is fair to say it exceeded even our demanding expectations.

News U K had its highest second quarter profit contribution since fiscal 2011 helped by an acceleration in digital paid subscriber growth. In addition, the Sun's traffic has surged with global monthly Uniques for December up 25% to $163 million and our fledgling U S SUNS site.

Growing rapidly.

It's worth reiterating and pondering for a moment some of those astounding numbers based on internal metrics as of December we had 160 million uniques for the New York Post 163 million uniques for the Sun over 80.

Million uniques for realtor Dot Com and 123 million Uniques for Dow Jones that is certainly a firm foundation for network growth.

In the U K wireless made a positive contribution to news media revenue and segment EBITDA growth.

We're also looking forward to the launch of talk TV, which will be available on platforms, including linear TV and OTT. The channel will take full advantage of our talent and content in the U K and via the global deal with peers Morgan our platforms in the U S and Australia, it would be high quality low cost.

And certainly impactful.

Subscription video services benefited from increasing subscriptions and decreasing churn. Thanks to the ongoing appeal of our streaming platforms. The high quality of our technology, our increasingly sophisticated understanding of audience data and the depth and broad appeal of our unparalleled entertainment sports and news offerings.

Sports seasonality is always a factor in Australia.

Total streaming subscribers expanded by 66% year over year with binge exceeding 1 million subscribers and Flash argues aggregation service in its infancy in charter as of December we had almost $2 3 million streaming subs, representing 56% of Fox sales total.

Fiber base, which was $4 $1 million is worth noting that in addition to the increase in streaming subs broadcast June was at a three year look.

The team.

Led by Civil and Mccann and Patrick Delaney is executing successfully on our strategy.

Scale streaming having developed world class technology and compelling user interface. We are increasingly confident in Fox tells future and thus actively looking at ways to maximize its value and ensure that we can build on that success.

We are delighted with the tightened progress at New school, but certainly not complacent as we contemplate the exciting potential of our company, which we will relentlessly realize for our investors.

That our trajectory has been transformed despite the vicissitudes of the virus is a testament to the inherent potential of the businesses and the enduring culture of the company.

There is no doubt that we will hopefully review our current structure and be institutionally perspective on behalf of the shareholders. We have made many timely disposals and self evidently successful purchases and are committed to maximizing value for those who have invested in our company.

While our profits and revenues are at record levels.

Certainly far from cited and will never be complacent, we firmly believe the best quarters in years yet to come.

Now for more details about the most profitable quarter since our reincarnation in 2013.

Susan <unk>.

Thank you Robert.

As Robert mentioned, we are delighted with our second quarter and first half results marked by strong revenue growth further margin expansion and record high total segment EBITDA.

2022 second quarter total revenues were $2 $7 billion up 13%.

Reflecting strong revenue growth across the company with our three core pillars digital real estate services, <unk> and book publishing growing 19%.

Total segment EBITA was $586 million higher than the prior year by 18% and a record high total segment EBITDA for the company since separation.

Excluding acquisitions currency fluctuations and other items as disclosed in our release adjusted revenues and adjusted total segment, EBITDA rose, 8% and 16% respectively.

Reported EPS was <unk> 40 cents as compared to 39 cents in the prior year.

Adjusted earnings per share were 44 cents in the quarter compared to 34 cents in the prior year.

During the quarter, we commenced our share buyback and announced the acquisition of nice chemicals as Robert mentioned, we anticipate the latest and base chemicals acquisitions to close in the first half of calendar 2022.

Moving onto the results for the individual reporting segments, starting with digital real estate services.

<unk> revenues were $456 million, an increase of 35% compared to the prior year.

The results include the acquisition of mortgage choice and the consolidation of Rei, India, formerly a lora Rei.

On an adjusted basis segment revenues increased 22%.

EBITDA rose, 25% to $178 million or 29% on an adjusted basis.

We continue to see higher investment spending at news and at Rei.

But at a more moderated right than the first quarter, notably at news.

<unk> revenues were $169 million or up 9% year over year off the back of 28% revenue growth in the prior year, primarily driven by the historically high lead volumes, which rose over 30% last year.

Real estate revenues increased by 16% and accounted for 86% of title revenues.

We saw higher revenues from the traditional lead generation business fueled by higher yields and increase penetration to market VIP. These hybrid product.

Referral offerings accounted for approximately 32% of total revenues and continue to benefit from record high home prices and higher referral fees.

Lower transaction volume.

Encouragingly close rates also improved average monthly unique users for the second quarter with $85 million up 6% over the prior year.

Like the first quarter revenue growth was partially offset by the divestiture of top producers March negatively impacting revenues by approximately three percentage points.

However, as anticipated lead volume declines moderated from the first quarter down 9% and we are now seeing the emergence of more typical seasonal patterns.

Importantly, lethal is up 18% compared to pre pandemic levels.

Yields remain robust given strong agent demand, which is more than offsetting the impact from lower lead volume.

Expanding into adjacencies, including new homes, and rentals and establishing partnerships like the recently announced open door and orchard like partnerships in a seller's market place remain a key focus in the second half.

I had another outstanding quarter with revenues rising 56% year on year on a reported basis to $287 million, which includes the $41 million contribution from the mortgage choice acquisition and $10 million from Rei India.

As a reminder, financial service revenues.

Flipped it on a gross basis in the revenue line in our financial disclosures and broker commissions are reflected in cost.

Alright, I enjoyed very favorable trends this quarter, including a 22% increase in Australian residential new buy listings double the first quarter right with city up 39% and now open up 25% aided by easing of Lockdown restrictions.

<unk> also continued to benefit from higher yields increased depth penetration and product mix.

Financial services, not only benefited from the integration of mortgage choice that'll.

So the record levels of applications and settlements.

Please refer to <unk> earnings release and their conference call. Following this call for more details.

Turning to the subscription video services segment revenues for the quarter were $498 million down approximately 3% on both a reported and adjusted basis and relatively stable from the prior quarter as the declines in Fox tell residential broadcast revenue and continued currency impacts on connection venues were partially.

Offset by strong growth in streaming revenues, which now account for 19% of circulation and subscription revenues.

Title closing paid subscribers across the Fox Tao group reached over $3 9 million at quarter end up 19% year over year, increasing from the prior quarter right by two percentage points title subscribers, including Triallist were approximately $4 1 million the highest on record.

The year over year increase was driven by higher binge and kayo subscribers, partially offset by the expected decline in residential brokaw subscribers, albeit at a more moderated rate than the first quarter.

In aggregate total streaming subscribers rose, 66% from the prior to almost $2 3 million of which approximately $2 2 million paying subscribers.

Streaming products in the aggregate reached 56% Fox health title subscribe to dice.

Binge had an outstanding quarter, increasing its total subscribers to over 1 million similar to kayo paying subscribers more than doubled from the prior to 928000 Beach added 126000 paid subscribers in the quarter almost double the net adds at the first quarter.

Ben just growth continued to be driven by the depth of its content library and the popularity of new shows, including a pinch original Sharon's Love me.

Kayo subscribers <unk> seasonal patterns with title subscribe is slightly down from the first quarter consistent with the prior two years.

The winter coats AFL and NRL remain key acquisition drive its the chaos with cricket and motor sports, providing essential viewing over the spring and summer months to satisfy the year round sports fans.

Australia is winter scorecards will resume in the third quarter with the return of AFL NRL nipple in supercuts.

Broadcast churn declined to 13% the lowest level since the first quarter fiscal 2019 and down four and a half percentage points. This is last year.

The Fox tell team continued to focus on product and Huntsman and higher RP subscribers, resulting in broadcast opex, increasing almost 3% from the prior to 82 Australian dollars and helping to mitigate subscriber volume declines.

Hook style ended the quarter with $1 6 million residential broadcast subscribers with the sequential decline being the lowest since the fourth quarter of fiscal 2020.

Commercial subscribers increase from the first quarter as parts of Australia opened up and were flat versus the prior year at 218000.

Segment EBITDA in the quarter of $86 million was down 31% driven by one off events, such as the ashes and the phasing of certain sports rights costs together with investments in marketing and technology.

Costs were consistent with our outlook commentary and we continue to expect full year total cost to be relatively flat if not down slightly in local currency, helping to deliver strong cash generation of Fox Hill.

Moving onto Dow Jones, Dow Jones continued its strong performance in the quarter with revenues of $508 million up 14% compared to the prior year with digital revenues accounting for 72% of total revenues this quarter up two percentage points from last year, adjusted revenues, which notably excludes the impact of <unk>.

P D rose 10%.

Circulation and subscription revenues increased 12%, including 13% circulation revenue growth, primarily reflecting the acquisition of IBD and continued strong volume gains in digital only subscriptions.

Digital net adds improved from the first quarter Dow Jones, adding 148000 digital only subscribers, including 115000 at the Wall Street Journal.

Professional information business revenues rose, 9% and accounted for 25% of revenues revenue growth from risk and compliance increased 17% driven by a higher entry rate and strong growth across the Americas, Europe , and Asia, and we continue to see modest revenue growth in youth wise.

Advertising revenues, which accounted for 28% of revenues this quarter grew 23% to $141 million the highest quarterly advertising revenue in the last five years.

Digital advertising revenues remained robust up 18% on top of 29% growth in the second quarter of the prior year and accounted for 56% of total advertising revenues.

We continue to see strong yield improvement led by direct display print advertising continued to surprise on the upside with 29% growth year over year, partly due to easy prior year compare but also due to the strength in technology and data C categories.

Dow Jones segment EBITDA for the quarter rose, 32% to $144 million. Despite the 43% gross last year with EBITDA margins expanding by almost four percentage points to 28% that reference represents the highest margin since news corp's acquisition in 2007.

Total cost increased 8% with approximately half due to the consolidation of IBD.

On an adjusted basis revenues and segment EBITDA for the quarter rose, 10% and 29% respectively.

At the publishing Harpercollins posted 13% revenue growth to $617 million and segment EBITDA rose, 3% to $107 million adjust.

Adjusted revenues rose, 4% versus the prior year, while adjusted segment EBITDA declined 7%. We are particularly pleased with these results given the global supply chain pressures, which impacted manufacturing and freight costs during the quarter and the tough prior year compare which fell 65% segment EBITDA growth last year.

Results this quarter benefited from the acquisition of hydrogen H strong frontlist performance and healthy industry dynamics with consumption levels still significantly higher than pre pandemic levels.

Digital sales rose, 8% this quarter and accounted for 17% of consumer sales with growth driven by downloadable audiobook.

Hi, Jim Hi, it's continued to perform according to plan for the quarter height, Jim Heights contributed $50 million in revenues and $10 million in segment EBITDA.

Turning to news media the momentum in this segment continued during the quarter revenues were 600, sushi $8 million up 11% versus the prior year. The biggest driver to the growth was the continued rebound in the advertising market as well as the strong growth in circulation and subscription revenues helped by the contribution from our recent content lots.

<unk> revenues.

Within the segment revenues at News Corp, Australia, unusual K increased 14% and 7% respectively.

Wireless group and the New York Post also continued to show strong topline growth.

Adjusted revenues for the segment increased 10% compared to the prior year.

Circulation and subscription revenues rose, 9% benefiting from strong digital subscriber growth incremental revenues from the platform agreements and cover price increases.

Advertising revenues increased 17% compared to the prior year with notable strength in digital and a recovery in print advertising across all our key markets.

Advertising revenues in Australia, with the easing of Lockdown conditions rose, 11% in both reported and local currency.

News UK advertising revenues rose, 23% or 21% in local currency within.

With impressive digital advertising growth.

At the Sun digital advertising surpassed print for the first time, driven by improved number of page views and higher yields.

In the U S. The trends at the New York pace remained strong with higher yields helping to drive advertising revenue performance, 19% higher year over year.

Segment, EBITDA of $111 million increased $45 million or 68% compared to the prior year, reflecting the higher revenues News Corp, Australia contributed $55 million to the segment EBITDA growth at both news UK and the New York post with positive contributors to the growth.

Segment margins topped 17% the highest since we had separation in 2013 adjusted segment EBITDA increased 65%.

I would now like to talk about some things for the upcoming quarter.

While we remain very encouraged with our strong year to date results and our trajectory. Thus far we are clearly mindful of the uncertainty and lack of visibility from the ongoing impacts of the pandemic, including the potential cost impacts from continued supply chain pressures, particularly in book publishing and I'm afterwards, as well as wage inflation and talent rich.

Tension across the company.

At digital real estate services, Australia residential new buy listings for January rose, 14%.

<unk> types of growth rates to slow in the second half as it cycled strong prior periods listing volumes and potential impacts around the upcoming federal election.

Please refer to Rei for more specific outlook commentary.

If we continue to see strong.

Spite lower inventory, we expect to continue to reinvesting news as we drive the core business and expand into relevant adjacencies, particularly new Heinz and rentals.

We expect the year over year growth rate of investment move in the second half to be relatively similar to the second quarter, but notably lower than the first quarter right.

In subscription video services, we remain pleased with the ongoing performance of the streaming products and the efforts to improve broadcast op who in churn.

We continue to expect full year costs in local currency to be relatively flat versus the prior year and we continue to monitor our commercial venue trends given the recent spike in Covid cases in the region.

At Dow Jones overall trends across the business remained strong with advertising and subscription growth continuing to perform well.

We expect to continue to reinvest in digital to drive consumer subscriptions and to further enhance our professional information business offerings.

And to reiterate we expect both the opus and base chemicals acquisitions to close in the first half of calendar 2022, and we will incur one time transaction costs related to these acquisitions.

In book publishing similar to the first half overall trends remained favorable despite lapping the benefits from COVID-19, and strong growth from the sales of the Richardson series in the third quarter last year and the ongoing supply chain pressures.

At news media overall advertising trends remained favorable and we remain cautiously optimistic about the second half, albeit recognizing that visibility is limited.

We continue to expect incremental revenues into nine tickets from the recent platform agreements with the majority of that allocated to news media.

We do expect some reinvestment for the segment in the second half given the strong year to date performance focused on new product initiatives marketing and the news U K T V project.

Although we expect costs in the second half to be slightly higher than the first half due to the phasing of certain costs.

And lastly, we continue to expect full year capex to be up $100 million versus the prior year, albeit we are trending lower than that in the first half with that let me hand, it over to the operator for Q&A.

Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

You're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment. We ask that you. Please limit yourself to one question to give everyone the opportunity to ask their questions.

Again press Star one to ask a question, we'll pause for just a moment to allow everyone an opportunity to signal.

Okay.

Our first question comes from Kane Hannan with Goldman Sachs. Your line is open. Please go ahead.

Good morning, guys.

Two quick ones from me just firstly move.

It did slow down in the quarter. Despite the improving lead decline just talk a little bit about the pricing tailwind you're seeing us with how we think about that into the second half and then just quickly on news media the payments from the tech platforms would that that full run rate in the second quarter or should we expect those to continue to grow into the second half.

Yeah.

Okay, and Oh take those.

Two questions first of all the macro trends are.

Realtor generally.

Fish's I mean, clearly there is some fluctuation in the U S housing market.

Overall impetus for families individuals to buy larger hubs to work from home to move locations to take advantage of.

Labor opportunities and the uncertainty of those job opportunities.

And mobility witness a paucity of employees are all positive influences.

First time mortgages.

Still at near Historic lows, and so that actually had purchases makes sense, particularly as rates are rising.

A reduction in Refis, but that's not a market to which we have exposure.

And the digitalization of U S property market is still at an early stage of very early stage and we are poised to take advantage of the opportunity in the short the medium and the long term.

As for the.

A big digital payments.

Starting to see the run rate, but it does those payments alone are really based payments and so they don't take into account.

Advertising.

Sure it advertising.

Generally speaking to improvement.

The commercial rights for distribution of our content low did I I see it.

<unk>.

The impact of the enhanced or without.

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

Thank you Kane.

We'll take our next question please.

We'll go next to ensure Rykowski with credit Suisse. Your line is open. Please go ahead.

Oh, Hi, Robert Hi, Susan.

Two as well.

The first one.

I guess a follow ups too.

Those comments on the content licensing revenues I'm just interested in your view on the sustainability of the earnings uplift that age of Dow Jones and news media.

Can you just maybe in particular do you expect.

This quarter in this year to reflect the fake at can you at least.

Sustained earnings you're obviously investing in the second half, but just just how you view the earnings trajectory would be would be helpful.

And then secondly, I think this has been a pretty clear thing in markets, but given the slide down in subscribers nice and bought some of the global streaming operators what are the dynamics that you've seen in the Australian training market.

Any risk to the three ambitions that you put out last September boxtel subscribers to get to either follow up Neil.

Thank you.

Well.

On the first question around the users who use media numbers.

Clearly the big digital agreements had an impact, but I think to focus on that alone is to actually not give you credit to the companies whether it be news U K.

Australia with a new approach in the way that those businesses have been transformed in recent years and it has been a heavy lift as you're doing in Australia, we had to close many of our print editions and.

In regions and communities and enhance our digital service so.

Others are more fundamental to the transformed.

Transform fortunate so when you look at the increase in EBITDA over the past year, the same quarter last year of 11, 5% most recent quarter 74%.

UK advertising up 21% in local currency use Australia advertising up 11% New York Post up 19%. These are fundamental shifts in the businesses.

There's no reason to.

I think that those fundamental shifts won't have an enduring impact.

That's the streaming.

Australia situations, rather different to the prevailing trends in the U S.

So it really is the village square for video and.

And we have many partners there in a way that's.

Column in the U S.

Not since it's rather like the Galapagos Islands, a unique ecosystem.

Recent rapid growth in billings is actually exceeding our expectations and carrier was a very different sports streaming service with the most important what type of winter sports along with the increasingly compelling formula one on soup because among many others.

That complete content package.

Lee.

And consistently compelling I mean, that's important viewing die after day week after week month after month months, that's not true and vital Cheng Cheng.

Yeah.

And then I just want to add to Robert's comments in relation to news media and he's absolutely right. I mean, the transformation of that segment in particular has been great and we've been really to launch it with it and just to give some context of the $65 million, increasing revenue $42 million that was advertising twenty-three with circulation and subscription.

Which is where those content licensing fees also a lot of it was advertising a lot of that is being fueled by digital advertising and the work that the teams have done around driving nice audiences and converting their businesses to digital antenna.

And benefiting from obviously strong yields.

And also the cost work that they've done they've done a huge amount of cost work and heavy lifting over the past couple of years, which has really helped to underpin those results. So it does give us confidence about how those businesses are going to continue going forward.

Thank you and Joe just we will take our next question. Please.

Our next question comes from Craig Huber Huber Research partners.

Great. Thank you.

What's your general thought here on this inflationary environment, we have going on right you think across your portfolio.

Obviously your numbers were really good here in the prior quarter. The outlook here you are talking about here is quite favorable as well, but what's your general thoughts on inflation, what it's what you think it's doing to your top line, but also your revenues until your revenue disclosure cost driven.

Do you have a nitpick question Susan.

Your overall costs for the company for the quarter, if you adjust for currency and acquisitions, how much was it up please in the quarter year over year. Thank you.

Well I'll make a quick observation about inflation and then Susan will follow up on all the subjects.

The inflationary pressures very segment by segment and country by country.

Obviously going to be.

An important issue or challenge.

Clearly from quite a while ago not transitory and so we started our planning long ago, asking each of the businesses to be cost conscious to look at whether open positions needed to be filled to be focused on retention payments.

In an intelligent way too.

To ensure that our teams also feel as though the.

Part of it been a purposeful journey, we start most certainly are the cultural component of it.

Loyalty complements the comparable Susan.

Susan.

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

Yes.

Thank you Craig just we'll take our next question. Please.

Our next question comes from Alan Gould at Loop capital.

Thanks for taking the question I've got two please.

Some of the digital platforms are talking about supply chain issues and inflation impacting our marketers.

Desire to advertise and impacting advertising you have a global perspective wondering what youre seeing with respect to that I know your advertising is looking quite good and then secondly, the platform fees that youre getting from the digital players what is the opportunity for the advertising subscription revenue on top of what you are already receiving on licensing fee.

Yes.

Susan would you like to pursue.

So just in relation to the platform fees I mean, we are working through obviously driving continued audiences and looking and working with those tech platforms in order to build out those audiences and so that will help us contribute to growing the advertising pie and particularly if we can grow the overall subscriber pie than we've got a high quality audience that we.

Look at <unk>.

Just in relation to the comments that other companies might ignite around supply chain presses precious and advertising.

Great.

We haven't seen that actually impact us from an advertising perspective, we've had great growth actually across digital and we've been really pleasantly surprised with the bounce back of print advertising, obviously off relatively low comps from the prior year, but it still has exceeded our expectations. So we're not really experiencing that at the moment and we haven't.

Seeing that coming through our results.

Thank you Alan.

And we'll go next to Darren Leung with Macquarie. Your line is open. Please go ahead.

Yeah.

Hello.

Thanks, Thanks for taking the time.

Just one question from me just a little color around the question of information business lumps like workplace. So it looks like with some of the parts going pretty well, but.

Also as required.

This was partly due to the climate it's slower.

Just any color around Pos or subscribers coming off or exactly right.

Darren.

I would make a general observation that businesses is itself being transformed by Palomar and the team at Dow Jones.

John Youre seeing obviously the success of this implies.

Those of you who you expect Teva will notice at the interface is changing in a way that's frankly more user friendly.

And.

The acquisition of both Airbus and base chemicals.

Uh huh itself have a positive.

The effect on the professional information business, including news was which will already have a focus on energy chemicals renewables carbon.

Obviously increase.

And similarly, with Factiva, where already as you no doubt know we have a remarkable array of.

The sources, it's a real Aladdin Chicago content.

That will both complement the.

Existing offering of diapers and base chemicals, but also overall strengthen those offerings because it's a I think it's a fair observation.

In recent years.

Those businesses haven't been growing at the same rate as risk and compliance.

But that's why a lot of work has gone into transforming and Youll see the result in coming quarters our spec.

Yes.

Thank you Darren Jeff will take our next question. Please.

Our next question comes from Brian Han with Morningstar.

Oh, Hi, two quick ones, if I may streaming services.

Please talk about any reason to screen.

Conversion rate of trials the squad has to pay.

Paying subscribers.

<unk>.

On free cash flows do you expect that working capital buildup to reserves in the next couple of quarters or should we expect.

Free cash flow to remain sort of depressed relative to earnings growth.

Hello.

I'll make just a general observation about.

Streaming to Fox, though which is overall you can see the strong growth.

And the.

Increasing portion of folks are revenue ascribed to streaming while at the same time I think this is particularly noteworthy were at a three year low was broke Australia.

So the fee is that some had the.

Increase in streaming would lead to a market deterioration of broadcast or unfounded.

Hmm.

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

Okay.

Thank you thank.

Thank you, Brian Jess will take our next question. Please.

Our next question comes from Joseph <unk> with <unk> Advisors. Your line is open. Please go ahead.

Hi, This is Patrick for drew effect or.

I had a quick question around the Opus and base chemical business.

Congratulations on actually getting a very good valuation, but I was a bit surprised by the timing.

I have it kind of the process being done by the first quarter of 'twenty, two and I have it in my model on and kind of in the back half of the third quarter. So what is driving that first half of calendar 'twenty two tiny.

[noise] Edmund obviously, we'd like to get the deals done as quickly as possible because we cherish. These companies because we can see how valuable or on what that will lead to a Dow Jones into just more generally how do you will see in our accounts in coming quarters and years the value of them.

Clearly, we're subject to our regulatory calendar.

There are some times.

Variable is unpredictable variables in that but we are fairly confident.

The ARPA steel will close next month.

Chemicals requires a couple of months after that.

Okay. Thank you very much.

Thank you Jess will take our next question. Please.

And at the moment I do not have any other questions holding so I will turn the conference back for any additional or closing comments, great well. Thank you Jess and thank you for all participating hope to talk to you soon have a wonderful day take care.

Ladies and gentlemen that will conclude today's call. We thank you for your participation you may disconnect at this time and have a great day.

Okay.

[music].

Good day and welcome to the News Corp, second quarter fiscal 2022 Conference call Today's conference is being recorded.

They will be allowed 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 Sir.

Thank you very much Jess Hello, everyone and welcome to news Corp's fiscal second quarter of 2002 earnings call. We issued our earnings press release about 30 minutes ago, and it's now posted on our website at Newscorp Dot com on the call today are Robert Thomson, Chief Executive and Susan <unk>, Zhou Chief Financial Officer.

We have all been with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward looking information with respect to news sports business and strategy actual results could differ materially from what is said news corp's Form 10-K , and Form 10-Q filings identify risks and uncertainties that could cause actual results to <unk>.

Her and contain cautionary statements regarding forward looking information.

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.

That I'll pass it over to Robert Thomson for some opening comments.

With record revenues and record profitability.

Florida.

He deserved by our employees for their collective and unstinting effort energy and creativity. We are all proud to be furthering a tradition of purpose and principle created by and curated by Rupert and Lachlan Murdoch.

Credit too must go to a board that has provided thoughtful prescient guidance during a particularly challenging period for most media companies in most countries.

Revenues for the quarter exceeded $2 $7 billion, a 13% increase year over year, while profitability rose, 18% to $586 million and net income reached $262 million.

The pimco and Eddy cue at a visceral enlightened understanding of the importance of professional journalism and we genuinely appreciate their personal and corporate commitment.

Our businesses are flourishing there was again strong performance at digital real estate services, Dow Jones, and book publishing and a rapid expansion of profitability at unused media segment.

We are delighted that agreement has been reached to acquire the opus and base chemicals businesses. After they required style for antitrust reasons, they will surely add to the lustre of the already lucrative Dow Jones professional information business those acquisitions should formally close in the first half of calendar 2022.

We had indicated that the strength of our cash position and a robust growth would enable us to make opportunistic purchases and that has come to fruition and at reasonable prices that we believe will benefit all our shareholders.

That studied strategic expansion has been complemented by a $1 billion share buyback program already well underway and which we expect will provide ongoing value to our investors.

Turning first to digital real estate services.

Unsurprisingly, there was 6.12 billion in existing home sales in the U S last year, the highest figure in 15 years and that total came despite the disruption of COVID-19 in viewing and reviewing homes.

Housing inventory levels.

As of December According to Comscore realtor traffic growth exceeded that of Zillow trulia for 23 straight months.

Which is vindication of our resolute focus on our core mission and customers, we will not mired in a capricious cul-de-sac of house flipping.

In Australia, our EIA reported revenue growth of 56%, which includes the integration of mortgage choice.

The tapering of rapid house price rises has been accompanied by a flurry of new listings, even though the COVID-19 situation remained somewhat unpredictable and one state Western Australia has chosen not so splendid isolation.

The Australian government is expecting an economic Renaissance so over the next year or so and that should benefit <unk> and all of our businesses in that country.

Dow Jones had a superb quarter with 14% revenue growth and a 32% increase in segment EBITDA at $144 million.

Bear in mind that these outstanding numbers come on top of a particularly strong quarter a year ago.

Underscoring the scale of Dow Jones achievements, we are successfully building upon success.

Total Dow Jones subscriptions, including <unk> rose, 17% in the quarter, reaching approximately $4 7 million and the Wall Street journal's total subs exceeded $3 6 million with nearly 3 million of them being digital only an increase of 19% year over year to be.

Clear. These are core subscribers, who are signing up to a premium product at a premium retail price.

And prices in a market that has tightened the immature and lacking in transparency and veracity.

And we expect the pressure for credible disclosure to be an additional source of revenue for our risk and compliance business.

For clarity. These two new businesses have revenue basis that are close to 100% digital and recurring highly profitable with healthy revenue growth and modest capex requirements. We expect that investors will be able to see clearly they have a positive impact in coming quarters that these deals were done at <unk>.

Another attractive multiples is self evidently a bonus for our investors.

Yeah.

Notable success was seen with <unk> drummonds, the pioneer woman cooks Super easy and Dave Grohl Storyteller. Looking ahead, we have high hopes for the Paris apartment by Lucy faulty another David Walliams installment in a superlative best selling world's worst series and what may well be the most telling.

Yeah.

This multimedia offering is yet another example of the clever contemporary leveraging of our world class content.

Yes.

The robust advertising results up 17% in the quarter were evident at all major markets across both print and digital.

Digital trends, particularly pleasing, which speaks to the value of our global network and improvements in our understanding of permission data.

It also reflects the sides leadership of Michael Miller in Australia, Rebekah, Brooks and UK and boat show on Genco and Keith pool at the New York Post.

News Corp, Australia showed a highly noteworthy improvement in profit contribution with digital paid subscriptions scaling to nearly 910000 and the intelligent expansion into digital Adjacencies.

Your post had an especially successful Q2 with an appreciable contribution to segment EBITDA. Thanks to a resounding advertising performance and its vast and growing digital audience we recorded.

160 million unique users in the months of December the <unk>.

Most increase in profit contribution has it is fair to say.

Ceded even our demanding expectations.

News UK had its highest second quarter profit contributions its fiscal 2011 helped by an acceleration in digital paid subscriber growth. In addition, the Sun's traffic has surged with global monthly Uniques for December up 25% to $163 million.

Our fledgling U S SUNS side growing rapidly.

3 million Uniques for Dow Jones that is certainly a firm foundation for network growth.

In the U K wireless made a positive contribution to news media revenue and segment EBITDA growth.

We're also looking forward to the launch of talk TV, which will be available on platforms, including linear TV and OTT channel will take full advantage of our talent and content in the U K and via the global deal with piers Morgan our platforms in the U S and Australia, it would be high quality low cost.

And certainly impactful.

Sports seasonality is always a factor in Australia.

Total streaming subscribers expanded by 66% year over year with binge exceeding 1 million subscribers and flash.

Aggregation service in its infancy in charter as of December we had almost $2 3 million streaming subs, representing 56% of Fox sales total subscriber base, which was $4 $1 billion is worth noting that in addition to the increase in streaming subs broadcast churn was at.

A three year loan.

The team.

Led by Civil and Mccann and Patrick Delaney is executing successfully on our strategy to scale streaming having developed world class technology and compelling user interface. We are increasingly confident in <unk> future and thus actively looking at ways to maximize its value and ensure that we can build on.

That success.

We are delighted with the tightened progress at New school, but certainly not complacent as we contemplate the exciting potential in our company, which we will relentlessly realize for our investors.

That our trajectory has been transformed despite the vicissitudes of the virus is a testament to the inherent potential of the businesses and the enduring culture of the company.

There is no doubt that we will hopefully review our current structure and the institution introspective on behalf of shareholders. We have made many timely disposals and self evidently successful purchases and are committed to maximizing value for those who have invested in our company.

Yes.

While our profits and revenues are at record levels. We are certainly far from sighted and we will never be complacent, we firmly believe the best quarters in years yet to come.

Now for more details about the most profitable quarter since our reincarnation in 2013, Susan <unk>.

Thank you Robert.

Robert mentioned, we are delighted with our second quarter and first half results marked by strong revenue growth further margin expansion and record high total segment EBITDA.

Fiscal 2022 second quarter total revenues were over $2 $7 billion up 13%, reflecting strong revenue growth across the company without three core pillars digital real estate services, Dow Jones and book publishing growing 19%.

Total segment EBITDA was $586 million higher than the prior year by 18% and a record high total segment EBITDA for the company since separation.

Excluding acquisitions currency fluctuations and other items disclosed in the release adjusted revenues and adjusted total segment, EBITDA rose, 8% and 16% respectively.

Reported EPS was <unk> 40 cents as compared to 39 cents in the prior year.

Adjusted earnings per share was <unk> 44 cents in the quarter compared to 34 cents in the prior year.

During the quarter, we commenced our share buyback and announced the acquisition of base chemicals.

Robert mentioned, we anticipate the latest and base chemicals acquisitions to close in the first half of calendar 2022.

Moving onto the results for the individual reporting segments, starting with digital real estate services segment revenues were $456 million, an increase of 35% compared to the prior year.

The results include the acquisition of mortgage choice and the consolidation of Rei, India, formerly Alara Rei an.

On an adjusted basis segment revenues increased 22% segment, EBITDA rose, 25% to $178 million or 29% on an adjusted basis.

We continue to see higher investment spending at news and at Rei.

At a more moderated rate than the first quarter, notably at news.

<unk> revenues were $169 million or up 9% year over year off the back of 28% revenue growth in the prior year, primarily driven by the historically high lead volumes, which rose over 30% last year.

Real estate revenues increased by 13% and accounted for 86% of total revenues.

We saw higher revenues from the traditional lead generation business fueled by higher yields and increase penetration to market VIP. These hybrid product.

Referral offerings accounted for approximately 32% of total revenues and continued to benefit from record high home prices and higher referral fees, despite lower transaction volume.

<unk> close rates also improved.

Average monthly unique users for the second quarter with $85 million up 6% over the prior year.

Like the first quarter revenue growth was partially offset by the divestiture of top producers March negatively impacting revenues by approximately three percentage points.

However, as anticipated lead volume declines moderated from the first quarter down 9% and we are now seeing the emergence of more typical seasonal patterns importantly, lethal is up 18% compared to pre pandemic levels.

Yields remained robust given strong agent demand, which is more than offsetting the impact from lower lead volume.

As a reminder, financial service revenues are reflected on a gross basis in the revenue line in our financial disclosures and broker commissions are reflected in cost.

Alright, I enjoyed very favorable trends this quarter, including a 22% increase in Australian residential new buy listings double the first quarter rice with city up 39% and now open up 25% aided by easing of Lockdown restrictions.

<unk> also continued to benefit from higher yields increased depth penetration and product mix.

Financial services, not only benefited from the integration of mortgage choice.

Also I saw record levels of applications and settlements.

Please refer to <unk> earnings release and their conference call. Following this call for more details.

Turning to the subscription video services segment revenues for the quarter were $498 million down approximately 3% on both a reported and adjusted basis and relatively stable from the prior quarter as the declines in Fox tell residential broadcast revenue and continued COVID-19 impacts on commercial venues were partially.

We offset by strong growth in streaming revenues, which now account for 19% of circulation and subscription revenues.

Title closing paid subscribers across the Fox Tao group reached over $3 9 million at quarter end up 19% year over year, increasing from the prior quarter rate by two percentage points.

Total subscribers, including Triallist were approximately $4 1 million the highest on record.

The year over year increase was driven by higher binge and kayo subscribers, partially offset by the expected decline in residential broadcast subscribers, albeit at a more moderated rate than the first quarter.

In aggregate total streaming subscribers rose, 66% from the prior year to almost $2 3 million of which approximately $2 2 million paying subscribers.

Streaming products in the aggregate reached 56% Fox health title subscribed the dice.

<unk> had an outstanding quarter, increasing its total subscribers to over 1 million similar to Cai paying subscribers more than doubled from the prior year to 928000 Beach added 126000 paid subscribers in the quarter almost double the net adds at the first quarter.

Growth continued to be driven by the depth of its content library and the popularity of new shows, including a pinch original Sharon's Love me.

Kayo subscribers <unk> seasonal patterns with total subscribers slightly down from the first quarter consistent with the prior two years.

Australia is winter scorecards will resume in the third quarter with the return of AFL NRL nipple in supercuts.

Broadcast churn declined to 13% the lowest level since the first quarter of fiscal 2019 and down four five percentage points versus last year.

The Fox tell team continue to focus on product enhancements and higher <unk> subscribers, resulting in broadcast opex, increasing almost 3% from the prior year to 82 Australian dollars and helping to mitigate subscriber volume declines.

<unk> ended the quarter with $1 6 million residential broadcast subscribers with the sequential decline being the lowest since the fourth quarter of fiscal 2020.

Commercial subscribers increased from the first quarter as parts of Australia opened up and were flat versus the prior year at 218000.

Costs were consistent with our outlook commentary and we continue to expect full year total costs to be relatively flat if not down slightly in local currency, helping to deliver strong cash generation of Fox Hill.

B D rose 10%.

Digital net adds improved from the first quarter with Dow Jones, adding 148000 digital only subscribers, including 115000 at the Wall Street Journal.

Advertising revenues, which accounted for 28% of revenues this quarter. It grew 23% to $141 million the highest quarterly advertising revenue in the last five years.

Digital advertising revenues remained robust up 18% on top of 29% growth in the second quarter of the prior year and accounted for 56% of total advertising revenues.

Dow Jones segment EBITDA for the quarter rose, 32% to $144 million. Despite the 43% growth last year with EBITDA margins expanding by almost four percentage points to over 28% that reference represents the highest margin since news corp's acquisition in 2007.

Total cost increased 8% with approximately half due to the consolidation of IBD.

On an adjusted basis revenues and segment EBITDA for the quarter rose, 10% and 29% respectively.

At book publishing Harpercollins posted 13% revenue growth to $617 million and segment EBITDA rose, 3% to $107 million.

EBITDA growth last year.

Digital sales rose, 8% this quarter and accounted for 17% of consumer sales with growth driven by downloadable audiobook.

Hi, Jim Hi, it's continued to perform according to plan for the quarter height, Jim Heights contributed $50 million in revenues and $10 million in segment EBITDA.

Turning to news media the momentum in this segment continued during the quarter revenues were 600, sushi $8 million up 11% versus the prior year. The biggest driver to the growth with the continued rebound in the advertising market as well as the strong growth in circulation and subscription revenues helped by the contribution from our recent comps.

Licensing revenues.

Within the segment revenues at News Corp, Australia, and use U K increased 14% and 7% respectively.

Wireless group and the New York Post also continued to show strong top line growth.

Adjusted revenues for the segment increased 10% compared to the prior year.

Circulation and subscription revenues rose, 9% benefiting from strong digital subscriber growth incremental revenues from the platform agreements and cover price increases.

Advertising revenues increased 17% compared to the prior year with notable strength in digital and a recovery in print advertising across all our key markets.

Advertising revenues in Australia, with the easing of Lockdown conditions rose, 11% in both reported and local currency.

News UK advertising revenues rose, 23% or 21% in local currency.

With impressive digital advertising growth.

At the Sun digital advertising surpassed print for the first time, driven by improved number of page views and higher yields.

In the U S. The trends at the New York Post remained strong with higher yields helping to drive advertising revenue performance, 19% higher year over year.

Segment, EBITDA of $111 million increased $45 million or 68% compared to the prior year, reflecting the higher revenues News Corp, Australia contributed $35 million to the segment EBITDA growth at both news UK and the New York post with positive contributors to the growth.

Segment margins topped 17% the highest since we have separated in 2013 adjusted segment EBITDA increased 65%.

I would now like to talk about some things for the upcoming quarter.

Tension across the company.

At digital real estate services, Australia residential new buy listings for January rose, 14%.

<unk> anticipates growth rates to slow in the second half as it cycled strong prior period listing volumes and potential impacts around the upcoming federal election.

Please refer to Rei for more specific outlook commentary.

If we continue to see strong <unk>.

Spite lower inventory, we expect to continue to reinvesting news as we drive the core business and expand into relevant adjacencies, particularly new homes and rentals.

We expect the year over year growth rate of investment needs in the second half to be relatively similar to the second quarter, but notably lower than the first quarter right.

In subscription video services, we remain pleased with the ongoing performance of the streaming products and the efforts to improve broadcast op who in churn.

We continue to expect full year costs in local currency to be relatively flat versus the prior year and we continue to monitor commercial venue trends given the recent spike in Covid cases in the region.

At Dow Jones overall trends across the business remain strong with advertising and subscription growth continuing to perform well.

We expect to continue to reinvest in digital to drive consumer subscriptions and to further enhance our professional information business offerings.

And to reiterate we expect both the opus and base chemicals acquisitions to close in the first half of calendar 2022, and we will incur one time transaction costs related to these acquisitions.

At news media overall advertising trends remained favorable and we remain cautiously optimistic about the second half, albeit recognizing that visibility is limited.

We continue to expect incremental revenues into nine figures from the recent platform agreements with the majority of that allocated to news media.

We do expect some reinvestment for the segment in the second half given the strong year to date performance focused on new product initiatives marketing and the news UK TV project.

Although we expect costs in the second half to be slightly higher than the first half due to the phasing of certain costs.

Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

Again press Star one to ask a question, we'll pause for just a moment to allow everyone an opportunity to signal.

Our first question comes from Kane Hannan with Goldman Sachs. Your line is open. Please go ahead.

Good morning, guys.

Two quick ones from me just firstly move new.

And of course, it did slow down in the quarter. Despite the improving lead decline just talk a little bit about the pricing tailwind you're seeing I suppose how do we think about that into the second half and then just quickly on news media.

<unk> from the tech platforms would that that full run rate in the second quarter or should we expect those to continue to grow into the second half.

Okay.

Right.

Okay and I'll take those two questions first of all the macro trends are.

Realtor generally auspicious I mean, clearly there is some fluctuation in the U S housing market.

Overall impetus for families individuals to buy larger hubs to work from home to move locations to take advantage of.

<unk> opportunities and the uncertainty of those job opportunities.

And mobility witness a paucity of employees are all positive influences.

First time mortgages.

Still at near Historic lows, and so financially purchases makes sense, particularly as rents are rising.

Hey, rich.

<unk> refis, but that's not a market, which we have exposure.

And the digitalization of U S property market is still at an early stage of very early stage and we are poised to take advantage of the opportunity in the short the medium and the long term.

As for the.

A big digital payments.

Starting to see the run rate, but it does those payments alone are really based payments and so they don't take into account.

Advertising.

And sure it advertising.

Generally speaking to improvement.

The commercial rights for distribution of our content low did I forget.

<unk>.

The impact of the enhanced deal with Apple.

In China, just want to add to the sort of phasing of those content costs licensing costs that we've got in Q2 was slightly higher than Q1, and we would expect the second half of the year to be slightly higher again as they continue to ramp, particularly given showcase hasn't launched in the U S.

Thank you Kane James.

We'll take our next question please.

We'll go next to ensure Rykowski with credit Suisse. Your line is open. Please go ahead.

Hi, Robert Hi, Susan.

I've got two as well.

One.

I guess a follow up.

Those comments on the content licensing revenues I'm just interested in your view on the sustainability of the earnings uplift at Dow Jones and with media.

He has made in particular do you expect.

This quarter in this year too.

Reflect a fake at can.

Can you at least.

So Stein days any you're obviously investing in the second half, but just just how you view the earnings trajectory would be would be helpful. And then secondly, I think this has been a pretty clear, saying in market, but given the slide down in subscribers nice and bought some of the global streaming operators what are the dynamics that you've seen in the history.

<unk> training market.

Do you see any risk to the three ambitions that you put out last September the bulk sale subscribers to get to I have a follow up Neil N. Thank you.

On the first question around the users who use media numbers clearly.

The big digital agreements had an impact, but I think to focus on that alone is to actually not give you credit to the companies whether it be news U K.

Australia with a new approach.

The way that those businesses have been transformed in recent years and it has been a heavy lift as you're doing in Australia, we had to close many of our print editions and.

And regions and communities and enhance our digital service so those.

A more fundamental to the.

Transform fortunate so when you look at the increase in EBITDA over the past year. The same quarter last year 11, 5%. Most recent quarter was 17, 4%.

K advertising up 21% in local currency use Australia, I've been talking up 11% newer post up 19%.

Fundamental shifts in the businesses.

There's no reason.

To think that those fundamental shifts won't have an enduring impact.

As the streaming.

Australian situation is rather different to the prevailing trends in the U S.

So it really is the village square for video and.

And we have many partners there in a way that's not not.

Not calling in the U S.

Not since is rather like the Galapagos islands are unique viewing ecosystem.

Recent rapid growth in billings is actually exceeding our expectations in Canada. It was a very different sports streaming service, which is the most important what type of winter sports along with the increasingly compelling formula one on soup because among many others.

Complete content package.

Lee.

And consistently compelling I mean, thats appointment viewing die after day week after week month after month months, that's not sure individual Cheng Cheng.

And then I just want to add to Robert's comments in relation to news media and he's absolutely Raj I mean, the transformation of that segment in particular has been great and we've been really to launch it with it and just to give some context of the $65 million increasing revenue $42 million that was advertising twenty-three was.

Circulation subscriptions, which is where those content licensing fees also a lot of it was advertising a lot of that is being fueled by digital advertising and the work that the teams have done around driving those audiences and converting their businesses to digital.

And benefiting from obviously strong yields.

Thank you and Joe just we will take our next question. Please.

Our next question comes from Craig Huber Huber Research partners.

Great. Thank you.

What's your general thought here on this inflationary environment, we have going on right you think across your portfolio.

Obviously your numbers were really good here.

Quarter. The outlook here you are talking about here is quite favorable as well, but what's your general thoughts on inflation. What do you think that's doing to your top line, but also your revenues I'm sorry, your revenue disclosure costs do.

Do you have a nitpick question Susan.

Your overall cost for the company for the quarter, if you adjust for currency and acquisitions, how much was it up please in the quarter year over year. Thank you.

Well I'll make a quick observation about inflation and then Susan will follow up on those subjects.

The inflationary pressure is very segment by segment and country by country.

Obviously going to be.

An important issue or challenge.

Clearly from quite a while ago not transitory.

So we started our planning long ago, asking each of the businesses to be cost conscious to look at whether IP positions needed to be filled to be focused on retention payments.

In an intelligent way too.

To ensure that our team is also feel as though the.

Part of our purposeful journey, which they most certainly are the cultural compartment.

Loyalty complements the compound patent.

Susan.

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

Thank you Craig Jeff We will take our next question. Please.

Next question comes from Alan Gould at loop capital.

Thanks for taking the question I've got two please.

Some of the digital platforms are talking about supply chain issues and inflation impacting marketers.

Desire to advertising impacting advertising you have a global perspective wondering what youre seeing with respect to that I know youre advertising looking quite good and then secondly, the platform fees that youre getting from the digital players what is the opportunity for the advertising subscription revenue on top of what you are already receiving on licensing fee.

Yes.

Susan would you like to pursue.

So just in relation to the platform phase I mean, we are working through obviously driving continued audiences and looking and working with those tech platforms in order to build out those audiences and so that will help us contribute to growing the advertising time, particularly if we can grow the overall subscriber pie than we've got a high quality audience that.

Okay.

Just in relation to the comments that other companies might have made around supply chain presses precious and advertising.

As you mentioned, we havent seen that actually impact us from an advertising perspective, we've had great growth actually across digital and we've been really pleasantly surprised with the bounce back of print advertising, obviously off relatively low comps from the prior year, but it still has exceeded our expectations. So we're not really experiencing that at the moment and we haven't seen that coming through our results.

Thank you Alan.

Thank you.

We'll go next to Darren Leung with Macquarie. Your line is open. Please go ahead.

Hello.

Thanks, Thanks for taking the time.

Just one question from me just a bit more color around the question of information business Mumps think workplace. So it looks like with some of the parts going pretty well, but that.

Relatively quiet.

This was partly due to the climate is slower.

Just any color around Pos or subscribers coming off or anything directly okay.

Darren.

It would make a general observation that businesses is itself being transformed by <unk> and the team at Dow Jones.

John Youre seeing obviously the success of this implies.

Those of you expect Teva will notice at the interface is changing in a way that's frankly more user friendly.

And.

The acquisition of both Airbus and base chemicals.

Uh huh itself have a positive.

Effect on the professional information business, including news was which will already have a focus on energy chemicals renewables carbon.

Obviously increase.

And similarly, with Factiva, where already as you no doubt know we have a remarkable array of.

The sources, it's a real elevens kind of content.

That will both complement.

Existing offering of diapers.

Chemicals.

So overall strengthen those offerings because it's a I think it's a fair observation.

In recent years.

Those businesses haven't been growing at the same rate as risk and compliance.

But that's why a lot of work has gone into transforming and Youll see the results in coming quarters our spec.

Yeah.

Thank you Darren Jeff will take our next question. Please.

Next question comes from Brian Han with Morningstar.

Oh, Hi, two quick ones if I may.

For your streaming services.

Just talk about any reason to screen.

Conversion rate of trials explore those too.

Paying subscribers.

Free cash flows do you expect that working capital buildup to reserves in the next couple of quarters or should we expect a.

Free cash flow to remain sort of depressed relative to earnings growth.

Well.

I'll make just a general observation about.

Streaming at Fox, which is overall you can see the strong growth.

Sure.

<unk>.

The increasing portion of folks are revenue ascribed to streaming while at the same time I think this is particularly noteworthy were at a three year low with broadcast churn.

So the fee is that some had.

Increase in streaming would lead to a market deterioration of broadcast.

Founded soon.

Susan.

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

Yes.

Thank you.

Thank you, Brian Jess will take our next question. Please.

Our next question comes from Jeff Victoire with Advisors. Your line is open. Please go ahead.

Hi, This is Patrick for drew factor.

I had a quick question around the openness and base chemical business congratulations on actually getting them at a very good valuation, but I was a bit surprised by the timing.

I have it kind of the process being done by the first quarter of 'twenty, two and I have in my model on and kind of in the back half of the third quarter. So what is driving that first half of calendar 'twenty two tiny.

Edmund obviously, we'd like to get the deals done as quickly as possible because we cherish. These companies because we can see how valuable or on what they will lead to Dow Jones into <unk> more generally and you will see in our accounts in coming quarters and years the value of them.

Clearly, we're subject to regulatory calendar.

There are sometimes a V.

Variable is unpredictable variables in that but we are fairly confident.

The <unk> deal will close next month.

Chemicals will close a couple of months after that.

Okay. Thank you very much.

Thank you Jess will take our next question. Please.

Ladies and gentlemen that will conclude today's call. We thank you for your participation you may disconnect at this time and have a great day.

Q2 2022 News Corp Earnings Call

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