Q1 2023 News Corp Earnings Call
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10 years Corp's first quarter fiscal 2023 earnings call.
Today's call today's conference is being recorded.
Media will be allowed are in a listen only basis.
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 operator however.
Hello, everyone and welcome to news Corp's fiscal first quarter 2023 earnings calls.
We issue our earnings press release about 30 minutes ago, It's now posted on our website at Newscorp Dot com.
On the call today are Robert Thomson, Chief Executive and Susan Pinnochio, Chief Financial Officer, we 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 next of course 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.
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 for the applicable periods posted on our website.
With that I'll pass over to Robert Thomson for some opening comments.
Thank you Mike while the macro environment has tightened the more volatile we believe the resilient foundations of the reincarnated Newschool give us a platform for sustained growth and increased profitability that clearly is evident in our revenue performance. This quarter, while revenues were down 1% to $2.5 billion that decline.
Was obviously, a consequence of foreign currency fluctuations on an adjusted basis. Our revenues grew a healthy 3% building on the robust results from last year, while profitability for the quarter was $350 million down 15%, although that reflects the forex headwinds and a reset by Amazon August book inventory levels and warehouse.
This footprint review, neither factories reflective of core business conditions, all of our long term potential our results follow two successive years of record profits at news calls it is important to keep that unprecedented success in mind, especially as we encounter what we expect to be ephemeral challenges. Our company has changed the digital terms of trade.
And we expect the current situation to be transitory, we see positive prospects across all ASIC nuts, and our mix of revenues and geographies is obviously advantageous in a complicated perplexing wounds.
Turning first to Dow Jones' Q1 was the best first quarter on record shows acquisition for revenues profitability and margin affirming the wisdom of our acquisition of Ifas, and CMA, which have bolstered the Dow Jones professional information business revenues grew a resounding, 16% and advertising was up 4%, which compares rather favorably to our number.
Competitors in particular digital advertising at Dow Jones Rose, 11%, a noteworthy achievement in this complex environment. In fact, Q1 represents the ninth consecutive quarter of year over year digital AD growth at Dow Jones.
In the past year, Dow Jones added 473000, digital only subscriptions and as of the end of Q1, 83% of subscriptions at Dow Jones were digital lung.
At the Wall Street Journal, despite the tough market paid digital subscriptions increased by over 350000 year over year.
During the quarter Investor's business daily launched a paid user market P. M to attract younger investors and commissioned and options information App that will present, new analytics for options trading a complex spots potentially lucrative sector.
With its panoply of premium products Dow Jones has renewed focus on bundling our premium content, including the Wall Street Journal market Watch and Barron's. These valuable combinations have already exceeded 200000 subscriptions and we have begun to rollout a bundle featuring WSJ barron's and IBD.
Revenues at the professional information business rose, 40% year over year, we continue to clearly see the benefit of risk and compliance and an environment of intensifying scrutiny by regulators, who are insisting that companies minimize risk and maximize compliance integration of opus and CMA has been proceeding successfully and I joined a burgeoning Dow.
Orange data and intelligence business, providing an impressive $52 million in combined revenues in Q1 and contributing materially to profitability this quarter Opus and CMA continue to leverage their proprietary data and analytics with new offerings, including carbon indices and are assisting companies and making sense of dynamic market for carpenter.
Overall, we are delighted with the tangible progress in our professional information business, which is providing an increasing level of high yield low churn digital fund.
A digital real estate services. This quarter, we saw resiliency, even though housing market conditions have tightened to become more volatile, especially in the U S. Army a group achieved substantial revenue growth in constant currency on the back of higher prices increased penetration of the hue Premier plus enhancement and strong listing volume while maintaining its more than three.
Three followed leading traffic over the competition.
There was also notable audience and revenue growth at Rei, India, which further consolidated its position as the number one property portal in that massive and growing market at move operator of realtor Dot com revenues were down 6%, reflecting relatively similar trends to the fourth quarter Realtors unique users have risen 21% since.
The first quarter financial 'twenty, thanks to product enhancements and increased marketing.
Additionally, and equip the business take full advantage of the inevitable upswing in the market, we are expanding our offerings in rentals and in developing shell side expertise, which we expect will drive profits far into the future.
Military is also taking decisive steps to streamline and optimize the business, while enhancing reinvestment capacity and capitalizing on long term growth opportunities.
Focus on seller leads which are the source of nice revenue in the Australian market is building on our recently acquired uplift. The utmost experience has been integrated into key shallow placements across the Si providing sellers the ability to get proposals from multiple agents and offering consumers significantly more choice. Meanwhile, even in.
In a challenging housing environment with higher mortgage rates tight inventory and inflation home prices have remained elevated and we know that active listings at realtor increased by 29% in the quarter compared to the prior year period.
Realtor remains focused on the long term opportunities in what is an estimated 200 billion dollar addressable market.
As mentioned earlier, the Amazon reset affected many published in Q1, including Harper Collins. This reset relates to Amazon's decision to reduce inventory levels and shutter warehouses and accounted for almost the entirety of Harper Collins revenue contraction and the vast majority of its profit decline this quarter, notably consumer appetite, which expanded during the pause.
<unk> continued to be robust and provides us with increasing confidence going forward and.
And we are absolutely focused on cost control Lacaba Collins and the imperative to improve margins in these challenging conditions.
He frontlist titles in the quarter included portion of an unknown woman by Daniel Silva log wire by Kelly Ripa and breaking history by Jared Bushnell, we are prospering from our global ownership rights to the Lord of the rings trilogy, given the popularity of the Amazon series and we are looking forward to the release of the stories, we tell by John a guidance and Colleen Hoover's next work.
Finally, we note that Harper Collins focus last month applied sided mill principal publishers and independent publisher of quality gift books, Sada mill, specializing cooking wine and spirits and human books and includes Applesauce press a children's brand its deep factories should provide an ongoing source of incremental revenue.
At subscription video services Foxtail had another strong quarter streaming subscriber penetration continues to expand and costs have been thoughtfully control.
Boxtel has recently renewed or signed valuable long term sports rights and content agreements, including the I F. L. W. W E and NBC Universal we.
We have obvious optionality at function, where the conversation is no longer about how much capital we plan to invest but the potential for capital return box.
Boxtel screening services at pains to point 8 million paying subscribers as of the end of September judging 34% versus the prior year and accounting for 63% total paying subscriber base.
Cowen Binge added nearly three quarters of a million paying subscribers in the posture alone underscoring the potential of Fox gel in our still expanding Australian market.
October delivered record audiences for the recent AFL and NRL finals. Meanwhile, Motorsports, the Rugby League World Cup and T 20 World Cup cricket.
Bolstering subscriber loyalty as many years with the spring selling season to Heidrick directed the news media segment experienced a revenue decline of 4%. So it rose a healthy 6% on an adjusted basis, when taking into account forex fluctuations and other items in constant currency, we saw healthy growth in advertising circulation and subscription.
Ipsen revenue at <unk>.
News Corp, Australia circulation revenues, improving constant currency and digital subscriptions exceeded the 1 million Mark for the first time up 13% year over year, new stock comp that I you asserted its leadership in the free media environment with an audience of 13 million in the month of September . Meanwhile.
Meanwhile, in Europe post continued to improve profitability.
In part to a strong increase in digital advertising them.
Post digital network also flexed it muscles with a 24% increase in page views, reaching an average of 129 million per week in Q1, and 151 million average monthly uniques in September .
At news UK, the Sun's digital advertising exceeded print for the fourth consecutive quarter and accelerated its growth and we're delighted by the success of the Sunbelt calm, which continued to increase its already sizable audience, particularly in the United States and the time Sunday Times also saw a 23% increase in digital pages.
Scriptures, reaching 468 Belles, marking its second best ever quarter of digital growth used broadcasting the new name for the radio and TV brands at news UK reported an increase in both reach and listening hours. According the latest Ray jobs report.
Bulks Board reached 2.9 million listeners, who tune in for more than 18 million hours up 10% quarter on quarter, and we expect the imminent for World Cup to be a source of audiences and of advertising.
Used call is building on a base that has grown stronger more global and more digital in recent years, we have seen record profitability in each of the last two fiscal years by many key measures. Our resounding progress has continued digital advertising on the rise screaming surging and subscriptions soared.
Despite the macro economic uncertainty, having streamlined and digitize their businesses and reached substantial agreements with the big Tech platforms to compensate us for our premium journalism, we are better equipped to generate increasing value to our investors and our strong cash position means that we have been able to return capital to shareholders and in their store.
Flea in future growth, while honoring our proud problems one last point as we announced last month following the receipt of matters from ribbon Rudolph intermodal family trusts. The New School Board of Directors has formed a special committee of independent Board members to begin exploring a potential combination with Fox Corporation.
There can be no certainty that the company will engage in such a transaction, we do not intend to comment further at this time and for that reason, we will not be taking questions. On this topic. Today. We are of course happy to answer your questions about the performance of and prospects for our business, particularly as it relates to the first quarter of this fiscal year.
As always we thank our investors for their faith and confidence in us and all our employees advertises readers and audiences for their valuable contributions and enduring support now I turn to Susan to expound and expand on these results.
Thank you Robert we have entered fiscal 'twenty 'twenty train with a different macro environment, including volatility in foreign currency impacting our headline results from Australia and UK businesses.
Fiscal 2022, we successfully navigated the company in a position of strength guided by our ongoing cost transformation work, which we are balancing investment and innovation to drive digital expansion.
The first quarter of fiscal 2023 presented some challenges, particularly as hopper columns, but most of the businesses performed well and come to parity in phosphates at East Gulf remains well positioned given the strength of our acetate healthy balance change and the continued diversification of our revenue base.
This quarter total revenues were approximately $2 $5 billion down, 1%, which included a $153 million or 6% negative impact from foreign currency headwinds.
Excluding the impact of foreign currency fluctuations acquisitions and divestitures this quarter adjusted revenue increased 3% compared to the prior year.
This will take meant EBITDA was $350 million down 15% compared to the prior E, which saw a record profit with 63% price.
That being said total segment EBITDA. This quarter was two up 31% over fiscal 2021 underscoring the material changes in recent years.
Also noteworthy is that the majority of the profit decline this quarter was driven by lower sales from Amazon due to the reset of its inventory levels and the right sizing of the toy House.
As well as foreign currency fluctuations neither of which we believe are reflective of underlying performance.
Adjusted EBITDA declined 15% versus the prior year period.
For the quarter, we reported earnings per share of seven cents compared to 33 cents in the prior year adjusted earnings per share were 12% in the quarter compared to 23 cents in the prior year.
Moving on to the results of the individual reporting segments, starting with digital real estate services.
Segment revenues were $421 million down 1% compared to the prior year. The results include a negative impact of $20 million or 5% from foreign currency fluctuation.
On an adjusted basis segment revenues increased 3%.
Segment, EBITDA declined 14% to $119 million impacted by higher employee cost and increasing miles driven.
Driven by strategic investment activities advice news and RNA together with negative impacts related to currency headwinds.
Increasing investment concept maze was change and expansion into adjacencies, including heavily rentals and new hires as we focus on the longer term opportunity adjusted segment EBITDA declined 7%.
News revenues were $169 million down 6% following 30% growth in the prior year period for the quarter real estate revenues fell 9% driven by lower lead and transaction volumes reflective of the broader industry trends.
Consumer affordability constraints impacted uniquely volumes, which declined 52% in the quarter, although that was a slight improvement from the fourth quarter right.
These trends were partially offset by cross optimization within the traditional lead Gen business higher sell through of our hybrid offering market VIP home price appreciation and continued advertising gains.
We also had revenue growth from our Jason's team, including the acquisition of Optimist, albeit these revenue streams are still in the early stages of development.
For Ferro offerings accounted for approximately 30% of total revenues down from 52% last year impacted by lower transaction volumes, partially offset by higher home prices.
Based on our internal metrics fruit as average monthly unique users were $86 million in the first quarter.
Rei had another strong quarter with revenues rising 2% year on year on a reported basis to $252 million, which included a $20 million or 9% negative impact from foreign exchange.
This was driven by price increases contribution from Premier Pos favorable depth penetration.
Growth in National listings, partially offset by a modest decline in financial services revenues change lowest instrument activity.
April he buy listings rose, 5% with Sydney, and Melbourne up, 5% and 12% respectively.
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 with $502 million down approximately 2% compared to the prior year on a reported basis due to foreign currency headwinds importantly on an adjusted basis revenues rose, 6% versus the prior year acceleration from the prior quarter rate of 4% price.
Streaming revenues accounted for 25% of circulation and subscription revenues versus 19% in the prior year and again more than offset courthouse rohit.
Official closing paid subscribers across Fox hope rate reached almost $4 5 million of kosher and up 16% year over year with the growth rate improved three percentage points from the fourth quarter.
Total subscribers, including trial has reached over $4 6 million.
Pipe streaming subscribers reached by the 2.8 million, increasing 34% versus the prior year, and adding 117000 sequentially as streaming subscribers now representing 63% of folks health total paid subscriber base.
Kayo paying subscribers reached almost $1.3 million up nearly 19% year over year slightly down from the fourth quarter levels due to typical seasonal passion to the end of the ISO and Nrl's agents in September .
Paying subscribers grew by about 67% year over year to over 1.3 million subscribers benefiting from the release at the half of the Dragon and the popularity of the Fox tell original series the 12.
OXXO ended the quarter with over one click 4 million residential broadcast subscribers down 10% year over year similar to the fourth quarter Rice broadcast churn was 14, 2% compared to 14% in the prior year, partly reflecting the acceleration of migrating subscribers of cables.
Broadcast Opry raised by a 1% to approximately 83 Australian dollars.
Segment EBITDA in the quarter of $111 million fell 3% versus the prior E significantly impacted by currency with adjusted segment EBITDA increasing 5%.
Moving on to Dow Jones, Dow Jones continued to post strong performance in the first quarter with revenues of $558 million up 16% compared to the prior year with digital revenues accounting for 79% of title revenues disproportion of up four percentage points from last year.
Results included a full quarter from both the opus and chemical market analyst acquisitions on an adjusted basis revenues rose approximately 6%.
Circulation revenue grew 5% driven by strong year over year volume gains at the Wall Street Journal digital only subscriptions up fishing percent joy, the $3 1 million and title job Dow Jones digital only subscriptions offer up fishing defense.
Professional information business revenues rose, 40% and accounted for approximately 35% of segment revenues driven by the acquisitions of <unk> and CMI.
Revenues from the acquisitions are progressing in line with our expectation as the businesses benefited from strong demand across numerous industries, including metals carbon plastics sustainability, biofuels and renewables, while he would continue to rise and retention remains strong.
Richmond compliance revenues grew 6%, although currency had a 10 percentage point negative impact on revenue growth given the business has high exposure to Europe and APAC.
Advertising revenues grew a healthy 4% to $94 million, despite locking 29% price in the prior year.
Digital advertising revenues rose, 11% in the quarter as we continue to see very strong yield increase and controlled growth in all categories, especially in database quota.
Digital advertising accounted for approximately 65% of total advertising revenues, which increased four percentage points from last year print advertising revenues were down 6%.
Dow Jones segment EBITDA for the quarter rose, 19% to $115 million as margins continue to increase with 50 basis points expansion year over year to nearly 22% helped by the inclusion of Opus and CMA.
Adjusted segment EBITDA for the quarter was down 1%, reflecting higher employee costs.
At book publishing as we flagged during the course out results were materially handset by Amazon's reset of inventory levels and right sizing of its warehouse footprint, resulting in significantly lower orders and higher returns.
Supply chain pressures continue to impact price and manufacturing cost, but is showing some signs of easing from recent quarters.
As it relates to Amazon, we have not seen similar inventory level adjustments from other book distributors will read Highlands and as Robert Nice It consumer demand has remained healthy and consumer sales data remained consistent with prior quarters.
For the quarter revenues declined 11% to $587 million and segment EBITDA declined 54% to $39 million.
We estimate Amazon accounted for almost the entire year over year revenue decline and the majority of the year over year segment EBITDA shortfalls.
Our backlist contributed 65% of revenues up slightly from last year benefiting from the demand of token titled helped by the Premier of the wings of power on Amazon.
Digital sales rose, 1% this quarter and accounted for 23% of pushing sales on an adjusted basis revenues fell 7% and segment EBITDA declined 51%.
Turning to news media, we continue to see relatively strong advertising trends, particularly at news, Australia revenues were $553 million down 4% versus the prior year, largely due to currency, which had a $62 million or 11% negative impact on revenues importantly, despite macro uncertainty adjusted.
He's the segment increased a healthy 6% compared to the prior year due to strength in circulation and subscription and advertising revenues in constant currency.
Circulation and subscription revenues declined 6%, but that included a 12% or $32 million negative impact from currency fluctuations.
In constant currency was driven by cover price increases in the UK, and Australia, and increasing content licensing revenues and double digit subscriber gains across music try it and the times and the Sunday times.
Advertising revenues declined 4% compared to the prior E, which included a 9% or $22 million negative impact from currency fluctuations grossing constant currency was driven by an increase in digital advertising revenues, primarily at the farm with digital revenue yet again, a quick print revenue, while Australia benefited from strong pre.
Performance led by a recovery in retail and travel which was impacted by the lockdowns in the prior year.
The New York Post also posted strong digital games.
EBITDA of $18 million declined 47% driven by over $20 million of higher costs related to talk TV and other digital investments together with higher newsprint production and distribution costs across the businesses, which have been impacted by the current inflationary and supply chain challenges adjusted segment EBITDA fell 44%.
Yeah.
Before we look at the outlook for next quarter I would like to touch on free cash flow first quarter free cash flow is typically lower due to the timing of working capital payments and we remain focused on driving strong and positive free cash flow generation for the year.
Turning to the upcoming quarter, we continue to expect higher Cogs due to supply chain and inflationary pressures advertising conditions are mixed and visibility remains limited across the businesses. We also expect ongoing foreign exchange headwinds given the current spot rates. These stray in dollar and pound sterling compared to the prior year.
Looking at each of our segments at digital real estate services Australian residential new buy listings for October declined 18% as we lap tougher prior year comparisons please refer to Rei for more specific outlook commentary.
At news, we expect lead and transaction volumes will be challenged in the short term and we will continue to take steps to mitigate those pressures, while balancing ongoing investments with cost discipline.
In subscription video services, we remain pleased with the performance of the streaming products and the ongoing focus of broadcast Opex and Shannon as they continue to migrate customers from cable to streaming.
Dow Jones, we remained focused on the integration of ifas and CMA advertising visibility remains short term. However, we are expecting a more challenging second quarter. We also expect the rate of investment in the second quarter to be higher than the prior he as we continued to focus on driving consumer subscription and enhancing a P IV offerings.
In book publishing supply chain and inflationary pressures continue to.
Albeit showing signs of easing we still expect headwinds from Amazon in the second quarter, although with strong customer demand, we expect any issues to be short term in nature.
News media like the first quarter, we expect incremental cost in relation to devote investments across the businesses, including top T V and other digital initiatives together with ongoing inflationary pressures, including newsprint prices.
Before we open for questions I would like to remind everyone that we will not be addressing any questions relating to the special committee and or a potential combination with Fox Corporation as Robert stated earlier with that let me hand, it over to the operations of Q&A.
We will now start the Q&A session. Please limit your questions to one.
Yes.
To ask a question, which is the race and deter Cornett Creek on the rates had 10 button at the bottom of the screen once it's open and right hedged based on media cell and Mccain with your question.
You send out an express stern nine duration and star six ton, yes. Thank you.
The first question.
Comes from Kane Hannan from Goldman Sachs. Please go ahead.
Good morning, Gunflint coming through.
Ah, yes kind of Aladdin glib.
Perfect.
For the question at this point, maybe just on the book publishing side of things.
Helpful commentary there the inter on Amazon in the border inflationary pressures just give us a sense of I suppose the margin decline in the first quarter, some 50 basis points and what you'd attribute to Amazons impact and what you would attribute Taco is inflationary sort of thing that is probably going to continue for the rest of the year.
And then just as a second sort of quick follow on.
Just talk about how you're thinking about M&A in the publishing space and whether you think Hawker would have any of the regulatory pushback as you know the Penguin random house had with the proposed acquisition.
Okay outlook clearly the supply China is a factor, but as for Amazon. It's fair to say, it's a femoral another journal, but meaningful in the first quarter. The combination of buys inventory adjustment and warehouse closures clearly credit logistically shoes, which we trust Amazon will resolve relatively soon but.
The demand for Bulks is undiminished, and we certainly have some alluring titles looming, including join a guidance.
Calling who those are.
And in the meantime, Brian Murray and his team are resolutely focused on cost control and unnecessarily improving margins as was Simon and Schuster. So clearly there is much more work ahead for the lawyers at both our companies are the legal documents must already run to many volumes themselves. Bob It is appropriate that the judge ruled that do.
Proposed merger would try to a behemoth of a decree Leviathan of Tottenham times Sherwood wheel disproportionate weight in the industry for ourselves, we'd absolutely resolutely focused on building the Harper Collins business in continuing the integration of Houghton Mifflin Harcourt.
Okay.
And time, maybe just to just to frame the Amazon impact, but the majority of the EBITDA decrease we'll see Jason antibodies that we had hoped it would be limited to Q1, but we are expecting decision impacts clean to the second quarter, but you know all things being while we expect the second half to pick backup and inflationary impact.
Have been coming down actually we are seeing slightly offset by volumes that we hopefully again expected to see.
<unk> Valley subside, a little bit in the second half.
Thank you Kane Tatyana and we'll take our next question. Please.
Next question comes from David Karnofsky from J P. Morgan.
Oh, Hi, Thank you Robert on Wall Street Journal Digital subscribers can you talk to the sub trends there for the prior two quarters I think you mentioned a tough market wants to see how you get factors like new cycle or economy, and then Dow Jones digital ads grew strongly in the quarter had four such associated for the macro or would you expect them to move.
Back to the bit demand debentures.
Uh huh.
Second part of the question was little unclear, but on digital subs.
We're up 30% for both Dow Jones, and the Wall Street Journal, a title subs were up 8% at Dow Jones for one 9 million and the.
The Ws China's 3.8 million what were saying I.
I wish.
Dow Jones generally is that we're able to take advantage of a massive audience wishes.
116 million monthly Uniques, and then gradually.
Push people up for the hierarchy of premium products that are at a premium price and clearly.
Clearly as we've taken on a more professional information content the ability to to take advantage of that opportunity is realized or secondly, we believe in vertical bundling set for example market Watson WSJ w's giant IBD IBD and barron's.
What you might call horizontal bundling wish.
Other companies indulging Andrew.
And there's no doubt that you'll see over the next six months.
The virtue of those bundles that Dow Jones has just begun marketing so we'll be able to update you in succeeding quarters, but we have no doubt that these strategies was one.
And David look I think on the advertising we didn't quite catch what the question was but we actually have been really pleased with the performance of advertising Dodge Rins have been growing advertising quarter on quarter set quite a few quarters, now which is being really placing and actually has the task.
Our expectations as to how well they've been doing I did say in my comments that we were expecting it to be a little bit more challenge come Q2, Q2 is one of the biggest advertising quarters across our market, but still pretty early days and we'll see how that pans out, but we do expect it to be a little bit more challenging in the second quarter against tougher comps.
Thank you David.
<unk> next question. Please its been great. Thanks. Your next question is from Garen Liang from acquired this <expletive> Rockville.
Hi, guys. Thanks for the auction.
Just a quick quantum as it been subscriber growth.
It's all one on Florida is just timing from you for how much was regarded as one heidrick is reagan from.
Pleasure versus potential offsetting.
Cost conscious consumers.
Maybe you don't know why that sort of thing about is that if the trend patient krish.
Okay.
We are very pleased with fees.
Sure.
Performances binge on and frankly in a tire advice.
Around one 3 million subscribers now and what we're seeing is.
Very uplift.
Lifting in the sense that.
Even though the streaming subscription cogs increased notably.
In fact up 35% our broadcast off who is actually higher so we're not seeing the fee had cannibalization.
And what it has done with Fox Tel.
It's giving us optionality, which is attribute to the toilet Patrick Siobhan Entertainment, Australia, we've secured long term rights the most watched sports and entertainment in Australia.
And I have been working relentlessly to improve the.
The customer experience and the focus not only on what the customer watches, but how they watch and that's why the churn performance has been so good.
Yes.
Thank you Gerry Rick Hough Ana will take our next question. Please.
Our next question is from Brian Han from Morningstar.
Brian .
Okay, a top down I think we'll take our next question. Please sorry, Brian .
Yes.
Brian just got on music.
Hi can you hear me.
Brian .
Robert just a quick one in digital real estate can you. Please confirm that news Corp is still investing in those.
J D might these ancillary businesses in the U S or is called cutting the main thing now for the division so all of that.
Broad very much because we see them converting becomes a bright long term future for the Rialto and that's why we are indeed investing there.
We're rightly cost conscious.
Whether it's rentals.
Whether it's the sell side as well as the buy side, we're continuing to invest in products. Because there is absolutely no doubt about the long term opportunity that digital real estate presents in the United States and Brian just to just to add to that actual core operating expenses at real tariff slapped within the core business year on.
And actually the increase that was saving costs year on year adjacent is strange I shouldn't say from investment line.
Thank you. Thank you Ryan talk afterwards, thanks, Brian talked and we will take our next question. Please.
Our next question is from Johnny Huynh from Allison partners.
Hey, I just wanted to ask about binge again, and then specifically on the AD taken you took away expectations in Austria, and then also the demand from advertisers as well.
Well, we're generally we're very pleased to see.
<unk> performance.
Bringing in advertising gives us another layer of revenue potential.
And I have no doubt that the team does it's modeling of that potential that we'll be able to update you in in coming quarters as it's unveiled to the market.
Jonathan just to add to that I think there's been a couple of questions just in relation to the pricing. We've been really pleased actually with how customers are being retained for beach and the crossroads is being portrayed.
You know it very very pleased with that and as Robert said, we know we're expecting strong performance across things with the content that would cost.
The efficiencies they join Dominic.
Okay. Thank you very much a top down and we'll take our next question. Please.
Are there questions from the line.
Great.
Thank you talked Deanna. Thank you all for participating have a great day, and we will talk to you soon take care.
Yeah.
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