Q4 2019 Earnings Call
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Good day and welcome to the news Corp's fourth quarter and full fiscal year 2019 conference call.
Today's conference is being recorded.
Media is invited on a listen only basis at this time I would like to turn the conference over to Mike's point. Please go ahead Sir.
Thank you very much Korea, Hello, everyone and welcome to news Corp's fiscal fourth quarter 2019 earnings call. We used to our earnings press released about an hour ago. It's now posted on our website at news Corp. Dot com on the call today are Robert Thompson, Chief Executive and Susan <unk> Chief Financial Officer.
We all know what 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 sad 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 definite 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.
Thanks, Mike.
New school completed fiscal year 2019 in a strong position with revenues, increasing 12% and profitability rising 16% against the prior year.
Reflecting not only the consolidation of Foxtel, but also the continued strength and development of core segments of the company, including book publishing and digital real estate services and substantial progress in their digital transformation, No news and information services businesses.
The concerted focus on our primary revenue drivers, including the creation and distribution of premium content was reflected in audience growth across news corps mile States and digital properties.
We are also acutely focused on simplifying the structure of the company and making clear the full value of the some of our products.
To that end, we recently announced a strategic review of news America marketing, including a potential sale of the business.
We have received material interest and the process is progressing rather well.
There is clearly a fundamental shift underway in the content landscape.
And one consequence, other than intensifying regulatory scrutiny of big digital.
He's a gradual transference of value to content creators who over the past decade have lost influence in revenue to the digital distributors.
With Rupert unlocking redox encouragement.
News Corp has been advocating vigorously on behalf of journalists journalism and the protection of intellectual property and that intense sometimes solo trees advocacy has begun to pay dividends the journalism and importantly for our shareholders.
We are still at a relatively early stage of this tectonic transformation.
But they will surely be an ongoing transfer value creators in coming years, which should be a great benefit to new school and its investors.
We have begun partnering with companies, such as Apple and Twitch, which recognize the value of our content.
And discussions are underway with other digital companies. So I am not at Liberty at this moment to provide more detail.
What I can say is that the terms of trade and Atlanta about talks I know bosley different even a year ago.
In fiscal 2019, the news and information services segment posted higher profitability, which was spurred by the rapid rise of digital paid subscribers.
The Wall Street Journal, the times, and Sunday Times, and the Australian all grew subscriber volumes at a healthy right with digital now accounting for the majority of their subscribers.
There is an emerging subscriptions sensibility, among consumers, which is obviously try benefit but we're also conscious of the need to provide better service to their subscribers rightly have high expectations for their digital experience.
Dow Jones is a media business that we believe has a distinct his ability to prosper in the digital age the Wall Street Journal recorded 14% growth in digital only paid subscribers, who now account for over 69% of the total subscriber base of 2.6 million.
Circulation revenue trends at Dow Jones remained robust rising 7% for the yeah, well about the rights to the New York times and others in the industry.
Since separation in 2013, yeah, Johns consumer circulation revenues have grown more than 40% and we do not tied to great digital revenues at the Wall Street Journal had expanded by almost 150%.
[laughter] advertising trends improved in Q4 for the Wall Street Journal I didn't July both print and digital advertising revenues were higher than a year earlier.
As we look to the future, we believe that Dow Jones could attract significantly larger subscription base five directions subscriptions and through content partnerships.
We have particular optimism about the international potential of Dow Jones, given the relatively low non U.S. share 12% of subscribers. Today. We are also seeing increasing ability the Dow Jones team.
Deploying customized artificial intelligence to sell specialist financial news and data products to professional and wealthy individual subscribers.
The Dow Jones professional information business posted revenue growth for the second consecutive year. After a period of transition overcoming currency had an important driver of that growth has been the risk and compliance business, which grew 24% for the full fiscal year to exceed $130 million of revenues at attractive margins.
Impressively that business has more than quadrupled in size since the separation six years ago.
Obviously companies around the world are focused on maximizing compliance and minimizing risk. So we are confident that they will be continuing growth in that sector.
In addition, Dow Jones World Class News coverage and analysis is now aggregate it doesn't mean that.
Significantly extending the reach and impact of Dow Jones trusted high quality journalism, and analysis and enabling us to inform how large a total audience over the past fiscal year, along with other new partnership arrangements Dow Jones Newswires is now available on more than 300000 additional terminals.
These partnerships make how news was the most widely available professional news, while I said this in the world.
In the UK in constant currency the times of London group print advertising revenues for the second consecutive year.
Digital paid subscriptions at the times and Sunday Times grew 19% to 304000, well regulatory approval was received this month for the sharing of resources by the times and Sunday times.
Clearly the Chinese should result in operational efficiencies, while we will be a situation in protecting the unique identity of each of those iconic must it.
Wireless group posted its highest ratings ever in the April to June period.
Chris Evans, the legendary radio broadcaster, who joined wireless groups Virgin Radio last year reached 1.1 million listeners a week across the UK during that period in fact, Virgin radio continues to be the fastest growing station in the UK.
Both in reach and listening hours.
Meanwhile, talk sport, so record audience figures with 3.3 million weekly listeners across the network in the quarter.
Under Rebecca Brooks expert leadership, we are ensuring that the peerless bull calf skills at wireless are being deployed to improve the quality of the audio products elsewhere at news UK to take advantage of rapidly increasing part cost them up.
In Australia, a focus on growth title with improvement in profitability for the year driven in part by an increase in digital subscriptions, which now exceed 517000 up 24% year on year with the Australian notably strong performance.
At the same time news dot com that I you has remained the number one website for 20 consecutive months well ahead of its rivals with its monthly unique visitor number topping 10 million and total visitors.
91 million in June .
News, Australia is also benefiting from the acceleration in digital advertising, including the expansion use extend the small to medium business solution and from its cost reduction efforts.
We are confident that Michael Miller and his talented team are well positioned to extend that operational success into fiscal 2020 .
At the New York post the copper price was doubled the $2 in metropolitan markets. The first increase in seven years and one reason for improved financial results I suppose.
And the post digital network continues to be strong with audience numbers, averaging more than 101 million unique users per month in the quarter. According to Google analytics.
In the subscription video services segment, the combination of Foxtel and Fox Sports was completed in April 2018, and throughout fiscal 2019, the new business has been focused on delivering premium content and experiences to customers and rapidly expanding our streaming services, which have grown markedly over the past year.
Foxtel is underpinned by a large and loyal broadcast subscriber base and unique content across sports entertainment documentaries and news.
As of the end of the fiscal year Foxtels total paid subscribers grew to over 3.1 million led by the success of our new sports streaming product chaos.
And continued expansion of Foxtel now with a number of subscribers increased by 36% from the prior year to 446000 at year end.
Okay, which was launched in November 20, Jain showed a material acceleration in subscriber additions into year end, we have a 330000 paying subscribers as of June 30, a doubling since last quarter.
Worth, noting is high as high levels of audience engagement with 90% of script subscribers using it each week watching an average of 8.5 hours of sports content across an average of six different sports.
In total.
How streaming buys in Australia has nearly doubled since calendar year end to approximately 777000.
It is notable that the growth in Cairo subscribers between the third and fourth quarter has actually been accompanied by a decline in average churn amongst sports tier subscribers to foxtel broadcast over the same period.
We announced in July the integration of Netflix into Foxtels, our Q3, and Q4 set top boxes, which along with the new user interface creates a unified content discovery experience for our customers and strengthens our position in the market as the preeminent creator and aggregated to have the broadest range of programs.
At the same time, the consolidation of Foxtel and Fox Sports has obviously provide an opportunity to review our cost base without undermining the quality of service full program.
Our digital real estate services, despite housing market headwinds, both Ari and realtor dot com strengthen their competitive position by continuing to innovate and expand audience.
Signs of improvement in the U.S. housing market imaging with realtor dot com traffic at record levels interest rates declining by lead volumes on the rise and pending home sales rising 2.8% in June .
Last November Tracy Fellows was promoted to president of global digital real estate underscoring, our company's increasing commitment to the sector.
Which has been an engine of growth since we separated in 2013 in fact over that period segment revenues have tripled through a combination of rapid growth at ARIA in Australia and acquisitions in the U.S. and Asia.
We are in the process of a major transformation at realtor Dot com underscored by the recent acquisition of up city and guided by our goal of providing consumers with a superior home buying and selling experience.
Well that acquisition and the migration towards a performance based model naturally had an impact on revenues and investment last year. It represents a commitment to future growth by increasing the quality of connections between consumers and real estate professionals and heightening our potential to maximize the value of doesn't directions.
We believe our focus on quality connections also increases our ability to generate additional revenue across the home buying and selling experience.
For mortgage origination to be an evitable spending done by every family during the profoundly important process of moving huh.
Oh, sorry, I group continued to significantly outperform the competition. Despite the self listing environment in the second half of the year.
For the Oh, sorry, I extended its lead as the denied generating nearly three times as many total visits.
The company is continuing to create products that provide genuine value for ambitious agents.
Our federal election in May in Australia, obviously contributed to economic uncertainty, but the political situation has clearly stabilized and the government is taking measures that should stimulate the housing market.
We also made good progress in Asia through our property with healthy revenue growth, despite fluctuating economic and political conditions.
In book publishing Harpercollins stride this year with new releases and a strong backlist fueling a 6% increase in EBITDA. Despite a tough comparison 20 high teens, which had benefited from a onetime lucrative licensing contract so Jay I [noise].
So Jay.
Tokens Lord of the rings as token himself right goals well that ends better.
That is certainly true of downloadable audio books.
For which revenues rose 40% for the year.
It is predominantly a fundamental shift in listening habits underway and we expect.
Double digit growth to continue in the current year.
Ryan Murray and the Harpercollins team finding new ways to make the most about content and enhance the profile of our was we have just announced a partnership with Sony Pictures Entertainment in Hollywood and Elizabeth guidelines and to form a Fox 2000 team to develop programming and films from the remarkable Harpercollins catalog.
We have also announced an agreement through Harlequin imprint with Bell media in Canada to produce movies from Harlequins extensive library of more than 30000 cartons.
The most successful book of the year was a standout hit from a Christian division by best selling author Rigel Whos Who's died due in follow up books go wash your face and girls couple apologizing together shipped more than 5 million units during the year.
We also saw great success, with David Walliams, including Osman stuff and worlds with teachers and mock Manson had continuing success with the sequel to the south lot of not giving an exclusive.
With everything is expensive.
With that I will draw as book title I will hand, the call over to Susan for an unvarnished account of that fourth quarter and Trulia person.
Thank you Robert.
Before I review, the XI and quarterly financial results I wanted to highlight Fyfifteen.
Basically we have made significant progress.
Firstly, we are making notable progress in stabilizing the news and information services segment and ended our fiscal year, which is nice.
At digital paid subscriber base continues to grow as well we continue to focus on streamlining our cost base and investing in new revenue streams.
Importantly, the segment posted high profitability this year with improvements across our key news publishing business unit.
The first time, we've seen improvement seems the company separation.
We will remain focused on these areas in the coming here and we're optimistic we can build on the parent east Texas.
Secondly, the team at Foxtel has made steady progress on its over the top offerings, including the successful launch of Coyote November and further improvements to its premium brewed coffee products.
Oh, no return to volume growth ending the year at the highest closing paid subscriber base and separation and now with the coal platforms enhance they are focused on creating a path to revenue and profit growth.
The performance in our publishing segment the XI underscores the value of premium content and the advantage of a global distribution network posting record profitability, even while facing a very challenging prior year comparable.
Given the rapid rise is downloadable books, an explosion in demand for premium content globally. We continue to explore ways at Harpercollins consider leveraging highly valued content into other media.
As Robert mentioned recent examples of these efforts around announced partnerships with Sony Pictures Entertainment at all so we don't need here in Canada Real Harlequin Division.
These are deals with minimal capital outlay, which have the potential to monetize content more broadly.
Our business is in the digital real estate services segment made strategic acquisitions expanded the product offering and continue to capture audience shares amid a challenging global housing market.
We feel positive about our pace of innovation and investment I believe the segment is well positioned going into fiscal 2020.
And finally, we continue to actively look at our portfolio in June we announced the news America marketing is undergoing a strategic review, including actively exploring a sale and that process is ongoing.
With that I would now like to discuss our financial results.
For the full year fiscal 2019 total revenues were $10.1 billion, a 12% increase compared to the prior year.
Reported results for fiscal 2019 include the consolidation of folks so.
On an adjusted basis, which excludes the impact of the folks so consolidation significant currency headwinds and all the options as disclosed in the press release revenues rose 1%.
Total segment EBITDA for the year was $1.24 billion compared to 1.1 billion in the prior year, a 16% increase over the prior year period, adjusted total segment EBITDA for the right focus and.
We diluted earnings per share were 26 cents compared to a loss of $2 60 in the prior year, primarily driven by the absence of the non cash impairment charges and write down of 1.2 billion recognized in fiscal 2018.
Adjusted earnings per share for the year were 46 cents. This is 44 cents in the prior year.
Free cash flow available to the company's biggie was $213 million, which included a step up in capital expenditures related to the consolidation of folks so.
And now for the quarterly financial details, we reported fiscal 2019 fourth quarter total revenues of approximately $2.5 billion down 8% versus the prior year due in part to the 105 million dollar impact from continued currency headwinds adjusted revenues declined 5%.
Total segment EBITDA for the quarter was $269 million compared to 314 million in the prior year down 14%.
Adjusted segment EBITDA declined 8%.
Well of course, our loss per share was nine cents compared to a loss of 64 cents a year ago with improvement mainly due to the absence of the rational for the Fox Sports, Australia Channel distribution agreement last year.
Adjusted earnings per share was seven cents compared to eight cents in the prior year.
Turning now to the individual operating segments, the news and information services revenues for the quarter were $1.2 billion down approximately 5% versus the prior year.
Currency had a $40 million or 3% negative impact and was responsible for the majority of the decline.
Digital revenues to Dow Jones, and the newspaper them off to represented 37% of combined revenues approximately 33% of the segment's revenues with digital up from 30 to sit in the prior year.
I just housing revenues for the segment were down 8% in the course of this is that Friday, with approximately $18 million or 2% due to negative currency fluctuations.
Circulation and subscription revenues were flat versus the prior year, despite a $17 million or 3% negative impact from foreign currency.
Segment EBITDA for the quarter was $108 million up 14% over the prior year on a very strong improvements in the last two quarters, primarily driven by news America marketing, but also benefiting from positive contributions from Dow Jones and news UK.
I will now talk through some segment highlights.
At Dow Jones consumer circulation revenues in the fourth quarter remains robust growing 7% for the fourth consecutive quarter benefiting from 14% growth in digital only paid subscribers at the Wall Street journal to over 1.8 million as well as subscription price increases digital paid subscribers accounted for 69% of total subscribers at the Wall Street Journal, which is up 64% last year.
Total subscribers in the quarter for Dow Jones consumer products, which also includes borrowings and financial news in the UK reached approximately 3.3 million again posting record levels.
Oh that digital only subscribers rose, 20% versus the prior year to 2.2 million subscribers.
Over the same period, Darren expanded its total subscriber base to 579000 or 16% year over year increase.
Within the professional information business risk and compliance grew 23% in the quarter compared to the prior year as expected exceeded $139 million in revenues this year.
We continue to expect significant growth ahead, as we expand our product range overall professional information business grew 2% this quarter.
Advertising revenues at Dow Jones in the quarter were flat a notable improvement from law School Shaw led by an improvement in digital advertising as we had anticipated.
Total quarter digital advertising accounted for 40% of total Dow Jones advertising compared to 59% last year.
Oh for costs on these portfolios advertising conditions overall relatively stable, we last quarter advertising revenue use at news, Australia, and you should pay declined 8% and 7% respectively. Yet both were down only 1% in local currency compared to the prior year benefiting from higher digital advertising revenues.
Pleasingly the times in the UK group pre tied to tightening revenues in local currency for the seventh consecutive quarter.
On circulation at digital subscribers around the globe, a growing as impressive right digital subscribers rose, 19% to 304000 at the times and the Sunday Times and I also have approximately 5 million registered users, which is both the school system subscriber acquisition and an advertising opportunity as we continue to leverage our increasing audience scale.
I'd use a stray a paid digital subscribers rose over 24% year over year to more than 517000, which includes 146000 digital of bundles is fraud. This would be a strain.
The increase in digital subscriptions, along we cover price increases at news UK and uses stripe allowed both markets to mitigate print volume declines and currency headwinds.
Finally at News America marketing revenues fell 6% driven by continued weakness in freestanding said products, partially offset by in store product cost initiatives helped them contribute high profitability in the quarter.
Turning to the subscription video services segment.
Revenues for the quarter was $536 million down 12% versus $610 million, a year ago of which $44 million or seven cents was due to the negative impact from foreign currency.
Broadcast revenue trends were relatively similar to the prior quarter with the revenue decline driven by lower food cost and smart device and changes to the food cost as far the package.
The revenue decline was partially offset by increased revenue contributions from Foxtel now entirely.
Segment EBITDA in the quarter was $85 million down 12% over the prior year.
From the fourth quarter, we have now comparing like for like as we completed the folk so consolidation in the fourth quarter fiscal 2018.
Turning to the <unk> Fox told closing paid subscriber base rose to 3.1 million as of June this year with volume growing 12% versus the prior year.
Growth was driven by higher strong adoption of folks tell now an inclusion of conventional subscribers at Fox Sports Australia.
Well that subscriber base approximately 2.4 million of the total closing subscribers with well cost in commercial subscribers and the remainder consisted of Caone folks don't know subscription.
We're making steady progress on our T.T. strategy, we carry paying subscribers at 331000 as of June Sushi I play for hundred 20, thousands and sell off that Oh, My <unk> and will be doubled since the third quarter driven by the cricket World Cup and the expansion about distribution channel.
Including trial is the total kind of subscriber base reached approximately 382000.
Pleasingly fall kind of always not posing a material change in the folks help would cost customer base with an estimated five to Santa Foxtel Disconnections its codes launch being driven by existing customers needing to kind of.
Okay. So now also performed strongly with social paying subscribers, reaching 446000 as of June so she up 36% from last year.
Well this is down from the my I don't think due to the conclusion of the game of Thrones Foxtel has been focused on retention and overall the product has exceeded our expectation.
In the aggregate total has a strong and growing bison RTT subscribers, which in total reach 842000 subscribers at June sushi of which approximately 777000 were paying subscribers accounting for 25% of folks tell social paying subscriber base.
That is reflective of foxtel strategy to monetize existing wrought by multiple platforms.
In the fourth quarter Broadcom treated with 14.7%. This is 12.5% in the prior year reflective of a 300 basis point improvement from the third quarter.
The outcome in the fourth quarter reflects the early successes from leveraging data and analytics to reduce churn the spot price increases.
In addition, the team is focused on stabilizing Broadcom ARPU, which was more than 70, I just try and told him a fourth quarter down 1% versus last year.
Capital expenditures related to folks tell were approximately 300 million U.S. dollars for fiscal 2019, which is lower than what we had anticipated and we expect sizable decline in fiscal 2020, approximately 65% of the topics with subscriber relation.
Finally, we issued foxtel and $200 million Australian dollars shareholder voting night at a variable interest rate of approximately 9% as we continue to work with bank refinancing upcoming maturities.
Apple publishing as expected we faced an unusually strong prior year comparison with the prior year, including a onetime revenue contribution of $28 million for the token sub license to Amazon and the releases Magnolia type by John again.
Revenues for the quarter decreased 14% to $419 million due to the fact as I just noted as well as approximately $18 million of negative impact from the new revenue recognition standard.
Segment, EBITDA fell to $44 million from 72 million.
With the biggest factor impacting profitability being the absence of the token deal from the prior year.
Notwithstanding the fourth quarter result, Harpercollins has had a very strongly outperformed our expectation.
Harpercollins twice as high digital revenues for the quarter and the fiscal year led by the continued expansion of downloadable audio which accounts for approximately one third of digital so today.
They were also able to send to capitalize on momentum and the debts that they've got close to generate moca to incremental revenues as I have done by the new deals, we signed eight and Bell media.
At the digital real estate services segment revenues were down 5% to $283 million, primarily related to currency headwind of $13 million.
On an adjusted basis revenues were flat.
Ari I group revenues were down, 6% and up 1% in local currency as high yield and increased its penetration was offset by an overall, 19% year over year decline in new listing volume during the quarter, which was noticeably weaker than the third quarter and full year right of 9%, 8% declines respectively.
Please refer to our earnings release Ann Inc. Conference call. Following this call for additional detail and comment on the outlook.
[noise] move revenues rose, 3% to $123 million versus the prior year with real estate revenues growing 8%.
The increase in real estate revenues, which represented 77% of total revenues reflect higher you totally a slight improvement in by lead volume and the acquisition of all <unk>.
Well lead volumes remain subdued the business did see an improvement in run rates in June which should build momentum for this coming fiscal year.
As I mentioned last quarter, we began life testing of performance based only model in over a dozen markets starting on may the supposed to analyze the impact and scalability of the platform.
Early results have been promising with improvements in engagement and making rights, which we expect will drive higher conversion right.
During fiscal 2020 , we will continue to allocate lead flows to ups <unk>, although we expect that in most markets, we will be offering burst that existing connection.
Along with the Citi Concierge model.
We have as mentioned last quarter has begun to reallocate resources within the realtor dot com teams to better position and streamline the business this year and beyond.
Audience, we saw an acceleration versus the third quarter gross writing average monthly unique users it real to Dot coms were a record 72 million for the quarter rising 14% versus the prior year together with a notable pickup in engagement.
Segment, EBITDA fell 15% to $84 million similar to the third quarter right. The decline was driven by higher interest me don't see she and the $5 million negative impact from currency.
On an adjusted basis segment EBITDA decreased 7%.
Oh, no not to mention a few themes for the fiscal 2020 yeah.
At news and information services, well advertising visibility remains limited the revenue mix is becoming less depended on print and we are encouraged by the pace of global uptake of paid digital subscribers.
In fact, excluding them the majority of the segment's revenues would be situational subscription driven.
First of all the advertising trends a similar to slightly better in the current quarter and we continue to remain vigilant on costs, while reinvesting digital offerings.
Overall, our expectation is to show the stability in the segment and it is pleasing that we finished the year with some strength.
We do not assess called who faced a challenging comparison due to the $48 million benefit in the prior year relationship news UK exit the guy in partnership with technical.
In subscription video services overall cost increases should be modest during fiscal 2020 absent currency fluctuations.
We will have one additional quarter of domestic cricket rights, especially approximately 20 million U.S. stores before locking the rise and some additional RTT expenses as we drive further penetration.
This will be in conjunction with our continued efforts to seek cost efficiencies. We also expect a noncash impact of approximately $50 million to $55 million seasonal 2020 related to a change in amortization methodology decision entertainment programming.
We expect Capex in Fox told to decline by approximately 20% compared to fiscal 2019, and overall expect high cash generation from the business.
In book publishing, we will face some tougher comparisons for the fiscal year given the outperformance in fiscal 2019. However, we are confident that flashes hospitals.
Which will be headlined by new releases from Raymond Hi, Jason Daniel Silva and David Wells in the UK among others, along with expected continued growth in downloadable audio books fiscal first quarter releases include Daniel Silvas, the newco and patches adopt shelf as well as high in addition of Gerstein see off of racing in the right, which will hit the maybe teaches this weekend.
At digital real estate services, despite a challenging listings market in Australia, Ari I should benefit from higher penetration and higher pricing.
Please refer to our high school for a more detailed outlook.
At Real Trophy school, 2020 , we anticipated higher revenue and higher profit contribution by further expanding New York City Concierge model returning the non listing based advertising back to growth and leveraging the recent cost initiatives with that let me hand, it over to the operations for Q.
Thank you very much if he'd like to ask a question on todays call. Please press star one on your telephone keypad.
If you're listening today using a speakerphone.
Hi, Robert talk Susan.
A couple of brief questions for me first one is around cost sweeping new signings by services. So in the quarter you had seemed like you had pretty good cost performance.
Given that EBITDA growth on lower revenues can you talk to the extent to which that was cost reductions with the news America marketing as opposed to the other.
Segments, We think news and Inphi services, and I'm, just interested particularly the extent to which ties cost reductions can continue into a fly 20, and then a news America marketing Youve given us a brief update on the sale process could you give us an indication of laclede timing that you're looking at and are you looking at 90 tried or financial bus.
Hi, I enjoy season here, maybe I'll take the first question and then hand over to Robert So the second question just in relation to the comp base declined 7%, but down four and on an adjusted basis. So across the division now joins costs are up so we would expect that to be up given the subscriber growth in the business that we have in the PRB business.
Across the other businesses in the UK and strike of the decline and within them clearly cost declined by around 12% year on year, we are expecting to see costs continue to increase across the cadence right. Now we have been quite vocal about that over the past couple of years. The teams across the UK, Australia is very focused on cost reduction and continue to look at ways that they can innovation drive cost, particularly out of the back office and some of the distribution chain and we would also expect to continue to think that join existing that business going forward, but I would say that overall, we do balance the cost reductions with investment even we didnt you kind of strange because it's important that we can support that.
Digital growth coming through in that business.
Thanks isn't it shows that but obviously that this man, it's a little difficult to be absolutely specific about the identity of the bid is.
So there are quite a few but more broadly we understand that becomes the U.S core that is complex.
It's not probably values and so we have begun.
The process of simplification that would be on the first most tangible sign of that is this out price as a net.
That company itself has changed character of the past few years and become more valuable because of its in store and digital growth.
And a little less relevant to news corps core businesses. So it made sense to that strategic review under his material interest in the company.
Thank you and show Karena, we'll take our next question. Please.
Thank you well next year from Mccain Henan with global.
Sorry.
Goldman Sachs. Please go ahead.
Good morning, guys just on the Fox till you TJ strategy I think in the past you've said you would only launching and it's 10 minutes followed if you are happy with categories performance I've always just given that growth you've reported in the quarter I mean could you give us a bit of an update around your plans if the if that exists for in its time in asphalt.
And then just on the NAND business could you give us a sense of I suppose the EBITDA margins that business makes that's always how you're thinking about you think that any potential proceeds from that transaction.
Okay.
Again, a little difficult to be specific but the fundamental principle applies that.
If we thought Kao is successful then we would proceed with the new product what we are seeing it kao his success and fundamentally.
What we're seeing is a real growth in the number of this drives prepared to pay for premium programming.
And there is little more premium and exclusive sports rights. The old story about Foxtel was that maxed out on subscribers that they were strictly limited number of us drives prepared to pay for content and that we'd hit that limit.
Frankly, that's clearly not the case and the doubling of Coyote subscribers has actually been accompanied by a fall during the same period by the rate of churn among sports Jessops subscribers on broadcast that is a significant trend and an indication of the success of care.
And Ken just in relation to news America marketing, we don't disclose the margins in relation to that business, but what I can say, we did slightly revenue into that obviously in the release.
At this stage, we are obviously exploring the options as Robert said in relation to the strategic review and that does include exploring the sale, but we're not going to comment further until that process has been completed as to what we might do with the cash pricing.
Thank you Ken Karena, we'll take our next question. Please.
Thank you we'll hear next from Craig Huber with Hover Research partners. Please go ahead.
Yes, hi, thank you.
I guess two quick questions rubber Susan what's changed in your mind in your Board's mind.
Potentially put news America marketing up for sale now I mean, why now for that.
And then also Susan can you give us a little more clarity on how we should think about the costs for Fox Hill for fiscal 2020 above and beyond what you've already said thank you.
Craig as I said, a little earlier.
We understand that the company is complex.
The.
The valuation.
The we get for one is really a remarkable collection of assets is not fully realizing that.
In the share price.
And so we have begun this process of simplification.
And yes.
The most obvious outcome at this stage if that is the decision to conduct.
This strategic review of Nam.
And that is well underway.
I think Craig I, just also add to that that one of the things that we've been thinking about how to allow a greater focus on musicals primary pillars, including the creation and distribution of premium content and the digital real estate segments.
So just in addition to the comments that Robert said just in relation to your second question in relation to total cost base. So as we think about next year clearly the current year.
Fiscal 2000, and not take that the investment need for Fox, so fairly clear about that and transparency, particularly in relation to the cricket Rod if we cost I'm looking forward to next financial year.
We will expect to have one additional quarter of cricket Rod So about 20 million us dollars.
We will no doubt have some continued investment in RTT as we scale those products and depending on the marketing activities around that.
But more importantly, as I mentioned in my comments, we will have this non cash impact related to the programming amortization change, which is about $30 million to $35 million. So that will impact on the results outside of that we expect the cost price to be relatively constant notwithstanding the variable nature of it.
You just described.
Thank you Craig Karena, we'll take our next question. Please.
Thank you will next year from Brian Han with Morningstar. Please go ahead.
Oh, Hi, Robert I have one question for you.
I noticed that folks recently invested in an online lending company called critical I think.
And it looks like something that perhaps new scope could also have been interested in as part of your digital digitalization strategy.
So my question is has there been situations, where new scope and folks compete for an acquisition.
And if so how do you guys decide who's going to take this is Steve and who's going to back off.
But Brian we look after news going I would say about that talks acquisition is that clearly.
Fox News Fox business news.
Great proselytize as of products.
And that particular company has a very broad range of financial products I am to consumers. So I wouldn't be surprised at all that it was a fox acquisition.
But we are separate companies and we ourselves have always reviewing our portfolio.
Oh, sorry <unk>.
Any more questions Rabid star one if youd like to ask a question on today's call, we'll pause for just a brief moment.
And it appears we have no further questions at this time I'd like to turn the call back over to Mr. Florin for any additional or closing remarks.
Great. Thank you Kareena and thank you for all participating we look forward to talking to you soon have a great rest of the day.
Take care.
Once again that does conclude today's conference. Thank you for your participation you may now disconnect your phone lines.