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.
This time I would like to turn the conference over to Mike for 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.
You 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 coal 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, Myostatin and digital properties.
We are also acutely focused on simplifying the structure of the company.
I'd make it clear the full value.
A fundamental shift underway into content landscape.
One consequence, other than intensifying regulatory scrutiny of big digital.
He is a gradual transference of value to content creators who over the past decade have lost influence in revenue to the digital distributors with Rupert and Laughlin Murdoch's encouragement News Corps has been advocating vigorously on behalf of journalists journalism and the protection of intellectual property and that intense sometimes solar trees advocacy has begun to pay dividends for 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 news corps and its investors.
We have begun partnering with companies, such as Apple and Twitter, which recognized 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 the tenor of our talks and are vastly different to 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 rate with digital now accounting for the majority of their subscribers.
There is an emerging subscription sensibility, among consumers, which is obviously to our benefit but we're also conscious of the need to provide ever better service to those subscribers, who rightly have high expectations for their digital experience.
Dow Jones is a media business that we believe has a distinctive 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 year well above the rights to the New York times and others in the industry.
Since separation in 2013, Dow Jones consumer circulation revenues have grown more than 40% and within that category digital revenues at Wall Street Journal have expanded by almost 150%.
Advertising trends improved in Q4 for the Wall Street Journal and in July both print and digital advertising revenue were higher than a year earlier.
As we look to the future we believe the Dow Jones can attract significantly larger subscription base for 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% subscribers today.
We're also seeing increasing ability of 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 headwinds 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 aggregated on the Bloomberg terminal 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 wires. The most widely available professional newswire service in the world.
In the UK in constant currency the times of London grew print advertising revenues for the second consecutive year digital paid subscriptions at the times and Sunday times grew 19% to 304000.
While regulatory approval was received this month for the sharing of resources by the times and Sunday times clearly the chain should result in operational efficiencies, while we will be assiduous in protecting the unique identity of each of those iconic mastheads.
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, Talksport 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 pls broadcast skills at wireless are being deployed to improve the quality of the audio products elsewhere at news UK to take advantage of rapidly increasing podcast amount.
In Australia, a focus on growth paid off 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 and notably strong performance.
At the same time news dot com that value 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 and over 91 million in June .
News, Australia is also benefiting from the acceleration digital advertising, including new 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 cover price was doubled to $2 in metropolitan markets. The first increase in revenues and one reason for improved financial results at the past.
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 care.
And continued expansion of Foxtel now with a number of its subscribers increased by 36% from the prior year to 446000 at year end.
Kao, which was launched in November 2013 showed a material acceleration in subscriber additions into year end with over 330000 paying subscribers as of June 30, a doubling since last quarter.
Worth, noting is tie 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.
Our streaming base 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 among 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 aggregator of the broadest range of program.
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.
At 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 us housing market.
Emerging 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 Us and Asia.
We are in the process of a major transformation at realtor Dot com underscored by the recent acquisition of Op 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 those interactions.
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 the inevitable spending done by every family during the profoundly important process of moving higher.
Our EA group continued to significantly outperform the competition. Despite the soft listing environment in the second half of the year.
For the year ARIA extended its lead over domain 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 thrive this year with new releases and a strong backlist fueling a 6% increase in EBITDA. Despite a tough comparison with 2018, which had benefited from a onetime lucrative licensing contract for Jay.
For J.R. tokens Lord of the rings as token himself road holds well that ends better.
That is certainly true of downloadable audio books.
For which revenues rose, 40% for the year is patently a fundamental shift in listening habits underway and we expect.
Double digit growth to continue in the current year.
Brian Murray and the Harpercollins team finding new ways to make the most of our content and enhance the profile of our orders we have just announced a partnership with Sony Pictures Entertainment in Hollywood and Elizabeth Gabler enter former Fox 2000 team to develop a programming and films from the remarkable Harpercollins catalog.
We have also announced an agreement through our Harlequin imprint with Bell media in Canada to produce movies from Harlequins extensive library of more than 30000 titles.
The most successful book of the year was a standout hit from a Christian division by best selling author Rigel Hollis, whose debut in full our books go wash your face and girls of apologizing together shipped more than 5 million units during the year.
We also saw great success, with David Walliams, including Us Monster and worlds with teachers and Mark Manson had continuing success with a sequel to the settle out of not giving an exclusive.
With everything is exclusive.
With that backdrop book title I will hand, the call over to Susan for an unvarnished account of our fourth quarter and full year performance.
Thank you Robert.
Before I review the quarter's financial results I wanted to highlight Feinstein.
Fiscal year, when we've made significant progress.
Firstly, we are making notable progress in stabilizing the news and information services segments and ended our fiscal year positive nice.
At digital paid subscriber base continues to grow while we continue to focus on streamlining absolute cost base and investing in new revenue stream.
Importantly, the segment faced a high profitability improvements across our key publishing business unit.
The first time, we've seen improvements since the company separation.
We will remain focused on these areas in the coming year and we're optimistic we can win on the parent.
Secondly, the team at Foxtel has made steady progress on it over the top offerings, including the successful launch of hiring identity and furthering treatment to premium broadcast products.
Foxtel return to volume growth ending the year at the highest closing paid subscriber base from separation and now with the core platforms enhanced they are focused on creating a path to revenue and profit growth.
The performance in Apple publishing segment. This underscores the value of premium content and the advantage of the global distribution network posting record profitability, even while facing a very challenging prior year comparable.
Given the rapid rise of downloadable OTI April 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 this effort around announced partnerships the Sony Pictures Entertainment and also with Bell media in Canada, Frail Harlequin Division.
These are deals with minimal capital outlay, which have the potential to monetize content more broadly.
Our business in the digital real estate services segment make strategic acquisitions expanded the product offering and continue to capture audience share 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 style 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 Foxtel.
On an adjusted basis, which excludes the impact of the Foxtel consolidation significant currency headwinds and other options as disclosed in the press release revenues rose 1%.
Total segment EBITDA for the 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 rose 4%.
Fully 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 44 cents in the prior year.
Free cash flow available to the company's the with $213 million, which included a step up in capital expenditures related to the consolidation of Foxtel.
And now to 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%.
For the quarter 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 write off of 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 in news and information services revenues for the quarter were over $1.2 billion down approximately 5% versus the prior year.
Currency had a 40 million to level, 3% negative impact and was responsible for the majority of the decline.
Digital revenues to Dow Jones, and the newspaper markets represented 37% of combined revenue approximately 33% of the segment's revenues with digital up from 30% in the prior year.
Advertising revenues for the segment were down 8% in the quarter versus the prior year with approximately $18 million or 2% due to negative currency fluctuations.
Circulation and subscription revenues were flat versus the prior year, despite $17 million of 3% negative impact from foreign currency.
Segment EBITDA for the quarter was $108 million up 14% over the prior year and 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 remained 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 from 64% last year.
Total subscribers in the quarter for Dow Jones consumer products, which also includes bearings and financial news in the UK reached approximately $3.3 million again, posting record levels of 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 and as expected exceeded $139 million in revenues this year.
We continue to expect significant growth ahead, as we expand our product range favorable professional information business grew 2% this quarter.
Advertising revenues declined in the quarter were flat a noticeable improvement from last quarter led by an improvement in digital advertising as we had anticipated.
For the quarter digital advertising accounted for 40% of total digital advertising compared to 39% last year.
Elsewhere across our news portfolio advertising conditions with overall relatively stable with last quarter advertising revenue you destroy unusually K declined 8% and 7% respectively. Both were down only 1% in local currency compared to the prior year benefiting from higher digital advertising revenue.
Pleasingly the times in the UK, Greece pre tied to timing revenue in local currency for the seventh consecutive quarter.
On circulation at digital subscribers around the globe are growing as impressive right digital subscribers rose, 19% to 304000 at the times and the Sunday times and they also have approximately 5 million registered users, which is both vessels the 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 bundle subscribers at the Australian.
The increase in digital subscriptions alone we cover price increases at news UK and uses straight allow both markets to mitigate print volume declines and currency headwinds.
Finally at News America marketing revenues fell 6% driven by continued weakness in freestanding insert products, partially offset by in store product right cost initiatives, helping them contribute high profitability in the quarter.
Turning to the subscription video services segment.
Revenues for the quarter were $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 broadcast smart device and changes to the protocol subscriber package.
The revenue decline was partially offset by increased revenue contributions from Foxtel now and catering.
Segment EBITDA in the quarter was $85 million down 12% with the prior year.
From the fourth quarter, we have now comparing like for like as we completed the Fox Hill consolidation in the fourth quarter fiscal 2018.
Turning to the Capesize Foxtels 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 Foxtel now an inclusion of commercial subscribers at Fox Sports Australia.
Of that subscriber base, approximately $2.4 million of potential closing subscribers with low cost in commercial subscribers and the remainder consisted of Caone foxtel now subscription.
We're making steady progress on our RTT strategy risque paying subscribers at 331000 as of June 30, our pay for 120000 to sell offset or maybe eight and more than doubled since the third quarter driven by the cricket World Cup and the expansion of our distribution channel.
Including trial is the total kind of subscriber base reached approximately 382000.
Pleasingly, thus far kind of always not pulling immaterial churning foxtel broadcast customer base with an estimated 5% to foxtel disconnections ensco's launch being driven by existing customers needing to kayak.
Foxtel now also performed strongly with total paying subscribers, reaching 446000 as of June 30 up 36% from last year.
Well this is down from the May update due to the conclusion of the game of Thrones Foxtel has been focused on retention and overall the product has exceeded our expectations.
In the aggregate Foxtel has a strong and growing base of RTT subscribers, which in total reach 842000 subscribers at June 30 of which approximately 777000 were paying subscribers.
Accounting for 25% of Foxtel, social paying subscriber base and is reflective of foxtel strategy to monetize existing rights apply multiple platforms.
In the fourth quarter broadcast Chen with 14.7% versus 12.5% in the prior year reflective of a 300 basis point improvement from the third quarter.
The outcome in the fourth quarter reflects early successes from leveraging data and analytics to reduce churn to spot price increases.
In addition, the team is focused on stabilizing broker ARPU, which was more than 70 I just try in dollars in the fourth quarter.
1% versus last year.
Capital expenditures related to Foxtel were approximately 300 million us dollars for fiscal 2019, which is lower than what we had anticipated and we expect sizable declines in fiscal 2020.
Approximately 65% of the Capex with subscriber relations.
Finally, we issued Foxtel and $200 million Australian dollar shareholder loan in May at a variable interest rate of approximately 9% as we continue to work with banks on 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 losses to Amazon and the release of Magnolia table by Joe and 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 a token deal from the prior year.
Notwithstanding the fourth quarter result, Harpercollins has had a very strong year and outperformed our expectations.
Harpercollins posted higher 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 sales today.
They will also look to further capitalize on momentum and the depth of the backlist to generate longer to incremental revenues as I have done by the new deal Society 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.
Our EA group revenues were down, 6% and up 1% in local currency as high yield and increased penetration with offset by overall, 19% year over year decline in U.S listing volume during the quarter, which was notably weaker than the third quarter and full year rate of 9%, 8% declines respectively.
Please refer to our earnings release and conference call following the scope for additional detail and comment on the outlook.
These 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 utilities, a slight improvement in by lead volume and the acquisition of Citi.
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 live testing and performance based only model in over a dozen markets starting on may the first 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 rates.
During fiscal 2020 , we will continue to allocate lead flow to oxy, although we expect that in most markets, we will be offering both our existing connection cost products along with the Citi Concierge model.
We have as mentioned last quarter began to reallocate resources within the realtor dot com teams to better position and streamline the business to this year and beyond.
Auto audience, we saw an acceleration versus the third quarter growth rate average monthly unique users at realtor dot com to a record $72 million for the quarter rising 14% versus the prior year together with a noticeable pickup in engagement.
Segment, EBITDA fell 15% to $84 million similar to the third quarter right. The decline was driven by higher interest may not CG and the $5 million negative impact from currency on an adjusted basis segment EBITDA decreased 7%.
I would now like to mention a few themes for the fiscal 2020, yes.
At news and information services, while 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 circulation subscriptions revenue.
So far the advertising trends a similar to slightly better in the current quarter and we continue to remain vigilant on costs, while reinvesting in our digital offerings.
Overall, our expectation is to show further stability in the segment and it is pleasing that we finished the year with some strength.
We do not assess quarter will face a challenging comparison due to the $48 million benefit in the prior year related to news UK exit of the gaming partnership we tackle.
In subscription video services overall cost increases should be modest in fiscal 2020 absent currency fluctuations.
We will have one additional quarter of domestic cricket rights, especially approximately 20 million us dollars before wrapping 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 non cash impact of approximately $30 million to $35 million in fiscal 2020 related to a change in amortization methodology decision entertainment programming, we expect capex in foxtel to decline by approximately 20% compared to fiscal 2019, and overall expect higher 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're confident with our flight of titles, which will be headlined by new releases from retirement age I think 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, the Dutch health as well as a tie. In addition of Gerstein is the art of racing in the rain, which will hit the movie theaters. 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 eight call for a more detailed outlook.
At Realtor for fiscal 2020, we anticipate both higher revenue and higher profit contributions by further expanding the ops Citi 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 you'd like to ask a question on todays call. Please press star one on your telephone keypad.
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And we'll take our first question from Entcho Raykovski with credit Suisse. Please go ahead.
Hi, Robert oxygen.
Couple of quick questions from me first one is around cost sweeping new city incisive assurance. So any color you had thoughts thanks.
Pretty good cost performance.
Do you find that EBITDA growth and while our revenue can you talk to the extent to which that was cost reductions would be news America marketing as a percentage.
Okay.
Shake lunch, we didnt lose any anti services I'm, just interested in particularly the exchange, which ties cost reductions continued into slide 20, and then our news America marketing Youve given us a brief update.
On the show process.
Could you give us an indication of laclede tightening that you are looking at and I guess looking at Miley tried off on actual Bob.
Hi, Andrew its season here, maybe I'll take the first question and then hand over to Robert for the second question just in relation to the call by declined 7%, but down 4% on an adjusted basis. So across the division Dow Jones costs are up but we would expect that to be up given the subscriber growth and the investment that we have in the PRB business in risk and compliance.
Across the other businesses in the UK and Australia, caustic decline and within that clearly cost declined by around 12% year on year.
We are expecting to see costs continue to increase across the UK and Australia, we're being quite vocal about that over the past couple of years the team 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 say that joins invest in that business going forward, but I would say that overall, we do balance the cost reductions with investment even within the UK in Australia, because it's important that we can support that digital growth coming through in the businesses.
Thanks, Susan and show.
Obviously at this moment, a little difficult to be absolutely specific about the identity for the business.
To say that there are quite a few.
But more broadly we understand that becomes the U.S core that is complex because it's not property values and so we have begun.
The process of simplification that will be ongoing the first most tangible sign of that is the sale process in that.
That company itself has changed carriage over 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.
Im sorry.
Goldman Sachs. Please go ahead.
Good morning, guys just on the Fox to all your TC strategy I think in the past you've said you would only launching and it's time in asphalt. If you are happy with his 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 that if that exists for an it's 10 minutes followed.
And then just on the NAND business could you give us a sense of us with EBITDA margins of that business snakes, that's sort of how you're thinking about you think of any potential proceeds from that transaction.
Okay again little difficult to be specific that the fundamental principle applies that.
If we thought it was successful then we would proceed with the new product what we are seeing at Keio his success and fundamentally.
What we're seeing is a real growth in the number of the strides prepared to pay for premium programming.
And there is little more premium nonexclusive sports rights. The old story about Foxtel was that maxed out on subscribers that they were strictly limited number of US dri is prepared to pay for content and that we'll 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 right of shared among sports Jessops subscribers on broadcast that is a significant trend and an indication of the.
Success Okay.
And Ken just in relation to news America marketing, we don't disclose the margins in relation to that business.
But what it translates we do disclose the revenue answer that previously 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 proceeds.
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 and your Board's mind to potentially put news America marketing for sale now me why now for that and then also Susan can you give us a little more clarity on how we should think about the cost 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 devaluation.
The we get for one is really a remarkable collection of assets is not fully realizing the.
In the share price.
And so we have begun this process of simplification.
And.
The most obvious outcome at this stage of that is the decision to conduct this strategic review them.
And that is well underway.
I think Craig I would just also add to that that one of the things that we've been thinking about is how to allow a greater focus on musicals prime rib 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 focus on the cost side. So as we think about next year clearly the current need for fiscal 2000, and not take that the investment needs for Fox Hill.
Fairly clear about that and transparency, particularly in relation to the cricket Rod if we cost timeline 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 impacting related to the programming amortization change, which is about $30 million to $35 million that that will impact on the results outside of that we expect the cost price to be relatively constant notwithstanding the variable nature often due to subscribers.
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 the Fox recently invested in an online lending company called credible I think.
And it looks like something that perhaps new scope could also have been interested in as part of your digital digital production strategy.
So my question is has there been situations, where news corp, and folks compete for an acquisition.
And if so how do you guys decide who's going to take the first Steve and who's going to back off.
So Brian we look after news going I would say about that Fox acquisition is that clearly.
Fox News Fox business news.
Great proselytize 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 have separate companies and.
We ourselves have always reviewing how portfolio.
Oh, sorry.
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.