Good day, and welcome to the News Corporation first quarter fiscal year 2016 earnings call. Today's conference is being recorded. The media is invited to today's call on a listen-only basis. At this time, I would like to turn the conference over to Mr. Mike Florin, Senior Vice President and Head of Investor Relations. Please go ahead, sir.

Thank you very much, operator. Hello, everyone, and welcome to News Corp's fiscal first quarter 2016 earnings call. We issued our earnings press release about an hour ago. It's now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Bedi Singh, Chief Financial Officer. We will open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corporation's Form 10-Q for the three months ended September 30, 2015 identifies risks and uncertainties that could cause actual results to differ, and these statements are qualified by the cautionary statements contained in such filings. Additionally, this call will include certain non-GAAP financial measurements, the definition of and a reconciliation of such measures can be found in our earnings release and our 10-Q filing. Finally, please note that certain financial measures used on this call such as segment EBITDA, adjusted segment EBITDA and adjusted EPS are expressed on a non-GAAP basis. The GAAP to non-GAAP reconciliation of these non-GAAP measures is included in our earnings release. With that, I'll pass it over to Robert Thomson with some opening comments.

Thank you, Mike. News Corp is on track in its transition to a more digital and increasingly global future, having integrated several recent acquisitions and built a powerful platform for sustained growth. We have focused on driving the long-term expansion of revenue and profit, and leveraging the potency of our brands, while diligently confronting costs to maximize long-term returns for all investors. During the last quarter, foreign exchange fluctuations obviously negatively affected revenue and EBITDA in our international operations, but this should not obscure the real progress made at many of our businesses. In fact, News Corp's revenues, excluding the effects of currency, grew 4% in the last quarter, underscoring the value of our shift to higher growth businesses and our prudent reinvestment strategy. We believe the global economy is still in relatively unchartered territory, with U.S. interest rate rise pending and emerging markets still subject to political and economic volatility. From a macro perspective, our core markets are growing, but not at an optimum level. We are particularly pleased with the progress at realtor.com, which is significantly ahead of schedule on key metrics. We are now by some reckoning the world's largest digital property listings company. Our majority-owned REA has just announced plans to acquire iProperty Group, the leading digital real estate operator in Southeast Asia. We also see a bright future in the U.S., where the national real estate market is still gradually returning to health, with recent increases in the volume of units sold and the potential for further expansion. The company's digital expertise and ability to harvest commissioned data has been enhanced by the addition of Unruly, Storyful and Checkout 51, all of which will have a positive impact across our businesses and around the world. We are already seeing significant new contracts and business opportunity,…

Thanks, Robert. During the first quarter, we approved a plan to dispose of the company's digital education business, and we completed the sale of Amplify's Learning and Insight businesses on September 30. Results for that segment are now reflected as discontinued operations. For comparability, this call will focus on continuing operations, excluding the impact from the digital education segment in both periods. We reported fiscal 2016 first quarter total revenues of $2 billion, down 4% from the prior-year period. As Robert noted, we were again impacted by currency headwinds, primarily the weaker Australian dollar, which declined over 20% versus the prior year and negatively impacted Q1 total reported revenues by $188 million or 8%. Excluding the impact of foreign currency fluctuations, acquisitions and divestitures, adjusted revenue declined less than 1% compared to the prior year. We reported total segment EBITDA of $165 million compared to the prior-year period of $194 million. Currency fluctuations, again, primarily the weaker Australian dollar impacted total reported segment EBITDA by $29 million or 15%. This quarter also includes $5 million of costs related to the U.K. newspaper matters, net of indemnification. Excluding these, as well as acquisitions and divestitures, our total adjusted segment EBITDA was down 7% compared to the prior year. Reported EPS from continuing operations were $0.22 versus $0.15 in the prior year. The current quarter EPS includes a tax benefit from the release of valuation allowances due to the planned exit of the digital education business, which resulted in increased expected utilizations of the NOLs that we acquired from the purchase of Move. Adjusted EPS from continuing operations were $0.05 versus $0.13 in the prior year. Now, let's turn to the individual operating segments. In News and Information Services, revenues for the quarter declined $161 million or 11% versus the prior-year period.…

[Operator Instructions] We'll take our first question from Entcho Raykovski with Deutsche Bank.

My question is around Foxtel, where obviously getting revenue growth, but there has been a significant step up in the costs. How do you think about those costs going forward? Do you view the costs now providing effectively a base or is there -- are there some one-off costs in this quarter, which you're likely cycle out of in subsequent quarters?

In the quarter obviously some of the costs are related to programming. So we had costs for the motor sports and so I think those to the extent we have sports-related costs, you'd expect them to recur. In terms of marketing costs, we're still actively marketing the new packages and I think there will be some continuing costs for that. But we should see those tapering down in the second half of the year. Obviously, with triple-play, there will be customer support and installation costs that will continue, but we should see those tapering down.

To add to Bedi's answer, obviously in sales in Q1 were up 38%. Total subs were up 10% to $2.9 million. It's a very dynamic market in Australia at the moment, as you're well aware. There is some competition, for example, from Netflix, but what you have to realize is the offering at Netflix is certainly inferior to that of Foxtel and indeed inferior to that of Netflix in the U.S.

And just to add to that, obviously, the full impact of the new subscribers that we've added hasn't yet flown through, because the additions were in the second half of last fiscal year. You should see that flowing through as well as the year goes on.

Operator, we'll take our next question, please.

And we'll take our next question from Fraser McLeish with Credit Suisse.

I've got a Foxtel related question as well. Just quickly, I think for the full-year, you said you expected Foxtel EBITDA to grow in FY '16. I'm wondering, if you're still expecting that given the first quarter? And also, it was helpful breaking out the cable and satellite growth. But I was just wondering, are you able to give us the number of Presto subscribers that are actually included in that base?

I think we still expect Foxtel to show EBITDA improvement as the year goes on. Again, it's a factor of what Robert and I both mentioned in response to the previous question, which is you'll see the effect of revenues for the new subscribers going all the way through and some tapering down of the costs. We're not actually breaking out I think the Presto numbers, but needless to say, most of the growth that we saw came from cable and satellite subscribers.

Operator, we'll take our next question, please.

We'll take our next question from Alice Bennett with CBA.

I'm sorry, I've got another Foxtel question. I just was wondering if you could give us a sense where ARPU has come through relative to the $93 you talked about in FY '15, but also just a sense of whether you're seeing any stabilization from the pricing gap, but also presumably some tiering down as Netflix penetration picks up in Australia. Just whether you're seeing those ARPU numbers start to base out or do you think there's still further downside to come?

So I think with the new pricing packages, what we're seeing is that ARPU has come down a little bit. I would say sort of mid-single digits. We haven't actually given out the actual ARPU number, but what's happening I think with that is we're seeing churn has actually improved. And in terms of spin-down, I think it's sort of on plan is the best way to put it. So we haven't seen anything significantly worrying with respect to spin-down.

Just to supplement Bedi, on the point of churn, it's down from 10.5% to 10.1%. Obviously, it's a very competitive market, but we believe we have a very competitive product.

Operator, we'll take our next question, please.

We'll take our next question from Alexia Quadrani with JPMorgan.

Hi, this is James Copeland in for Alexia. I just wanted to ask you a question about the journal and video and mobile advertising. I'm just curious, if you can provide any insight on how mobile and video are progressing and particularly given how rapidly mobile is growing at a couple of your peers. Could you say anything about adding new marketers maybe that are already advertising in other platforms that you might be bringing onto mobile for the first time?

It's a very good question. We are seeing obviously significant growth in the mobile audience and generally speaking in recent years, that growth in audience hasn't been reflected in a similar growth in mobile advertising. What we have done by acquiring companies like Unruly and Storyful is to bring real mobile video expertise into musical voice and not just at the Wall Street Journal, but across the company. And so that is enabling us to derive higher returns and set us on a track for longer-term exploitation of obviously what is going to be a commercially crucial canvas.

Operator, we'll take our next question, please.

We'll move next to Doug Arthur with Huber Research.

Just a question on HarperCollins and book publishing. You've had a number of tough comp quarters here with Divergent. How do you see the pipeline in comps going forward?

I think with Divergent, the next quarter we should see some easing of the comps, even though Divergent was still pretty big for Q2. So I think that's probably the way to look at it. Obviously, the mix of books, any quarter compared to the prior quarter, it sort of like depends on what happened. So I think it is one of those businesses where we will continue to go quarter-by-quarter. But generally we're very pleased with the way the book business is developing. I think, obviously, we'll see how the Christmas selling season pans out.

Just to be more specific, clearly we had a great hit with the American Sniper at this time last year and into the new year, but just to give you a range of figures that highlight the difficulty of comparison, which is a great challenge for the team at HarperCollins. Last year in the first quarter, Divergent generated about $25 million in revenue off of about 3.7 million units. In the just completed quarter, it was $2 million off 400,000 net units. And also don't forget about 40% of those units were e-books, which are a higher margin. So that gives you a sense of why the comps were so complicated.

Operator, we'll take our next question, please.

We'll take our next question from Justin Diddams with Citi.

Just a question on Move. Impressive revenue growth for the quarter. I was wondering if you could just elaborate a little on where that growth is coming from, whether it's sort of increased volume and usage through the platform, whether you put price increases through on the CoBroke product and how you are driving that revenue growth, that would be really useful.

Well, its two things I think to highlight. First of all, it's not only an increase in the quantity of traffic, its very high quality traffic. And that's leading to, in particular in the CoBroke area, an increase in revenue that's quite significant. I think overall, the revenue rose 33%. You might have noticed earlier this week a company that starts with the final letter of the alphabet, Zee that is, Zed elsewhere, was up 13%. And one other important component was a media advertising, which is where not only in the editorial content, but also in the approach to media advertising we saw a significant increase, that was up 60% year on year and so both of those components have made material improvement.

Operator, we'll take our next question, please.

We'll take our next question from Andrew Levy with Macquarie.

Just a question on the book segment. You mentioned that the industry trends were a weaker for e-book sales. I just wanted to get your thoughts on what might have been driving that, whether it was related to releases or you think there's some of the industry issue at play at the moment?

It is sort of hard to tell in precise detail, but I think it's obviously a mix of books will affect that. I think pricing can be a factor in that. I think there's a number of things at play, but generally, if you read the other book companies and what they have been publishing in terms of their results, I think there seems to be a general weakness in e-books.

And to add to Bedi's point, which is obviously correct, it's made particularly so in our case because of the Divergent effect and its pronounced e-book component.

Operator, we will take our next question, please.

We'll take our next question from Craig Huber with Huber Research.

Yes, hi. Curious how much thought you guys have given and your Board of Directors has given to potentially breaking up the company by either spinning off your news and information segment to a separate standalone public company or taking your entire Australian assets and spinning those off into separate Australian equity?

Craig, I think one thing you'll have noticed from the results is how the complimentary of our assets has created a powerful platform that it makes News Corp as it is far more than the sum of the parts. We couldn't have done what the team have done at Realtor without the newspaper assets. We couldn't have done what the team have done at REA without those newspaper assets. And you're seeing that compliment of entirety play out in other ways. And as we get more and more data across the businesses, whether they be the newspaper businesses, the News America Marketing or the real estate companies, we'll be able to share important demographic data. And I think that does give us a real comparative advantage. And what you're seeing at the moment in the ad market, as I mentioned in my preamble, at the moment there is a lot of tension between advertisers and agencies, and that's both in, for example, freestanding inserts area, right across the newspaper advertising, and we genuinely believe that the asset mix we have has created a platform for the future, for the company and obviously for shareholders.

Thanks, Craig. Operator, we'll take our next question, please.

We'll take our next question from Brian Han with Morningstar.

Bedi, can you confirm, did you say the earnings and cash flow benefits of divesting Amplify won't come through until fiscal '17? And how much did Amplify cost News Corp in cash burn in '15?

So in '15 the cash burn was roughly about $200 million. There will be some benefit in fiscal '16. But what I meant was that the full effect will be felt from fiscal '17 onwards.

Operator, we'll take our next question, please.

We'll take our next question from Alice Bennett with CBA.

I just had a question about data, which you're referencing quite a lot. Just wondering whether you're close to the point where data is becoming monetizable, I guess. One of your competitors in Australia has talked recently about programmatic finally turning positive, the yields for the online display revenues, because of their data and what they are doing with it. Are you at the point where you're close to monetizing it or is it more just sharing it with other parts of your business?

Alice, we're certainly monetizing it. Obviously, there is data and there's high quality and there is low grade. And you look, for example, one of the Checkout 51's benefits for the company and its efficacy is clear, is that instead of intentions or context through the uploading receipts, you're seeing buying actions. That tells you a lot about not only the purchase, but the purchaser. So for example, if somebody goes to a home improvement store and buys 15 tins of paint, some siding for the house, that person may be preparing that particular home for sale. That lead is invaluable to a realtor. And so at the same time, if that person is moving into an area or leaving an area that's what you might call a typical cashman area for a Wall Street Journal reader, it's an opportunity to attract a new subscriber. That's internally our ability to optimize that data and clearly we'll get more sophisticated, as the months progress. And we're also able to use that data for our clients, our advertisers and our partners.

Operator, we'll take our next question, please.

We'll move next to Eric Katz with Wells Fargo.

So I assume you're consolidating high property into your financials in calendar Q1, as you mentioned. Can you tell us the size? How much revenue and EBITDA does that business generate?

We will be consolidating -- the REA will be consolidating our property. And obviously since we consolidate REA, it will flow upwards into our consolidation. EBITDA from that business is sort of marginal and revenues are sort of in the $50 million range.

Thanks, Eric. Operator, we'll take our next question, please.

And we'll take our next question from Alice Bennett with CBA.

Just one more question. Just with subscription revenues around the world, it provided a bit of a buffer to your newspaper revenues, the last couple of years. Just wondering with the cover price increases that have been fairly aggressive, whether you see that kind of tapering out over the next year or so or you still see further scope for those to continue to rise?

Alice, I think I wouldn't agree with your phrase aggressive. I think we've been conscious of our different markets and the elasticity that different products have. And if you're talking about the Wall Street Journal or Times of London, that's very different to the daily telegraph. But at the same time, we believe that these are beacon brands that they have the best journalism in the world, and there remains a certain elasticity, which varies by segment.

Thanks, Alice. Operator, we'll take our next question, please.

We'll go next to Entcho Raykovski with Deutsche Bank.

Just a follow-up question around cable network programming, and obviously there was news earlier this week that the EPL contract has been lost to another provider. I just wanted to understand, how do you think now internally about a potential loss of subscribers, given that contract is gone? And do you intend to backfill perhaps that spot with either direct agreements with the clubs or other spots?

Entcho, obviously you can buy any route as long as you're prepared to pay any price. But sometimes, by our reckoning, any price is not appropriate for us or our shareholders. And as you say, there are some EPL fans in Australia, there's no doubt about that, but we're certainly not talking about prime time. The 3:00 PM kickoff in U.K. is 2:00 AM in Australia. So as you know, hard-core fans of anything in Australia are called tragics. So the sweet spot for EPL at 2:00 in the morning, our tragics are insomniacs. And the other thing you might have noticed yesterday, Bayern Munich beat Arsenal 5-1 in the Champions League, which maybe itself an indictment of the value of the Premier League.

Operator, I think we have time for one last question.

We'll take our final question from Peter Stamoulis with Evans & Partners.

I was just interested in your thoughts around this ad blocking technology and how it may impact your traditional mastheads, and in particular advertising revenues going forward, and how I suppose you mitigate those risks?

Look, it's much talked about and less seen, to be honest, in our businesses. The truth is that, for example, Unruly will give us expertise around ads and insight into the use of ads that is valuable to our clients and as well as to our products. But the role of ad blockers is much more pronounced in what you might call commodity content sites. Sites that have more noise than news and that's certainly not ours. End of Q&A

Well, thank you all for participating. And have a great day. And we'll talk to you next quarter.