Good day, and welcome to the News Corp. Third Quarter Fiscal 2019 Conference Call. Today’s conference is being recorded. Media will be on a listen-only basis. At this time, I would like to turn the conference over to Mike Florin. Please go ahead, sir.

Thank you very much, Todd. Hello, everyone, and welcome to News Corp’s fiscal third quarter of 2019 earnings call. We issued our earnings press release about an hour ago, and it’s now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We’ll open with some prepared remarks, and then we’ll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp’s business and strategy. Actual results could differ materially from what is said. News Corp’s Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial measurements such as total segment EBITDA, adjusted segment EBITDA and adjusted EPS. The definitions and GAAP to non-GAAP reconciliations of such measures can be found in our earnings release. With that, I’ll pass it over to Robert Thomson for some opening comments.

Thanks, Mike. News Corp reap rewards from our digital strategy this quarter, underscored by a robust rise in digital subscriptions across our media properties, a sharp increase in digital audio book sales and continued expansion at our digital real estate businesses, despite volatile conditions in property markets. In the third quarter, the company saw 17% revenue growth to nearly $2.5 billion reported net income of $23 million versus $1.1 billion net loss in the prior year and there was a 36% increase in total segment EBITDA. These results reflect the consolidation of Foxtel and, among other things, another distinguished performance by Harper Collins. For the nine months to the end of March, our revenues were 20% higher and profitability was 29% higher. Turning first to the News and Information Services segment, where Dow Jones continues to expand its national and global digital reach. We have recently entered into a partnership with Apple, which is at an early stage. But the initial signs are encouraging, but in terms of reaching new audiences and the strength of engagement with The Wall Street Journal in the new app. The journal is the most trusted masthead in America and that value can be seen in its results this quarter, with paid digital-only subscribers of the journal growing to nearly $1.8 million, reflecting 19% growth. In total, 68% of subscribers are now digital-only. Equally as significant, in the last quarter, about 55% of circulation revenues of Dow Jones were digital, and we believe there is undoubted potential for future growth. In addition to the journal, other noteworthy Dow Jones properties include Barron’s and MarketWatch. At MarketWatch, audience expanded 13% in the first nine months to approximately $30 million average monthly unique users and revenue rose 13%. Barron’s subscribers grew over 20% in the quarter compared…

Thank you, Robert. Turning to the financials. Fiscal 2019 third quarter revenues were nearly $2.5 billion, up 17% versus the prior year and total segment EBITDA was $247 million, up 36% versus the prior year. Results reflect the impact of the consolidation of Foxtel. On an adjusted basis, which excludes the impact of the Foxtel consolidation, currency fluctuations and the other items disclosed in our release, revenues rose 2% and EBITDA decreased 4%. For the quarter, earnings per share were $0.02, as compared to a loss of $1.94 in the prior year, which included a non-cash write-down related to Foxtel, as well as non-cash impairment charges at News America Marketing and FOX SPORTS Australia. Adjusted earnings per share were $0.04 in the quarter versus $0.06 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 5% versus the prior year. Currency had a $52 million, or 4% negative impact and was responsible for most of the decline. Approximately 31% of the segment’s revenues were digital, up from 29% in the prior year. Advertising revenues for the segment accounted to 48% of segment revenues and were down 9% versus the prior year, with approximately $23 million, or 4% due to negative currency fluctuations. Circulation and subscription revenues, which accounted for 44% of segment revenues were relatively flat versus the prior year, this despite foreign currency negatively impacting these revenues by $22 million, or 4%. Within the segment, revenues at Dow Jones rose 1%, News UK and News America Marketing declined 8% News Australia declined 7%. I will now talk through some segment highlights. At Dow Jones, 73% of revenues are reoccurring and subscription-based, relating to either consumer products, primarily for The Wall Street Journal and Barron’s…

Thank you. [Operator Instructions] We’ll take our first question from Alexia Quadrani of JPMorgan.

Thank you very much. I was just going to ask you about your opportunity you see with Apple News. I know that that Journal has agreed to have a partnership with them, The Wall Street Journal. I’m curious about how you envision this relationship to go? And do you have maybe anymore plans to funnel more subscribers to The Wall Street Journal?

Well, the first two statistics to bear in mind is that, there are 189 million iPhones in – used in the U.S. and 1.4 billion iPhones active globally. So that’s quite a broad deep and interesting user base. The Apple deal is important. We are proud to work with companies that value journalism and are popularizing a subscription mechanic. There’s just no doubt that we are reaching a far larger audience with Apple, readers who may have had preconceptions about The Wall Street Journal, and imagine that it was just the world’s best business newspaper. Well, it’s much more than that. It is the most trusted masthead in America. Its coverage of politics is by far the best in the business and its lifestyle and sports coverage is peerless. There is no better wittiest sportswriter than Jason Gay, and I just hope my compliments don’t go to his [or she did] [ph]. We are attracting more younger readers and more women from our internal data, that’s very early obviously in the Apple relationship. But what we’re not doing is compromising the business subscribers for whom we will provide even more specialist information.

Thank you, Alexia. Todd, we’ll take our next question, please.

Thank you. Next question comes from Entcho Raykovski of Credit Suisse.

Hi, Entcho.

Hi, Mike. Hi, Robert. Hi, Susan. One question from me around the rate of digital revenue growth at News and Info Services. It appears to have slowed a little bit over the last couple of quarters. Susan, you mentioned that Dow Jones digital revenues hadn’t been that strong for the quarter. Can you explain the dynamics which are going on there? Is there – I suspect there’s no particular FX impact driving this, given it is within Dow Jones. And I guess what gives you confidence that this will improve into the last quarter and beyond?

Hi, Entcho. Thanks for the question. I think – look at – you’re right, there’s no real FX impact coming through in those particular subscribers. I mean, what I would say is that the subscribers quarter-on-quarter do ebb and flow. We are happy actually with the growth that we’ve seen with Wall Street this quarter and we do expect it actually to pick up into the next quarter as well. But in addition to that, we have seen strong growth across our quality masthead around – within the UK and also within Australia. So I think overall, we are very comfortable with the level of growth that we’ve got and we do expect that to continue.

And just to complement Susan’s answer, Entcho, the decisive factor from a macro perspective, a strategic perspective is that more publishers are charging and more readers expect to be charged. That pattern has not been long and emerging. But as the sensibility is socialized, we should be able to charge higher prices for our great journalism. And are we at the end of that journey? Certainly not. But we have traveled further down the road that many people have imagined possible a couple of years ago.

Thank you, Entcho. Todd, we will take our next question, please.

Thank you. The next question comes from Kane Hannan of Goldman Sachs.

Good morning, Robert and Susan. Just on that revenue slowdown at Move. Can you just comment on how much of that I suppose relates to the U.S. housing market and sort of macro weakness versus how much is coming from the four month delay in Opcity?

Well, the prevailing winds in the property market haven’t been particularly auspicious. And I would cite them at this stage as being the most significant influencing factor. And obviously, we acquired Opcity with the aim of providing quality leads to realtors, value-added leads that genuinely add value for our customers and are valuable for us. And we’re in the very early stage of its development. And clearly, there has been some investment to build up that platform, and that clearly has an impact on EBITDA. But I would still remind you that core real estate revenue at realtor rose 14% year-on-year in that sluggish property market and that the audience in April did indeed rise to a record 69 million uniques. And that momentum has certainly continued in May according to our Journal figures.

Thank you, Kane. Todd, we’ll take our next question, please.

Thank you. Next question comes from Alan Gould of Loop Capital.

Thank you. I’ve got a question for Robert and a question for Susan. Susan, first, the Foxtel debt, so you’ve financed with some parent company loan. Just wondering why that wasn’t just done as rolled over with some more non-recourse debt from Foxtel? And then Robert, a bigger picture question. I was at the Fox meeting earlier this morning, and they’ve really simplified that company. I mean, it took years in the making chase Carey Price talked about that five to 10 years ago. What is the process for News Corp to simplify itself?

Alan, I’ll go first. I think it’s important to note that we actually do have a lot of flexibility internally and externally in relation to that financing. And what we do constantly balance is providing the right flexibility for that business at the appropriate cost. It’s also important to note that we’ve put it in as a shareholder loan, so we see that as optionality moving forward in relation to that.

Yes. Look, we’re very happy with our asset mix. But it’s fair to say that we’re constantly reviewing that. And one thing that’s not appreciated at times is the complementarity between those assets, for example, between realtor and our digital media properties which have played a crucial role in generating traffic for realtor. And you can see from the two most significant investments we’ve made, Move, realtor.com as it’s better known, and Harlequin now a crucial part of HarperCollins that they have been transformative for both digital real estate and Book Publishing and have made us much more a digital company and much more a global company to the benefit of all investors. But we’re constantly reviewing that portfolio to ensure that both in the medium and long-term that investor interest are taken care of.

Thank you, Alan. Todd, we’ll take our next question, please.

Thank you. The next question comes from Craig Huber of Huber Research Partners.

Great. Thank you. Susan, maybe I missed this, but I always find it helpful when you can give the breakdown for the circulation revenue growth year-over-year with and without currency in your three main areas. And I also have a follow-up question, please.

Yes, just in relation to circulation, so in local currency, Dow Jones was up 7%. Australia was up 3%. News UK was up 2%. So overall circulation revenues were up 4% in local currency.

And what were those numbers with currency as we have right now?

In currency, they were in my recorded remarks, which I shall just find. I can – why don’t you ask your second question while the guys get that for me?

Yes. Robert, on this Apple News, I’m just curious you obviously thought long and hard about this before you put your Wall Street Journal content on there in terms of cannibalization from your digital product. But what percentage of your articles that you have on your main Wall Street Journal website or your main section of the newspaper are available on Apple News?

Well, what you have is The Wall Street Journal is obviously through a different prism, different configuration and it’s designed for a general reader. And at the same time, we’ve clearly enhanced the business experience on professional app. So that if you look now, for example, at the financial sector or the tech sector, that there are many more articles than there were a month ago. So we’re very conscious that it’s a different audience and audience that may not have thought of itself as a Wall Street Journal audience. But we firmly believe that the number of people who will appreciate, benefit from and buy The Wall Street Journal will be enhanced by that partnership.

Thank you.

And Craig, just in relation to the reported numbers, so UK down 4% and Australia down 7%, obviously, Down Jones in line.

Thank you.

Thank you, Craig Todd, we’ll take our next question, please.

Thank you. Next question comes from Eric Pan of JPMorgan.

Good afternoon, guys. Thanks for taking my questions. Congrats on a strong quarter. Two if I can. As the Game of Thrones comes to an end, does it make sense for you to renew your partnership with HBO when it comes due in a couple of years? And with regards to Kayo, it seems that you’re adding subs at an annual pace of about 400,000. What percentage of households in Australia do you estimate are willing to pay for a sports-only OTT product? Is the ceiling the same as Foxtel or potentially lower?

Well, look, I wouldn’t comment on upcoming contract negotiations other than to say that the Game of Thrones has been a tremendous hit for Foxtel and Foxtel Now in Australia. And again, it would be invidious to give you a hard and fast number. But what is very, very clear is that the growth in Kayo is significant, it’s real. And we’ve made clear that we’re in a development phase and there will be investment, but we’re already seeing the results of that investment. Kayo has been in the market for barely six months and frankly, you’re not just building a brand, but you’re changing habits and meeting changing habits. And the key thing is that what is extremely clear from what we have seen in recent months is that Australians are prepared to pay for higher-quality content delivered when they want to watch, and it must be what they want to watch. And the great enduring myth was that Australians wouldn’t pay. Australians are paying.

Eric, just to follow-up to that just in relation to the market size. We obviously are looking at the market, the 70% of subscribers that don’t take sports, and we know that our penetration has been for the 30% or just below that for quite sometime on the core broadcast product. We also know from our research that there are about 6 million to 8 million Australians who are very passionate about sports. 70% of that group do not subscribe to Foxtel. And our research also estimates that 4 million of that group are willing to pay for content in some way, shape or form. So that’s really the audience that we’re aiming at.

Thank you.

Okay. Thank you.

Thank you very much. Todd, we’ll take our next question, please.

Thank you. Next question comes from Brian Han of Morningstar.

Robert, you mentioned that you incorporate Netflix into your set-top box at Foxtel. Can you elaborate a little bit more on that, and what the commercial arrangement is?

Well, obviously, we can’t go into the details of the commercial arrangement. But conceptually, we want Foxtel to be a broad platform to provide the services that Australian consumers want to use. And this particular deal is even – is indicative of that strategy.

Thank you, Brian.

[Multiple Speakers]

I’m sorry.

[Multiple Speakers]

Thank you. [Operator Instructions] At this time, we have no further questions. I’ll turn it back to management for closing remarks.

Thank you. Thank you very much. Thank you, Todd, and thank you for all participating and we look forward to speaking with you soon. Have a great day.

Thank you, ladies and gentlemen. This concludes today’s conference. You may now disconnect.