Welcome to the News Corp's Second Quarter Fiscal 2025 Earnings Conference Call. Today's conference is being recorded. Media will be allowed on a listen-only basis. At this time, I'd like to turn the conference over to Michael Florin, Senior Vice President and Head of Investor of Investor Relations. Please go ahead.

Thank you very much, Operator. Hello, everyone, and welcome to News Corp's fiscal second quarter 2025 earnings call. We issued our earnings press release about 30 minutes ago and it's now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Lavanya Chandrashekar, Chief Financial Officer. We'll open some prepared remarks -- they'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 cautious 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 conciliations of such measures can be found in the earnings releases for the applicable periods posted on our website. With that, I will pass it over to Robert Thomson, for some opening comments.

Thank you, Mike. News Corp had yet another fruitful quarter, qualitatively and quantitatively. Revenues on a continuing operations basis, which excludes Foxtel, grew 5% to $2.24 billion, while profitability rose 20% to $478 million, as we made significant progress in our digital development. A few more metrics to highlight our performance, net income from continuing operations urged to $306 million, a 58% increase compared to the same quarter in the previous year, that is correct, 58%. While our EPS from continuing operations was $0.40 compared to $0.28 in the prior quarter. And our overall margin rose from 18.7% to 21.4%. Our three pillars of growth, Digital Real Estate, Dow Jones and Book Publishing continued to expand their segment, EBITDA robustly, while we saw the positive impact of rigorous cost discipline and digital development in our News Media segment. With a keen eye on our innate strengths, we took a significant step towards implication with the agreement to sell Foxtel to DAZN, a premier global sports streaming provider, for a total enterprise value of AUD 3.4 billion or approximately seven times Foxtel's fiscal 2024 EBITDA. The agreement is a tangible recognition of Foxtel's successful digital transformation and should surely benefit our shareholders, our partners at DAZN and all Australian sports fans. We expect the transaction to close in the second half of the current fiscal year, subject to regulatory approvals and other customary clone conditions. Hence, Foxtel financials are now reported as discontinued operations. The sale of Foxtel should have a meaningful impact on our balance sheet. Upon closing, Foxtel's outstanding shareholder loans will be repaid in full, including AUD 574 million to News Corp, while its third-party debt will be transferred with the business. News Corp will also hold an approximate 6% stake, in the fast-growing DAZN. We are proud…

Thank you, Robert, for the kind introduction. I am delighted to be with all of you today and look forward to meeting many of you in the coming months. I'm excited to join News Corp amid the company's continued impressive digital evolution. As Robert mentioned in December, we announced an agreement to sell Foxtel to DAZN, which for News Corp will allow for a greater focus on our core growth pillars, will meaningfully strengthen our balance sheet and should reduce our future capital intensity. Turning to the quarter. Foxtel's financial results are reflected as discontinued operations for fiscal 2025 and 2024 second quarter and year-to-date periods and subscription video service is no longer a reportable segment. I will not speak to Foxtel's results on this call, and they are excluded from the numbers I'll be discussing today. But more information will be available in the 10-Q to be filed tomorrow morning. We will also be filing an 8-K with recast historic financial information. News Corp reported fiscal second quarter revenues on a continuing operation basis of $2.2 billion rising 5% year-over-year and total segment EBITDA of $478 million increasing 20% year-over-year. Margins improved by nearly 270 basis points to 21.4%. Three core pillars, Dow Jones, Digital Real Estate and Book Publishing, collectively grew revenue by 7% and segment EBITDA by 16%. Second quarter adjusted revenues rose 4% compared to the prior year, with the difference from reported, primarily due to currency impact, while adjusted total segment EBITDA rose 20% versus the prior year. For the quarter, we reported earnings from continuing operations per share of $0.40 compared to $0.28 in the prior year. Adjusted earnings from continuing operations per share were $0.33 in the quarter compared to $0.27 in the prior year. Moving to the individual segments, starting with Dow…

Thank you. We will now start the Q&A session. [Operator Instructions] Our first question will come from David Karnovsky with JPMorgan. Please unmute your line and ask your question.

Hi. Thank you. Just maybe on the Foxtel deal. I want to see if you could discuss a bit the structure here and reasoning to take this own equity as payment and maybe your view on the asset. And then following this, Robert, would be great to get your updated view on the overall News Corp structure, and can you say at this point if you're still engaged in an overall strategic review? Thank you.

David, obviously, the deal is subject to the usual regulatory approvals, in particular out of the foreign investment review board in ACCC in Australia, and we're providing whatever information is important agencies require. We do expect that the deal formally close this fiscal. But I should emphasize that we will be close partners with DAZN whose team we've found to be particularly impressive. And I think it's fair to say that they have found the Foxtel team to be particularly impressive. Essentially, you have the marriage of two world-class companies, and together, they will be more than a sum of their parts. As for structural reform, the Foxtel deal itself should reinforce the sense that we are constantly reviewing our portfolio. And that deal is eloquent testimony that we don't just review, we act decisively. We are conscious of maximizing returns to our shareholders and the improved returns have certainly come from buttressing of bolstering our core pillars. And that is reflected in our share price, not entirely, obviously, but somewhat. I'm sure you're aware that our shares have risen more than 26% over the past six months.

Thank you, Dave. Luke, we will take our next questions.

Our next question will come from Kane Hannan with Goldman Sachs. Please unmute and ask your question.

Kane?

Good morning, guys. Maybe just the comments -- the introduction, Robert, around Dow Jones earnings growth accelerating in the second half despite expectations for more [indiscernible] during in the second half. Just talk a little bit more about what's driving that? Is that the Factiva impact dropping away, improvement in subscriber trends you called out of the journal. So let's just help us stand what gives you the confidence in the improving second half?

Well, Kane, I think it's a combination of two things. The Dow Jones circulation trends, the total subs were up 9% at around 5.9 million. Digital only up 13% and we're very focused they're on average revenue per subscriber and are seeing positive trends in the Dow Jones dynamics pricing strategy unfolds. And that was the reflected in the overall 3% increase in circulation revenues despite a continuing fall in print circulation revenue to be counted. So digital circ revenues were up 8% and the Dow Jones' team is generally confident that the phasing of subscribers from discounted entry-level offers to more standard pricing is proceeding well. And we will see that reflected in ensuing months. And then it -- Clearly, Risk and Compliance and Dow Jones Energy are both faring well, and we have all confidence in them.

If I could just add to that, Robert. I mean -- Kane, one of the things we need to remember is that the second half generally tends to be the time when we have more additions in any case. So there is a seasonality piece there as well, which will help.

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

Our next question will come from Jason Bazinet with Citi. Please unmute and ask your question.

Just had a question for Mr. Thomson. Given that it's a year into the Spotify deal, can you just remind us what you are hoping to achieve with that agreed? And then based on consumer behavior sort of a year-end, what essence, if any of you learned, so far?

Jason, I'm very proud of the partnership with Spotify, which I think itself has changed the audio book market and the broad trends there remain in place now. The audience is expanding and audio overall was 13% higher. And there I say, even the e-books were 6% higher after a couple of years of relatively sluggish sales. I think what we are seeing is a change in consumer behavior, adaptation by both Spotify and Audible for that increased audience. And dare I say we are beneficiaries of that.

Thank you.

Thank you, Jason. Luke, we will take our next question.

Our next question will come from Entcho Raykovski with Evans & Partners. Please unmute and ask your question.

Hi, Robert. Hi, Lavanya. My question is just around the expected use of the proceeds from the Foxtel sale. I appreciate the transaction is yet to close, but you'll get some money as part of the shareholder loan repayment. So do you expect that presents some scope for capital management? Or is your intention to reinvest those proceeds. And I don't know as part of that answer, if you can give us any sort of broad guidance on where you expect CapEx to trend going forward post completion of the sale? Thank you.

Well, no, clearly, we are absolutely focused on generating maximum value long-term for our shareholders. We have a $1 billion buyback provision in place. And you can see from our disclosures that that, that buyback is well underway. As well as that, we have the dividend payments. So we're extremely conscious of shareholder returns and returning to shareholders. I mean last fiscal, we returned 70% of our available free cash flow through the buyback. And clearly, the significant increase in our free cash flow in recent years has given us optionality and the upgrades to investment grade by both Moody's and S&P Global in recent days reflect that reality. But we will go on being conscious of our duty to shareholders, but we do so from a position of strength.

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

Our next question will come from David Joyce with Seaport Research. Please unmute and ask your question.

Thank you. I appreciate your outlook for the back half of the year. Could you provide some more color though on the timing of when we would be lapping the price increases, Dow Jones on the consumer and professional services side? And also when you would expect the products to be coming online at the REA and contributing them? And then finally, on Book Publishing. If you have more of an outlook over the next few quarters of significant titles that would be released -- that will be drivers. Thank you.

Well, I think we've given as much guidance as we can. They're on the likely trajectory for Dow Jones and pricing. Essentially, what you are seeing, by the way, there is the increase in digital and all which led to 81% of our revenues are being generated through digital compared to 78% last year. And secondly, the continuing influence through the expansion of the pit business relative to the entire business. And impact of that higher margin business on our profitability is quite obvious. The margin at Dow Jones rose from 27.9% to 29%. And there's every reason to believe in coming months and quarters and years, dare I say, that as PIB takes a larger share of revenue, that margin will continue to expand. As for the books business, we have a full roster as always, at HarperCollins, the books that Lavanya and I mentioned. But also we have a very strong backlist there, which is some -- the value of which is sometimes underestimated by certain analysts and through the years, we have been working diligently on bolstering that back, which tends to be more profitable, obviously, enough. And it's not insignificant, the backlist share rose from 60% to 61% of total sales in the recent quarter. That backlist is a platform for future growth.

I'd just add to that, just to -- on Harper. I mean what we have guided to in the second half is that growth will be moderating because we've had more phasing of this -- off the front list into the first half of the year. So, just something to keep in mind.

Thank you, David. Luke, we will take our next question please.

Our next question will come from the line of Craig Huber with Huber Research. Please unmute and ask your question.

Thank you. Robert, I just wanted to ask you, as you know, you guys went public with your thoughts on optimizing the structure of the company, two Novembers ago. A lot of people applaud you for what you did with Foxtel, simplifying the company from that angle. I'm just curious, as the other gentleman was asking as well. Is there more to go here to simplify the company? I know part of its kind of maybe gummed up a little bit here, just given the tough U.S. mortgage market, if you ever going to do anything with realtor.com, nobody would want you to potentially sell that into the lousy work and we may not optimize the value of it and so forth? But putting that issue aside, can we may be potentially get another announcement here before maybe we get to the two-year mark. I just want to get a little sense here what we're playing with here. Is there more to come here on the optimize the company? Thank you.

Craig, we are constantly reviewing the structure of the company. And look, it is fair to say that the Foxtel deal itself is hard evidence of that, that -- our consideration of the appropriate structure does not end with that significant decision. But there is no doubt that we have a collection of very valuable assets. And I certainly wouldn't underestimate the value of Realtor. I mean when you look at the new growth areas there, so seller-related revenues, new homes and rentals, all of which have been a focus of investment by Damian and the team. Those revenues rose 51% in the quarter compared to a year earlier. And just one other point worth highlighting at Realtor and this is according to comScore, so it's independent, not one of those wonderful internal metrics used by some. Realtor has a significantly higher rate of visits per unique -- page visits per unique visits than Zillow. And that's valuable. That shows that we have a quality audience. These are drive buyers. These are not drug buyers, I should say. These are customers parking account in the garage.

Thank you.

Thank you, Greg. Luke, we will take our next question please.

Our next question comes from the line of Brian Han with Morningstar. Please unmute and ask your question.

Robert, just to be clear on Dow Jones, your expectation that year-on-year growth will accelerate in the second half. Were you referring to revenue growth or earnings growth? And are there any plans to increase investment in Dow Jones going forward, whether in marketing or technology? Thanks.

We're always looking for opportunities for Dow Jones. And you can see from the investments, dare I say, Sage investments made in recent years, which are now coming to fruition. If there's an opportunity at a reasonable price, we'll pursue it. We see two areas of potential improvement from the Dow Jones team. One, we're coming into the period, as Lavanya mentioned, of higher sales. And secondly, we are also seeing that the dynamic pricing system adopted by the team is starting to bring us benefit. So, the combination of both.

Thank you, Brian. Luke, we will take our next question please.

Yes. [Operator Instructions] Our next question will come from Evan Karatzas with UBS. Please unmute and ask your question.

Okay. Good morning. Can I just ask one around the strong Dow Jones margin expansion you're delivering? Maybe -- sorry, you talked about a couple of minutes ago. Can you just firstly just give an idea of the margin headwind from the Factiva dispute to help us with, I guess, a more normalized margin? And then you kind as well, is this expectation of the 100-ish basis points quarterly margin expansion. Is that around the level are you expecting for the rest of the year or, I guess, going forward, just given the multiple moving parts happening there in the second half that you've spoken to? Thanks.

Thank you for your question, Evan. This is Lavanya. We're not -- I'm not going to be giving margin guidance for Dow Jones for the second half of the year. But to kind of talk about what the impact of Factiva was, just from a revenue perspective, Factiva had more than a 300 basis point impact on revenue. And so you can kind of do the math there on what that may have impacted from a margin perspective. Look, in the second half, we will continue to be disciplined on cost. We will continue to work towards improving profitability and really focused on monetizing all the subscriptions that we added last year. And we should expect to continue to see upside in margins.

Thank you, Evan. Luke, we will take our next question please.

At this time, we have no further questions. I'll hand the call over to Michael Florin for closing remarks.

Great. Well, thank you all for participating. We look forward to speaking to you soon. Have a wonderful day. Take care.