Welcome to the News Corp's Third 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 Relations. Please go ahead.

Thank you very much operator. Hello everyone and welcome to News Corp's fiscal third 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 with some prepared remarks and 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 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 reconciliations of such measures can be found in the earnings release for the applicable periods posted on our website. With that, I'll pass over to Robert Thomson for some opening comments.

Thank you, Mike. The sustained strength of News Corp's third quarter results reflects the company's strategic transformation. We have pursued digital growth, realigned our assets, focused relentlessly on cost discipline, and asserted the essential value of our intellectual property in a changing challenging content world. These potent results come despite political turbulence that has clearly affected some of our business partners and undermine their ability to plan coherently. We firmly believe that this disruption is a femoral and that the U.S. has the potential for robust growth when the heavens return to equilibrium. The administration's pursuit of sensible deregulation and a sound energy policy, combined with America's economic progress and innate creativity, should surely produce favorable results. When Adam Smith spoke sagely of the power of the invisible hand, he did not envisage an economic slap in the face from the unruly introduction of exorbitant tariffs. America's animal spirits do need emancipation from the cage of uncertainty. As for our company, net income from continuing operations rose 67% to $107 million in the third quarter compared to the prior year. While revenues were $2 billion ahead of the prior period by 1% despite blustery currency headwinds. Total segment EBITDA increased 12% with the overall margin expanding from 13% to 14.4%. Third quarter adjusted revenues were actually ahead by 2%, while adjusted total segment EBITDA expanded 15%. Our reported EPS from continuing operations doubled to $0.14, while our adjusted EPS was $0.17 compared to $0.13 a year ago. Following the close of the quarter, we concluded the sale of Foxtel to DAZN, highlighting our intention to concentrate investment on three core pillars of growth; Dow Jones, Digital Real Estate, and Book Publishing. The transaction saw the transfer of $724 million of Foxtel debt off our balance sheet and the direct repayment…

Thank you, Robert and good afternoon. I'd like to start by reinforcing our distinguished Chief Executive's comments on our ongoing transformation. While economic and geopolitical conditions have been uncertain, we continue to be purposeful in our execution and strategic focus. We have transformed our asset mix increasing exposure to recurring revenues while reducing advertising exposure. Moreover, the majority of our revenue is now digital. Our divestiture of Foxtel has resulted in News Corp being more weighted to our 3 core pillars, Dow Jones Digital Real Estate Services and Book Publishing. This is expected to drive faster growth with less capital intensity and hence a higher return on invested capital. Our strong balance sheet and steady cash flow enables us to maximize shareholder value creation. During these turbulent times as you as would expect from Newscorp we are monitoring trends closely. As things stand the direct impact of tariffs on News Corp is expected to be immaterial. Of note at present newsprint is excluded from additional tariffs as our children's and Christian books imported from China. In these volatile times we will continue to focus on what we can control and we'll seek to take cost action as necessary. Turning to the quarterly results which I'm pleased to report were again strong. As a reminder, Foxtel's financial results are reflected as discontinued operations for the fiscal 2025 and 2024 third quarter and year-to-date periods and subscription video services is no longer a reportable segment. News Corp reported fiscal third quarter revenues on a continuing operations basis of $2 billion rising 1% year-over-year and total segment EBITDA of $290 million increasing 12% year-over-year. Margins improved by 140 basis points to 14.4%. This quarter Dow Jones and Digital Real Estate contributed 88% of profitability. Third quarter adjusted revenues rose 2% compared to the…

Thank you. We will now start the question-and-answer session. [Operator Instructions] Our first question will come from Kane Hannan with Goldman Sachs. Please unmute your line and ask the question.

Good morning, guys. Thank you for the question. Just I suppose on the Dow Jones business the standout in the quarter. Is there any more color you can share around how we think about the rate of investment going into the fourth quarter. It did pick up a little bit this quarter. And just where that investment was on sort of the Dow Jones consumer or across the business? And also how we think about that going forward as well would be helpful.

There was no particular startling increase in investment in Dow Jones. We did make the acquisition and the related acquisition costs that of Dragonfly and Oxford Analytica, which will add to the professional information business but we are duly focused on both the consumer business where we are seeing that increase in ARPU that Lavanya spoke about on the last call, and we'll continue to do what's necessary and reasonable to drive that revenue. And secondly, with people, I can say is that we're consistently reporting double-digit revenue increases in the key segments, and there's no reason to presume that those double-digit increases will not continue, particularly at risk and compliance and energy where we have been adding new services modestly and creating new products about charging a premium for premium content. As mentioned, the overall numbers have been complicated by a Factiva relationship which had a 200 basis point impact on total revenue but we are now beginning to let that issue. Overall, we are extremely confident about the continuing growth of both revenue and profits at the professional information business.

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

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

Hi, Robert. Hi, Lavanya. My question is also on Dow Jones. Just a follow-up on the 200 basis point impact on from the Factiva dispute. Do you mind just to clarify do you expect a similar impact in the fourth quarter? And then longer term, I'm just interested in any comments you could provides on where Dow Jones margins can get to. You mentioned last quarter that you'd expect margins to expand given people will be a greater contributor to earnings. I mean you obviously saw that 1.3% expansion in the quarter. So is there a longer-term target you can share or even just some quantitative direction that would be quite useful. Thank you.

Thank you, Entcho. I'll maybe start and then Robert can add on. On the Factiva dispute, look as we cycle through it as we start to lap it, I mean the impact of the -- will start to reduce. So in the fourth quarter I would expect a smaller impact than what we've seen in the third quarter which was sequentially smaller than in the second quarter as well. On margins, here's how I think about margins on Dow Jones. First and foremost the growth of the Professional Information Service business that really does help lead to margins the kind of strong growth that we've had on that business of 6% this quarter with risk and compliance up 11% indulgence, energy up 10%. That definitely helps both with operating leverage as well as with sweetening the mix. The growth on the consumer business as well helps with operating leverage. And then the team as always continues to be focused on being very disciplined on costs as well. And so that also helps with margin growth.

Yes just to reiterate what Lavanya said, as you note the margin expanded from 21.7% to 23%. And there's every reason to believe that as that professional information business expands so will the overall margin as that is a higher-margin segment. PIB revenues now account for 39% of revenues and a majority of profit and that PIB share of the business is expanding quarter-after-quarter.

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

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

Thank you. Given your very strong balance sheet position now, I was wondering how you're prioritizing the strategy going forward for capital allocation across internal investments, external investments, capital returns? And to the extent there are M&A opportunities, do you envision anything that would provide incremental connectivity among your business lines? Or would be really still focusing on some of the core growth drivers like professional business services? Thanks.

David, when it comes to acquisitions, obviously, we can't be specific, but we can be -- give general guidance, and that is we have identified three core pillars, and we will look for opportunities in those three areas. What we will certainly not do is squander our hard-earned cash by overpaying for businesses. And I think you can see our record in that regard in recent years, dare I say, has been impeccable. Look, it's also true that we've received approximately AUD 592 million in cash for the repayment of the Foxtel shareholder loans. Now we've obviously been conscious of our responsibility to shareholders, and that imperative will simply never wane. There has been -- we've all been subject to a certain amount of market turbulence, but our share price as of the close today was just over 32% higher than a year ago. And look, we take that not as a conclusion, but as an increment. And it is fair to say we've been careful in marshaling our cash, maximizing our investments and ensuring that returns through our dividend and a $1 billion buyback reflect those resources. Last fiscal, we returned 70% of our available free cash flow to investors. And as was noted, we've been recently upgraded to investment grade by both Moody's and S&P. So clearly, our optionality has really been greater.

Thank you, David. We'll go for next question please.

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

Great. Thank you. Appreciate it. Robert, I guess, first, congratulations on getting the Foxtel deal done. Should investors, as you guys think out over the next six to 12 months, expect you guys to rationalize, simplify the company any further? I mean, anything potentially on the real estate side where we have to maybe wait until maybe realtor.com sort of turns the corner here in terms of revenue growth and margin and profit enhancement or -- and also Factiva, too. I mean, I go back a long way with Dow Jones. I mean, covering on the sell side back when Dow Jones as a stand-alone company 20, 22 years ago. And remember back then, Factiva was in tough shape and still kind of struggling. -- just looking -- listening to the numbers and stuff. Just wondering if that might be open to be off the books. Just further thoughts on simplifying the company.

Sure. Craig, look, the Foxtel deal itself is a living, breathing example of our continuing willingness to make significant decisions about structure and focus in the interest of our shareholders. There's often much discussion about digital real estate, and we obviously examine all segments. But I think, Craig, as you savvily noted on the last earnings call, the current state of the U.S. property market means that there's a significant underappreciation of realtors value. And whatever we may happen to do in whatever sector, we are focused on realizing maximum value for our shareholders. If you look at what we've done over the past few years, we are certainly not strategic some nebulists. We have a fairly clear vision of trends and challenges and opportunities, and we are now in a prime position to take further advantage for both the short- and long-term advantage of our shareholders. If you look at what we've done over the past few years, we are certainly not strategic some nebulists. We have a fairly clear vision of trends, and challenges, and opportunities, and we are now in a prime position to take further advantage for both the short-and long-term advantage of our shareholders. The assets we've retained and developed are world-class, as are our teams, and they are in sectors primed for growth. Look, we remain focused on increasing our asset value and reducing the implied discount to intrinsic value. And needless to say -- which means I am indulging in tautology, we have never been complacent, but we do have some reason to be confident.

Thank you.

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

Our next question will come from the line of Alan Gould with Loop Capital. Please unmute your line and ask your question.

Yeah. Thanks for taking my question. Robert, I'd like to talk about the original portion of the Dow Jones business. It is doing great, but the original one, you're continuing to grow subs. I know part of the strategy is converting people from promotional pricing to higher-paying pricing. How is that endeavor going?

Yeah, look, you're exactly right in placing our strategy at Dow Jones, and total-subs were 7% higher, driven by digital-subs, which rose 14%. And we are very focused on average revenue per subscriber and seeing positive trends, as the Dow Jones dynamic pricing strategy is unfolding. I mean, that trend itself was reflected in the overall 7% increase in circulation revenues, which were up from a 3% increase in the previous quarter. Now, the Dow Jones team is rather confident that the phasing of subscribers from discounted entry-level offers to more standard pricing is proceeding well, and that strategy will be reflected in the digital numbers in coming quarters. And, by the way, in total at Dow Jones, our digital contributed to 82% of revenue. So we are talking about a company that's certainly contemporary in character and a powerful digital platform on which to build.

Thank you, Alan...

Thank you.

Thanks, Alan. Luke, we will take our next question, please.

Yes. [Operator Instructions] Our next question will come from Evan Karatzas with UBS. Please unmute your line by pressing star six to ask a question.

Okay. Hi. Thanks. Just maybe a follow-up on Dow with the higher-priced player moving customers to higher-price plans -- can you talk to, I guess, the churn impact from those customers moving to the non-promotion plans? And I guess also any, learnings from that in terms of the elasticity of those consumer subs? And I guess maybe, more medium-term, if potentially price increases could be more of a theme going forward, that might help with continued ARPU growth for that consumer subs business, please? Thanks.

Evan, we're learning every day about price elasticity, which is really the kernel of the dynamic pricing system that's being deployed by the team at Dow Jones. Obviously, advanced AI is making that process somewhat easier. You're able to identify certain cohorts where you do have more elasticity, and you are able to identify certain cohorts where there may be some vulnerability. And so, overtime, there's no doubt the aim is to reduce churn and maximize revenue, and we have both the expertise and the tools at our disposal.

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

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

Well, thank you, Luke, and thank you to all the investors for participating. We look forward to talking to you shortly. And have a wonderful day. Bye, for now.