Ladies and gentlemen, thank you for standing by, and welcome to the 21st Century Fox Fourth Quarter 2015 Earnings Release. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Reed Nolte.

Thank you very much, Ryan. Hello, everyone, and welcome to our fourth quarter fiscal 2015 earnings conference call. On the call today are Lachlan Murdoch, Executive Chairman; James Murdoch, Chief Executive Officer; and John Nallen, our Chief Financial Officer. First, we'll give you some prepared remarks on the most recent quarter and year and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to 21st Century Fox's business and strategy. Actual results could differ materially from what is said. The company's Form 10-K for the 12 months ended June 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-K filing. Finally, please note that certain financial measures used in this call such as segment operating income before depreciation and amortization, often referred to as EBITDA, and adjusted earnings per share are expressed on a non-GAAP basis. The GAAP to non-GAAP reconciliation of these non-GAAP measures is included in our earnings release. And with that, I'm pleased to turn it over to Lachlan.

Thank you, Reed. Good afternoon, everyone, and thank you for joining us on what has shaped up to be a very busy day for all of you. It's my first time back on our earnings call for a number of years, and I must say it's a privilege to be back at the company in an executive capacity and on this call with you and with Reed, with John and with James. As you know, on July 1, we formally completed a leadership transition that we have been working towards for some time. James and I both appreciate the board's confidence in us, and we are keenly aware of the responsibilities that come with it. We are extraordinarily energized to be leading the company at a time when there are so many opportunities ahead. But of course, the company finds itself in this position, thanks in very large part to Chase, who we must thank for his many years of exceptional leadership. And while Chase will no longer be joining these calls, he continues to be highly involved in many aspects of the company. His ongoing counsel is a valued asset to us. James and I have been immersed in 21st Century Fox in all its iterations and in the broader industry generally for at least the past 25 years. This background and context will serve us well as we partner to lead 21st Century Fox through a time of accelerated industry change. I can assure you that we, the board and the senior management team are intensely focused on the array of opportunities that are emerging for 21st Century Fox and for our shareholders. Now while there has been a particular emphasis on it recently, the reality is that our industry has always been evolving and innovating. The imperative…

Thanks, Lachlan. It's John and good afternoon. At the outset I'll remind you that because of the sale this past November of our DBS businesses to Sky, our reported financial results for the year and for the fourth quarter are not like-to-like. So to continue to present a more meaningful comparison, we are providing and commenting on, total company adjusted revenue and EBITDA, which excludes the DBS businesses in all periods. So let me start with the full year results. For the full year, total company adjusted revenues were $27 billion up 3% over last year, driven by double-digit revenue growth in the cable segment, partially offset by comparisons against the prior year, which included the Super Bowl revenues in the television segment and a full year of Shine in the film segment. Total segment full-year adjusted EBITDA was $6.49 billion, 3% higher than a year ago, reflecting higher contributions from our cable and film segments, partially offset by lower results at the television segment. Overall, we had a 6% negative impact on our EBITDA growth rate from foreign currency effects. Reported net income from continuing operations attributable to shareholders this year was $8.4 billion or $3.93 per share on a reported basis. This includes $4.2 billion of income reflected as other net, which largely relates to the gain from the sale of the DBS businesses to Sky, and also includes approximately $800 million of charges recorded in the fourth quarter, of which approximately half relates to programming inventory that will no longer be aired and contract termination costs for the canceled CLT20 Indian cricket tournament. The majority of the balance represents charges from the disposition of certain pension liabilities. Additionally, this year's equity earnings of affiliate results include income of approximately $600 million, primarily related to Sky's gains on…

Thanks very much, John, and thanks Lachlan, and thanks, everyone, for being on the call. As we begin a new fiscal year, we're very pleased with where the business is, but of course, there's a lot of work to be done. Moving forward our overall priorities are to build upon the goals we set as a senior leadership team we formed 21 CF two years ago. First and foremost, as a creative company, we're focused on great storytelling across the business. Our continued creative execution from our partnerships with writers and producers across the spectrum at TCFTV, at FXP to our sports investments and operations at STAR Sports in India to the diverse and multi-faceted slate that we continue to develop at Fox Filmed Entertainment is the necessary ingredient to any continued and future success. Secondly, and at the crux of the changes in our industry, we have to make sure those stories get to our customers in the most effective and compelling way possible. And that's all about ensuring a great consumer experience, both in partnership with MVPDs and over-the-top via established platforms such as Hulu or Netflix or SkyGo or by creating totally new experiences through which customers can discover and consume content, and engage with advertising. Primarily this digital video approach is about ensuring a high-quality, on-demand and live experience, and a seamless multi-platform access approach that responds to customers' needs and meets and exceeds their expectations. These capabilities and enhancing the material in 21 CF are a large focus for the team. Thirdly, we recognize and we relish our position as a global company with diverse and deep assets across the globe. We'll continue to focus on selective, deep growth in markets that really matter. For example, India and Latin America comprise more than two thirds…

Thank you, James. And now, Ryan, we'd like to turn it over and take questions from the investment community.

Our first question will come from the line of Ben Swinburne with Morgan Stanley. Please go ahead.

Thank you. Two questions. First, James, on the cable network outlook, you mentioned domestic affiliate revenue growth and visibility. How long can you guys sustain double-digit growth when you look out, particularly when you factor in how much the landscape is changing? And are the deals that you're signing, do they allow you to go direct-to-consumer? Are there any restrictions? How do you think about balancing that and price when you go through these renewals?

Thanks, Ben. Look, I think the – look, first of all, I think domestic affiliate growth has been pretty strong. And as I said in my comments, I think we will continue a lot of that momentum. We've got really good visibility on the portfolio and as I said about 80% of next year's numbers. And as from time-to-time you get the opportunity to reset that. We think there's still gains to be made both in volume with respect to distributing, getting two-fold distribution, a number of our networks as well as in price, as we continue to invest on screen and really concentrate around these core brands that we've talked about. So we're pretty optimistic about it actually from our portfolio's perspective, which has some unique kind of elements to it, so we feel good about that. It's also a really exciting time in terms of these affiliate relationships because fundamentally with the vast majority of customers consuming multi-channel television through what are the traditional MVPDs, there's a huge amount of opportunities to innovate on those platforms and both from a standpoint of ad innovation, from the standpoint of new pricing models, et cetera, we think that actually it's a pretty exciting environment to actually be – to be operating in. In addition to that, we see new entrants and I think the opportunities for growth with new over-the-top kind of full or medium service MVPDs emerging, we think is a real positive as you see downstream competition increasing that drives a lot of innovation, it drives innovation across the whole kind of subscriber universe and creates new headroom for growth into what we previously called the kind of broadband-only households, which really become part of the pay TV universe through these services, which we think is a positive. With respect to our flexibility to produce, to go direct-to-consumer and things like that, without getting into the specifics of individual deals, we do – we have quite a lot of flexibility in terms of how we license the programming, how we license our channels and how we price them both on a wholesale and retail basis. But we haven't made any big decisions on that point at this point and there are no current plans for an independently-priced direct-to-consumer offering right now.

Got it. And then, John, just on the guidance – at the risk of being greedy, you gave a lot of details, but when I add up the numbers, I use 15% for cable, I'm getting EBITDA pretty close to $7 billion, maybe a little bit less, and growth in the kind of 6% to 7% range. The only missing piece would be other, so I don't know if you had any comment on how we should think about the other, the overhead line in 2016?

No. I think that'll be a touch above where we are from a others and expense category, so that'll be a touch above driven by a number of factors. But you should look at that as a touch above where it is right now.

A touch above 2014?

Yeah, a touch above where 2015's expense came in.

Yes. Got it.

If you think about 2016, it should – the expense level should be a touch more than where it is.

Thank you.

Thank you, Ben. Ryan, could we have next question, please?

Comes from the line of David Bank with RBC Capital Markets. Please go ahead.

David?

Sorry about that. I want to follow up on the – first on one of the comments Lachlan made in his introductory comments about opportunities to potentially bolster the portfolio with companies, like true[X] on the AdTech side. And I guess I wanted to know what is it that you think you might need on the AdTech side now that you have true[X] kind of as the core DMP? What is it you envision as being the kind of perfect opportunistic-type asset to ad? And then second kind of as a follow-up to the prior question, I think historically you've actually been pretty specific about the duration of the average RSN deal, something like 75% to 80% of the footprint locked up over the next four to five years. Can you remind us of what the distribution visibility looks like going out a little further than the next year or two? Thanks very much.

I'll take – David, thanks. It's James. I'll take the second question, and then Lachlan can answer the...

Great.

...acquisition and the AdTech piece. Just on the RSNs, I mean it's a variety of different timeframes at this point, both in terms of the affiliate agreements and obviously the contractual agreements. But most of them are in that range, even four to five years at this point on average, some longer, some shorter, depending on the marketplace. And so – and, Lachlan do you want to do the...

Yeah, sure. Look, on the AdTech – and I think it's important to recognize that we are at the very beginning of some of the programmatic advertising technologies (39:33), and so we don't see – while we're not looking at any specific bolt-on acquisitions today, we do expect to do them. And they will be, I said, opportunistic and disciplined as we go. But certainly it's a fast-moving space and we want to be leaders in it.

Thank you, David. Operator, could we have next question, please?

Comes from the line of Vasily Karasyov with CLSA. Please go ahead.

Thank you. Good afternoon. James, I think my question is for you. You talked about Hulu, so I was wondering where you see the growth in subscribers coming from. Would you need to take them from other SVOD services or do you believe it's complementary to all existing options? And then given clearly your belief on the potential value here, what is your longer-term plan with the ownership there? And ultimately getting credit in the stock price for the value, if it succeeds?

Thanks, Vasily. Look, Hulu is growing really well right now. We're very encouraged by it. We're soon to – the company is soon to surpass 10 million paid customers with Hulu Plus, and really has the velocity that it hasn't had for years, so we're very excited about that. I think growth is coming from a variety of places. I don't think it's sort of a zero-sum game between Netflix or an Amazon Prime and Hulu. Seems like most customers or many, many customers will have both. And many customers are MVPD customers as well, so it's – it comes from a variety of places that have very attractive price points, and I think, importantly, with a distinctive offering. So when you look at the offering of currents, when you look at some of the new output agreements that are coming through Hulu and the breadth of programming there that the team puts together, and the partners contribute, it's very much a unique offering, so people want it in addition to other things. And that's driving really good growth right now. I think the standpoint of – the plans for Hulu – right now Disney and us who are partners in Hulu, obviously Comcast is a partner, but is operating under the consent decree for a while, we are very committed to growing this business, we think it's a very exciting business. We think we can grow it substantially more than it's gotten to to-date. And it can be a very, very valuable asset for us. I would say when you talk about getting credit for the value, it's a little frustrating, we do think it's a great asset inside our portfolio, but similar to many of the non-consolidated assets in our portfolio, from our stake in Endemol Shine to the big one at Sky, it is a little frustrating, and we don't believe we get the value for those assets. Stake in – our value in the Sky business this year has gone from $9 billion to well over $12 million in the space of 12 months, not including the substantial and very tax efficient distribution of capital in the transaction that we executed to merge the three Skys that Lachlan mentioned in his remarks. So, I guess I would – I'm not going to start asking you the questions, but I think it's probably (42:50) on the call why we might not get that credit, but we're big believers in those businesses and we think they can continue to grow.

Thank you.

Thank you, Vasily. Can we have our next question, please, Ryan?

That comes from Michael Nathanson with MoffettNathanson. Please go ahead.

Thanks. I have one for James and one for John. James, there's a feeling in the marketplace that as we all gravitate to smaller bundles or the new entrance you talk about like Apple TV, that your RSNs will be dropped. So I wonderer do you think that's a legitimate worry, why or why not?

Look, there's obviously been a lot of attention on the RSNs – thanks, Michael, by the way, for your question. Look, I think we take the view that we sort of operate in the domestic marketplace, and we have five core brands that Lachlan outlined. Sports is a broad brand that includes our RSNs, and as we approach these agreements with distributors and with our partners, either over-the-top or otherwise, it's really a complete offering. And I think you have to remember that in the markets where these RSNs are, they are often the most popular channel in the marketplace, we are very, very pleased to just renew for example the St. Louis Cardinals for 15 years, and in St. Louis in baseball season, RSN there is often the number one TV channel in the market. So, on a market-by- market basis, these channels are hugely compelling, the content is genuinely differentiated and has a passionate following. And I think it's a real benefit to all of our – to our partners and distributors to carry these things, and we continue to seek to distribute them. I think the question around small bundles and as things emerge, I think we are seeing, and I've spoken about this in the past sort of a – there is a bit of a re-bundling going on, and I think we're well positioned in that marketplace because of the work that we've done to really invest on screen around these big brands, and to invest in the content that really matters to our customers, and I think local sports is very much a part of that mix, and is a very strong offering.

Okay. Thanks. Let me ask one to John. John, I think overall the data points you gave us in guidance, and I appreciate that, is you gave a guidance that you think broadcasting will be flat this year in advertising, and I wonder why do you think that is given the current rate of declines you're seeing now, and also the current rate of network ratings for Fox. Why are you so optimistic that you'll get a flattening of ad revenues the coming year?

I think, realize that in the television segment we have two big classes of programming, right? We got both entertainment and sports. The vibrancy and deepness of the sports marketplace continues. So while we do have linear declines we are projecting internally and hopefully we'll do far better than this, declines on the linear side. Our sports ratings and revenue coming from sports should cover that. In addition, I would say we are also anticipating that declines in the linear side on entertainment will be captured really for the first time by increases in non-linear advertising. So it's that degree of confidence and that plan we have that leads us to flat on advertising overall.

And if I can just add to that, Michael, as I said in my comments earlier, we really are encouraged by what we're seeing in the non-linear monetization, that's doubtful to say, but we've started – we've been talking to you and all of our shareholders about this for a little while. We've started to make real investments. We've made an acquisition but we've been investing across the board in our capability there, and it's early days, but we really are encouraged by it. So we see that as a very positive factor and one that – it's really I think, in success will be create a totally new dynamic in this business where we think about investing on screen, creating multiplatform access and the screening environment in particular being potentially a more attractive advertising environment than the linear environment. And that's why we think that streaming is so important and really taking a very proactive stance in terms of how our streaming products are presented to customers, how the on-demand universe works around our content and how we're monetizing that. It's something that we're seeing early traction on.

Okay. Thanks, James.

Thank you, Michael. Ryan, next question please.

Comes from the line of Jessica Reif Cohen with Bank of America. Please go ahead.

Thanks. I have two questions. One is a follow-up to James and what you were just talking about. Trying to maybe go through some of the color on some of these investments in advertising that will drive growth, how are you guys thinking about advertising and streaming versus addressability? If you can give color on like the timing, it sounds like you're starting to see some of the benefits and I guess as part of that, you mentioned that India and LatAm are big areas of growth for advertising. Could some of these investments you're making here be applied in some of the areas of the world?

Thanks, Jessica. The – look, I think as Lachlan mentioned, this is an area sort of advertising technology that we want to be proactive in and we want to be – from a standpoint of monetizing our product and making this a place such a great place for creators to come and make things and do well with them. We think advertising technology is an important part of that. The true[X] acquisition was an important acquisition for us because we really embedded in the operations of the business and that's leading to new opportunities. I think from the standpoint of analytics that we've been doing already and really gearing up outside of that, it fits in very well from the standpoint of looking at new things that we can do in terms of product innovation from engagement units to time-shifted advertising and other things, we think that that's pretty exciting. And in the streaming environment, something that you can do in a much more targeted and addressable basis, so you can be more efficient with lighter loads and create a better customer experience in the on-demand marketplace as well as the linear marketplace as well. So, those are the sorts of things that we're very focused on and looking at, as well as really just getting, putting more weight into the digital sales effort itself, working with clients and agencies around creating the currencies that really can generate demand. On the international markets or ex-U.S. markets, already to give you an example, the hotSTAR platform in India, which was a very, very rapidly – is a rapidly growing mobile Internet platform around all of our programming that we create known in India which is a lot. We are working very closely between the STAR teams and the Fox Networks and particularly the true[X] team to build the ad platform underneath that, we've sort of taken a view that we really wanted to build audience first and the ad platform is being kind of done in parallel, but this capability directly applies and is being applied to creating some of those new opportunities. I think the other piece here on Latin America and India, and particular India, don't forget how strong the linear advertising market is, when you have a real position of ratings leadership that we have and we can sustain that, we're able to really grow our linear advertising very, very attractively and still the majority of that marketplace for a while yet is that way and there's a huge amount of growth to come. I mean you don't see it really in the numbers consolidated because of the sports investment we've been making, but the entertainment business alone in India in fiscal 2015 is over $300 million EBITDA business and that's something that is growing at a very rapid pace. So it's a real – there's a real advertising marketplace there that is growing organically and we're able to grow our share in it as we go forward.

Okay, great. And then the second question is when you have a hit like Empire, how are you thinking about monetizing it differently? Can you just talk about how you would monetize it over the next one, two, three years versus what you would've done in the past year or so?

Well, I think the most important thing about Empire is as we go into the second season, which is coming up right away, is that we get it creatively right, and we're very confident in our partners and the writers and producers and the cast there who have really proven themselves to be just tremendous, but our real focus is on launching the show giving it the appropriate marketing support and getting out there properly. The non-linear monetization on that is an addition is a new feature here and what we're seeing going forward is the ability to monetize a much more spread out view. And we talked a lot as an industry around three days versus seven days. I think we're probably more focused on 30 days and six months. We're still seeing customers come to the pilot episode of Empire on some platforms. And in the coming years, being able to monetize that audience, which is a quality-live, engaged audience, is going to be just as important as audiences in other windows. So it's more about the total breadth of audience across programming that's made over a longer period of time that you can do well with, not to mention other windows, SVOD, box sets, series stacking and things like that.

Thank you, Jessica. Ryan, can we have next question, please.

Comes from the line of Rich Greenfield with BTIG. Please go ahead.

Hi. Thanks for taking the question. I have a couple. One just kind of on the management side. I guess it'd be great to hear from Lachlan and James, could you kind of explain exactly how the management structure will work? Does one of you have final say, meaning does James report to Lachlan or vice versa? Or do you split up the company's divisions or you look at everything jointly? And then I have a business question.

Sure. Rich, can you hear me? Let me start with that. So with the management structure, it is a true fifty-fifty partnership. James and I have been working together for many years. I think we know each other better than anyone knows us. And so as we work towards this transition, which has also becoming a – has been a focus of ours over some time, we've gone into this carefully thinking it out and with our eyes very open. And I've got to say, it's working extraordinarily well. We are either together or we talk together on a daily basis. And I think that what's really important to understand here is that we are both sort of uniquely invested in the success of the company. And we're also both uniquely invested in each other's success. And that's really the key to this relationship. And so we're very pleased with how it's working out.

And then just in terms of thinking about James' comments and your comments about the challenging structural changes that are going on, we're seeing obviously a TV ad market that feels increasingly like it's in secular decline. And we're seeing comments from Disney and others about the bundle really starting to fray and more consumers either shaving or giving up entirely. Just wondering now that we've had the management change at Fox, how do you think about a merger of equals with Time Warner? Why isn't gaining greater scale in IP a priority as you look out into 2016 and beyond?

Hi, Rich. It's James. Look, I think first of all, it's not a new – it was a year ago today when we finished speculating on hypothetical M&A activity. Listen, we're big believers in the content business. We are big believers in IP, and we think scale is important. But our focus as we've been saying for a while, our focus is very much on execution. We really like the product mix that we have and the asset mix that we have, and we are able to dial up that scale as you've seen both in terms of investing in markets where we have really a deep presence like in parts of Latin America or India, and in the U.S., where we're increasing the volume of our production pretty dramatically. And we feel like we have the capability to do that. Without commenting on any hypothetical future activity, we like the asset mix. We think we're in a good position. And I think to your point about the sort of changing landscape, as I mentioned earlier in my remarks, I think we have sort of a unique set of assets here where even though we can talk about the whole MVPD universe and as you mentioned the kind of total subscriber trends there, but our channels and brands still have headroom for growth, many of them, most of them actually, because they're at a different life stage, if you will. And also we're really going in and challenging in markets where we're bringing new competition in the national sports network market, in the business news market, in places like that that had dominant players. And we're really coming from a different base, really going and taking share. In June, we out-rated ESPN on Fox Sports 1, for the first time, kind of a milestone. And we're very excited about the opportunities for those things to grow. But that doesn't mean that we're complacent. The fundamental point that I think we're trying to make here is that we are more proactive than ever and will be with our partners in the MVPD universe and new over-the-top players coming in to really make sure that from a customer experience point-of-view, the on-demand kind of universe for them and the product offering of our set of content is something that is really special and works for them and meets and exceeds their expectations and that's something that I think from the standpoint of, I think, the last 20 years maybe in the cable industry, our channels business, et cetera, we haven't really as an industry in the U.S. been that focused on. As a large part of our business is direct-to-consumer around the world, we're really applying a lot of that and thinking about how we partner with all of these players as well as increase the capability ourselves to go out and do a better job there and grow the business.

Thank you, Rich. Ryan, can we have next question, please.

That comes from the line of Todd Juenger with Sanford Bernstein. Please go ahead.

Hi. Thank you very much. Probably not a big shocker here. I would love to ask just for some more thoughts probably James on the trade-off you think of when you think about the various platforms, especially those that exist outside of the bundle where people are consuming more and more of content like yours. And do you agree or disagree that as consumers have the chance to watch your content in environments that are outside of the bundle often that don't contain advertising or even if they do, like the asset you partly own which is Hulu, do you not agree that that creates further risk for core elements of your business like affiliate fees and you – they expressed excitement about digital, we delivered advertising that are clearly the core growth drivers in the plan to lay forward? Would love to hear how you think about those trade-offs. Thank you.

Thank you. Thanks, Todd, for your questions. Thank you for your letter.

I'm glad you read it.

I gave it to Lachlan, he said so okay. Listen, I think it's a good question. I think what we have to think about and what we do as a team here, this is something that occupies a huge amount of our time thinking about how do we – as the platform choices the customers are making really evolve when you see a lot more competition downstream in terms of the retailing of video programming, either on ad supported or not ad supported. Internet networks like Netflix versus kind of smaller bundles like Hulu Plus. There's – we need to get a better understanding and we've developed this now about where our best business is and then what we need to do within those businesses to do – to make it better. So for example, when we talk about our digital non-linear advertising business starting to really get a little bit of traction and thinking about offsetting some of the linear declines, a lot of that comes both from our own sort of either authenticated apps and online distribution of our product, but really a lot of it comes from Hulu inventory that we're able to monetize better and better as we go along. So it's really about working in this developing system to be able to create new opportunities to do better than we're doing in the linear kind of scheduled multi-channel environment. And I think it's really important to note that even though we might be going through 10 million Hulu customers and there's 10 growing to 10 plus X million broadband-only households, so to speak, really this 85 million, 90 million MVPD household marketplace, all digital with new services being rolled out through that universe is a huge opportunity in terms of ad innovation, in terms of bundling and pricing, in terms of on-demand capability and we're very committed to making that the best experience it can in partnership with some of our biggest wholesale customers be it DIRECTV or Comcast or whomever. So I think our goal here is to be a really flexible licensor to make our distributors successful, but also to make the economics of distribution on these platforms enhance from where they are today, and that's really coming from, as I said in my comments, discoverability of our content, accessibility across multiple platforms and multiple devices and ad innovation that is candidly less interruptive, more targeted, lower load and higher priced.

Thank you, Todd. Ryan, could we have next question, please?

That comes from the line of Doug Mitchelson with UBS. Please go ahead.

Thanks so much. Two questions. One for James; I think investors want to give you more credit for STAR in India, but every time it looks like profit growth is going to take off, there's something new to invest in and it's all worked out but sports or regional networks or building out more channels, I think that's been the story of a better part of 20 years. So just I think, James, as you look at over the next few years is essentially the build-out of the platform in India done and margin starts to grow along with revenues or is there potentially more to invest in India that we should make sure we think about in our models. And I'll just have the second one for John. I know I hate to rehash Ben's question, but I'm math challenged, so when I take cable networks at mid-teens and minus $200 million on film and flat on TV, other up a little bit. I get 7% growth $6.95 billion. Is that mid-single digits in your mind? Or am I just math challenged?

Let me jump on that one. I'm not about to fill in Excel spreadsheets for a lot of people, but there's a range that mid-single digits is in. And I think given the number of data points that we've given, which is I mean pretty significant, when we reflect on it, I think you can get to a range in mid-single that we're running the business toward.

Doug, thanks for your question about India. I think – look, I'd say it's a fair – it's a good question. We are enthusiasts about the business there. I think I would say it's probably been – I don't know if it's in 20 years. I'd say 15 years ago, we started broadcasting in Hindi and created STAR Plus and that really put us on the pathway to turning around STAR TV overall and particularly creating something in India that could be profitable and really lift our Asian business. Remember before that it was a big – a heavy loss maker. So I think over the last 15 years, we were able to kind of organically invest in programming, organically invest in some new channels in certain areas and got to a pretty good place. Certainly over the last six or seven years, we've really dialed it up in terms of how we invest there and what we want to do. And you're right. Listen, I mean the regional language business is something that we thought was important for us. We did that in a combination of acquisitions with Asianet and more recently MAA TV, but also organically creating STAR Pravah, STAR Jalsha, and so forth, some organic offshoots in regional languages. I think at this point, we're really seeing the scale of the sports investment, which is really a bigger organic investment than anything we've done there in the past peak, and we have good visibility around the revenue growth around the business and the amelioration of the rate of growth in the sports investment going forward. So I do think that when we look out in 2017, 2018 and beyond, you can see real operating leverage in terms of profits in the India business come through. Now that said, we're big believers in the marketplace and if we saw opportunities there that could materially enhance the value of the business, we would have to be very thoughtful about them. But I think from an organic investment point-of-view outside of the digital investment in hotSTAR and really growing that, you're seeing a peak in the television business given the scale of the sports investment we've made. And we don't see any new major sports rights in the very near-term horizon that would materially change that. We've successfully exited the CLT20 competition this year and launched the second season of Kabaddi actually at a very cost-effective rate, which is year-on-year up 45% in its early matches, so we think that's pretty good. So I think we're still very much on track to see $0.5 billion or so of EBITDA in India within the next sort of three years or so, and a real velocity towards $1 billion of EBITDA shortly thereafter around the end of the decade or the beginning of the next one.

Yeah, and I'd add, Doug, that there are – just as we've gone through cycles, even in the U.S., there are years where we're heavy on sports, when a World Cup occurs, much like when a Super Bowl occurs in the U.S. So there's – I wouldn't call it as lumpy anymore, but there are years where there will be particularly big events that'll occur.

Yeah, but that's right, not quite as lumpy as it has been.

Exactly.

Yeah.

Thank you, Doug. Ryan, could we have next question, please?

That comes from the line of Anthony DiClemente with Nomura. Please go ahead.

Thanks for taking my questions. James, you mentioned June being a big month for FS1. As you guys continue to build out FS1, do you think you want more sports rights? I mean some investors wonder if you'd consider bidding on Thursday Night Football if and when it comes up? And then, John, if you'd just indulge one more question about the guidance, can you talk about what's in the budget for cable advertising? I know you talked about television. What's embedded in cable advertising that's in your fiscal 2016 outlook? Thanks a lot.

Yeah, okay. The – thanks very much. The thing on the sports rights, look, I think we're pretty – as we've said before about Fox Sports 1, we were very clear and transparent about what we were investing in and the rights packages that we had acquired and that we're pretty happy with them. So on Fox Sports 1, we don't see anything in the near-term that is terribly material that we need to go and do to achieve our plans. The portfolio is really coming through now and we're starting to see the impact of the investments and deals that we've made over the last 18 months to two years, as those things kind of roll through in Fox Sports 1. With respect to Thursday Night Football, first of all, without getting into idle speculation about it, I would imagine that a lot of that would end up being in broadcast and not on Fox Sports 1, so it's slightly different question, but it's very – we've been a partner of the NFL for many, many years. We love the NFL product. We think our customers love football. We know they do and it remains and continues to be a really unique offering for customers and we're always interested in finding ways that make sense to enhance what we can do and to try to do more with really unique events like the NFL, and I think we're seeing encouraging signs now in the summertime around the new NFL season in terms of pricing and advertising and we remain very, very committed to the sport. So if there were opportunities that made sense, we would of course consider them.

Anthony, on the – you pick the one metric of course that I didn't offer but I will give it to you. On advertising, we're expecting mid to high single-digits coming out of the domestic portfolio at this point in FS 2, important there as is Fox News given what is turning into be a big political year and probably a massive viewership coming in the next day to that network. Those will be drivers of our advertising gains. Internationally, we're probably in the mid-teens range and STAR particularly will continue to be the growth driver behind that.

Awesome. Thanks a lot.

Thank you, Anthony. Operator, I think we have time for one last question, please.

Okay. And that will come from the line of Bryan Kraft with Deutsche Bank. Please go ahead.

Hi. Thanks for taking the question. I had one for James and Lachlan and another for John. James or Lachlan, Sky, how do you see it fitting in with the strategic portfolio at this point? How do you think about the potential to spin it off at some point or would it make more sense to own more? You talked about not getting credit for it in your evaluation. And then, John, I just wanted to ask you what's reflected in the guidance as far as currency exchange rates and hedges? In other words, is the guidance reflective of some combination of current spot rates and hedges that you've put in place or is it based on current spot rates at this point with some cushion maybe from the hedges? Just wanted to get a little more color on that. Thank you.

Thanks very much, Bryan. It's James. On Sky, look, I think we've been pretty clear about this in the past and I think I'll be consistent today. Obviously, we do get a little frustrated that the credit and the value doesn't necessarily flow through, but at the same time, we believe the business is dynamic and growing business and an exciting one. We've been very focused on completing the transaction at last year taking our consolidated assets at Sky Deutschland and Sky Italia and combining those with what was BSkyB and is now Sky Plc and we think that's been very, very attractive for Sky and Sky shareholders and very, very attractive for us and our shareholders. And we're very focused on supporting the company in terms of completing that integration and really dialing up the velocity which that business can operate and perform, and I think you saw their results last week and that is all going reasonably well. So we like the business. We think it's a very strong business and one that has a huge amount of headroom for growth. That said, these unconsolidated assets are something that a number of years ago we said about to simplify and we've done that in a variety of places around the world with a number of assets that we've either divested of or acquired the balance of. But today we have no immediate plans around that and we're focused very much on supporting Sky in its growth and we think that's creating a lot of value over the long-term for us, although to your point, not necessarily realized in our stock price today.

And, Bryan, as you think about foreign exchange for us, your focus should be more on current spot rates. That's the way we generally price this. We do have a moderate, I describe it as, hedging program focused on four particular currencies, sterling, euro, reais and peso. But to be honest, we'd like to if foreign exchange rates change, we've left enough room to capture the upside, but current rates is really the place that you should focus as far as analyzing where we'd be on foreign exchange.

Thank you, Bryan.

Thank you.

Now I'd like to turn it over to James for a few closing comments.

Yeah, thanks, Reed, and thank you, everyone for being on the call today and taking the time. Lachlan and John and I just thought we'd like to leave you with a few quick points of – a few comments of really reinforcement. First of all, we finished 2015 having achieved many of our goals. And we think with a really good position for the future and hopefully we've been able to flush a little bit of that out for you today. Secondly, the financial profile of the business is strong and our approach to capital allocation has been and it will be consistent. And thirdly, our focus is very much on execution. And our energy and our enterprise are being applied to this strategy of creative excellence, customer focus and also global scale. So all of us here are very allied to the opportunities, and we're super aligned and energized about what's before us. So I look forward to speaking to you all in the future, as we all do. And thank you very much for your time.

Thank you, everyone.

Thank you.

And ladies and gentlemen, today's conference was recorded for replay. If you wish to access the replay system, it will be available after 8:00 p.m. Eastern today through August 19, 2016, at 1-800-475-6701 with the access code 364875. International participants may dial 320-365-3844. Those numbers again, 1-800-475-6701. International is 320-365-3844 with the access code 364875. That does conclude your conference. You may now disconnect.