News Corporation (NWS) Q4 2014 Earnings Report, Transcript and Summary

Good day, and welcome to the News Corp Fourth Quarter Earnings Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Mike Florin, Senior Vice President and Head of Investor Relations. Please go ahead, sir.

Thank you very much, Blake. Hello, everyone, and welcome to News Corp's fiscal fourth quarter 2014 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 Bedi Singh, Chief Financial Officer. We'll open with some prepared remarks, and then we'll be happy to take some questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corporation's Form 10-K for the 12 months ended June 30, 2014 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 reconciliation of such measures can be found in our earnings release and our 10-K filing. Finally, please note that certain financial measures used on this call, such as segment EBITDA, adjusted segment EBITDA and adjusted EPS are expressed on a non-GAAP basis. The GAAP to non-GAAP reconciliation of these non-GAAP measures is included in our earnings release. With that, I'll pass it over to Robert Thomson for some opening comments.

Thank you, Mike. We've now completed 1 full fiscal year as the new News Corp. And it's fair to say that the sensibility of a startup has characterized our pursuit of digital and global expansion for our distinctive portfolio of companies, a portfolio that is diverse in both revenue mix and geographic spread. We will be building on the company's proud tradition and the progress attained over the past year, during which we made disciplined strategic acquisitions, targeted divestments and tactical investments in technological and international initiatives. The company is at the very center of the global debate over the value of content and the creation of platform permutations for the delivery of that content. Throughout the year, we have also been disciplined on costs and aim to deliver value to our customers, advertisers and investors. One year into our existence, the real measure of our progress lies in the answer to this question. Are we better off, better positioned today than when the journey began? For News Corp, the answer is a resounding yes. We said on Investor Day that we would become more digital and global, and we are. We have increased market share in a number of our business, most notably, REA and HarperCollins. We said that we would be acutely and astutely cost-conscious. And we have been, and we'll continue to be. Our costs this year are down, and we will assiduously search for additional savings. We said that technology is the canvas for our content, and that has never been more true than it is today. We said that the percentage of our revenue that comes from nonadvertising sources will increase significantly over 5 years. And 1 year in, we can see that prediction being borne out. In fact, today, nonadvertising sources account for more than 50% of our revenues, and that has provided us added support in a sometimes challenging advertising marketplace and an uneven economic recovery. For the year, revenues were $8.6 billion, a 4% decrease, while EBITDA improved 12% to $770 million. Most important, our free cash flow improved by more than $290 million to $365 million. Let me be more specific about our acquisitions, cost consciousness, investments, digital and global initiatives and the challenges we faced. Our acquisitions, and we're in an early phase of our expansion, have echoed our determination to grow digitally and globally and show that we will not be rushing naïvely to overpay for underachieving companies. Just last week, we completed the acquisition of Harlequin, which will give HarperCollins a jumpstart on international digital expansion and a platform for future growth. We believe this was a prudent and disciplined move that will benefit HarperCollins and News Corp. This very day, our HarperCollins executives are in Canada, working constructively with the talented Harlequin team. Our first acquisition was Storyful, the world's leading social media news agency, which has already launched FB Newswire with Facebook and last week, celebrated 1 billion views of its videos on YouTube. Now we are focusing on monetizing that traffic and using Storyful's unique authentication expertise for the benefit of our businesses and of our clients. We also continue to recast our portfolio, consistent with our cost-conscious focus. And so we sold the Dow Jones Local Media Group and the Community Newspapers Group to focus on core branded properties in the U.S. And we sold the live events business at HarperCollins earlier this year, which we viewed as not core to our mission. We are resizing the cost base in News and Information Services with savings that are made more realizable by the extra focus and increased cooperation in the new News. This has been achieved through a combination of operational and back-office initiatives including a wide range of contract negotiations and health and pension reforms, among many other steps. Bedi will elaborate on these efforts shortly. We also expect to achieve natural efficiencies across our businesses as we migrate to digital, with consolidation of servers and software and the repurposing of platforms. This trend is evident at HarperCollins, which is well down the path of digital migration and which will certainly benefit from Harlequin's success and skills on line. We have made smart targeted investments, including partnerships with real estate sites in China and Hong Kong through REA, a leading online real estate services company in Australia. The deals give us a connection with a still-maturing market in China and will bring Chinese investors closer to property opportunities in Australia and elsewhere. And speaking of REA, I'd like to point out their robust numbers and the ongoing benefit from secular tailwinds, as agents are increasingly aware of the high ROI that REA can offer. REA recently announced the purchase of a minority stake in iProperty for $100 million. iProperty has burgeoning online property, advertising operations in Southeast Asia and just reported revenue growth of over 40%. We are excited about potential global opportunities in this sector. Also this year, we announced plans to add $50 million to our investment in SEEK Asia, a growing employment listings business, as we expand our presence in Southeast Asia, a region which we believe holds tremendous growth potential. Last year, we launched BallBall, which offers exclusive soccer highlights from the 5 major European leagues to audiences in Indonesia, Japan and Vietnam through desktop, laptop, mobile and tablet platforms. And also on the investment front, this past year, we successfully launched the global programmatic advertising exchange, which has helped us cut out third-party networks and allowed us to work directly with advertisers who want to reach our premium audiences. Owning our data and protecting the privacy of our customers are imperatives. While still early, we are certainly pleased with the pricing improvement and extra revenue that we've generated. We remain firm believers in the power of print, but we are committed to using technology to make our content more accessible, mobile and profitable. And that is why we have been driving digital throughout News Corp. In the U.K, The Sun launched Sun+, the digital version of the country's most popular newspaper, and we are focused on enhancing engagement with the imminent launch of a new tablet app. Our News UK publications have integrated innovative sports video clips and apps and expanded into online luxury shopping, catering to the needs of an extremely desirable demographic. In particular, we've been pleased with The Times, which grew in volume, revenue, pricing and market share, thanks to great journalism and sustained technological toil. A newspaper launched in 1785 has definitely made a successful transition into the digital age. In Australia, we're pleased to show very strong digital growth for our paid digital subscriber base over the past year, now exceeding 200,000. And The Australian, which has just celebrated its 50th birthday, released a new iPad app. Today, The Australian has more paying customers than at any time in its history and a larger audience than ever, with more than 3 million readers each month. We are planning to relaunch our paid digital mastheads in Australia with a simplified subscription offering. We'll also begin integrating these digital publications with a unique form of interactive advertising that will take advantage of the strengths of different formats. No matter how esteemed the publication, our teams are working continuously to improve the experience for our readers and for our advertisers. Also in Australia, Foxtel announced triple play bundling and launched Presto, its new online movie service, which is in its infancy. Foxtel is focused on monitoring market conditions to respond to competitors and to opportunities and on driving penetration to increase the value of this great asset. Here in the U.S., Dow Jones released key enhancements to Factiva, and The Wall Street Journal bolstered its digital leadership through new video programming and the launch of WSJD, along with verticals focused on economics, marketing and Washington policy. Also in the U.S., I'm particularly pleased to note that in-store advertising has shown impressive growth in News America Marketing. There is as much discussion about owning the point-of-sale. But the point-of-purchase is crucial and that is the strength of our in-store team. Amplify launched its new digital curriculum in English Language Arts for grades 6 to 8, and we are excited about the quality of the offering as we engage with school districts around the country. In publishing, e-book sales at HarperCollins this quarter were 23% higher versus the prior year, thanks in part to the success of the Divergent trilogy, which underscored the power of book blockbusters in a digital environment. And HarperCollins was at the forefront of the industry in forming partnerships with online e-book subscription services, Oyster and Scribd. Of course, any kind of review of the year must include the challenges we have faced, including advertising headwinds in Australia and elsewhere. The ability to make confident forecasts is undermined by the erratic patterns that have characterized trading, particularly in print, which is seriously undervalued as a platform by advertisers. Print is a concentrated, intense reading experience with unique affinity in our digitally distracted age. Our professional information business at Dow Jones is still in the process is being recast following a period of difficulty, about which we're being quite frank. Clients are responding favorably to the new product, pitch and pricing. But the development work is not yet done. The rate of decline has certainly eased, but we expect some softness for a quarter or 2. In balancing the opportunities and challenges, we believe there's more upside in the opportunity than downside in the challenge. Our core message is untarnished and unvarnished. We promised that we would work with restless energy on behalf of investors, who understandably expect that creativity is balanced by physical discipline and that the expansion does not just mean an expanding cost base. Despite headwinds, we still experienced significant growth in free cash flow and we showed stable profit margins, demonstrating the strength and diversity of our asset base. We remain focused on driving top line performance and generating sustained and sustainable revenue -- returns for our shareholders. In summary, 1 year into our existence, News Corp is unified by our pursuit of premium content and the building of iconic brands, brands that are potent platforms in a digital age. We understand the deep affinity between those brands and our audiences. That affinity is the nexus of revenue and of profitability. This is a company where calculated risks are taken, instincts followed and objectives pursued with passion, purpose and principle. We are, as our Executive Chairman Rupert Murdoch said on Investor Day, an eclectic and an unconventional company in an age where such attributes hold great value. We remain fully aware of the challenges we face, whether the vagaries of the macroeconomic cycle in the countries where we work, the ebb and flow of advertising and readership rates and the mass media mass migration, which continues to unfold. Those challenges will be met with a focus on costs and on digital and global growth. We are intent upon fashioning an ever more rewarding future for our audiences, our employees and our investors. Now I will turn it over to Bedi to discuss the financials in detail.

Thanks, Robert, and good afternoon, everyone. As Robert mentioned, we made strong progress in our first year to further digitize our asset portfolio and improve our market share across several business units. We prudently reduced our cost base and held consolidated adjusted EBITDA margins relatively stable, despite continuing advertising headwinds. For the full year, we reported revenues of $8.6 billion, a 4% decrease versus the prior year. Excluding the impact of acquisitions, divestitures and foreign currency fluctuations, adjusted revenues were 1% lower than the prior year. We reported full year total segment EBITDA of $770 million, which was a 12% increase versus the prior year. Reported results included costs related to the U.K. Newspaper Matters, net of indemnification, which was $72 million for the year. Excluding all acquisitions and divestitures, costs related to the U.K. Newspaper Matters and foreign currency fluctuations, adjusted total segment EBITDA was down 2% versus the prior year, and would have being flat, excluding the dual rent costs for the London office. Fiscal 2014 reported EPS were $0.41 versus $0.81 in the prior year, which included a significant nontaxable gain in Other net related to the CMH acquisition and the sale of our ownership interest in SKY Network Television, as well as impairment charges net of taxes. Excluding the impact of all these and other items, our adjusted EPS were $0.46 compared to $0.62 in the prior year. Free cash flow available to News Corp was $365 million, an improvement of $293 million compared to last year. For the fourth quarter, the company reported total revenues of $2.2 billion, a 3% decrease versus the prior year period, and our adjusted revenue declined by 1%. Fiscal fourth quarter total reported segment EBITDA was $127 million, a 2% decrease versus the prior year period. Reported results included $16 million related to the U.K. Newspaper Matters net of indemnification. Our adjusted total segment EBITDA this quarter declined by 7%, but was slightly up excluding $13 million of dual rent and other facility costs, mainly related to our London office relocation. With that as a brief overview, let's look at our fourth quarter performance for our key segments. As you can see, we have now added a new reporting segment, Digital Education, to present Amplify separately, which was previously included in the Other segment. In News and Information Services, revenues for the quarter declined $104 million or 6% versus the prior year period. Adjusted segment revenues were down by 5%. Within segment revenues, advertising declined around 9% this quarter, similar to what we had seen in the third quarter. Looking at advertising performance across our key publishing units. At News Corp Australia, advertising revenue declined around 16% or 11% in constant currency for the quarter, a slight improvement from the prior quarter. The biggest improvement came from national advertising, where we also saw some improvement, albeit a smaller magnitude, in retail. At News UK, advertising revenue has declined around 1% or 11% in local currency, fairly similar to last quarter. Vastness [ph] was driven by retail, combined with the decline in broadband and mobile ad spending versus the prior year, partially offset by the late Easter this year. And at The Wall Street Journal, advertising declined low-double digits this quarter, impacted by much tougher year-ago comps and weakness in a few categories, most notably telecom and finance. Total circulation and subscription revenues for the quarter declined around 4%, driven primarily by continued softness in professional information business and Dow Jones, which had a negative $17 million impact to revenues this quarter. This was an improvement, however, versus the third quarter, as we continue to make progress to stabilize trends and retain existing Factiva customers. Total newspaper circulation revenues showed modest growth in local currency, mostly driven by prior quarter subscription and cover price increases at a number of our mastheads. It's worth highlighting, as Robert mentioned, that this quarter we saw volume and revenue growth in local currency at The Times in the U.K. and at The Australian, further tangible evidence that our quality newspapers are benefiting from the migration to digital. At News America Marketing, sales improved 4% versus the prior year period, led by double-digit growth in in-store advertising and modest growth from the FSI business. Segment EBITDA decreased $80 million in the quarter or 38% as compared to the prior year period, and adjusted segment EBITDA was down 34%. Included in segment EBITDA was $11 million related to the relocation of our London operations for dual rent and other facility costs. And we also incurred much higher expenses at News U.K. related to specific marketing initiatives, as I had discussed last quarter. We also had higher severance costs in the U.K. this quarter. In Cable Network Programming, revenue declined $10 million or 7% compared to the prior year quarter due to adverse foreign currency fluctuations. Subscription revenues, which account for over 80% of FOX SPORTS revenues, were flat but grew 6% in local currency, benefiting from higher digital platform subscribers and higher CPI-linked cable and satellite affiliate fees. Advertising revenues declined modestly and were fairly consistent with the prior quarter, impacted by a soft marketplace, combined with the absence of alliance to our rugby tournament in the year-ago quarter. Segment EBITDA in the quarter was flat compared to the prior year. Adjusting the impact of foreign currency fluctuations, adjusted revenues were down 2% and adjusted segment EBITDA improved by 11%. In Digital Real Estate Services, revenues increased $22 million or 24% compared to the same quarter last year, reflecting higher pricing and uptake of premium products. Segment EBITDA increased $16 million or 35% compared to the corresponding prior year quarter due to the increased revenue. If you exclude adverse foreign currency impacts, adjusted revenue and adjusted segment EBITDA grew 33% and 41%, respectively. Turning to the Book Publishing segment. Revenues improved 10% and segment EBITDA grew 50% versus the prior year quarter. We continue to see very strong performance from the Divergent series by Veronica Roth, which clearly got a boost from the theatrical release in March and have begun to spread overseas. We sold globally an additional 3.6 million net units of the series this quarter and a total of over 19 million net units for the year. Total e-book net sales for the quarter grew 23%, mainly due to the Divergent series, and accounted for 22% of HarperCollins' consumer revenue, up from 19% in the prior year period. We have, as Robert mentioned, completed the acquisition of Harlequin Enterprises from Torstar Corporation for CAD 455 million. We expect, as we've indicated before, the deal to be accretive to earnings in fiscal 2015 and to improve our free cash flow. We are just now beginning the integration work with Harlequin, and we will update you on our progress over the course of the year. On an annualized basis, we expect Harlequin will contribute revenues in the $320 million to $340 million range, excluding the joint ventures. We haven't yet factored any material synergies in the current fiscal year. We do expect to incur nonrecurring transaction costs of approximately $5 million in fiscal '15. At our Digital Education segment, revenues decreased $7 million compared to the prior year quarter, primarily due to lower project-based consulting revenues at Amplify's legacy assessment business, as I had also noted on our last call. Segment EBITDA was negative $53 million and was fairly consistent with the prior year. For the full year, Digital Education EBITDA loss was $193 million. Amplify remains on track to roll out the English Language Arts digital curriculum targeted to grade 6 through 8 for this coming fall. We expect to have approximately 10,000 students for our digital ELA curriculum and 20,000 for our digital math and science supplemental offerings signed up this year. In addition, Amplify will have around 250,000 students signed up for the fall to use its digital hybrid K-5 program known as Core Knowledge Language Arts, which is viewed as a bridge to our broader digital product offerings. And finally, our next-generation tablets, designed in collaboration with Intel, are also on track for a fall rollout with plans to deploy to at least 26,000 students. In our Other segment, which primarily includes corporate overhead and our strategy and creative group, excluding U.K. Newspaper Matter costs, segment EBITDA was negative $49 million compared to negative $76 million allocated in the prior year. With respect to our earnings from affiliates, Foxtel ended the year with around 2.6 million total subscribers, up 6% versus the prior year, driven by higher digital platform subscribers. Cable and satellite churn improved to 12.5% compared to 14.2% in the prior year. Broadcast ARPU rose 1% for the full year, impacted by a February price increase. Foxtel revenues for the year were up 2% on a constant currency basis and EBITDA was up 8% similarly. Turning now to cash flow. News Corp's cash flow from operations improved to $854 million compared to $501 million in the prior year, and free cash flow available to News Corp improved to $365 million compared to $72 million in the prior year. Just a few additional items to note. CapEx for fiscal '14 finished at $379 million, which was in line with our expectations. And included in that CapEx was around $100 million related to costs for the London office relocation and HarperCollins headquarters within Manhattan. On our ongoing cost-savings initiatives. As I've mentioned in past quarters, we have been very focused on reducing the cost base. In the aggregate, we identified over $100 million in annualized cost reductions, most of which we'll realize in fiscal '14. The majority of savings are in distribution and production, including renegotiated paper and ink contracts, closing our divestitures of warehouses and printing plants, reduced software technology spend through aggressive procurement efforts and restructuring of healthcare and pension plans. And we will continue to look at further efficiencies in the coming year. Let me now discuss a few drivers that we see for fiscal 2015. At News and Information Services, we'll be looking to enhance our paywall offerings with planned relaunches across all regions. We will still have the dual facility expenses related to the relocation of the London office in fiscal 2015 of around $25 million. While the professional information business at Dow Jones remains challenged, we do expect stabilization over the course of the year. Advertising remains relatively weak. But our ad sales teams are cautiously optimistic, and we hope for improvement. We expected continued strong performance at News America Marketing, led by in-store advertising. At Cable Networks, programming costs should be up only modestly given the few additional events this year, including the Asian Cup in January and the Cricket World Cup in February, March. And we have no major rights renewals coming up this year. At Book Publishing, given the huge success of Divergent last year, at this point we do expect HarperCollins to face tougher comps, particularly in the second half of fiscal '15, before reflecting performance from the Harlequin acquisition. At Digital Real Estate, we expect continued strong performance, benefiting from favorable secular trends and high ROI to the agents. At Digital Education, the focus will remain to broaden its curriculum and drive further sales adoption. Given that the curriculum is now in the commercial rollout phase, we will begin capitalizing some of the content development costs. We expect to capitalize $60 million in fiscal 2015 related to ELA, and that EBITDA will improve by at least this amount. We expect, however, our total cash investments spent at Amplify to be relatively similar in fiscal '15 as it was in fiscal '14. Corporate overhead and creative and strategy group will likely spend similar levels to fiscal '14, in a range of $160 million to $180 million. Finally, CapEx for fiscal '15 should be around $400 million, including the additional $60 million capitalized software costs at Amplify, as well as around $70 million in the U.K. to complete the London office relocation. So in summary, fiscal 2014 was a very busy year for News Corp, and we balanced ongoing operational efficiencies with prudent investments and strategic acquisitions to expand our global footprint and digital offerings. We remain steadfast on stabilizing top line performance and look forward to updating you on our progress throughout the year. And with that, let me turn it back to the operator for Q&A session.

[Operator Instructions] And we will take our next question from John Janedis at Jefferies.

Bedi, now that you've been public for a year, can you give us your current views on return of capital given your free cash flow generation last year? And then on news segments, the decline in EBITDA, at least in the fourth quarter, was a bit more than what I would've expected. Are those marketing initiatives going to step down in the next quarter or 2? And are you starting to run out of leverage to pull on the cost front?

Thanks, John. Let me just start by addressing the fourth quarter. Clearly, as we had also mentioned in the third quarter, we expected to see additional marketing costs in London, which indeed did come through, and ones viewed [ph] that they will be beneficial to us in terms of revenue in the quarters to come. The London relocation, obviously, was also an extra expense in that quarter. And the professional information business at Dow Jones was also soft. So I think that gives you a sense of the kind of impact those things had in Q4. With respect to your earlier question, I think the way to think about it is we're still very focused on making sure that the business is stabilized, especially in News and Information Services. And we look to additional investments and smart, strategic and disciplined acquisitions, clearly with a view to generating long-term shareholder value per share, which remains kind of our mantra.

Our next question comes from Entcho Raykovski at Deutsche Bank.

My question is around Amplify. And you've obviously provided some guidance there into fiscal '15. Is that contingent on targets being met throughout the year? Or are you feeling it's too early in the performance of the business necessarily to be setting targets?

It's Robert here. To be honest, it's little early in the business to be setting targets. But what we're focused on is the development of the curriculum. That's the key part of the investment that we've undertaken at Amplify. And we said to you 18 months ago, that in 18 months, we would have a much clearer indication of the trajectory of the business. And I think it's fair to say now that we are getting a sense of that. And we still hold ourselves to that deadline. And so as the business unfolds over the next 12 months, we'll be keeping you updated about sales, about sales patterns and about the substance of the business.

And if I can just add to that. Clearly, ELA was the sort of production effort and now it's gone to market. But we still have a lot of production effort behind math and science, which will continue in 2015. And sales for those products will start at the end of 2015.

It's a significant investment, but it's clearly a significant opportunity.

And sorry, if I could just follow up. In the coming few months, so do you have specific student targets that you do need to reach? Are you prepared to disclose those?

Look, we don't have specific targets. This business, as you can understand, is evolving. It's in the early stage of the evolution. It's evolving quickly. And as we pass key metrics, we'll pass those metrics onto you.

Our next question comes from Justin Diddams with Citi.

Just a question on the News Information Services business. Given we enter FY '15 with what's potentially a continuation of these advertising declines, do you think there's scope again in FY '15 to cut the same amount of cost out of the cost base? Otherwise, we probably need to put in an EBITDA number much lower for this year if you're not able to cut those costs. I just wanted to clarify that it was $100 million spend from the office move in the U.K.?

So in terms of CapEx that we spent in the London building, that was -- in fiscal '14, it was $75 million of capital expenditure. And we expect somewhere in that sort of region in fiscal '15 as well, just to fit out the building completely. People have started moving in, but not all the floors are occupied.

Justin, under your question about cost and advertising trends. First of all, on costs, clearly, we're -- because of the concentration and new focus of the new News, we are finding opportunities to consolidate and to cut costs. And that, frankly, is not going to stop. And that's separate from trends in the advertising revenue, which clearly, the winds have been buffeting. But what we're seeing really are different circumstances in different regions. And it's -- at the moment, there are indications that the rate of decline has declined in Australia. There are green shoots on a nullable [ph] plane. And part of that is great work by our team in Australia. We focused on local advertising, and local advertising revenue trajectory has changed in Australia. The national market is different, but there'll be an increasing focus on that as well. And that's a great tribute to Julian Clarke and Peter Tonagh and our advertising team in Australia. At Dow Jones and The Wall Street Journal, it clearly was a quarter of decline. But as we look forward a little bit, you'll see that, for example, WSJ magazine, which didn't exist when News Corp took over Dow Jones, in September it will have 2 issues. One of them a record amount of revenue. You can count the pages for yourself. Meanwhile in the U.K. in the last quarter, clearly there was some marketing spend. I know companies like to blame the World Cup for all sort of ailments, but it was clear that if England had progressed beyond the group stage in Brazil that advertising would've picked up. There would've been momentum. But it's also fair to say that the England team failed to exceed low expectations.

And our next question comes from Michael Morris at Guggenheim Securities.

With respect to The Wall Street Journal and the value of the content, the fact that I think it's must-have-access-to for most business professionals, could you talk a little bit about the pricing power there? How you look at pulling levers on pricing and the risk domestically? And also, when you look at that brand outside the U.S, where do you think you are in fully leveraging the brands and content and what's -- what can we be looking for there in the future?

Well, I think it's fair to say that we haven't fully leveraged the brand and that Will Lewis, who's been doing a marvelous job since he took the helm, is looking not only overseas opportunity, but what more, to your point, can be done to leverage and take advantage of the necessity that many people have to read Wall Street Journal content, but also looking at different platforms for delivery of that content. And over the period since the News Corp acquisition, we've been seeing strong year-after-year growth in circulation revenue. And there's no reason for that not to continue.

Our next question comes from Alexia Quadrani at JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: When you look at the Book Publishing business, which has clearly been an outperformer for some time here, and you look at the -- a book like Divergent, which is a multiple part -- there's several books in this series, how long does -- how long of a tail does that typically have? I mean, I know you mentioned more challenging comps in the back half of your fiscal year. But for the next couple of quarters, can we continue to benefit from this series or have we already played it through a bit?

Look, it's a little difficult to forecast. I need better [ph] soothsayers. And it is -- it's a blockbuster. Well for example, there are variables that may have an efficacious impact, such as the release of the second movie in the trilogy, which is scheduled for the spring. So it's a -- we're -- at the moment, it's fair to say that we're still seeing benefits.

Our next question comes from Doug Arthur at Evercore.

Robert, you alluded to a sort of stepped-up or accelerated rollout of digital content in the News and Information group given the success of the Sun+. And I mean, that's not a new strategy. But in terms of this marketing spend, as you do similar efforts in Australia, perhaps more stepped up in the U.S., are we likely to see the marketing spend line go up as a result, in line with this effort?

To be honest, Doug, I wouldn't draw too many conclusions -- long-term conclusions from the last quarter. I think one of the advantages we have as a company now is that we learn from experiences in different places. The executives in London, Sydney and New York are constantly talking about efficient marketing spend. And so that focus is enabling us to, generally, over the longer term, keep the marketing spend to the minimum necessary.

Our next question comes from Craig Huber at Huber Research Partners.

My first line of question, please. What was the cash level on your balance sheet at the end of the quarter? And also, what is holding you guys back from buying stock and/or putting in place a quarterly dividend? I have a follow-on.

So our cash balance at the end of the quarter and, obviously, the fiscal year, was $3.1 billion. Anyway, in terms of how we think about deploying the cash, as we've said before, we're very focused on making sure that we are doing smart strategic acquisitions, that we make sure the top line is getting stabilized. We make internal investments in projects such as BallBall. So that's really the front line focus to make sure we build long-term shareholder value at the company.

Our next question comes from Adam Alexander at Goldman Sachs.

Just a question on Dow Jones' Institutional business. It's obviously been a drag for FY '14. You mentioned that you've seen some stabilization. I'm just wondering if you could give some color around what's the key area of customer pushback there and how you're going about addressing that?

To be frank, the key area of push back was in Factiva, where we had changed the offering in a way that, to be honest, some of the clients found unacceptable. And so what we've done, we've listened to our clients. We've perfected the product -- the pitch and the pricing, and we're starting to see some positive feedback there.

We'll take your next question from Eric Katz at Wells Fargo.

With regard to the investment REA Group made in Southeast Asia, can you tell us a little bit more about that asset and if you think it can move the needle in the segment off already strong growth rates? And then secondly, foreign currency has been a big headwind for you in fiscal '14, but it seems like it could lapping some of those comps. So do you feel like you may have a bit of a tailwind now in fiscal '15 as you lap that?

It's hard to ensure predict on foreign currencies. But yes, I think, generally speaking, shouldn't be as unfavorable as we saw in 2014. Are you asking about the iProperty acquisition? Sorry, I didn't get the first part of the question.

Yes.

So we've taken a small stake in iProperty. I think we've disclosed it's 17% or 17.5%. It's really REA that's done that. And I think it's part of their stated objective of expanding outside sort of Australia, but near to Australia in a sense, so that you have the ability to monitor what's going on in the region that's close by. We'll have a board seat on that company, for that investment. And I think we'll help them and encourage them to grow. There may be cross-platform opportunities with other things we're doing in the region, such as with SEEK Asia or with BallBall, which we haven't fully exploited yet.

I think it's fair to say at the Investor Day, we indicated that we would increase our presence in East Asia and frankly, in the U.S. We're keeping that promise. As Bedi said, it's a relatively small, at this stage, investment. But it's a small investment in a fast-growing region.

[Operator Instructions] Our next question comes from Alice Bennett at CBA.

Just -- I have a question around FOX SPORTS. Maybe just a bit of a clarification. So did you say that total local currency revenue was down 2% but subscription, up 6%? And if that's the case, what drags down? Was it just advertising or was there something else that drags the total revenue down to that negative territory?

I think the reported numbers were dragged down by foreign currency. But I think local currency, we were up.

Okay. So is that the adjusted number in the...

Yes. Adjusted -- we've adjusted for -- sorry, yes, for currency.

And there are no further questions in the queue.

Okay. Well, thank you, all, for participating, and we look forward to sharing with you our progress throughout the year. Have a good night.

And that does conclude today's conference. We thank you for your participation.