Good day, and welcome to the News Corp's Fourth Quarter Fiscal 2016 Earnings Call. Today's call is being recorded. [Operator Instructions] . At this time, for opening remarks and introductions, I'd 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, Jessica. Hello, everyone, and welcome to News Corp's Fiscal Fourth Quarter 2016 Earnings Call. We issued our earnings press release about 30 minutes ago, and now posted it on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Bedi Singh, Chief Financial Officer. We will open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corporation's Form 10-K for the 12 months ended June 30, 2016, 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 the 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 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, and thank you all for joining the call. We ended fiscal year 2016 with strong results in the fourth quarter, highlighted by robust year-over-year growth in revenues and EBITDA at Digital Real Estate Services and a palpable upturn at HarperCollins. For the fourth quarter, reported revenues were $2.2 billion, a 5% increase versus the prior year. Total reported segment EBITDA was $361 million, up 68% compared to the prior year. This figure includes a $122 million benefit from the Zillow legal settlement. But even absent that adjustment, EBITDA still improved tangibly in the quarter. In Digital Real Estate, we experienced 21% growth in revenues in the fourth quarter, further illustrating the key role the segment is playing in News Corp's success. In fact, since our separation 3 years ago, revenues at Digital Real Estate have more than doubled, and the segment is expected to become the biggest contributor to EBITDA in the future, thanks to the ongoing growth of REA and the renaissance of realtor.com in the U.S. This increasing role in one of the world's fastest-growing digital sectors augers well for our future. Book Publishing ended the year with much momentum, highlighting the value of high-quality content and the ability to leverage that content across both print and digital platforms. HarperCollins' success this quarter, with revenues rising 11% and EBITDA surging 52% year-over-year, was driven by new releases and thoughtful cost initiatives. Fox Sports Australia had another good quarter, with increased revenues, thanks in part to record ratings, which came from capitalizing on its top-tier content and developing our long-term franchises in the country's most popular sports. The quarter's results certainly underscored the tremendous power of live sports, which have increased in relative value in a world of viewer fragmentation and program promiscuity. While global print…

Thanks, Robert. Starting with our fourth quarter results. We reported fiscal '16 fourth quarter total revenues of $2.2 billion, up 5% from the prior year. As we had hoped, currency headwinds moderated during the quarter, with an impact of only $54 million to reported revenues. As we mentioned previously, this being a 53-week fiscal year for us, fiscal fourth quarter includes an extra week, which positively impacted revenues by $112 million, with the majority of that at News and Information Services segment. Excluding the impact of foreign currency fluctuations, acquisitions and divestitures, adjusted revenues grew 6% compared to the prior year, including the extra week, and we're relatively flat excluding that. Reported total segment EBITDA was $361 million, which includes a benefit of $122 million related to the Zillow settlement. Excluding that benefit, total segment EBITDA would have been $239 million. Adjusted EBITDA, which excludes the settlement benefit as well as acquisitions, the impact of currency and legal costs related to the U.K. Newspaper Matters grew 23% versus the prior year period. Both reported and adjusted EBITDA also include the impact of the extra week that I mentioned earlier. For the quarter, EPS from continuing operations, which includes the Zillow settlement benefit net of tax, were $0.16 compared to $0.01 in the prior year. Adjusted EPS from continuing operations were $0.10 versus $0.08 in the prior year. For the full year fiscal '16, we reported total revenues of $8.3 billion, a 3% decline compared to the prior year. The decline in revenues included a negative impact from foreign currency of $455 million. Excluding the impact of foreign currency, acquisitions and divestitures, adjusted revenues for the year were flat compared to the prior year. Reported total segment EBITDA was $684 million, which includes a onetime charge of $280 million for the…

[Operator Instructions] We'll go first to John Janedis with Jefferies.

Bedi, can you talk more about the magnitude of the expected cost savings in the Australian print segment beyond the $40 million, given some of the synergies you spoke to? And are there any other programs in the U.S. or U.K.? And then on a related topic, given the headlines in the regions, could you just talk more about current trends you're seeing on the print side, on advertising to start the first quarter on a global basis?

Thanks, John. So on cost reductions in Australia, we had previously said that the annual program was around 5%, and 2.5% was realized in fiscal '16, and we expect the remainder of that to sort of flow-through in fiscal '17. On top of that, I know the Australian operation continues to examine a number of opportunities in sort of shared service functions, et cetera. So I think we would expect to see slightly higher cost savings even than that in Australia. In the U.S., Dow Jones has been cutting costs, headcount was 6% lower this year than it was the year before. In addition to that, they are looking at a lot of the structural issues at Dow Jones, and we expect further cost-reduction programs to be implemented this year. In the U.K., there was a big cost-reduction program we announced, if you recall, in late January, February, that's being implemented. FTEs are down 8% year-over-year and the marketing spend is slightly higher, but the guys in the U.K. are also looking at backroom savings, and they're looking at some consolidation opportunities.

Yes, just to supplement what Bedi said. John, generally, there's a culture of cost consciousness in the company, as Bedi explained, clearly, there's a shift transition going on in the businesses. Print is still very precious to us, but digital ever more important, and our teams are being realigned accordingly. The other aspect that we're focusing on and we're certainly seeing savings, and a little difficult to quantify, but we'd be able to articulate it, over time, to you more precisely is in sharing services. And that's, for example, particularly the case in the U.K., where the businesses occupy a single building, which gives us an opportunity to examine what is the right size of services for contemporary business. As for ad performances, as Bedi had previously indicated, there is a problem with visibility. There's a certain amount of political instability that has been in Australia with an election and the uncertainty that followed it. As you know, we're in the midst of an interesting election in the U.S., and there has been some upheaval in the U.K. There's no doubt that, that has had something of an impact on the business in the last quarter. Looking ahead, visibility is a bit of an issue. But I think there's a lot more fundamental, more profound issue, which is, there's a lot of instability in the ad market itself. A lot of advertisers are questioning the return on investment, and we see a particular opportunity being host to a portfolio of premium sites to provide them not only with settings appropriate for their advertisements, i.e., high-quality content, but measurability. And we talk about visibility, of course, but viewability is very important. And it's interesting that there's an angst-driven debate in the advertising world about the viewability of ads. As I've said before, and it's worth emphasizing again, every print ad is a 100% viewable.

And we'll now take a question from Entcho Raykovski with Deutsche Bank.

My question is around the acquisition of the Wireless Group. You're able to talk a little bit more about the strategy behind the acquisition. In particular do you see cost-saving opportunities when you combine it to the remainder of the U.K. [ph] growth, or do you see a revenue opportunity from the acquisition?

Entcho, it's really a revenue opportunity. What you have in Wireless Group, and obviously, the acquisition is pending, is a series of radio stations, websites and actually global sports audio rights that very much complements not only the strength of The Sun, but those of The Times. And it's certainly our intention to develop Wireless Group, but also to use it, to develop the Sun platforms because you can see a wonderful overlap of demography and also an enduring growth in its audience. Radio is, these days, unlike some content forms, not subject to the vicissitudes of piracy. So we're very optimistic about Wireless Group. We're very optimistic about its potential for all of the News U.K. Properties. And just for example, its potential impact on Sun Bets, which is -- they've rolled out this year in the U.K. by Rebekah Books and the team. Obviously, during a football match, making the broadcast for football match exciting, compelling for quite a lot of listeners and quite a lot of readers, the opportunity to have a flutter is something that they're interested in. And so from the sport itself, from the sport extensions, right through to the newspapers, we can see genuine concrete benefits.

We'll now take our next question from Eric Katz with Wells Fargo.

So you made quite a few moves in Australia recently from acquiring APN to -- we've seen some recent news around some investments to upgrade paper quality and also shutting down some papers and even speculation of a sale of some local papers. Could you maybe give us a little more perspective into the strategy to reshape the newspaper business in Australia?

Michael Miller and the talented team in Australia are looking for synergies across the papers, across the websites, and clearly, you can create a network effect because each of these newspapers is a platform, and those platforms are complementary. And the other element to bear in mind there is it obviously helps us with those regional papers to develop in the Queensland, in particular, to develop the REA franchise.

We'll go now to Tim Nollen with Macquarie.

My question is actually about the Books division. A couple of things. I think, Bedi, you might have mentioned the e-book revenue was 19%, if I heard that correctly, down from 33%. Could you please clarify if I heard that right? And if so, why such a sharp drop? I guess, it must be the mix of titles, and kind of what that means for your print versus your e-business? And then a second question on the industry, also on the books business, is do you give a breakout of international sales within HarperCollins? You mentioned a good global expansion there.

Tim, digital revenues were 19% versus 23%, not 33%. So it wasn't that big a drop. But yes, you are right, every quarter, the mix will change a little bit, depending on the books and how they are indexed in terms of physical versus digital. But we see, overall, the digital sort of percentages stabilizing. And we're also seeing good growth in physical books. So in terms of international, we don't break out the international revenue. But I think we've been very pleased with the Harlequin acquisition. I think we've announced in the past a number of authors whose books we've taken in different languages. We used to be just predominantly an English-language publisher. Now we publish in all the major languages.

I'd just like to add to Bedi's thoughts there, which we had taken out costs at HarperCollins, we've taken out cost of Harlequin, so the upturn in revenue is particularly enhanced EBITDA in the most recent quarter. And as we've indicated, we're very confident about the momentum in the book industry. And just one example of the synergistic relationship between Harlequin and HarperCollins. Traditionally, Harlequin was just a mass-market publisher. And so you didn't see it in trade locations, your typical corner or independent bookstore. And now because of HarperCollins' power placement, you are, and for some of those titles, traditional Harlequin titles, combined with an enhancement of covers and presentation, generally, you're seeing that Harlequin authors are getting anywhere between -- certain authors, not all authors, certain authors getting anywhere between a 50% to 100% increase in revenue per title.

We'll go now to Fraser McLeish with Credit Suisse.

Bedi, can I just check, did you say that Foxtel EBITDA in the fourth quarter was down 1% on an adjusted basis?

Yes, that's correct. On an adjusted basis.

Great. So that rate of decline has kind of been coming down over the course of the year. And are you sort of more confident you're now at a level where that can -- we can sort of get some growth back from here?

Well, I think at Foxtel, the key mission, in a sense, is still driving subscriber volume so that we create long-term value, both for Foxtel and its partners. So I think we will continue to see -- we will continue to have offerings in the market, and that might mean that we have to continue investing in some marketing. But we're focused on volume, and at this stage, we're not really giving any sort of guidance on where the EBITDA might be. I think we're very focused on -- the PT [ph] very focused on making sure we drive subscriber growth.

Could I just ask, just about the cost -- could I ask about the cost base in general at Foxtel? I mean, you're talking about sort of more better control or looking at cost across the group. Is there opportunity to reduce costs at Foxtel?

Yes, I think definitely. I think Peter Tonagh and his team are looking at all aspects of costs, including set-top boxes, and we're looking at all the agreements we have in place to try and see whether we can improve on profitability. It's a constant ongoing thing they're doing.

And to add to Bedi's thoughts, clearly, Peter Tonagh and his team want to focus on the core marketing of the core Foxtel offering. That is the key for growth, not only at Foxtel, but also at Fox Sports. We're -- thankfully, we're seeing a take-up of the Fox Sports package in new Foxtel subscriptions well into the 90% range, which is indicative of Fox Sports' power, but also indicative of the importance of Foxtel as a conduit for those subscriptions.

We'll take our next question from Craig Huber with Huber Research Partners.

Yes, just curious, for Move, realtor.com, what was EBITDA on the fourth quarter and the full year? And if you could pull out the legal expenses, that would be helpful, please.

So in terms of legal expenses, for the full year, we spent $38 million, and it was $15 million in the quarter. We're not breaking out a specific EBITDA number for Move, but I think it's fair to say we're very, very, very pleased with the way Move has performed. And it is EBITDA positive, very nicely, if you exclude the legal expenses and even if you exclude stock-based compensation expense. I would say that we've invested a lot in Move in terms of marketing and new products. And I would say that Move is better placed today in terms of EBITDA than it was in its last year as a public -- stand-alone public company 18 months ago, and we expect that this EBITDA is going to ramp going forward.

And just to reemphasize what Bedi said, that in -- our core EBITDA was nicely positive. And unlike many digital companies, our core EBITDA does indeed include stock-based compensation.

We'll go to Doug Arthur with Huber Research.

Bedi, adjusted EBITDA of $274 million, up 23%. I'm not -- maybe I missed this. What impact, if any, did the extra week have on that number?

So we've given out the revenue impact of the extra week. On the EBITDA impact, I think it's -- you can assume that the quarterly margin for each segment can be applied to revenue to sort of derive the -- the revenue impact was $112 million for the quarter, majority of it was in News and Information Services.

And next, we'll take a question from Brian Han with Morningstar.

Just a couple of quick ones. For Fox Sports, what percentage of Fox Sports revenue is from advertising? And also, how much debt -- net debt is in Foxtel now?

So advertising is about 20% of total revenue, and it's been growing quite nicely, thanks in part to the very strong ratings we've been having. And sorry, the second part of your question was?

How much net debt is in the Foxtel vehicle?

It's about $3 billion in total debt in Foxtel's financial statements. And by the way, we'll be filing those financial statements along with our 10-K, so you should be able to get a full detail of the debt position.

Our next question will come from Sacha Krien with CLSA.

Just a couple of questions for Bedi, please. Just, Bedi, you've called out the legal cost on Move for this financial year. Just wondering if you can do the same for News America Marketing and whether there's any reason those costs won't fall away. And then secondly, just in relation to sports rights renewals, I think you mentioned, there weren't any major renewals on the horizon. Does that also apply to Foxtel? I thought maybe we had the AFL rights at least coming through this year?

So on NAM, we haven't actually broken out the numbers. It's fair to say that we incurred significant legal cost in fiscal '16, and we will expect those to be considerably reduced going into fiscal '17. On the sports rights renewals, we actually renewed the AFL deal at Foxtel recently, so we don't expect any additional AFL-type renewal at Foxtel.

We have both the AFL -- through Foxtel and Fox Sports, we have the AFL and NRL rights up to 2022, and I have to say, we're delighted with the ratings this year, particularly the NRL ratings at Fox Sports. And Patrick Delaney and the team there are doing a wonderful job of highlighting the value of the franchise.

[Operator Instructions] And we would take our next question from Raymond Tong with Goldman Sachs.

Just a question on the U.K. business. Can you maybe give a bit of color on your expectations and the impact of Brexit on the business, please?

Generally, we haven't seen a particular impact of Brexit. There's been a little less economic uncertainty, there have been very stimulus measures promised by the Bank of England. We're seeing how the government responds. To be honest, the most important thing will be, more generally, the economic policy of the U.K. government. And it's fair to say that one clear sign of our confidence in the U.K. was our planned acquisition of the Wireless Group. Certainly, it's our hope that the U.K. government will take advantage of the opportunity to introduce policies that are pro-growth. And if that's the case, then we would expect all of the businesses to thrive and for us to be in a position to take advantage of that circumstance.

It appears there are no further questions at this time. Mr. Florin, I'd like to turn the conference back to you for any additional or closing remarks.

Great. Thank you all for joining, and have a great day, and we'll talk to you next quarter.

This concludes today's call. Thank you for your participation. You may now disconnect.