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

Thank you very much, operator. Hello, everyone, and welcome to News Corp's Fiscal Third Quarter 2014 Earnings Call. We issued our earnings press release over an hour ago. 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 questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-Q for the 3 months ended March 31, 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-Q 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 will pass over to Robert Thomson for some opening comments.

Thank you, Mike. We are nearing our first birthday as the new News, and young though we are, the group companies have made significant progress on the strategy outlined to you at the Investor Day, ahead of the company's launch. We surely have much toil ahead but are patiently building a robust platform for the company and for the future. Our guidance then was that the 2 profound trends of our time, with globalization and digitization, and that we would pursue them with purpose and passion. In the past month alone, we launched a series of initiatives to realize that stated ambition. We announced our intention to acquire Harlequin Enterprises, which will give HarperCollins and the broader company vastly expanded digital and global reach. While 99% of HarperCollins books are published in English, Harlequin books are published in 34 languages, and 40% of its revenues come from books published in languages other than English. That expertise will be crucial as we build our book business but also essential as we seek to create a network effect for complementary content sites globally. Storyful, a social news agency and first acquisition, struck a landmark agreement to power Facebook's new Newswire, providing eloquent evidence of its ability to identify valuable content amidst the sea of material on the web, sifting the meritorious from the mediocre and the factual from the faux. Within News Corp, we envisage that through Storyful, we can create video verticals around content communities, ranging from science fiction fans at HarperCollins to soccer fans in London. BallBall, our fledgling East Asian soccer platform, which has exclusive mobile and digital rights to European league video highlights, announced a partnership with Vietnam's leading private media company while expanding exponentially its audience there and in Japan and Indonesia, hitting a record 1.4 million…

Thanks, Robert, and good afternoon, everyone. First, I'll give you some high-level financial highlights, and then we will discuss each segment in further detail. We reported fiscal 2014 third quarter total revenues of $2.1 billion, a 5% decrease versus the prior year period. However, if you exclude the impact of acquisitions, divestitures and foreign currency fluctuations, adjusted revenues were flat with the prior year, and as Mike Florin mentioned, the earnings release includes the reconciliation to reflect these adjustments. Turning to EBITDA. We reported total segment EBITDA of $175 million, which was a 4% increase versus the prior year period. Again, excluding all acquisitions and divestitures, the costs related to the U.K. Newspaper Matters, which were $20 million net of indemnification this quarter, and foreign currency fluctuations, adjusted total segment EBITDA improved by 3%. Adjusted EPS were $0.11 compared to $0.13 in the prior year, and reported EPS were $0.08 versus $0.56 in the prior period, which included a significant nontaxable gain in other net, which was related to the sale of our ownership interest in SKY Network Television in New Zealand. Free cash flow available to News Corp for the first 9 months was $496 million, an improvement of $362 million compared to the prior year. And as noted by Robert, our results demonstrate effective portfolio diversification, with a healthy mix of advertising, content sales and recurring circulation and subscription revenues. While we have faced some headwinds this quarter, particularly in print advertising, we were still able to post strong EBITDA and free cash flow available to News Corp, thanks to the strong performances at HarperCollins, REA, FOX SPORTS Australia and in-store advertising at News America Marketing, coupled with our continued focus on cost management. With that as an overview, let’s turn to the individual operating segments. In News…

[Operator Instructions] First question comes from Jessica Reif Cohen with Bank of America Merrill Lynch.

I wanted to follow up on something you mentioned on the call. This book publishing subscription model, is that something that will be rolled out in the next year? Can you give us any color on what you're thinking of charging? And would it be a Harlequin-type -- like romance? What are the genres that you're thinking of? And then the second question is on Amplify. Can you give us any more clarity on sort of key benchmarks, like adoptions or anything we can look -- timing of what we can look for, for some progress?

Thanks for the question. There are 2 different types of subscriptions that we're referring to. One is a book subscription offering, where we have partnerships with companies such as Scribd and Oyster. The subscription offering that I was specifically referring to was the development of our plus programs, whether it's Times+ or Sun+ and similar plus programs in Australia built around newspaper offerings. They would have both digital access and us providing access to audiences to discounts and so on. And you could certainly imagine for many of our papers that the Harlequin catalog would be a very suitable offering, both to, as we're intending to do, bringing the back catalog front and center but also provide a platform for further Harlequin sales.

And, Jessica, on your question on Amplify, I mean, as I said, the sales force is out there right now in all the major markets. I think we would expect to see some sort of contracts emerging before the summer, during the summer, as the new school year will be starting in September. That would be the expectation.

Our next question is from Fraser McLeish with Crédit Suisse. Fraser McLeish - Crédit Suisse AG, Research Division: Just -- you gave some numbers on digital subscribers in Australia. I was just wondering if you'd be able to give us an update on digital subscribers around your other newspaper properties. And also, just -- could you -- just a housekeeping one. Could you tell us where Foxtel's debt stands at the moment, please?

Well, to be honest, we're not breaking out all of our digital numbers, and it's not necessarily a like-for-like comparison. What we are seeing is a good digital growth at The Times of London, where net-net, paying customers are on the rise. That's a combination of print and digital. We're at the early stage of the Sun+ digital offering. And the next phase, the next iteration of that, really, will come with the upcoming football season in the U.K. And at the New York Post, we've seen a doubling of digital usage, but that's, at the moment, to a free site, since the site itself was redesigned about 6, 7 months ago. And we continue to see a robust digital growth at The Wall Street Journal. That's a quick sum-up for you, but you have to be careful because, clearly, there are some free offerings in the numbers, as well as paid-for numbers. But what we're seeing generally is confidence around the globe at our properties in the future of digital.

And, Fraser, just on your question relating to Foxtel, obviously, as you guys know, Foxtel is not consolidated, but we do give separate financial data for that at the end of the year. For the last balance sheet, they had approximately $3 billion of debt, of which $2.2 billion is third-party debt and about $800 million was shareholder loans, which were equally split between Telstra and ourselves.

[Operator Instructions]

We'll hear next from Alan Gould with Evercore.

I've got a question regarding Amplify. It seems like the losses are running a little bit less than we might have anticipated. Do you still see yourself having Amplify cost $160 million to $180 million this year?

Alan, yes, I think they're running kind of where we expected they would be running, and I think for the year, it will be somewhere around the $180 million sort of that sort of level of investment.

How much was it this quarter?

It was about $44 million, I think, this quarter.

Next is Alexia Quadrani with JPMorgan. Alexia S. Quadrani - JP Morgan Chase & Co, Research Division: My question is on the strength we saw in the Book Publishing business in the quarter. I guess is there any color you can give us on how we should think about the outlook for revenue growth there? I mean, how long does a popular book like Divergent typically continue to drive growth? And given the younger demographic skew of that book, does it help your digital subscription model there?

Well, it's -- obviously, it's inappropriate to forecast. However, what we can say is that, clearly, there's a strong digital component to the Divergent offering, where e-book growth was up 46%. Revenues -- our e-book penetration itself rose from 21% to 26%, and clearly, with digital, the contribution margin of digital is around 75% versus 40% for hardcover and 60% for paper. But more broadly, without being specific about any sort of forecast, clearly, Brian Murray and the team at HarperCollins have some follow-up books related to the Divergent series early in the next financial year, and there will be a series of Divergent-related movies, which I understand the next one is slated for spring of next year.

Next is Entcho Raykovski with Deutsche Bank.

My question is around the Harlequin acquisition. I was just wondering if you can provide some milestones for the acquisition, the stage at which it gets to grow. And obviously, that business seems to have been pretty challenged over the last couple of years. And I just wanted to understand why the e-book segment has been so challenged at Harlequin, whereas HarperCollins has been growing very strongly.

I'm not sure it's fair to say that the e-book segment has been challenged for Harlequin. In a sense, it's selling about 40% of its books digitally in the U.S., so it has a quite sophisticated platform. What we see in Harlequin is an opportunity not only to develop the Harlequin offerings, which as I outlined earlier do have some complementarity with our popular papers but, more importantly, to develop our HarperCollins offerings. Because HarperCollins, 99% of the books are published in English. With Harlequin, you get 34 languages. And for us, it was always going to be a question of build versus buy to build out our global infrastructure. But -- and clearly, Harlequin was a great opportunity. You're getting institutional intelligence and understanding of those markets and, frankly, something else, which is a little more abstract, the social capital. These types of books have an editorial empathy that you need to connect with different cultures. So all of those characteristics of Harlequin were attractive to us and so was the price.

Our next question comes from Justin Diddams with Citi.

I just have a question for Robert. The Australian newspaper business has been hit pretty hard. I mean, I think it would be described as nothing short of violent, the change in advertising, momentum for newspapers in Australia. And, Robert, I just wanted to get your view onto why advertisers in the Australian market had turned on newspapers and when you think that we will reach the bottom in this sort of fairly aggressive decline in revenue momentum.

Well, look, I think forecasting, obviously, is inappropriate. What I can say is that newspapers are oversold. Newspapers are a very powerful platform, and I think there's a certain fatalism at other media companies in Australia that may have infected the perception of papers. But we're very proud of our papers. And I think what will become more clearly understood over time is the relative power of print in a digital world, where you literally cannot multitask if you are reading a newspaper. And to a certain extent, what you're seeing in Australia is a lagging of a trend that was profound in the U.S. and U.K. in recent years. Each newspaper market is different. You have a cauldron of competition in London, which obviously expedited some of the competitive challenges not only among other papers but platforms. And so in Australia, you are now seeing that trend writ [ph] large. But I do think that there'll be a reconsideration of the value of print in the next year or so because it's a platform that we know can deliver results to advertisers. And we'll be doing our best with the Australian team over the coming months to prove that point.

We'll hear next from Michael Morris with Guggenheim Securities.

My question is about the B2B offering from Dow Jones. Can you describe the changes that you made to the product and how that better exploits your competitive advantage? And also just remind us, your target audience there. Is it individuals or businesses that are using existing services? Are you trying to expand the market for the type of product?

Well, broadly speaking, we've adjusted the product, we've adjusted the pitch and we've adjusted the pricing to suit our customers' needs. What Will Lewis and the team have done in the last few months is go out and, frankly, talk to customers and find out what they want for us. I think broadly defined, there are 2 sectors, there's the B2B sector, the high-end finance, high-end corporate, what you would call a B2P segment, which is Business to Professional, which is separate to the B2C of The Wall Street Journal. And so the team are working up strategies in both. Some of the -- about 4 weeks ago, some fundamental changes were made to Tractiva [ph] to make it more user-friendly. You are able to bookmark more articles, the search was improved. But you have to see these improvements as iterative -- we will go on improving the product. What we've found is that our customer base has welcomed the changes, and it's now up to our sales staff and our product team to continue to pitch and to continue to sell.

Next is Craig Huber with Huber Research Partners.

My questions had to do with Foxtel, please. In the quarter, adjusting for currency, can you please give us what the revenue percent change was year-over-year, operating profit and also EBITDA, please?

The revenues were up kind of in the low single digits, and the operating income, I think we reported was higher. We took some price increases at Foxtel in February. So I think that sort of is the financial picture there.

When you say higher, what do you mean? Can you quantify that at all for operating income?

We're not giving out a specific number, but if you look at the...

Look at the press release.

Press release.

Next is Adam Alexander with Goldman Sachs.

Robert, you talked a bit on the call about pushing cover pricing and subscription pricing across the masthead, and it seems to be doing quite well. Still seems to be a fair bit of a gap though between what you charge for Wall Street Journal and some of your competitors. Given the characteristics of your rata base, what plans do you have to sort of close that gap over time?

Well, I think the 2 key things to bear in mind is affinity and intensity. And affinity and intensity in relationships with both readers and advertisers, which is -- while not only as a source of circulation revenue but as source of advertising revenue newspapers, remain a powerful platform. Clearly, we will be looking at pricing both print and digital. And print and digital bundled at The Wall Street Journal, it's a great product. It's improving all the time. The other area that we'll be looking at, obviously, is global, where only 20% of our audience at the moment is outside the U.S. Clearly, given the character of the content, there is a great opportunity for us to take advantage of that.

Our next question is from Sacha Krien with CLSA.

I've just got a question on the economics of the Book Publishing segment. In your Investor Day presentation, you presented unit economics for hardcover versus e-books. And the price you had in there for e-books was $14.99, and I think royalties of about $2.60. Can you give us an idea of how this has been changing or trending since the Investor Day presentation and where you see it going, going forward?

Actually, those haven't changed that much. And I think the margins that we were looking at are still around 75% for e-books versus 40% for hardcover and 60% for paper. So it's been pretty consistent with what we reported.

[Operator Instructions] Our next question comes from Eric Katz with Wells Fargo.

So when the spin from Fox was first being discussed, there was the thought by most investors that the reason for the spin was to allow News Corp to purchase newspaper assets and expand that business. But now we see your biggest acquisition, thus far, is a book publisher, and there's been some complementary acquisitions that seemed to bolster the current newspaper assets. So can you frame the M&A strategy for us at this point in time? Should we expect some newspaper M&A or you're looking to diversify even more?

I think it's fair to say that the 2 guiding trends of strategy, generally, are globalization and digitization. You've seen that with the first acquisition, Storyful, which has been very well-received both from an editorial perspective, but not just for our newspapers, from our digital sites, particularly, but also from a commercial perspective because Storyful will be able to create content communities around products and companies, and I think you'll see some of that in coming months. So we said during the Investor Day, globalization and digitization, and that's very much what the team is doing.

Next, we'll hear from Alice Bennett with CBA.

I just had a question around the digital sales of Harlequin and HarperCollins. It looks like there's a bit of a divergence with Harlequin, much stronger in the U.S. relative to the other markets they're operating in. I just wondered if there is a similar divergence within HarperCollins. Are your digital sales much above that 26% rate in the U.S. market or is it broadly similar across the globe?

Well, clearly, Divergent is not just a book title, but it varies in the case of Harlequin because it's strong in emerging markets, where, quite frankly, the digital development is less forward. There will be -- whether it's Brazil or India. And I would recommend, actually, that you look at the Harlequin website to get a sense of the range of its international exposure, which is a great asset. But download speeds have slowed, and people are less likely to download. So partly, it's defined by the economics and economics of itself defines digital development, but it also varies by genre of book.

Thank you, operator. Any other questions?

No, that does conclude today's question-and-answer session. Mr. Florin, at this time, I'll turn the conference back to you for closing remarks.

Well, thank you for all your time. We look forward to showing an update next quarter. Have a good day if you're in the States and, well, a good day in Australia.

This concludes today's conference. Thank you for your participation.