News Corp's Third Quarter Fiscal 2024 Earnings Conference Call is being recorded, and media are allowed to listen. The call is being led by Michael Florin, Senior Vice President and Head of Investor Relations, with CEO Robert Thomson and CFO Susan Panuccio also present. The call may include forward-looking information and non-GAAP financial measurements. Thomson highlights the company's progress in transforming and increasing value for shareholders, with a slight increase in profitability compared to the previous year. This is the fourth consecutive year of growth for the company.

Despite challenging macroeconomic conditions, News Corp has seen improvement in their revenues, particularly in their Digital Real Estate Services and professional information businesses. Their free cash flow has also increased significantly and digital revenue now makes up over half of their total revenues. They are adapting to the digital revolution and have extended their partnership with Google. The company's structure is being reviewed and changes have been made to provide flexibility. Circulation and subscriptions now make up a larger portion of their revenues compared to advertising, which used to be their main source of revenue.

Dow Jones has seen significant changes in their business, with 8% of their revenue now coming from digital advertising. Their professional information business continues to experience double-digit revenue growth and is expected to be the largest contributor to profitability in the future. They have also launched new products, such as the APAC Carbon Market Report and Integrity Check, to expand their offerings and help companies comply with regulations. Digital subscriptions have also increased, with over 5 million daily subscribers to Dow Jones brands. The company expects to see a reduction in churn and an increase in circulation revenues in the future.

The market for print advertising remains soft, but digital advertising has increased by 4% compared to the previous year. REA, a digital real estate platform, saw a 15% increase in revenue due to a 6% increase in listings. They have also introduced a new pricing schedule and are confident in the potential for expansion in India. At Move, revenue declines have moderated and lead volume has turned positive for the first time in 2 years. The company is improving their product and user experience to prepare for a potential change in market trends.

The CEO of realtor.com, Damian Eales, emphasizes the importance of buy-side agents in the current legal landscape of the National Association of Realtors. The company is well-positioned to capitalize on its relationship with home buyers and agents. A rental agreement with Zillow benefits both parties financially and realtor.com has seen a 5% growth in unique users compared to a decline for homes.com. The company's media platforms, such as the Wall Street Journal and Bible Gateway, give them a distinct advantage in expanding reach and building brands. HarperCollins saw a 2% increase in segment EBITDA for the quarter and a 40% increase for the year-to-date period.

The company had a strong performance in April and is hopeful for the fourth quarter, particularly in the audio book market due to their partnership with Spotify. Digital revenues hit 25% of total consumer revenues in Q3, and the company believes the audio segment will continue to grow. Bestsellers in Q3 included several novels and a memoir published in multiple languages. The company anticipates a strong performance in Q4 with upcoming releases. At Subscription Video Services, the company launched a new streaming product and is working to increase engagement and improve the customer experience. Adjusted segment EBITDA improved by 1% and Kayo, a sports streaming service, had its highest quarterly net additions since inception. Recent price increases and expected subscriber growth are expected to benefit the bottom line.

In Q3, Foxtel saw growth in streaming revenues and overall margins. News Media also saw an increase in digital penetration and a decrease in costs. The Times of London will expand digitally into the US, following the success of the US Sun. The Times and Sunday Times saw an increase in digital subscribers, while News Corp Australia saw a 7% increase in digital subscribers. News Corp believes they are on a path to continued success with their trusted intellectual property in a time of polarization and AI-generated falsehoods.

News Corp's third quarter total revenues were down 1%, but adjusted revenues were flat. Segment EBITDA was up 1% on a reported and adjusted basis, and earnings per share were $0.05 compared to $0.09 in the prior year. Digital Real Estate Services saw a 7% increase in revenues and a 2% increase in segment EBITDA, with higher profit from REA Group offsetting lower revenues and higher costs at Move. Adjusted segment EBITDA grew 7%.

The real estate company REA had a strong quarter with a 15% increase in revenues, driven by residential yield increases and improved growth in national listings. Move's revenues decreased by 6% due to lower industry trends and transaction volumes. However, there was a 4% increase in lead volumes and a 9% improvement in average monthly unique users. A rentals partnership with Zillow was announced to improve rental content offerings and increase investment in marketing and core offerings. The focus for realtor.com is to position itself for a housing recovery by modernizing technology, improving content, and leveraging News Corp's network.

The NAR settlement will be monitored closely, but the company remains confident in the long-term potential of realtor.com. The Subscription Video Services segment saw a decline in revenues, but streaming revenues increased. Total paid subscribers for Foxtel and Kayo increased, while residential broadcast subscribers decreased. Segment EBITDA for the quarter was down slightly, but adjusted segment EBITDA increased. Dow Jones had a strong quarter with a 3% increase in revenues, with digital revenue accounting for the majority.

In the third quarter, circulation and subscription-based revenues accounted for 82% of total revenues, with strong growth seen in PIB, Risk and Compliance, and DJ Energy. Retention rates remained high at over 90%. Two-thirds of the growth came from new customers, products, or upsells, with the remaining from annual price increases. Digital-only subscription growth accelerated, driven by increased penetration of bundling offers. Advertising revenues declined 2%, with digital advertising improving and print advertising declining due to weakness in the financial sector.

In the third quarter, Dow Jones segment EBITDA grew 8% to $118 million and had the highest contribution to the company's profitability. Margins improved by 110 basis points due to strong B2B performance. Book Publishing saw a 2% decrease in revenues due to softness in consumer demand and challenges with mass merchandiser accounts. However, segment EBITDA improved 2% and margins improved slightly due to cost efficiencies and supply chain improvements. The backlist and digital sales were strong contributors to consumer revenues, and a recent partnership with Spotify helped drive mid-teens growth in downloadable audio sales. News Media continued to face challenges with print advertising declines, resulting in a 6% decrease in revenues.

Circulation and subscription revenues were stagnant while advertising revenues declined in the News Media segment due to print challenges. The segment's EBITDA also decreased due to lower revenue and increased costs. The outlook for the short-term is uncertain, but the company hopes to see growth in Australian residential new buy listings and a moderation in revenue declines at Move. There may be higher expenses and lower streaming revenues in the Subscription Video Services segment, while Dow Jones is expected to have strong revenue and profitability performance with slightly higher expenses for the fourth quarter and full year.

The overall revenue trends at Book Publishing are stable, with a slight decline in physical sales in the third quarter but strong performance in downloadable audio. News Media is facing challenges in advertising revenue, particularly in Australia, and is focusing on cost efficiencies in digital products. The other segment is expected to have stable costs in the fourth quarter, with CapEx slightly lower than expected. The company has made investments in Move and is targeting both marketing and product development, with a focus on serving realtors. The impact of the recent legal settlement on the business model is not discussed.

The speaker discusses the company's experience in Australia and how it positions them well to take advantage of the real estate market. They are focused on making sure their back end and user interface are solid and providing value for customers. The company is also focused on the world's largest property market and has the media assets and global experience to succeed. The spend is evenly focused on product and marketing, with a pullback in Q3 and Q4 of last year. The next question is about Book Publishing and the demand trends. The speaker mentions some softness at big box retailers and potential for streaming and widening the market for audio books with Spotify. They have not seen any additional interest from other DSPs to carry their content.

The company has seen a return to strong sales in April and improvement in margin in Q3. They have benefited from the international expansion of audio books and their partnership with Spotify. The Book Scan data for Q3 showed a 3% decrease in consumption, but they expect strong comparisons in Q4. The company cannot comment on the financial details of their renewal deal with Google, but it does not include payment for AI use of their content.

Craig Huber asks about the progress of News Corp's transformation and simplification. Robert Thomson says they are well advanced in their planning and have taken necessary regulatory steps to ensure flexibility and create value for shareholders. They are not complacent and will continue to generate momentum.

The company's share price has risen by 46% in the past year, but there is still a significant discount on the company's value. The next question is about the decrease in BINGE subscribers, which is due to the writers' strike from last year. The company has already announced a 5% head count reduction and exceeded cost savings, but will continue to focus on costs.

The company has various cost-saving initiatives in place to offset any potential revenue shortfalls. They are confident in their ability to manage costs and have seen good margin expansion as a result. The company is constantly looking for efficiencies and has announced various cost-saving measures in different divisions of the business. They aim to strike a balance between cost reduction and reinvestment in realtor.com.

The operator introduces a question from Jamie Laskovski about the company's structure changes and potential growth in the medium-term. Robert Thomson responds that the changes were related to regulatory changes in Australia and cannot provide further details. Michael Florin thanks Jamie and concludes the call.

This summary was generated with AI and may contain some inaccuracies.