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News Q1 2023 Earnings Call Transcript


Listen to Conference Call View Latest SEC 10-K Filing View Latest SEC 10-Q Filing

Participants

Corporate Executives

  • Michael Florin
    Senior Vice President and Head of Investor Relations
  • Robert J. Thomson
    Chief Executive Officer
  • Susan Lee Panuccio
    Chief Financial Officer

Presentation

Operator

Welcome to News Corp's First Quarter Fiscal 2023 Earnings 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.

Michael Florin
Senior Vice President and Head of Investor Relations at News

Thank you very much, operator. Hello, everyone, and welcome to News Corp's Fiscal First Quarter 2023 Earnings Call. We issued our earnings press release about 30 minutes ago, and it's now posted on our website at newscorp.com. On the call today are Robert Thomson, Chief Executive; and Susan Panuccio, 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-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information. Additionally, this call will include certain non-GAAP financial measurements such as total segment EBITDA, adjusted segment EBITDA and adjusted EPS. The definitions and GAAP to non-GAAP reconciliations of such measures can be found in our earnings release for the applicable periods posted on our website.

With that, I'll pass it over to Robert Thomson for some opening comments.

Robert J. Thomson
Chief Executive Officer at News

Thank you, Mike. While the macro environment is patently more volatile, we believe the resilient foundations of the reincarnated News Corp give us a platform for sustained growth and increased profitability. That clearly is evident in our revenue performance this quarter. While revenues were down 1% to $2.5 billion, that decline was obviously a consequence of foreign currency fluctuations. On an adjusted basis, our revenues grew a healthy 3%, building on the robust results from last year. Profitability for the quarter was $350 million, down 15%. Although that reflects the ForEx headwinds and a reset by Amazon of its book inventory levels and warehouse footprint. We view neither factors reflective of core business conditions or of our long-term potential. Our results follow two successive years of record profits at News Corp. It is important to keep that unprecedented success in mind, especially as we encounter what we expect to be a femoral challenges.

Our company has changed the digital terms of trade, and we expect the current situation to be transitory. We see positive prospects across all our segments and our mix of revenues and geographies is obviously advantageous in a complicated perplexing world. Turning first to Dow Jones. Q1 was the best first quarter on record since acquisition for revenue, profitability and margin, affirming the wisdom of our acquisition of Opus and CMA, which have bolstered the Dow Jones professional information business. Revenues grew a resounding 16% and advertising was up 4%, which compares rather favorably to a number of competitors. In particular, digital advertising at Dow Jones rose 11%, a noteworthy achievement in this complex environment. In fact, Q1 represents the ninth consecutive quarter of year-over-year digital ad growth at Dow Jones. In the past year, Dow Jones added 473,000 digital-only subscriptions. And as of the end of Q1, 83% of subscriptions at Dow Jones were digital only.

At Wall Street Journal, despite the tough market, paid digital subscriptions increased by over 350,000 year-over-year. During the quarter, Investor's Business Daily launched a paid newsletter Market TM to attract younger investors and commissioned an options information app that will present new analytics for options trading, a complex but potentially lucrative sector. With its panoplia premium products, Dow Jones has renewed focus on bundling our premium content, including the Wall Street Journal, MarketWatch and Barron's. These valuable combinations have already exceeded 200,000 subscriptions, and we have begun to roll out a bundle featuring WSJ, Barron's and IBD. Revenues at the Professional Information business rose 40% year-over-year. We continue to clearly see the benefit of risking compliance in an environment of intensifying scrutiny by regulators who are insisting that companies to minimize risk and maximize compliance.

The integration of Opus and CMA has been proceeding successfully, and they joined a burgeon in Dow Jones Data and Intelligence business, providing an impressive $52 million in combined revenues in Q1 and contributing materially to profitability this quarter. Opus and CMA continue to leverage their proprietary data and analytics with new offerings, including carbon industries and are assisting companies in making sense of dynamic market for capital. Overall, we are delighted with the tangible progress in our professional information business, which is providing an existing flow of high-yield, low churn digital plan. At Digital Real Estate Services this quarter, we saw resiliency even though housing market conditions have patently become more volatile, especially in the U.S. REA Group achieved substantial revenue growth in constant currency on the back of higher prices, increased penetration of its new Premier Plus enhancement and strong listing value while maintaining its more than three forward-leading traffic over the competition.

There was also a notable audience of revenue growth at REA, India, which further consolidated its position as the number one property portal in that massive and growing market. At Move, Realtor.com, revenues were down 6%, reflecting relatively similar trends to the fourth quarter. Realtor's unique users have risen 21% since the first quarter of financial '20. Thanks to product enhancements and increased marketing. The position and equip the business to take full advantage of the inevitable upswing in the market, we are expanding our offerings in rentals and in developing sell-side expertise, which we expect will drive profits far into the future. Realtor is also taking decisive steps to streamline and optimize the business while enhancing reinvestment capacity and capitalizing on long-term growth opportunities. Our focus on seller leads, which are the source of most revenue in the Australian market is building on our recently acquired UpNest.

The UpNest experience has been integrated into key seller placements across the site, providing sellers the ability to get proposals from multiple agents and offering consumers significantly more choice. Meanwhile, even in a challenging housing environment with higher mortgage rates, tight inventory and inflation, home prices have remained elevated, and we note that active listings at Realtor improved by 29% in the quarter compared to the prior year period. Realtor remains focused on the long-term opportunities in what is an estimated $200 billion addressable market. As mentioned earlier, the Amazon reset affected many publishers in Q1, including HarperCollins. This reset relates to Amazon's decision to reduce inventory levels and shutter warehouses and accounted for almost the entirety of HarperCollins revenue contraction and the vast majority of its profit decline this quarter. Notably, consumer appetite, which expanded during the pandemic, continue to be robust and provides us with increasing confidence going forward.

And we are absolutely focused on cost control with HarperCollins and the imperative to improve margins in these challenging conditions. Key frontlist titles in the quarter included Portrait of an Unknown Woman by Daniel Silva, Live Wire by Kelly Ripa and Breaking History by Jared Kushner. We are prospering from our global ownership rights to the Lord of the Rings trilogy given the popularity of the Amazon series, and we are looking forward to the release of the stories we tell by Joanna Gaines and Collin Hoover's next work. Finally, we noted HarperCollins focused last month acquired side of mill publishers, an independent publisher of quality gift books. Cider Mill specialized in cooking, wine and spirits and humor books, and includes Apple source press at children's brand. Its deep backlist should provide an ongoing source of incremental revenue. Our subscription video services, Foxtel had another stronghold, streaming subscriber penetration to expand and costs have been thoughtfully on.

Foxtel has recently renewed or signed valuable long-term sports rights and content agreements, including the AFL, WWE and NBC University. We have obvious optionality at Foxtel where the conversation is no longer about how much capital we plan to invest but the potential for capital return. Foxtel streaming services obtained 2.8 million paying subscribers as of the end of September, surging 34% versus the prior year and accounting to 63% of the total subscriber bank. Kayo and BINGE added nearly 0.75 million subscribers in the past year alone, underscoring the potential of Foxtel in a still expanding Australian market. Foxtel Group delivered record audiences for the recent AFL and Minera finals. Meanwhile, Motorsport, the Regal World Cup and T20 Worldcup cricket are bolstering subscriber loyalty as we hear streamline directors. The News Media segment experienced a revenue decline of 4%, but it rose a healthy 6% on an adjusted basis when taking into account ForEx fluctuations and others. In constant currency, we saw a healthy growth in advertising, circulation and subscription revenue.

Our News Corp Australia circulation revenues improved in constant currency and digital subscriptions exceeded the $1 million mark for the first time, up 13% year-over-year. News.com.au asserted its leadership in the free media environment with an audience of 13 million in the month of September. Meanwhile, in New York Post continued to improve profitability, thanks in part to a strong increase in digital advertising revenues. The Post digital network also flexed its muscles with a 24% increase in page views, reaching an average of 129 million per week in Q1 and 151 million average monthly in September. At News UK, the Suns digital advertising exceeded print for the fourth consecutive quarter and accelerated its growth. And we're delighted by the success of the Sun.com, which continued to increase its already sizable audience, particularly in the United States. At the time, Sunday Times also saw a 23% increase in digital paid subscriptions, reaching 468,000, marking its second best-ever quarter of digital growth.

News broadcasting, the new name for the radio and television brands of News U.K. reported an increase in both reach and listening hours according to the latest REA jobs report. Forksport reached 2.9 million listeners. We've tuned in for more than 18 million hours, up 10% quarter-on-quarter, and we expect the imminent World Cup to be a source of audiences and of advertiser. News Corp is building on a base that has grown stronger, more global and more digital in recent years. We have seen record profitability in each of the last two fiscal years. By many key measures, our resounding progress has continued, digital advertising on the rise, streaming, surging and subscriptions storing. Despite the macroeconomic uncertainty, having streamlined and digitized our businesses and reached substantial agreements with the big tech platforms to compensate us for our premium journalism, we are better equipped to generate increasing value to our investments.

And our strong cash position means that we have been able to return capital to shareholders and invest shortly in future growth while hornoring our proud problems. One last point. As we announced last month, following the receipt of letters from Rupert Murdoch and the Murdoch family trust, the News Corp Board of Directors has formed a special committee of independent board members to begin exploring a potential combination with Fox Corporation. There can be no certainty that the company will engage in such a transaction. We do not enter comment further at this time. And for that reason, we will not be taking questions on this topic today. We are, of course, happy to answer your questions about the performance of and prospects for our business, particularly as it relates to the first quarter of this fiscal year. As always, we thank our investors for their faith and confidence in us. and all our employees, advertisers, readers and audiences for their valuable contributions and enduring support.

Now I turn to Susan and expand on these results.

Susan Lee Panuccio
Chief Financial Officer at News

Thank you, Robert. We have entered fiscal 2023 with a different macro environment, including volatility in foreign currency impacting our headline results from our Australian and U.K. businesses. Throughout fiscal 2022, we successfully navigated the company to be in a position of strength, guided by our ongoing cost transformation work, which we have balanced with investment and innovation to drive digital expansion. The first quarter of fiscal 2023 presented some challenges, particularly at HarperCollins, but most of the businesses performed well in constant currency and suffice to say that News Corp remains well positioned given the strength of our asset mix, healthy balance sheet and the continued diversification of our revenue base. First quarter total revenues were approximately $2.5 billion, down 1%, which included a $153 million or 6% negative impact from foreign currency headwinds.

Excluding the impact of foreign currency fluctuations, acquisitions and divestitures, first quarter adjusted revenues grew 3% compared to the prior year. Total segment EBITDA was $350 million, down 15% compared to the prior year, which saw a record profit with 53% growth. That being said, total segment EBITDA this quarter was still up 31% over fiscal 2021, underscoring the material changes in recent years. Also noteworthy is that the majority of the profit line in this quarter was driven by lower sales from Amazon due to the reset of its inventory levels and the rightsizing of its warehouse footprint as well as foreign currency fluctuations neither of which we believe are reflective of underlying performance. Adjusted EBITDA declined 13% versus the prior year period. For the quarter, we reported earnings per share of $0.07 compared to $0.33 in the prior year. Adjusted earnings per share were $0.12 in the quarter compared to $0.23 in the prior year. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services. Segment revenues were $421 million, down 1% compared to the prior year.

The results include a negative impact of $20 million or 5% from foreign currency fluctuations. On an adjusted basis, segment revenues increased 3%. Segment EBITDA declined 14% to $119 million impacted by higher employee costs and increased operating costs driven by strategic investment activities of both Move and REA together with negative impact related to currency headwinds. The increase in investment costs at Move was due to the expansion into adjacencies, including salaries, rentals and new homes as we focus on the longer-term opportunity. Adjusted segment EBITDA declined 7%. Move revenues were $169 million, down 6%, following 30% growth in the prior year period. For the quarter, real estate revenues fell 9% driven by lower lead and transaction volumes, reflective of the broader industry trends. Consumer affordability constraints impacted uniquely volumes, which declined 32% in the quarter, although that was a slight improvement from the fourth quarter rate. Both trends were partially offset by price optimization within the traditional lead gen business, higher sell-through of our hybrid offering, market VIP, home price appreciation and continued advertising gains.

We also had revenue growth from our adjacencies, including the acquisition of UpNest, albeit these revenue streams are still in the early stages of development. Referral offerings accounted for approximately 30% of total revenues, down from 32% last year, impacted by lower transaction volumes, partially offset by higher home prices. Based on our internal metrics, Foxtel's average monthly unique users were 86 million in the first quarter. REA had another strong quarter, with revenues rising 2% year-on-year on a reported basis to $252 million, which included a $20 million or 9% negative impact from foreign exchange. Growth was driven by price increases, contribution from Premier Plus favorable debt penetration and growth in national listings, partially offset by a modest decline in financial services revenues due to lower settlement activity. Overall, new buy listings rose 5% with Sydney and Melbourne up 5% and 12%, respectively. Please refer to REA's earnings release and their conference call following this call for more details. Turning to the Subscription Video Services segment.

Revenues for the quarter were $502 million, down approximately 2% compared to the prior year on a reported basis due to foreign currency headwinds. Importantly, on an adjusted basis, revenue grew 6% versus the prior year, accelerating from the prior quarter rate of 4% growth. Streaming revenues accounted for 25% of circulation and subscription revenues versus 19% in the prior year and again, more than offset broadcast revenue declines. Total closing paid subscribers across Foxtel Group reached almost 4.5 million at quarter end, up 16% year-over-year with the growth rate improving three percentage points from the fourth quarter. Total subscribers, including trial has reached over 4.6 million. Total paid stream subscribers reached over 2.8 million, increasing 34% versus the prior year and adding 117,000 sequentially with streaming subscribers now representing 63% of Foxtel's total paid subscriber base. Kayo paying subscribers reached almost $1.3 million, up nearly 19% year-over-year, slightly down from the fourth quarter levels due to typical seasonal patterns at the end of the AFL and NRL seasons in September.

BINGE paying subscribers grew a robust 67% year-over-year to over 1.3 million subscribers benefiting from the release of the House of the Dragon and the popularity of the Foxtel Origin series, The 12. Foxtel ended the quarter with over 1.4 million residential broadcast subscribers, down 10% year-over-year, similar to the fourth quarter rate. Broadcast churn was 14.2% compared to 14% in the prior year, partly reflecting the acceleration of migrating subscribers of cable. Broadcast ARPU rose over 1% to approximately AUD83. Segment EBITDA in the quarter of $111 million fell 3% versus the prior year, significantly impacted by currency, with adjusted segment EBITDA increasing 5%. Moving on to Dow Jones. Dow Jones continued to post strong performance in the first quarter with revenues of $515 million, up 16% compared to the prior year, with digital revenues accounting 79% of total revenues this quarter, up four percentage points from last year. Results included a full quarter from both the Opus and Chemical market analytics acquisitions.

On an adjusted basis, revenues rose approximately 6%. Circulation revenue grew 5%, driven by strong year-over-year volume gains with the Wall Street Journal digital-only subscriptions, up 13% to over $3.1 million and total Dow Jones digital-only subscriptions also up 13%. Professional information business revenues rose 40% and accounted for approximately 35% of segment revenues driven by the acquisitions of Opus and CMA. Revenues from the acquisitions are progressing in line with our expectations as the businesses benefited from strong demand across numerous industries, including metals, carbon, plastics, sustainability, biofuels and renewables, while yields continue to rise and retention remains strong. Risk and Compliance revenues grew 6%, although currency had a 10 percentage point negative impact on revenue growth given the business' higher exposure to Europe and APAC. Advertising revenues grew a healthy 4% to $94 million despite lapping 29% growth in the prior year.

Digital advertising revenues rose 11% in the quarter as we continue to see very strong yield improvement and saw growth in all categories, especially in B2B this quarter. Digital advertising accounted for approximately 65% of total advertising revenues, which improved four percentage points from last year. Print advertising revenues were down 6%. Dow Jones segment EBITDA for the quarter rose 19% to $113 million as margins continued to improve with 50 basis points of expansion year-over-year to nearly 22%, helped by the inclusion of Opus and CMA. Adjusted segment EBITDA for the quarter was down 1%, reflecting higher employee costs. At Book Publishing, as we fared during the quarter, results were materially hampered by Amazon's reset of inventory levels and rightsizing of its warehouse footprint resulting in significantly lower orders and higher returns. Supply chain pressures continue to impact freight and manufacturing costs but are showing some signs of easing from recent quarters.

As it relates to Amazon, we have not seen similar inventory level adjustments from other book distributors or retailers. And as Robert noted, consumer demand has remained healthy, and consumer sales data remained consistent with prior quarters. For the quarter, revenues declined 11% to $487 million and segment EBITDA declined 54% to $39 million. We estimate Amazon accounted for almost the entire year-over-year revenue decline and the majority of the year-over-year segment EBITDA shortfall. Our backlist contributed 65% of revenues, up slightly from last year, benefiting from the demand of token titles helped by the premier of the Rings of Power on Amazon. Digital sales rose 1% this quarter and accounted for 23% of consumer sales. On an adjusted basis, revenues fell 7% and segment EBITDA declined 51%. Turning to News Media. We continue to see relatively strong advertising trends, particularly at News Australia. Revenues were $553 million, down 4% versus the prior year, largely due to currency, which had a $62 million or a 11% negative impact on revenue.

Importantly, despite macro uncertainty, adjusted revenues for the segment increased a healthy 6% compared to the prior year due to strength in circulation and subscription and advertising revenues in constant currency. Circulation and subscription revenues declined 6%, but that included a 12% or $32 million negative impact from currency fluctuations. Growth in constant currency was driven by cover price increases in the U.K. and Australia, and increase in content licensing revenues and double-digit subscriber gains across News Australia and The Time and the Sunday Times. Advertising revenues declined 4% compared to the prior year, which included a 9% or $22 million negative impact from currency fluctuations. Growth in constant currency was driven by an increase in digital advertising revenues, primarily of the sun where digital revenue yet again equals print revenue, while Australia benefited from strong preperformance led by a recovery in retail and travel, which were impacted by the lockdowns in the prior year. The New York Post also posted strong digital games.

Segment EBITDA of $18 million declined 47%, driven by over $20 million of higher costs related to Talk TV and other digital investments, together with higher news production and distribution costs across the businesses, which are being impacted by the current inflationary and supply chain challenges. Adjusted segment EBITDA fell 44%. Before we look at the outlook for the next quarter, I would like to touch on free cash flow. First quarter free cash flow is typically lower due to the timing of working capital payments, and we remain focused on driving strong and positive free cash flow generation for the year. Turning to the upcoming quarter. We continue to expect higher costs due to supply chain and inflationary pressures. Advertising conditions are mixed and visibility remains limited across the businesses. We also expect ongoing foreign exchange headwinds, given the current spot rate for the Australian dollar and pound sterling compared to the prior year. Looking at each of our segments, at Digital Real Estate Services, Australian residential new buy listings for October declined 18% as we lapped tougher prior year comparisons.

Please refer to REA for more specific outlook commentary.At Move, we expect lead and transaction volumes will be challenged in the short term, and we will continue to take steps to mitigate those pressures while balancing ongoing investments with cost discipline. In Subscription Video Services, we remain pleased with the performance of the streaming products and the ongoing focus of broadcast ARPU and churn as we continue to migrate customers from cable to streaming. At Dow Jones, we remain focused on the integration of Opus and CMA. Advertising visibility remains short term. However, we are expecting a more challenging second quarter. We also expect the rate of investment in the second quarter to be higher than the prior year as we continue to focus on driving consumer subscription and enhancing our PIB offerings. Input publishing supply chain and inflationary pressures continue to persist, albeit by showing signs of easing.

We still expect headwinds from Amazon in the second quarter, although with strong customer demand, we expect any issues to be short term in nature. At News Media, like the first quarter, we expect incremental costs in relation to price investments across the businesses, including top TV and other digital initiatives, together with ongoing inflationary pressures, including newsprint prices. Before we open for questions, I would like to remind everyone that we will not be addressing any questions related to the special committee and/or a potential combination with FOX Corporation, as Robert stated earlier. With that, let me hand it over to the operator for Q&A.


Questions and Answers

Operator

[Operator Instructions] The first question comes from Kane Hannan from Goldman Sachs. please go-ahead.

Kane Hannan
Analyst at The Goldman Sachs Group

Good morning, guys. Coming through. Yes Latin clear. But it's thanks for the questions this morning. Maybe just on the book publishing side of things, helpful comments there at the end around Amazon and the broader inflationary pressures. Just give us a sense of, I suppose, the margin decline in the first quarter, some 50 basis points what you'd attribute to Amazon's impact and what you'd attribute to, I suppose, the inflationary side of things that is probably going to continue for the rest of the year? And then just as a second sort of quick follow-on. Just talk about how you're thinking about M&A in the publishing space whether you think ARPU would have been the regulatory pushback that Penguin Random House had with their proposed acquisition?

Robert J. Thomson
Chief Executive Officer at News

Kane, look, clearly, the supply chain is a factor. But as for Amazon, it's fair to say, it's a femoral, not eternal, but meaningful in the first quarter. The combination of both inventory adjustment and warehouse closures clearly created logistic issues, which we trust Amazon will resolve relatively soon. But the demand for books is undiminished, and we certainly have some luring titles looming including China Gains and Colleen Hoover. So -- and in the meantime, Brian Murray and his team are resolutely focused on cost control and necessarily improving margins. As for Simon and Schuster, look, clearly, there is much more work ahead for the lawyers at both companies. the legal documents must already run into many volumes themselves. But it is appropriate that the judge rule that the proposed merger would create a book behemoth, literally Leviathan, a titan of times that will disproportionate weight in the industry. For ourselves, we're absolutely resolutely focused on building the HarperCollins business and continuing the integration of Houghton Mifflin Harcourt.

Susan Lee Panuccio
Chief Financial Officer at News

And Kane, maybe just to frame the Amazon impact. The majority of the EBITDA decrease was due to Amazon. We had hopes that it will be limited to Q1, but we are expecting to see some impacts coming into the second quarter. But all things being while we expect the second half to pick back up. And the inflationary impacts has been coming down actually. We are seeing a slightly offset by volume, but we can hopefully again, expect to see those subside a little bit in the second half.

Kane Hannan
Analyst at The Goldman Sachs Group

Thank you can Tatiana

Operator

Next question comes from David Karnovsky from JPMorgan.

David Karnovsky
Analyst at JPMorgan Chase & Co.

Hi thank you Robert, on this internal digital subscribers. Can you talk to the subtrends there for the prior two quarters? I think you mentioned a tough market. I wanted to see how you view factors, like new cycle or economy? And then Dow Jones utilizes grew strongly in the quarter. Is that sort of the disposed to the macro? Or would you expect some impact to the demand eventually?

Robert J. Thomson
Chief Executive Officer at News

Second part of the question was a little unclear but on digital subs, they were up 30% for both Dow Jones and the Wall Street Journal. Our total subs were up 8% at Dow Jones, 4.9 million and the WSJ, that's 3.8 million. What we're seeing with Dow Jones generally is that we're able to take advantage of a massive audience, which is 116 million monthly uniques and then gradually push people up for the hierarchy of premium products at a premium price. And clearly, as we've taken on more professional information content, the ability to take advantage of that opportunity is realized. And secondly, we believe in vertical bundling. So for example, MarketWatch and WSJ, WSJ and IBD, IBD and Barron's not what you might call horizontal bundling which other companies in Belgium. And there's no doubt that you'll see, over the next six months, the virtue of those bundles that Dow Jones has just begun marketing. So we'll be able to update you in succeeding quarters, but we have no doubt that the strategy is a wise one.

Susan Lee Panuccio
Chief Financial Officer at News

And David, look, I think on the advertising. We didn't quite catch what the question was, but we actually been really pleased with the performance of advertising in Dow Jones have been growing advertising quarter-on-quarter for quite a few quarters now, which has been really pleasing and actually have surpassed our expectations as to how well they've been doing. I did say in my comments that we were expecting it to be a little bit more challenged come Q2. Q2 is one of the biggest advertising quarters across our markets, but it's still pretty early days, and we'll see how that pans out. So we do expect it to be a little bit more challenged in the second quarter against tougher comps. Thank you, David.

Operator

Next question is from Darren Leung from Macquarie. this should right to fill.

Darren Leung
Analyst at Macquarie

If thanks for the opportunity you Just a quick one about the BINGE subscriber growth. So it's up quarter-on-quarter Mr for for, how much was driven already. However, it is. Major investments trials, 17. Cost-conscious consumers and maybe know by that sort of saying that is that the trend based increase I just want..

Robert J. Thomson
Chief Executive Officer at News

We are very pleased with the subscription performance at BINGE. And frankly, at Kayo, both have around 1.3 million subscribers now. And what we're seeing is very uplifting in the sense that even though the streaming subscription has increased notably, in fact, up 35%. While broadcast ARPU is actually higher. So we're not seeing the fear cannibalization. And what it has done with Foxtel, it's given us optionality, which is a tribute to the toil of Patrick Savona and the team in Australia, we've secured long-term rights, the most watched sports and entertainment in Australia, and they have been working relentlessly to improve the customer experience. And the focus not only on what the customer watches, but how they watch and that's why the churn performance has been so good.

Susan Lee Panuccio
Chief Financial Officer at News

Thank you, Darren.

Operator

And next question is from Brian Han from Morningstar.

Brian Han
Analyst at Morningstar

Hi can you hear me. Well it Just a quick one. In digital real estate, can you please confirm that News Corp is still investing in those adjacencies and cellulite businesses in the U.S. Or is cost cutting the main thing now for the division?

Robert J. Thomson
Chief Executive Officer at News

Brian, very much so because we see a bright long-term future for Realtor. And that's why we are indeed investing, we're rightly cost-conscious. But whether it's rentals, whether it's the sell side as well as the buyer side, we're continuing to invest in products because there is absolutely no doubt about the long-term opportunity that digital real estate presents in the United States.

Susan Lee Panuccio
Chief Financial Officer at News

And Brian, just to add to that, our actual core operating expenses at Realtor are flat within the core business year-on-year and actually, the increase that we've seen in costs year-on-year due to those three adjacencies in the investment mode.

Operator

Next question is from Johnny Huynh from Evans and Partners.

Johnny Huynh
Analyst at Evans and Partnersq

I just wanted to ask about BINGE again and then specifically on the ad pack. Can you talk about expectations on ARPU and then also the demand from advertisers as well?

Robert J. Thomson
Chief Executive Officer at News

Well, generally, we're very pleased with the BINGE performance bringing in advertising gives us another layer of revenue potential and I have no doubt that the team does its modeling of that potential that we'll be able to update you in coming quarters as it's unfilled to the market.

Susan Lee Panuccio
Chief Financial Officer at News

And Johnny, just to add to that. So I think there's been a couple of questions just in relation to the pricing. We've been really pleased actually with how customers have been retained for BINGE and the price-rise that's been put through. So we've been very, very pleased with that. And as Robert said, we're expecting strong performance across BINGE with the content that we've got and the work that, that business has been doing down there.

Operator

There are no further questions from the line.

Michael Florin
Senior Vice President and Head of Investor Relations at News

Great. Well, thank you, Tatiana. Thank you all for participating. Have a great day, and we will talk to you soon. Take care.

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