News Corporation (NWSA)
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AGM 2018

Nov 6, 2018

Speaker 1

and information services, while facing ongoing challenges from industry wide print advertising, we are successfully transforming to the digital age. With both digital advertising and subscriptions on the rise in this country, in Britain and Australia. We also have capitalized on the public's growing appetite for quality journalism, especially at a time when so much false information proofreads through social media. Some of the most popular and trusted markets in the world are in our portfolio. To ensure continued progress, we exercise strict financial discipline across the board.

We put an emphasis on subscriptions to reduce our reliance on advertising. We constantly innovate through acquisition of digital startups and technological transformations of historic brands. I think all of our employees, our readers and audiences, advertisers and investors, helping us deliver another successful year. And we look forward to even greater progress in the years ahead. I'd now like to call to the podium Robert Thompson, who will have some remarks of his own about the state of our company.

Thank you.

Speaker 2

This presentation may include certain forward looking information. Actual results could differ materially from what is said due to risks and uncertainties. For more details, please refer to News Corporation's SEC filings, which identify risks and uncertainties that could cause actual results to differ and which contain cautionary statements about forward looking information. Thank you, Rupert. In these challenging times for some media companies, it is significant that during saw growth in revenues and total segment EBITDA across its businesses.

In total, revenues rose 11% to $9,000,000,000 and EBITDA increased by 21% to $110,000,000,0.0 When the new News Corp was launched five years ago, we promised to be increasingly digital and global. It was also crucial for our shareholders that we become more than the sum of our parts. While there is much to accomplish, closer integration among our companies is helping us to realize our potential and the composition of our revenue mix has changed profoundly. These are not contrived concepts, but measurable outcomes and our full year numbers provide hard evidence of the company's evolution. This past year, as a result of the combination of Foxtel and Fox Sports Australia and the muscular performances at book publishing and digital real estate services, the new News Corp crossed the $1,000,000,000 threshold in profitability for the first time, as Rupert mentioned.

Meanwhile, the international debate led by News Corp on digital provenance has intensified with Google, YouTube and Facebook and Amazon under compounding pressure to purge piracy and share the permission data generated by our quality journalism. These companies are conscious that past abusive practices will be untenable, if not illegal, in the future. We are monitoring e evolution closely and it is clear that the dominant algorithms are under increasing scrutiny across the globe. One notable development over the past year is the combination of Foxtel and Fox Sports Australia. We now control the combined company and with a new leadership team at the helm, the business conspicuously increases the share of subscription revenues in our total revenue composition.

At the time of our separation, almost half of NewsCore's revenues came from advertising. Today, in the subscription and other non advertising revenues exceeded 70%, giving NewsCore a healthy foundation for growth and for a deeper relationship with customers. In In News and Information Services, we're able to offset print advertising declines through expanding digital revenues. We have seen notable success in subscriber growth at Dow Jones, which crossed the 3000000 subscriber mark in June 0, with digital now accounting for more than 60% of The Wall Street Journal subscribers. Also at The Australian and The Times and The Sunday Times, digital subscribers are now more than half of the total subscriber base.

At Dow Jones, there was a solid 7% increase in full year revenues of the Professional Information business and a particularly robust performance in risk and compliance. Dow Jones is also working closely with the team at Storyful, whose unique understanding of social media around the world is crucial for companies seeking to avoid becoming reputation roadkill. The New York Post is gathering momentum in a tough tabloid market and is the standout performer in Greater New York. Meanwhile, in May 0, topped its primary competitor in The UK in the number of unique visitors. Also in Great Britain, Wireless Group saw another strong set of audience figures in part because of the prowess of our UK print and digital platforms in aligning their marketing efforts and the sharing of talent across our properties.

In Australia, our team adroitly addressed the cost base strength in the business. The results of that vigilance were reflected in a positive segment EBITDA contribution for the year. As for Book Publishing, our team at HarperCollins, through their divining of great authors and empathetic curating of manuscripts and clever marketing, ensured notably strong results in and saw particularly strong growth over 50% in audiobooks. At our fastest growing segment, Digital Real Estate Services, segment revenues rose 22% and segment EBITDA rose 24% for the year. Digital real estate accounted for 37% of our total EBITDA last year, up from only 24 at the time of our reincarnation.

At Move, home of realtor.com, real estate revenues for grew 20% with total revenues up a healthy 15% for the year. Realtor.com continued to show audience gains and has nearly doubled its revenues since the acquisition by News Corp less than four years ago. Last month, we completed our acquisition of Opcity. Based in Austin, Texas, Opcity is a market leading real estate tech platform that matches qualified homebuyers and sellers with real estate professionals in real time. With Opcity's U.

S. Client base of 40000 realtors, this deepens our engagement with both realtors and homebuyers. Meanwhile, in Australia, REA continued to be an industry leader in audience and innovation in expanding into adjacencies like the mortgage broking business, which has quickly gained traction with 350000 self completed financial profiles as of June '30. At the close of this fiscal year, five years since our rebirth as a company, we are proud to honor the traditions of News Corp and look forward to the with confidence to the future with a company whose fabric has evolved, but whose character endures. Behind the impressive results of this past year are the people of News Corp, who serve our readers, audiences, advertisers and partners with verve each day.

All have contributed to our success and have laid firm foundations for robust returns for our investors. Thank

Speaker 1

you. Thank you, Robert. I now call this meeting to order. And before proceeding to the business, I would like to introduce our directors and members of our management. On stage with me are our General Counsel, Mr.

David Petoskey Chief Executive and Director, Robert Thompson Co Chairman, Mr. Lochton Murdoch Lead Director and Chairman of the Order Committee, Mr. Peter Barnes Chairman of the Nominating and Corporate Governance Committee, Mr. Jose Maria Zasna and Chairman of the Compensation Committee, Mr. Masra Sadiki and the Chief Financial Officer, Ms.

Susan Panuccio. I'd like to sit in the front row are Ms. Kelly Ayotte, Ms. Natalie Bancroft, Mr. Joel Klein and Ms.

Ana Paula Purcella. Mr. James Murdoch is not able to attend and sends his apologies. Also present today are Ms. Krishnan and Mr.

Hobson of Ernst and Young, the company's independent registered public accounting firm. In accordance with the company's bylaws, I hereby appoint Mr. Raut from American Election Services as the independent Inspector of Election at this annual meeting. This meeting is held pursuant to a notice of annual meeting of stockholders made available or mailed on or about September 2438, to each record holder of the company's common stock as of Sept. 7, 2018.

A list of stockholders of record entitled to vote at this meeting has been available for examination at the company's headquarters for the past ten days. It's available at this meeting as well. All documents concerning the call and notice of this meeting are available here today and will be filed with the records of the meeting. An Inspector of Election has examined the proxies received and reports that holders of a majority in voting power of all of the outstanding shares of stock entitled to vote are present in person or represented by proxy. Therefore, I hereby declare a quorum present at the meeting.

It is now 10:15 on Nov. 6, 2018. The polls are now open for voting. You do not need to complete a ballot if you voted or returned a proxy before the meeting. And only Class B common stockholders of record and valid proxy holders can vote at this meeting.

Those of you who requested a ballot so that you could vote in person were provided with a ballot when you enter the meeting. If you wish to cast a ballot now, please raise your hand and a company representative will collect your ballot for tabulation. You will have an opportunity to ask questions after all matters being submitted to stockholders for a vote are presented. Please hold your questions until that time. We have three items on the agenda.

The first matter to be acted upon by the stockholders is Proposal one, The election of directors, the Board has nominated the following individuals to serve as directors: Lachlan Murdoch, Robert Thompson, Kelly Ayotte, Jose Marie Asner, Natalie Bancroft, Peter Barnes, Joel Klein, James Murdoch, Ana Paolo Pesoa, Mesura Siddiqui and myself. If elected, these director nominees will each serve a one year term expiring at the twenty nineteen annual meeting or until his or her successor is duly elected and qualified. Proposal two is for the ratification of the selection of Ernst and Young LLP as the company's independent registered public accounting firm for the fiscal year ending June 3039. Proposal three is an advisory vote to approve executive compensation. A preliminary report of the inspect of election reflects that more than the majority of the eligible votes cast to be voted for the election of each of the director nominees for the ratification of Ernst and Young LLP as the company's independent registered public accounting firm and for the advisory approval of executive compensation.

Thank you very much for your support. We will report the final results of the meeting in an SEC filing shortly. At this time, any stockholder, proxy holder or qualified representative who wishes to ask a question related to any of these proposals, all regarding the business operations of the company, should proceed to the microphone and present the yellow admission ticket that you received when you came today. Before asking your question, please state your name and affiliation. We ask that you comply with the rules and procedures for conduct of the meeting so that we can conduct an orderly meeting.

So go ahead.

Speaker 3

Hi. My name is John Lindsay. I'm a shareholder. First, I want to say thank you for pushing back against these tech giants and they're bludging leeches, if I can use that sort

Speaker 1

of terminology. You speak up the

Speaker 3

Yes, they're bludging leeches. Anyway, thank you so much. What I wanted to say was, we seem to be morphing into a hybrid news mediareal estate company. And if we don't merge with Newfox, will we go for acquisitions in the future? I know you can't talk about that, but do you see any sort of media acquisitions coming down the line?

Speaker 1

No, we're always on the lookout. I wouldn't say never. If something we think it'd be beneficial, we'll go ahead. But we're nothing of an enormous nature inside. We keep adding small things for digital.

Speaker 3

And I just want to ask one more question. Do you think you'll have to say, Jay, where you don't print the newspapers and they'll all be digital?

Speaker 1

No. I think that particularly the quality papers is here for a long time. I mean, sure, it's in some we're finding decline, but papers like The Wall Street Journal, The Times, The Australian are holding very well. Australia may be off for a part in print. So, you know, it's going on, but it's a long way to go.

Thank you. Yes, go ahead.

Speaker 4

James Patterson, Mr. Chairman, stockholder. Congratulations on the success of the corporation over the past year and continuing. I urge you to aggressively monetize the legalization of sports betting in The United States and like to hear the corporation's plans on doing that, if you could share those with us. I also have here a column in the San Francisco Chronicle Sunday from former Labor Secretary Robert Reich, who says that Fox News is the source of unbridled hate in America and that the corporation is monetizing hate and violence and profiting from this.

And he's mentioning that corporate executives, the on air talent, but the implication is board members, stockholders, viewers, everybody associated with Fox News. And I'd like to hear your response to this. These charges being made here are outrageous slander against the board, the corporation, it's our stockholders. And this is outrageous it's been going on. And I'd like to hear what the corporation plan I'd like to give this to you if you haven't seen it.

But I'd like to hear what the corporation's response to this because it's outrageous to say that everybody associated with Fox News is profiting from hate and the source of hate and

Speaker 3

violence in

Speaker 4

our country.

Speaker 3

Thank you.

Speaker 1

Thank you. Well, of course, News Corporation has nothing to do with Fox News, but some of us are certainly directors of Fox as well. And I said we're very proud of Fox News. It's news, it's fair and balanced. It has commentators who tend to be, not all, but tend to be conservative, that's true.

But if you're looking for hate, look at some other news channels. It's no longer news, it's just participants, activists. So no, we're fine about Foxtrot. We'll stand up for Fox News anyway. It's got a huge audience, which is doing very well, but that's part of Fox, not this company.

What's in there? Obviously, I have a

Speaker 2

question. On sports betting, I think obviously, it's a little early to speculate. I think you're exactly right that it opens up all sorts of opportunities, but as in sport, we must play to our strengths.

Speaker 5

Philip Berman, portfolio manager and shareholder, are just a few comments to put things in perspective for both companies. For decades now Rupert Murdoch has Fox has been the leader in the entertainment and media business. Fox was the first to develop the longest running animated Simpsons TV show. When it was twentieth Century Fox, Rupert was the first to put on the big screen, the first Marvel comic book character, which always garnered high box office receipts. For decades, twentieth Century Fox produced some of the most acclaimed, popular and dearest TV series.

It is highly noteworthy that twentieth Century Fox produced the first film to gross more than $1,000,000,000 at the box office, namely Avatar.

Speaker 1

Titanic was the first.

Speaker 5

Okay. Well, if you count the foreign sales. It is interesting to see that these eclectic Fox assets have now been sold to Disney branded empire. In addition, now we have finally Rupert's dream to be complete with Rupert and Laughlin working together at the Fox Empire, the new Fox Empire. In closing, nobody does it like Rupert Murdoch.

Looking forward, the newly remitted Fox assets are the best in the business and are strategically well positioned for the future. We're moving back more towards our roots. We all love Rupert Murdoch and Laughlin too.

Speaker 1

Thank you very much. Your comments are very welcome, although not much to do with Hughes Corporation. But thank you. Thank you. Any other questions?

And are there any other ballots that need to be collected? No. So it's now 10:25 on Nov. 6, 2018. The poles are now closed.

Concludes the business described in the notice of meeting. So the meeting is adjourned. Thank you very, very much, everybody.

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