Good day. Welcome to the News Corp third quarter 2016 earnings call. Today's call is being recorded. Media is allowed to join today's conference in a listen-only mode. At this time, for opening remarks and introductions, I'd like to turn the conference over to Michael Florin, Head of Investor Relations at News Corp. Please go ahead, sir.
Thank you very much, Tom. Hello, everyone. Welcome to News Corp's fiscal third quarter 2016 earnings call. We issued our earnings press release about 30 minutes 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 will open with some prepared remarks. 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-Q for the three months ended March 31st, 2016 identifies risks and uncertainties that could cause actual results to differ. 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 a 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'll pass it over to Robert Thomson for some opening comments.
Thank you, Mike. In our pursuit of digital, and particularly mobile growth, we continue to develop and to diversify the portfolio of our businesses and aggressively control our operating costs to free resources for further innovation and to expand margins across the company. The third quarter results were materially affected by a $280 million pre-tax charge at News America Marketing to resolve a legacy lawsuit and related claims. Continued currency headwinds impacted revenues by $72 million and EBITDA by $9 million. Excluding those factors and other special items, our revenues and total segment EBITDA declined 5% and 8% respectively, which was disappointing. We believe, however, that the company is on track to see improvements in the fourth quarter with the expansion of our digital real estate business, foreign currency comparisons hopefully beginning to ease, and cost-saving initiatives taking firmer root.
Our pursuit of digital growth continues apace. We enhanced our status as the world's largest digital property company with REA's completion of the iProperty acquisition in Southeast Asia, where we are now the most influential player. Meanwhile, traffic and revenue growth remained robust at REA and realtor.com. We are focused on driving mobile revenue and are pleased with, but not complacent about the results at realtor.com, where the mobile audience grew close to 50% this quarter and now represents 60% of page views and the majority of leads. Despite the difficult conditions for advertising, we saw both Dow Jones and News Corp Australia contributing to segment EBITDA growth, thanks to more digital subscriptions, digital advertising growth, and ongoing cost reduction.
While we believe in the strength of our print properties, we are investing energetically in the rapid pursuit of digital, which is clearly evident in the transition at Dow Jones. At Dow Jones this quarter, digital accounted for more than 50% of total revenues, and digital-only subscribers at The Wall Street Journal grew to 893,000, representing nearly 45% of the base. We are building a strong digital platform on top of the WSJ print circulation, which today is double the size of its nearest rival. 51% of The Wall Street Journal digital audience now comes from mobile, up six percentage points from a year ago. With the advertising market in the midst of upheaval, advertisers and agencies are understandably experimenting with their spend. We firmly believe that premium brands and audiences are currently undervalued by advertising agencies, some of whom are more interested in fashion than function.
With Silicon Valley's demand for quality content more voracious than ever, and advertisers rightly seeking greater digital accountability, we believe News Corp is ideally positioned to capitalize on these macro trends through the power of our global mastheads, businesses, and audiences. Bedi will shortly provide more granular detail of the numbers, but reported revenues fell 7% to $1.9 billion, and the reported total segment EBITDA loss was $122 million. Excluding the one-time pre-tax legal charge of $280 million at News America Marketing, total segment EBITDA would've been $158 million, a decline of 14%. We are very focused on leveraging the key strengths of our portfolio. As one example, we recently reached an agreement with a leading consumer packaged goods company that involves both News America Marketing and realtor.com, and we expect many more such deals as advertisers appreciate the value of our brands and deep audience relationships.
Let me review some of our lines of business, beginning with digital real estate services. With the ongoing success of REA, the completion of REA's acquisition of iProperty, and the growth of realtor.com, News Corp's digital real estate business is continuing its robust expansion. iProperty is the leading digital platform in Southeast Asia, complementing our existing businesses and allowing the further repurposing of software and of expertise. News Corp Australia also completed the acquisition of DIAKRIT, a leading provider of 3D visualization for the real estate industry, which we plan to incorporate more broadly at REA and around the industry. This will help differentiate News Corp's digital real estate capabilities worldwide, and provide a valuable service to realtors, vendors, and buyers.
For the most recent quarter, revenues at Move, which operates Realtor.com, expanded at 20% year-over-year, while user engagement at Realtor.com continued to grow briskly, with page views more than 25% higher to a record 1.5 billion views. Minutes spent on the site increasing nearly 30% year-over-year. We have momentum and the strongest engagement in the U.S. housing market. A market that we believe is yet to fully recover from the financial crisis, and is still at a relatively early phase of its digital evolution. Also in this quarter, average monthly unique users increased by 30% year-over-year, including strong growth in mobile. For the month of April, we recorded 55 million monthly uniques, and the average user of our mobile app accessed around 20 pages per visit. That's not including photo galleries.
We are continuing to improve our product line to enhance the services for Realtors and the efficacy for users. We have a number of new products coming to market at Realtor.com, including Turbo, which will assist the promotion of listings for agents and brokers. Early in fiscal 2017, we plan to roll out Showcase 2.0 to provide even more direct links to properties and leads for Realtors, vendors, and buyers. We are also enhancing our software and services offerings for agents to improve the efficiency of their business and bolster the efficacy of leads in ROI. We continue to enhance the site experience to drive deeper engagement, personalization, and integrating more relevant content with robust local neighborhood information.
In Australia, where digital real estate is at a more advanced stage of development, the REA Group had a solid quarter, with revenues expanding by 20% year-over-year, excluding the impact of foreign currency, thanks primarily to the broader penetration of premium products. REA in Australia has more than twice the traffic of its nearest competitor. REA continues to work ever more closely with Realtor.com and other News Corp properties. One modest sign of that partnership was the successful launch this past week by the Australian newspaper of a glossy magazine, Mansion, based on The Wall Street Journal's well-known section and in conjunction with REA.
Overall, excluding currency and M&A costs, adjusted revenues at the digital real estate services segment grew 18%, and adjusted EBITDA grew 23% year-over-year, despite the higher legal costs at Move, which is involved in ongoing litigation in tandem with the National Association of Realtors against Zillow over the theft of corporate secrets and the destruction of evidence. In Australia, Fox Sports posted strong EBITDA growth, in part due to the absence of costs from the Cricket World Cup and Asia Cup in the prior year. We're encouraged by the particularly robust ratings with the launch of the new season of Rugby League and Australian rules football. The NRL and AFL are both up low double digits over the prior year.
We believe the strong early returns in both sports this year are positive indicators for subscriber growth and advertising, and highlight the value of our deals to secure NRL and Aussie rules rights until 2022. These key sports should provide a platform for the long-term growth of our franchise. At Foxtel, we saw the appointment of Peter Tonagh as CEO, and expect that he will further develop the company, which we operate in partnership with Telstra in Australia. There have been several changes to the Foxtel executive team, and we are confident that the development of products, and crucially, the marketing of those products, will be enhanced over the coming year. In a challenging marketplace, Foxtel grew subscribers to around 2.9 million subs, which included a roughly 6% increase in cable and satellite subs versus the prior year, and higher Presto subscribers.
Foxtel is announcing today an agreement with 6 top English Premier League clubs, launching three dedicated channels with all home and away matches for Chelsea, Liverpool, Manchester United, Manchester City, Tottenham Hotspur, and most significantly and profoundly, Arsenal. These teams account for 75% of the EPL fan base in Australia. This agreement is yet another strong sign of how Foxtel differentiates itself from the competition with its premier content, which we believe also includes Australia's best portfolio of films and other programs. A growing roster of homegrown dramas that are proven audience-pleasers. We expect our new team will make that point to consumers tempted by lesser offerings from other providers who may have name recognition, but a relatively limited flow of compelling content.
Foxtel, which has an approximate 14% equity stake in the Network Ten, is already seeing benefits from the MCN advertising joint venture. The partnership with MCN delivers a broadened sales platform and obvious operating efficiencies. It is worth noting that 10 was the only free-to-air network to gain market share in its fiscal first half. HarperCollins faced a challenging quarter, as we had foreshadowed, due to tough comparisons with the strong sales of Divergent and American Sniper last year, the trends do appear to be improving. There is a stronger pipeline, including the paperback edition of Go Set a Watchman and the publication of Megyn Kelly's first book, scheduled to appear this November.
In the next fiscal year, we look forward to launching the latest books from Daniel Silva, Patricia Cornwell, and Veronica Roth, the author of the Divergent series, whose next novel, Carve the Mark, the first part of a duology, is due for release in January. The book's cover was released today to much acclaim by Veronica's many, many fans. As a result, we are encouraged by the outlook for the next fiscal year and expect to see improved year-over-year comparisons in the current quarter. We also continue to strengthen our international operations to make the most of hit books globally. For example, by having taken full control of our operations in Italy and France, and expanding in India.
At News and Information Services, while the print ad market, particularly in the U.K., remains somewhat challenging, and News America Marketing's FSI revenues were certainly under pressure, we are continuing to right-size our cost structure while emphasizing the importance of high-quality content and providing creative products and quality audiences for our advertisers. This quarter, segment EBITDA reflected positive growth at both Dow Jones and at News Corp Australia, thanks in part to the benefits of earlier efficiencies. Let me take a moment to discuss some of our cost initiatives in detail. At News Australia, we have announced an initial goal of 5% in annualized fixed cost reductions across the business, and we are well on the way to achieving that target, with AUD 40 million of cost savings expected in the second half of this fiscal year.
These savings range from lower production costs to the closure of loss-making businesses and reduced headcount across the divisions. This, along with the moderation in print ad declines and acceleration in digital revenue, has contributed to News Corp Australia's stronger growth this quarter. As a way to demonstrate our scale, according to a new study by Nielsen and the IAB, News Corp digital properties reached just under 16 million Australians above the age of 14 each month, which is higher than Facebook. At Dow Jones, expenses moderated thanks to a combination of lower sales and marketing spend and reduced newsprint expense. As we've communicated, we have ambitious goals for ongoing digital growth.
In this quarter, we also relaunched the MarketWatch website, and we have seen 20% revenue growth, with quarterly traffic exceeding 20 million unique users and page views over 150 million, up high teens versus the second quarter. At the professional information business, we rolled out customized newswires, created a new vertical targeted at financial regulation, and launched Factiva Mobile, providing additional avenues for future growth and improving the service for our professional subscribers. Revenues at our risk and compliance business grew 30% year-over-year. The tougher regulatory climate in many sectors, particularly in financial services, is clearly stimulating demand for our products. At News UK, we still see challenges in the ad market. There was continued weakness in print demand, specifically from the supermarket sector, which itself is in the midst of upheaval. Variable and fixed operating costs have both declined, a trend which Bedi will detail momentarily.
In addition, the cover price of The Sun rose GBP 0.10 in March. The Times cover price increased by GBP 0.20 in April. We are looking forward to the launch of a redesigned Sun website in the coming weeks, which should attract more traffic and be a stronger ad platform. We believe there is clearly room for significant growth in digital advertising at The Sun, given that the site itself has just emerged from behind a paywall. Traffic has almost doubled to more than 35 million monthly unique visitors since October, after which the site was fully opened. News America Marketing continues to face pressure on freestanding insert revenues, while domestic in-store display showed solid growth. Our key ambition is to complement the printed coupon business with a new mobile offering, which is why the team is focused on growth at Checkout 51.
Leveraging our platforms at Dow Jones, the New York Post, and realtor.com, NAM has accelerated the expansion of Checkout 51, and it is now in the top 10 of all free shopping apps in the App Store. As mentioned previously, we announced this quarter that News America Marketing has agreed to settle its legacy class action lawsuit with consumer packaged goods companies that was instigated by trial lawyers. We're pleased that we can continue to work with our long-term business partners without the unwelcome distraction of this case. In conclusion, we are focused on rapidly shifting News Corp into higher growth businesses while determinedly reducing our expenses at the News and Information Services segment to better reflect the changes in the advertising market. We are pleased with the continuing progress in digital real estate, which has become a large and growing pillar for the company's future.
With that, I'll turn you to Bedi for further detail on the quarter's numbers.
Thanks, Robert. We reported fiscal 2016 third quarter total revenues of $1.9 billion, down 7% from the prior year period. As Robert noted, we were again impacted by currency headwinds, although lessening from the prior quarter, which negatively impacted Q3 total reported revenues by $72 million. Excluding the impact of foreign currency fluctuations and acquisitions, adjusted total revenues declined 5% compared to the prior year. Reported total segment EBITDA loss of $122 million includes a one-time pre-tax charge of $280 million related to News America Marketing settlement of the CPG class action lawsuit and related claims. Excluding that cost, total segment EBITDA would've been a positive $158 million. Currency fluctuations impacted total reported segment EBITDA by $9 million, or 5%, and we also incurred transaction costs of $7 million related to REA's acquisition of iProperty and $3 million in legal costs related to the U.K. newspaper matters.
For the quarter, adjusted EPS from continuing operations were $0.04 versus $0.09 in the prior year. Reported EPS from continuing operations, which includes the News America Marketing settlement charge, net of tax, were negative $0.26 compared to $0.08 in the prior year. Turning now to the individual operating segments. In News and Information Services, revenues for the quarter declined $122 million, down 9% versus the prior year period. Adjusted segment revenues declined 6%. Within these segment revenues, advertising declined around 15%, or roughly 11% in local currency, due to weakness at the FSI business in News America Marketing and in print advertising, offset by strong digital ad growth at Dow Jones. Circulation and subscription revenues declined 4%, but were overall flat in local currency. News and Information Services reported a segment EBITDA loss of $187 million.
Excluding the News America Marketing settlement charge, segment EBITDA this quarter would've been a positive $93 million, a decline of 18% compared to the prior year. Adjusted segment EBITDA was down 11%, an improvement from the prior quarter rate, with declines at News America Marketing partially offset by growth in our newspapers due to strong improvements at both Dow Jones and News Corp Australia. Looking at performance across our key units, at Dow Jones, domestic advertising at The Wall Street Journal declined 4% versus the prior year quarter, a slight improvement from last quarter. Declines in print advertising were again partially offset by continued solid growth in digital, driven by strength in programmatic and custom content. Digital accounted for approximately 1/3 of Dow Jones' ad revenues this quarter.
Wall Street Journal circulation revenues grew 5% this quarter due to higher subscription pricing and higher digital paid subscribers as print volume remained relatively stable. Digital-only paid subscribers were 893,000 for the quarter, a strong double-digit gain over the prior year. At PIB, we saw positive net installs and stable revenues excluding currency, led principally by continued strength in the risk and compliance business. At News Corp Australia, advertising revenues for the quarter declined 15%, or 7% in local currency. The rate of decline in print advertising moderated due to sequential improvements in the national and retail categories. We also saw an acceleration in digital advertising growth compared to last quarter, led by strength at news.com.au. Circulation revenues at News Corp Australia were relatively stable in constant currency as a result of cover price increases and higher paid digital subs, largely offsetting print volume declines.
We took a cover price increase for the weekday metro newspapers of AUD 0.10 during the quarter. Digital paid subscribers grew over 25% year-over-year to 273,000 for newspapers and other publications as of the quarter end. As expected, we are seeing the benefit of the cost reduction program implemented at the end of Q2 and realized an estimated AUD 17 million of cost savings in the quarter and are on track to meet the AUD 40 million target for the fiscal second half. As a result, News Corp Australia showed improvement both on reported and local currency basis compared to the prior year. At News UK, advertising revenues declined 21%, or down mid-teens in local currency, driven by weakness in print advertising at both The Sun and The Times, reflecting a weakened marketplace from the prior quarter.
Digital, while small as a percentage of revenues, accelerated led by The Sun. Circulation revenues at News UK declined mid-single digits in local currency compared to the prior year, primarily due to newsstand volume declines and the removal of The Sun's paywall, which were partially offset by subscription and cover price increases. The key management focus at News UK is on improving the performance at The Sun, particularly its digital proposition. We will be relaunching The Sun's website imminently, which will be integrated with much more video and better aligned for mobile usage and monetization in conjunction with our video ad platform, Unruly. In Q3, The Times continued to gain circulation market share and saw modest volume growth. The Times had 174,000 digital-only subs as of the quarter end, representing more than 40% of the total paid subscribers.
Declines at News UK moderated from last quarter, primarily reflecting overhead and editorial saving initiatives, lower newsprint prices across all titles, and cover price increases. At News America Marketing, revenues declined 17% versus the prior year quarter. FSI weakened this quarter due to lower volumes and pricing pressure, as we had anticipated. Domestic in-store, however, rose slightly this quarter. News America Marketing also incurred higher investment spending at Checkout 51, its digital and mobile coupon company. Checkout 51 is a key part of the strategy to digitize News America Marketing, and the current focus, as Robert mentioned, is to drive app downloads and expand usage. Turning to the book publishing segment, revenues decreased 11% and segment EBITDA declined 36% versus the prior year.
Declines were due to expected tougher year-ago comps from the sales of the Divergent series and American Sniper, as we noted in the last earnings call, as well as lower e-book volume across the marketplace, similar to the second quarter. As a result, total digital revenues for the quarter were 21% of consumer revenues, down from 25% in the prior year. Divergent sold less than 1 million units this quarter compared to 2.3 million units in Q3 last year, and HarperCollins also sold 2.7 million units of American Sniper in the prior year. Combined, those two franchises accounted for the majority of the year-over-year revenue shortfall. Top-selling books this quarter include "The Nest" by Cynthia Sweeney and "Pretty Happy" by Kate Hudson in general trade books, and "The Glass Sword" by Victoria Aveyard in children's.
In digital real estate services, total segment revenues increased $24 million or 14% to $194 million, which includes the consolidation of iProperty and DIAKRIT, which closed in February, and the lapping of the Move acquisition in November 2014. Segment EBITDA was $39 million, down from $42 million in the prior year, which reflects $7 million in one-time transaction costs for the iProperty acquisition, higher planned marketing expenses at REA Group, and $11 million higher legal expenses at Move related to the Zillow litigation. Importantly, adjusted revenue and adjusted segment EBITDA grew 18% and 23% respectively, inclusive of the $11 million higher legal expenses at Move. As Robert noted, Move is currently in litigation with Zillow, and we would expect to incur some additional legal costs in the fourth quarter as we prepare for trial in early June.
REA's revenues grew 9%, or approximately 20% in local currency, due to higher list depth product penetration, partially offset by an earlier Easter as compared to the prior year. Move revenues rose 20% versus the prior year, driven by strong growth from the connection for co-brokerage product and higher non-listing media revenues, partially offset by reduced ad inventory as part of the site redesign. Unique user growth at Realtor remains strong, up 30% to 50 million average per month for fiscal Q3 and hitting a record 55 million users in April. In cable network programming, revenues decreased by $9 million or 8% compared to the prior year. On a currency-adjusted basis, revenues were flat. Subscription revenues declined 5%, as higher affiliate fees and subscriber gains were more than offset by FX headwinds. Excluding currency, subscriber revenues grew around 3%.
Advertising revenues declined 18% due to the absence of the Asian Cup and the Cricket World Cup in the prior year. In local currency, ad revenues declined around 12%. Segment EBITDA in the quarter, however, rose 26% on a reported basis and 33% adjusted for currency due to lower acquisition costs from the absence of these two sporting events. With respect to earnings from affiliates, Foxtel ended the quarter with approximately 2.9 million total subscribers, with cable and satellite subs increasing approximately 6% compared to the prior year period and higher Presto subs despite increased competitions from SVOD players. Foxtel revenues for the quarter in local currency were up 2%. EBITDA declined 4% in local currency due to higher programming costs and an increase in subscriber acquisition costs driven by new offers launched in January.
Foxtel no longer expects to increase EBITDA over FY 2015 due to these factors and continued focus on sales and marketing. Foxtel posted record gross cable satellite adds this quarter, driven by favorable consumer reception to offers in the market. Churn in the quarter rose to 14.3% from 10.9%, which was largely driven by subscribers on no-contract offers. We expect churn to remain higher than normal in the short term. Year-to-date churn was relatively stable and amongst longer-tenured subscribers, remains near record low levels. Heading into the fiscal fourth quarter, there are a few points to note. First, as we've disclosed in our filings, this being a 53-week fiscal year for us, we have an extra week in fiscal fourth quarter, which should have a modest positive impact on revenue and EBITDA.
We expect to see continued cost savings at NIS segment across each of our key business units and the flow-through of recent cost-saving initiatives. Book publishing should benefit from the normalizing of comparables, given the absence of Divergent comps and a strong pipeline this quarter, including the paperback release of "Go Set a Watchman." We expect REA to benefit from the early Easter, which should be a positive on listing volume in Q4. Move continues to expect strong revenue growth off the back of increased audience. Finally, CapEx for continuing operations for the year is likely to be in the $240 million-$260 million range, below the $308 million from last year. With that, let me hand it over to the operator for Q&A.
Thank you, sir. Ladies and gentlemen, if you'd like to ask a question at this time, it is star one on your touch-tone telephone. Please make sure your mute function is turned off to allow your signal to reach our equipment. We ask that you please limit yourself to one question during the Q&A session. Again, that's star one at this time to ask a question. We'll take our first question from Eric Katz with Wells Fargo.
There's been quite a bit of news around potential buyout of Telstra's stake in Foxtel. I was just wondering if maybe you can touch on some of the key positive and negative aspects you're mulling over for that potential acquisition, and maybe just your general thoughts on that business over the next few years and how it differs from Telstra, who looks like they want to exit. I guess on top of that, what's your appetite for leverage to make a deal of this size happen? Thank you.
Eric, we're not going to speculate on idle speculation. What we can tell you is that the new team at Foxtel, led by Peter Tonagh, and at our partners in Foxtel, Telstra, are determined to improve the business. We're investing in subscriber growth. You saw today with the announcement of the acquisition of EPL Premier League rights via the six most important clubs, that day after day, week after week, Peter and the team are both improving the product and, most crucially, improving the projection. We believe that there's no doubt that Foxtel has the best suite of programs. There's no doubt that that portfolio is starting to resonate. It already is resonating with our long-term subscribers. There's obviously a little bit more churn when you have a lot of offers out there.
Long term, we believe that the health of Foxtel is robust and that we have full faith in the new executive team. I think the cleverness of the deal that they've done on Premier League rights tells you that we're certainly going to look after our fans who like EPL, but we were never going to acquire EPL in a way that would hurt EPS. You might want to watch a game in the middle of the night and pay a lot of money to do that. That's what Australians would call a nocturnal marsupial. You're a rather sad and sultry person in the middle of the night. You could watch the game, frankly, with your family at lunchtime and cheer on your favorite players.
One other thing about the particularly interesting offering that Peter and the team have at Foxtel is that you'll also be able to see all the reserve games, the under-21 games. When well-known players like Shane Duffy or Jack Wilshere come back into the intermediate teams, ahead of playing in the main team, you'll be able to watch those games as well.
Thanks, Eric. Operator, we'll take our next question, please.
Next question comes from Entcho Raykovski with Deutsche Bank.
Hi, Robert. Hi, Bedi. My question is around digital real estate services and Move specifically. Apologies if I missed this. Are you able to tell us what the EBITDA for Move was over the quarter? Then in light of the continued legal expenses which are being incurred, do you still expect Move to be break even for the full year?
Hi, Entcho. We don't actually specifically give out Move's EBITDA, but I can tell you that in Q3, there was positive EBITDA, this is despite the fact that we incurred the higher legal expenses in the Zillow litigation. We expect clearly, given the audience growth we've seen at Move, we expect revenue growth going into Q4. I would expect barring legal fees, which we don't know what the quantum of those could be in Q4, putting legal fees to one side, we would expect to see EBITDA positive and EBITDA growth in the fourth quarter for Move.
Just to supplement what Bedi said, that includes our stock-based compensation, which some companies in the sector don't do. As Bedi said, we fully expect core EBITDA growth this quarter, and we fully expect even faster EBITDA growth in succeeding quarters. We're in the middle of what you might call home renovations at realtor.com. You can see from what you might call a buy-side product, the co-broke, where we have 45% revenue growth year-on-year, that side of the business is doing well. Ryan O'Hara and the team at Move are now working on improving the sell side product. That's the one known as Turbo and another known as Showcase. We expect over coming months and into the next fiscal for those also to have a positive impact.
Thanks, Entcho. Operator, we'll take our next question, please.
Our next question comes from Alexia Quadrani with JP Morgan.
Hi, this is James Kopelman in for Alexia. A question on the Journal in digital. Digital subs are obviously growing fast, and you guys are reaching impressive levels. Can you talk about strategies for further growing digital subs and maybe provide some color on what you're looking at, whether it's with regards to retention, perhaps lowering churn, or in terms of on the product side, whether it's adding video, expanding into new verticals? You mentioned MarketWatch earlier. I guess, where do you see the opportunities, and how are you exploiting them? Then as a follow-up, one of your publishing peers, I think when they were at a similar level of subs within about 1 year, they passed 1 million.
I guess, any color on or if you could comment on what your own sort of broad timeline is for hitting that key threshold of 1 million digital-only subs. Thanks.
We certainly are optimistic for the digital potential of Dow Jones and the Journal in particular. What we're doing, obviously, is emphasizing as one must in the contemporary age of content, video, increasingly interactive engagement with this premium audience. Also developing new verticals, sort of virtuous verticals that give us more elasticity because they touch professionals in a way that on a need-to-know basis, these are knowing audiences, but frankly, they're also paying audiences. I think you need to see the Dow Jones offering as essentially having three segments, is the B2C and the B2B, both of which are well-known, Factiva, Newswires, venture capital-related verticals are at the B2B side. But there's also a very strong B2P play between the consumer and the business. That's the business to professional.
We see that the team there, Will Lewis, and the editorial team are constantly fashioning new products for the fast-growing B2P segment, which is obviously a more sophisticated product, frankly, at a more sophisticated price.
Operator, we'll take our next question, please.
Next question comes from John Janedis with Jefferies.
Thank you. Robert, you talked about mastheads and audiences being undervalued by agencies, and I think you'd say you have the scale, and you felt that way for a while. How do you change that narrative and/or inertia to realistically gain share of budget?
John, it's a really good question. One way you change the narrative is to start talking about it, as we are. Secondly, we have to do a better job of selling the power of the platforms and the reach of the audiences. You look at our U.S. digital platforms, and that's Realtor, the Post, Wall Street Journal, MarketWatch, that's around 160 million monthly uniques. I'll tell you one story, which we use our own platforms to create new products and generate new audiences. You may have noticed just over two weeks ago, we created a puckish libertarian site called Heat Street. Heat Street has picked up one million uniques in just over two weeks. Our external marketing spend on Heat Street, $10,000. That is proof of the power of our platforms relative to external platforms. We have to do a better job of explaining it.
Quite frankly, I think advertisers need to challenge agencies because at times, the interest of the agency and the interest of the advertiser are not in alignment.
Thanks, John. Operator, we'll take our next question, please.
Our next question comes from Doug Arthur with Huber Research Partners.
Yeah, Bedi, on book publishing, HarperCollins, just to be clear, are you expecting top-line growth in the fourth quarter or just improvement? Thanks.
Look, clearly, it also depends on what the mix of books is. At this stage, when we look at where the last month and where we are entering this month, I would expect both top-line growth, and I would expect improvement at the bottom line.
Great. Thank you.
Thanks, Doug. Operator, we'll take our next question, please.
Next question comes from Craig Huber with Huber Research.
Yes. Hi. You guys threw out a lot of numbers on the newspaper ad revenues. I don't think I heard the U.K. ad revenue % change in the core year-over-year with or without currency. And also, can you remind us the Zillow loss that you're talking about, what dollar amount are you guys going after there, please?
On the U.K. part, what I said was that ad revenues in the U.K. declines 21%. In local currency, they were down mid-teens. On the legal settlement, I'm not sure we are going to be saying a lot other than the fact that there's a trial date that's been set in early June, and we are preparing to go to trial.
Thanks, Craig. Operator, we'll take our next question, please.
Next question comes from [Michael Kans] with BlueMountain Capital .
Hey, just to follow up on one earlier question on Move. I might have missed it. Did you disclose the revenue in the quarter for Move? You have generally done that.
Sorry, we didn't hear the question.
Mike, can you repeat the question? We just had trouble hearing you.
I was just wondering what the absolute revenue at Move in the quarter was.
We actually don't give out a separate number for actual revenue. We give out percentage increase.
It was up 20%.
20%.
Quarter-on-quarter. The unique users up 30% for the quarter itself in April, up 25%.
Thanks, Mike. Operator, we'll take our next question, please.
Next question comes from Brian Han with Morningstar.
Thanks very much. Are you still incurring any cash flow losses on Amplify, even though you've sold it? As a general question, what % of your newspaper cost base relates to newsprint now?
With respect to Amplify, we pretty much cleaned up most of the bits that were left over. In the quarter, there was a very immaterial sort of loss. Looking at Q4, we have a very immaterial amount of cash flow to go, and we expect to be completely cleaned up as of 30th of June.
As for newsprint is probably less than 10% of total cost for a masthead these days. What we have been able to do across our mastheads with the extra focus of the new news is whether it be software, the publishing systems, newsprint contracts, generally, we are engaging a lot more collective cooperative bargaining of the company. We're able to get costs down, share experiences, share expertise, de-dupe expenditure in a way that is having a tangible, positive impact on all the cost bases.
Operator, we'll take our next question, please.
We'll go next to Sacha Krien with CLSA.
Thanks, guys. Just in relation to News America Marketing legal costs, can you give us an idea of the quantum of fees you've incurred over the past quarter and perhaps over the past 12 months? Just to confirm that there aren't any legal fees rolled up in that charge. Just a quick second question in relation to Foxtel. Is it churn that's the primary reason behind not hitting the previous guidance?
With respect to legal fees for NAM, we incurred $10 million roughly in the quarter, the settlement that was for $200 million does not include these $10 million of legal fees, which went through separately.
For Foxtel, as you know, we're in the midst of an intensive marketing drive. The churn will have an impact on revenues, partly because, as Bedi mentioned, the no-contract offers. You're still looking at ARPU in the high 80s, which is significant, you are looking at a very low rate of churn for long-term customers. You should note that Foxtel implemented a $1 price increase for the entertainment tier, which will have a benefit in the next quarter.
Thanks. Operator, we'll take our next question, please.
Next question comes from Tim Nollen with Macquarie.
Hi. Thanks. I'm interested in The Sun with you removing the paywall. If I remember correctly, when you set up the paywall for The Times several years ago in the U.K., your viewership dropped by a big number, 90% or something like that, which is understandable because you're getting people to pay. I just wonder if The Sun went through something similar. Now I think you said the uniques have doubled. I recognize it's still relatively early, but it seems like there might be a lot more ground to recover. I just wonder what might be different now versus the last time The Sun was basically free to all viewers. Thanks.
I think we have a lot of faith in the quality content of The Sun. There's no doubt that the audience already has increased. We're relaunching the website itself in coming weeks, which we presume both obviously on desktop and crucially on mobile, will have a profound impact. The ad sales teams are gearing up for that opportunity. It's definitely an opportunity. The Sun will be a brand that resonates, obviously, particularly in the U.K., but it's also a brand with a global halo. We see real potential there over coming quarters.
Thanks, Tim. Operator, we'll take our next question, please.
We'll take a question from Michael Nathanson with BlueMountain Capital Management.
Hey, thanks for taking another question. I was just wondering, now that you've settled, at least on the CPG side, the NAMM suit. I was wondering if you can talk a little bit more about kind of how you see the value of that business quantitatively versus the pretty considerable settlement. I guess from a market perspective, it's not clear that you're getting that much value from the ownership of NAMM, and you don't disclose metrics.
Why was it worth spending $300 million to settle this lawsuit?
Well, as you can see, Marty and the team at NAM are investing significantly in the digital character of the company, because NAM has unique relationships with CPGs, it has unique relationships with retailers. What we're seeing with NAM coming closer to other parts of the organization, is those are complementary skills which are helping introduce, for example, Realtor and our other properties to advertisers who in the past may not have had a particularly close client relationship with us. The key thing over the next 12 months will be the development of digital. You always have to remember that NAM has significant free cash flow, that the install business has been growing strongly, even as the FSI business has been under pressure.
In a very short period, Checkout 51, and I would advise you to check out Checkout 51, has become one of the top 10 shopping apps. That means in terms of reach on the Apple App Store, it has more prominence than Walmart and Walgreens.
Thanks, Mike. Operator, we'll take our next question, please.
We'll take a question from [Peter Small s] with Evan & Partners.
Oh, hi. I was hoping you could provide a level of visibility into programming costs, both across Fox Sports Australia and Foxtel going forward over the next 12 months. Thanks.
In terms of Fox Sports, as you know, the similar costs on the NRL will be starting in the fourth quarter. We expect to incur some additional costs there. We'll also have some additional costs related to a few more matches at Wimbledon, the new Rugby Union contract also kicks in. We'll see an increase in sports costs there. As you know, at Fox Sports, costs tend to be sort of lumpy, EBITDA tends to be a little lumpy. Overall, we expect that in the fourth quarter, EBITDA should be improving slightly compared to the prior year.
Thanks, Paul. Operator, we'll take our next question, please.
Ladies and gentlemen, if you'd like to ask a question at this time, it is star one on your touchtone telephone. Star one. We'll pause just a moment. Mr. Florin, there are no further questions at this time. I'd like to turn the call back over to you for any closing remarks.
Well, great. Thanks, Tom. Thank you all for participating. Have a great rest of the day. We'll talk to you soon.
Ladies and gentlemen, this does conclude today's conference. We appreciate your participation.