Good day, ladies and gentlemen, and welcome to the News Corporation second quarter FY 2015 earnings conference call. Today's call is being recorded. Please be advised, media is invited on a listen only basis. At this time, I'd like to turn the conference over to Michael Florin, Senior Vice President and Head of Investor Relations. Please go ahead, sir.
Thank you very much, operator. Hello, everyone, and welcome to News Corp's fiscal second quarter 2015 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 Bedi Singh, Chief Financial Officer. We will open with some prepared remarks, and then we'll be happy to take questions from the investment community. This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-Q for the three months ended December 31st, 2014, identifies risks and uncertainties that could cause actual results to differ, and these statements are qualified by the cautionary statements contained in such filings. Additionally, this call will include certain non-GAAP financial measurements.
The definition of and 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 the second quarter of fiscal year 2015, we continued to pursue the long-term development of the company, as well as delivering positive results in the here and now. With reported revenues of $2.3 billion, up 2%, stable EBITDA of $328 million, and a rather healthy free cash flow. Importantly, excluding currency fluctuations during a patently volatile period in the Forex market, acquisitions, and other non-operating costs, our adjusted EBITDA grew by a robust 4%. That makes two successive quarters of improving revenues year-over-year, signaling that the transformation is on track and that most of our core businesses are delivering solid results. At the heart of the metamorphosis of a company with a proud provenance, a very proud provenance, is our promise to become more digital and increasingly global. Both of those characteristics are clear in the numbers today.
It is also worth noting that these achievements come despite a very uneven global advertising market. Advertising remains distinctly short-term, making prognostication difficult. The diversity and the depth of our portfolio have provided a solid buffer. This quarter marks the first time partial results from Move are included. Although we don't yet have a full quarter of performance, it is fair to say that the expansion of our digital real estate portfolio should provide a firm foundation for future growth. Our confidence has only increased post-closing. For example, average unique users at realtor.com grew at a record rate of approximately 33% in January to 37 million. Total visits to the site rose 46% on a year earlier, importantly, total mobile visits rose 79%. While there is much toil ahead, there's also much reason for optimism.
Our other major acquisition to date, Harlequin, has continued to benefit our book publishing business, helping to usher in a new era of international and digital expansion at HarperCollins. Harlequin has access to over 100 markets and publishes in 34 languages, which is a far broader base for us, we have already begun using that reach to take more advantage of successful titles. Here are a few top-line observations about our Q2 performance. With Harlequin integrated into its stable of brands and solid results in other divisions, HarperCollins continues to show great strengths. Sales of the Divergent series have exceeded our expectations again, with 1.5 million units sold in the second quarter. We are keenly looking forward to the second film in the Divergent series, Insurgent, scheduled for release next month.
We have also benefited significantly from the release of the film American Sniper, which has obviously stimulated sales of the eponymous book, now atop bestseller charts in the U.S., U.K., and Australia. The tome had strong momentum in the month of January, when it sold 1.2 million units. To date, Chris Kyle's American Sniper has sold 3.9 million copies, that title is rising rapidly. HarperCollins announced this week the acquisition of the North American rights to the newly discovered novel by Harper Lee, the author of the monumental To Kill a Mockingbird. The novel, Go Set a Watchman, will be published on July 14 this year and gives HarperCollins a head start for next fiscal year. If the overwhelming interest in the announcement is reflected in book sales, we can expect robust performance this summer and beyond.
During the quarter, we also saw increased monetization of the backlist by Brian Murray's team at HarperCollins through dynamic pricing and subscription offerings, demonstrating how digital drives value for titles. Going forward, we are optimistic about the rich seam that is our back catalog. The net effect of the developments this quarter at our book publishing segment, revenues improved by 20% and EBITDA by a healthy 13% versus the prior period. The Dow Jones continues to make progress at the professional information business. We were particularly pleased that advertising at The Wall Street Journal was higher than in the prior year. One reason was an increase in advertising by technology and finance companies in the print edition of the Journal. It is certainly meaningful that tech companies see the value and power of print as a platform and its desirable demographic.
At News Corp Australia, we again saw sequential year-over-year improvement, with advertising declining only 3% in local currency and EBITDA again up versus the prior year. Our digital subscriptions are now approaching 250,000, almost 30% higher versus the prior year. It is still early days in our digital development. We've been revamping the product offerings, including the launch of new apps at our Metro mastheads, and we have reduced costs, including the closing of our Gold Coast printing site, while we have successfully raised newsstand pricing and subscription rates to drive circulation revenues. For News UK, it's worth noting progress at Sun+, The Sun's digital offering, which reported a total 225,000 paid subscriptions in late November. The figure representing over 10% of the masthead's overall circulation and helped offset print volume declines.
There is no precedent or template for this project in the popular masthead market, we are still learning about churn, loyalty, and seasonality. What we do know is that the advertising climate in the U.K. remains very difficult, we are renewing our efforts on digital ad sales and assiduously cultivating core clients. The Times has distinguished itself by being the only U.K. newspaper to show an increase in print circulation in the most recent audited reports and been the best performing national newspaper for seven consecutive months. We've seen both print and digital volume growth, and ARPU continues to increase year-over-year. At a time of media transformation with a flood of low-grade listicles and cheesy charticles, it is clear that high-quality journalism attracts high-quality revenue and reader engagement across all platforms.
Importantly, as we highlighted last month, The Times reported an increase in profitability in the last fiscal year, thanks to the success of its digital strategy and higher print sales. Turning to News America Marketing. It is operating in a challenging environment, particularly with respect to its FSI products, where the competition is particularly intense. The in-store sector showed growth, is a smaller proportion of overall revenue in the sector. We are exploring partnerships to digitize the insert business and leverage our strategic relationships with retailers and consumer packaged goods companies. In Australia, we are pleased with the early results of the new pricing strategy at Foxtel. The company's market penetration had stalled for several years, we agreed with our partner, Telstra, to lower the entry price and market this uniquely rich service with extra vigor.
Early results are encouraging, with an increase of just over 80% in new sales volume and a lower than envisaged percentage of existing clients taking cheaper packages. Bedi will furnish more details in a few moments, these early numbers, and they are early numbers, are a tribute to the efforts of Richard Freudenstein and his team. Foxtel also announced this week the commercial launch of its Triple Play bundle and shortly will unveil its advanced iQ3 set-top boxes, broadening its product offerings with a view to solidifying its leadership in the market. Fox Sports Australia celebrated the success of the national sports teams in recent weeks, with Australia winning the Asian Cup at the weekend, which itself will further stimulate interest in soccer. We should benefit as we hold the rights to local soccer matches, as well as to the increasingly popular English Premier League matches.
Meanwhile, the Australian team is also favored to win the Cricket World Cup, which begins in coming days. Cricket, while a mystery to some in the outside world, is an important component of the offering in Australia. Also in Australia, REA had a very good quarter. Not only demonstrating growth, but an improvement from the fiscal first quarter in revenues and profitability in local currency. It continues to extend its position as the market leader and has expanded its international footprint, raising its stake in iProperty, the East Asian digital site, to around 20% and acquiring a strategic 20% stake in Move. At Move, Ryan O'Hara has just taken over as CEO, and there is already a profound difference in the metrics as the company is being integrated into the broader News Corp platforms.
Those of you who access wsj.com or the New York Post online will see search boxes for realtor.com, and you will increasingly see some sophisticated targeted subscription ads for the Journal and the New York Post on realtor.com as we leverage unique data to drive precisely targeted offers. While realtor.com's core business is real estate, we believe its audience can be monetized in many other creative ways, given the vast array of demographically desirable data we will derive from home buyers. At realtor.com, we have also begun layering in content from Dow Jones, The Wall Street Journal, MarketWatch, and the New York Post. We're improving engagement, driving more impressions, particularly on mobile, as a dramatic increase in traffic in January attests. This improvement comes largely from organic improvements, not from increased marketing expense.
We launched a new homepage with improved user experience and search functionality, and we are working to incorporate realtor.com into the News Corp programmatic ad exchange, which is well-positioned to drive higher CPMs. We are also making a concerted push in the New York City market, which had not been well-served in the past. We are leveraging the audience at the Post and the Journal and our partnership with the leading real estate companies. We expect a stronger presence in New York to increase the flow of prestige properties, but also to raise the profile of realtor.com on Madison Avenue and elsewhere, and create a more lucrative digital advertising platform. Let us be very clear. We are at the earliest of stages with the development of realtor.com, and the U.S. market itself is at an early stage of development.
Having looked more closely at the company since the acquisition, we are even more excited about its potential, both for the group and as a business in one of the fastest-growing digital sectors. Macro conditions are also more auspicious, as mortgage lending restrictions have been relaxed, housing starts are on the rise, and the real estate rooms in the U.S. market generally are positive. We have been candid with you about the importance of the seasonal selling season at Amplify. There is no doubt that the digital curriculum is the most advanced of its kind, and we have a remarkable creative and committed team under Joel Klein's astute leadership. Furthermore, we are very realistic about the exigencies of the marketplace and the importance of a robust sales network. Our focus is to drive both scalability and profitability, and we expect a meaningful reduction in investment spend next year.
Taken together, the second quarter of fiscal 2015 tells a compelling story of News Corp's evolution as a business. We are definitely more digital and global, thanks to the success with digital subscriptions at our mastheads, the expansion of subscribers at Foxtel, the development at HarperCollins through the Harlequin purchase, and the addition of realtor.com and our other Asian real estate-related investments. Advertising trends are difficult to forecast, and the situation in Greece remains a potential catalyst for more widespread economic upheaval. We are resolved to be vigilant in reducing costs. Having explained that we would be reconfiguring the company over the first two years, and having seen that plan unfold on schedule, we will continue to review our capital allocation priorities. Our goal remains to be balanced among organic investment, strategic M&A, and, as we had indicated, the return of capital.
Let me turn it over to Bedi, who will provide background detail and texture on today's results.
Thanks, Robert. I'll cover some high-level financial highlights and then discuss each segment in further detail. We reported fiscal 2015 second-quarter revenues of $2.28 billion, a 2% increase versus the prior year period. Excluding the impact of acquisitions, divestitures, and foreign currency fluctuations, adjusted revenues were in line with the prior year. With regard to EBITDA, we reported total segment EBITDA of $328 million, compared to the prior year period of $327 million. This quarter includes $13 million of costs related to the U.K. newspaper matters net of indemnification and $16 million of transaction-related costs for the Move acquisition, which closed in mid-November. Excluding those costs, plus the remaining impact of acquisitions, divestitures, and foreign currency fluctuations, our adjusted total segment EBITDA grew by 4% versus the prior year.
As Robert noted, we were impacted by currency headwinds, primarily the Australian dollar, which negatively impacted Q2 total revenues by AUD 72 million, or 3%, and total segment EBITDA by AUD 16 million, or 5%. Reported EPS were $0.24 versus $0.26 in the prior year period due to higher effective tax rate and lower interest income. Excluding restructuring and impairment charges, U.K. newspaper matters costs and other one-time items, our adjusted EPS were $0.26 versus $0.31 in the prior year. The results again underscore the strength and diversity of our asset portfolio, which continues to show underlying EBITDA and free cash flow improvement despite the uneven global ad marketplace. We continue to extract cost efficiencies while strengthening two of our key pillars, digital real estate and book publishing, which we believe will materially reshape the growth profile of News Corp.
Turning to the individual operating segments, in news and information services. Revenues for the quarter declined $89 million, or 6% versus the prior year period, and adjusted segment revenues declined 3%. Within the segment revenues, advertising, which was 58% of segment revenues this quarter, declined around 9%, or 6% in local currency, relatively similar to the first quarter. If you look at the performance across our key units, starting at News Corp Australia, advertising revenues for the quarter declined around 10%, or approximately 3% in local currency. Again, showing sequential year-over-year improvement versus fiscal first quarter and last year's fiscal fourth quarter on a local currency basis, helped by market share gains in print and higher digital advertising sales. We saw strong improvements there in the national, notably government and travel, real estate, and classified ad categories.
News Corp Australia EBITDA also improved due to lower costs, including overhead reductions, and from the closure of the Gold Coast printing facility in the prior fiscal year. At The Wall Street Journal, advertising grew 2% versus the prior year. A big improvement from the first quarter, benefiting from strength in two key categories: finance and technology, combined with strong demand for The WSJ magazine. We saw advertising growth in both print and digital this quarter. At News UK, advertising revenues remained soft this quarter, declining around 18%, or 16% in local currency, which was slightly worse than Q1, still impacted by weakness in grocers, telecom, finance, and automotive. At News America Marketing, revenues declined due to continuing weakness in freestanding inserts, which have been under pressure over the past two quarters, impacted by lower spending from consumer packaged goods companies.
The decline was partially offset, though, by in-store advertising growth. Total circulation and subscription revenues, which account for 35% of segment revenues this quarter, declined by 3%. The decline was driven by the professional information business at Dow Jones, which had a negative $11 million impact to revenues this quarter, but again, continues to show sequential year-over-year improvement as the pipeline of business is strengthening. As Robert had noted, we expect to see further improvements in the second half and hopefully be positioned for growth next fiscal year. Total newspaper circulation revenues, however, showed modest year-over-year growth on a local currency basis in every region, driven by subscription and cover price increases at a number of our mastheads, coupled with higher revenue from digital subscribers, which more than offset print volume declines.
Of note, starting in January, we have begun to migrate legacy Wall Street Journal subscribers to higher price point tiers. Segment EBITDA decreased $39 million in the quarter, or 15%, as compared to the prior year period, and adjusted segment EBITDA was down 12%. Included in segment EBITDA was $8 million impact related to the relocation of our London operations for dual rent and other facility costs. As I've mentioned on past calls, we do not expect any material dual rent and other facility costs from the second half and onwards. This quarter, we also incurred roughly $9 million higher legal expenses at News America Marketing related to ongoing litigations. Turning to the book publishing segment, revenues improved 20%, and segment EBITDA grew 13% versus the prior year quarter.
Excluding the results from the Harlequin acquisition, which closed on August 1st, and foreign currency fluctuations, adjusted revenues were in line with the prior year, and adjusted segment EBITDA declined 4% due to tough comparison from the Divergent series in the prior year period. While the Divergent series continues to sell well, this quarter totaling over 1.5 million net units, this, as expected, was lower than the 5.7 million net units sold in the prior year period, creating a $33 million revenue challenge. Despite that challenge, the core HarperCollins business performed very well to nearly match year-ago levels, with solid contributions in general books from Amy Poehler's "Yes Please," Patricia Cornwell's "Flesh and Blood," and Chris Kyle's "American Sniper," as well as continued demand of Sarah Young's "Jesus Calling" series in Christian publishing. Total e-book sales for the quarter grew 14% and accounted for over 17% of consumer revenues.
Harlequin contributed $80 million of revenues and $11 million of EBITDA in the quarter. It's worth highlighting that Harlequin's profitability is improving, we are implementing a number of initiatives to reduce costs, including streamlining manufacturing and distribution, as well as harmonizing sales strategies. In cable network programming, revenues improved $2 million or 2% compared to the prior year quarter. Subscription revenues grew 3%, benefiting from higher affiliate fees from Foxtel and increased number of subscribers. Advertising revenues declined modestly due to adverse foreign currency fluctuations, revenues were up slightly in local currency despite a soft TV marketplace. Segment EBITDA in the quarter was up 2% compared to the prior year period. Excluding the impact of foreign currency fluctuations, adjusted revenues increased 11% and adjusted segment EBITDA improved by 9%.
In digital real estate services, we now include results from both REA Group and from Move effective from November 14th. Total revenues for the segment increased $51 million or 50%, EBITDA improved 4% compared to the prior year period. Again, included in the reported results are $16 million of transaction-related fees for the Move acquisition. Excluding foreign currency fluctuations, REA's adjusted revenue and adjusted EBITDA grew 26% and 38% respectively, an improvement from the prior quarter, driven by higher pricing and increased penetration for enhanced products. Reported results also include $34 million in revenue and $3 million of EBITDA for Move for the period November 14th through the quarter end, as the business continued to benefit from higher traffic this quarter. EBITDA does include $4 million of stock-based compensation expense though, as a point of reference, Move excluded stock-based compensation when reporting their adjusted EBITDA.
Audience growth at realtor.com has accelerated through the year, with fiscal second quarter average monthly unique users up 26%, led by mobile platforms which were up 60%. Also importantly, lead volume growth improved by 38%. As Robert noted, our immediate focus for realtor.com is on product development. We've already refreshed the homepage, added widgets and links across The Wall Street Journal digital network and the New York Post, are integrating our content across the site. Our goal is to drive significant revenue growth and material contribution to profitability in the coming years, early results are encouraging with January monthly unique users up over 30% to 37 million.
In the second half of this fiscal year, we expect to see revenue growth accelerate, driven by the continued success of our buyer-agent co-broke product, which grew over 100% last quarter, combined with higher usage levels. We also intend to reinvest judiciously in marketing and product development, as I've previously said. Overall, we are very pleased about Move's trajectory and remain excited about its potential. At Business and Education, revenues were flat compared to the prior year quarter, and segment EBITDA improved $20 million to a loss of $24 million. Again, about $40 million of that improvement was due to the capitalization of software development costs related to our digital ELA learning products, and the balance came from operating efficiencies. With respect to earnings from affiliates, Foxtel ended the quarter with around 2.7 million total subscribers, up 5% versus the prior year, driven by cable satellite subscribers.
Foxtel revenues for the quarter in local currency were in line with prior year and EBITDA improved 2%. Churn declined to 11.8% from 12.8% in the prior year quarter. Foxtel launched its new revamped pricing and packaging on November 3rd last year with an expectation of improving cable satellite subscriber penetration over the course of the year. While it's early in the rollout, results overall are encouraging. Total new sales volume has improved by approximately 80% since launch, and churn has reduced. Despite the impact of the lower selling price point, ARPU remains stable year-over-year, reflecting the limited spin down to date of it. Turning now to cash flow.
News Corp's cash flow from operations in the first half of fiscal 2015 improved to $492 million compared to $407 million in the prior year, and free cash flow available to News Corp improved to $275 million compared to $217 million in the prior year. The vast majority of our $1.9 billion cash on hand is in US dollars. We continue to expect full-year CapEx to be relatively similar to the prior year at around $400 million, including around $70 million for the London relocation, which is now complete, and $60 million related to capitalized software and Amplify Learning. In summary, we believe this quarter and the first half results demonstrate that News Corp is on the right track.
While the ad market has been unpredictable and currency has been and remains a headwind, we believe the steps we're taking, both in reinvestments and operating efficiencies, are positioning the company for long-term growth. With that, let me hand it back to the operator for Q&A.
Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star then one on your telephone keypad. If you're on a speakerphone, please pick up a handset and make sure your mute function is turned off to allow your signal to reach our equipment. Once again, ladies and gentlemen, star one. We'll go to Fraser McLeish with Credit Suisse.
Thanks very much. Just a quick question on Move. Just noticing that ListHub is, or Zillow's not going to be getting its listings from ListHub anymore. Was that your decision or theirs? What sort of impact is that going to have on your revenues? What sort of strategic advantage do you think that's going to give you once those listings go? Thanks.
Well, certainly we were in negotiations with Zillow up until recently, they filed a form which declared that those negotiations had finished. It's fair to say, if you want to put it this way, they took the initiative. It is now up to ListHub, of course, to recreate through the rather complex MLS system, which is through Zillow, through the complicated MLS system, a feed that takes into account that there are in total around 850 MLSs, frankly, that's their responsibility. ListHub itself provides feeds to about 166 publishers. We at Move, of course, have a direct feed from the MLSs, we don't use ListHub itself, which is a syndication services. What we do have at Move, quite frankly, is fresher listings, more accurate listings, that we are going to make clear with our marketing over coming months.
We believe that once it becomes clear that they are our comparative advantages, that users will, as they already are, increasingly turn to realtor.com as their source of real estate listings and information. There is no material impact at all on our revenues through the Zillow move.
Okay. Operator, we'll take our next question, please.
Our next question comes from John Janedis with Jefferies.
Hi, thank you. Just to follow up on your prepared remarks, do you need any more scale through acquisitions in the real estate or book verticals, if you will? How do you think about your cash balance and the timing around the potential for return of capital, given your desire to have that balance? Thanks.
Certainly with the Move acquisition, our immediate goal is to develop the potential of the company. As we've made clear, we're very excited about that. That will be an ongoing task in the next year or two. As for the book publishing business, we've successfully integrated the Harlequin business into HarperCollins, which, as you can tell performed very well during the quarter. We look ahead to more cost synergies at Harlequin, but we also look ahead with much optimism to the catalog that we have, more generally at HarperCollins. As we've said in the past, the first two years are years of consolidation and development and transformation. We're well on schedule there. We'll obviously be reviewing capital allocation in coming months, but that's really all we can say at this stage.
To reinforce our sense that we're pleased with the trajectory of the company, and in particular with both the book publishing business, and so far from what we've seen, very much so with the performance of the new team at Move.
Okay, great. Operator, we'll take our next question, please.
We'll now hear from William Bird with FBR.
Yeah, good evening. I was wondering if you could elaborate on your expectation for meaningful reduction in Amplify investment spending next year. Was wondering if you could address whether you're committed to all three business lines, and if you're open to considering narrowing the scope of the business. Thank you.
Look, we have two priorities over the coming months. One is to continue to develop the best quality digital curriculum in the country, and we believe in the world. Secondly, to get our sales teams out to see the market reaction to that curriculum. That will be the priority. We'll be reviewing the situation at Amplify at the end of that selling season, but we're confident in our curriculum and we're confident in our teams.
Thank you.
Okay. Operator, we'll take our next question please.
We'll go on to Alexia Quadrani with J.P. Morgan.
Hi, thank you. Just following up on your comments on your prepared remarks about the strength you saw in the quarter at The Wall Street Journal, particularly in the print side, where you saw positive growth. I guess, any more color you can give there in terms of, I know you mentioned the tech and the finance being a driver of that. Was it more broad-based? I guess, was there anything specific to the quarter that led to the strength, or do you think this could be a more sustainable trend? Just a second question, if I may, on News America and the weakness there. Do you find that to be a core holding for your company, or is that something you might strategically consider to maybe divest down the road?
Look, we were extremely gratified by the performance of The Wall Street Journal in the quarter just passed. I think what you saw was a recognition by tech companies and finance and others, luxury goods advertisers in the magazine, about the strength of the platform, the power, and obviously the positive reaction to the advertisement. I think it tells you that The Wall Street Journal has a distinct demographic, and it tells you that high-quality content brings high-quality audiences and high-quality advertisers. As for News America Marketing, the task for our team there is to push hard on the FSI business. It's a competitive market. There's absolutely no doubt about that. They know the extent of the challenge.
To give you a sense of the opportunity at News America Marketing, they are very much involved in discussion with our team at Move, looking at how you can bring together, for example, knowledge that somebody's going to move house with household-related products in which News America Marketing has a particular strength.
Thank you.
Operator, we'll take our next question, please.
Thank you. We'll go on to Entcho Raykovski with Deutsche Bank.
Hi, Robert. Hi, Bedi. Entcho Raykovski here. Can you hear me?
Yes.
Yep.
Go ahead.
Hi, Robert. Hi, Bedi. My question is around Fox Sports Australia. Obviously you've achieved some higher affiliate pricing in the quarter. I just wanted to understand, is this part of a new package that Foxtel is providing as well? Also, there have been some new channels which are being offered for Fox Sports Australia. Are they likely to result in higher costs over the coming quarters?
The increase in revenue is related to subs itself, up low double digits, which is due to the growth in those subs. We're very optimistic that the development of the channels there will provide an opportunity for more growth in revenue than growth in expenses. I think the team there is particularly excited that the sports in which they have specialized, like soccer and cricket, are sports in which the, as we mentioned earlier, the national teams are doing well, and when you have a positive mood, you have greater audience growth. I'll put you across to Bedi for some further metrics on that.
Obviously, there'll be some cost increases in Q3. We've got some one-time events, the Asian Cup, Cricket World Cup, that'll take costs up a bit. Margins and maintaining the margins will depend on how much higher volume we get in terms of subscribers and additional rate increases.
Okay.
Thanks. Operator, we'll take our next question, please.
We'll go on to Eric Katz with Wells Fargo.
Thank you. Just two quick ones. First, on the last call, you mentioned that circulation revenue would've been flattish in 2014 without DJX. Can you remind us when those headwinds fully subside and what circulation would've looked like in fiscal Q2 excluding DJX? Also, you made two recent investments in India sort of back to back. Can you talk a little bit about how big of an opportunity these investments could be, and what is maybe the overarching strategy in India?
Right. On DJX, as I said, we're seeing improvement in terms of the rate of revenue drop, and I think by the end of this fiscal year, we should be pretty much out of that. Coming into the new fiscal year next year, we should actually see that not being a drag on the overall circulation. In terms of the India investments, we made an investment in a real estate company called PropTiger, and we also made another small investment. We're looking at the Indian market, in terms of making relatively smart and sort of relatively smaller-sized bets. The market there is completely exploding in terms of internet platforms, and I think we have to be in that market.
There's a lot of synergy in addition on the real estate side, with things we are doing, not just here in the U.S. with Move, but also with REA, operating in the Asia Pacific region.
Thank you.
Operator, we'll take our next question, please.
Justin Diddams with Citi.
Thanks very much. Morning, guys. My question is around the News UK. Advertising down 16% in local currency. I don't think we can sustain that kind of decline so much longer. I'm wondering what the strategy is for the U.K. business to either halt those advertising declines and/or monetize football rights or what the plan is for the U.K. business, particularly in the context of a $70 million office move.
Well, Justin, first of all, the office move was bringing together all the companies, and out of that, we've already seen not only creative synergies but cost synergies, and those cost synergies will continue to be manifest. There's no doubt that the advertising market in the U.K. is a volatile one. The winds are fluky. What Mike Darcey and the team are doing in particular of, one, focusing on digital advertising, where we do believe that there is room for growth. Two, we're constantly looking at circulation revenue. Three, where the team is going out and arguing in a very competitive market about the value of the news mastheads, which is very clear, and it's very clear indeed when you look at the circulation uptick in The Times, where while other newspapers are struggling, The Times is doing very well.
That message, when advertisers hear it and understand it, will resonate not only with advertisers but with potential consumers. Mike and the team are very much on the case, and they certainly have levers to pull.
Great. Operator, we'll take our next question, please.
Thank you. Our next question comes from Craig Huber with Huber Research Partners.
Thank you. I wanted to focus for a second here on the cost outlook for your Australian newspapers and the U.K. papers. Do you feel at this stage that you have much room to take out plenty more cost? If you could give us a sense how much room to take out at this stage, both the U.K. and Australia, please.
Craig, the way to think about it is in Australia. I think we've said that on previous calls. The team there keeps doing a super job looking at the distribution, the manufacturing footprint. We brought down prices on newsprint. They're doing a lot of work looking at duplication of back rooms. I think there's fair runway to go in Australia, to keep taking out costs. I think they're diligently doing it. The U.K. has taken out a lot of costs. I think there's always opportunity. Clearly, as Robert said, now that we've put everybody into one building in one location, some of that work has started now in terms of can we get synergies out of everybody being together in one place. I think there's still work going on there.
I would say probably Australia, there's more than there is in the U.K. Thanks.
Operator, we'll take our next question, please.
We'll now go to Doug Arthur with Evercore ISI.
Yeah, thanks. On book publishing, flat adjusted revenues seems pretty impressive given the Divergent comparison. Is that comparison likely to get tougher in the next quarter, or next two quarters, or will the next movie release and the books attached to it start to offset that? How do you see that playing out near term?
Very good question. Look, it is a tough comparison. Q3 last year, the series sold around eight million units. Look, there was surprise on the upside last quarter with the emergence of "American Sniper." The full value of "American Sniper" will be felt in this quarter. To be honest, sales are increasing still for that particular book. As you mentioned, we do have the imminent release of the next film in the series. Again, around that, there'll be a lot of marketing and product placement that one would presume will be beneficial for sales. The team at HarperCollins have done an excellent job of making those tough comparisons and making the most of it. Not only a great front list, but a back list that they are dynamically pricing and exploiting full value of.
Thanks.
Thanks.
Operator, we'll take our next question, please.
We'll now go to Michael Morris with Guggenheim.
Thanks. Good afternoon. My question's on Wall Street Journal, the price increases that you put through for new subscribers last quarter. Can you talk about what you learned in terms of the trajectory of new subscribers, whether that was impacted by the price increases and how that impacted the price increases for existing subscribers you put through this quarter and whether it gave you more confidence in the pricing power that you have at the Journal? Thanks.
I think we have a lot of confidence in the pricing power of the Journal, both in print and digitally. We increased the newsstand price. Newsstand sales are not a large percentage, but they're a significant measure at times of reaction to price increases. That was an increase from $2 weekday to $3, with very little impact on circulation itself. There's an immediate measure of the strength of that brand and the elasticity that we have.
Great. Operator, we'll take our next question, please.
Adam Alexander with Goldman Sachs. Please go ahead.
Well, good afternoon, Robert. I've just got a question on Move. Now that you've had some time to look at the business, make some management changes, and you've reported some quite good metrics to date. At acquisition, you mentioned a marketing investment would make the acquisition sort of dilutive to earnings. I'm just wondering whether that's still your expectations, and if so, when we expect that sort of marketing spend to start ramping up?
Well, the marketing spend will ramp up when we're happy with the marketing campaign and when we're happy with the adjustments to the site to make the user interface better, to improve the experience that not only for users of the site, but for realtors, who are our core clients. Those are the priorities in the shorter term. Around that, we will build a marketing campaign. What I have to say has been gratifying is that what we presume to be the case, the bringing together of the platforms of the Dow Jones network and Move realtor.com, that would've of itself, for example increased the power of organic search. That is what you're seeing behind that rapid rise in usership in recent times. We're particularly gratified by the increase in mobile usage.
For example, the mobile app, the number of visits in January was up close to 65%. When you look at the app, the number of page views per visit, as best we can tell at the app, was around just over 18 pages per visit. You're not only getting a lot of visitors, but you're getting very sticky visitors. That comes at frankly, very little or no marketing cost. Whatever we do longer term with marketing spend, and there will be marketing spend and our guidance has to be that it will be dilutive. What we're already seeing is an impact that has exceeded our expectations on the upside so far in terms of traffic and stickiness.
Operator, we'll take our next question, please.
We'll now hear from Alice Bennett with CBA.
Hello. Just have a question around Foxtel. I think you mentioned total subscribers up around 5%, and in recent quarters and years, most of that growth has been coming through with the digital subs. Just wondering, post the price change, if you can give us a sense of how much the cable and satellite subscribers were up relative to the digital ones.
Hi. I would say it's split almost evenly. We are seeing encouraging pickup in the cable and satellite part of it, which is good.
Okay. Just on Foxtel, the iQ3 box, do you have any sense when that should be launched?
I don't think they've announced the date, but we think it should be soon.
Okay. Thank you.
Operator, we'll take our next question, please.
Tim Nollen with Macquarie, your line is open.
Hi. Thanks. I've got a couple, actually, if that's okay. Unrelatedly, first, I just wanted to ask, you mentioned about CPG, FMCG advertisers being quite tight with their budgets. I think that was a reference in particular to the U.K. I wonder if you've got any further comment regarding that category in general. If you want to talk for your FSI business or just in general across your newspapers, because that's a major advertising category that I know has been not spending very much lately. Separately, secondly, on the subject of Amplify again, I assume you'll let us know if and when you win some decent school districts, but could you just describe the status of school district purchases of curriculum materials now under the Common Core? Most states rolling out the Common Core this year.
I just don't quite understand what the status is of states' decisions to go about making new curriculum purchases.
Well, it's difficult to generalize about advertising markets. You see trends in the U.K. and Australia and at "The Journal" are frankly different. I wouldn't want to therefore generalize about a particular sector globally. I think what we are experiencing at News America Marketing is competition in the sector generally for freestanding inserts. As for Amplify, we expected around 30,000 subscribers for digital curriculum. We're around about that total at the moment, so it's on track. We're quite honestly in the high peak of the selling season now, so we'll have clearer numbers for you next quarter and the following quarter. Around the Common Core, clearly there's a lot of debate about the Common Core, but even those states that don't adopt the Common Core in its entirety are adopting elements of the Common Core.
It varies very much state by state as to how different that adoption process is. We're confident that there is a strong market for high-quality digital curriculum in the U.S., and that confidence is flowing into the sales teams who are, as they should be, out selling.
Okay. Operator, we'll take our next question, please.
Thank you. We'll go to Brian Han with Morningstar, Inc..
Oh, hi. Thanks for your time. Now that the Move acquisition has been made and Amplify investment spending is going down, your CapEx outlook is pretty benign. Your free cash flow is still tumbling in. I'm still wondering how you think about the capital management front going forward.
Brian, look, I think we've been pretty consistent in what we've said in terms of out of the gate, we were looking at capital allocation priorities in terms of stabilizing the business, in terms of potential acquisitions. I think Robert Thomson said earlier to another question that we had, clearly the company is stabilizing. I think in terms of looking at our capital allocation priorities, we are now reviewing those in much more detail.
Okay. Operator, are there any additional questions?
No, sir. No additional questions. With that, I will go ahead and turn things back over to Michael Florin for any additional or closing remarks.
Okay. Well, thank you very much, and have a great day.
Thank you. Ladies and gentlemen, once again, that does conclude today's conference. Thank you all again for your participation.