Earnings Call: Q4 2014

Aug 7, 2014

Good day. Welcome to the News Corp fourth quarter earnings call. Today's conference is being recorded. Media will be in listen-only mode for the duration of the call. At this time, I would like to turn the conference over to Mr. Michael Florin, Senior Vice President and Head of Investor Relations. Please go ahead, sir. Thank you very much, Blake. Hello, everyone. Welcome to News Corp's fiscal fourth quarter 2014 earnings call. We shared our earnings press release about an hour 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 some 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-K for the 12 months ended June 30th, 2014, 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 reconciliation of such measures can be found in our earnings release and our 10-K filing. Finally, please note that certain financial measures used on 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 will pass it over to Robert Thomson for some opening comments. Thank you, Mike. We have now completed one full fiscal year as the new News Corp. It's fair to say that the sensibility of a startup has characterized our pursuit of digital and global expansion for our distinctive portfolio of companies, a portfolio that is diverse in both revenue mix and geographic spread. We will be building on the company's proud tradition and the progress attained over the past year, during which we made disciplined strategic acquisitions, targeted divestments, and tactical investments in technological and international initiatives. The company is at the very center of the global debate over the value of content and the creation of platform permutations for the delivery of that content. Throughout the year, we have also been disciplined on costs and aim to deliver value to our customers, advertisers, and investors. One year into our existence, the real measure of our progress lies in the answer to this question: Are we better off, better positioned today than when the journey began? For News Corp, the answer is a resounding yes. We said on Investor Day that we would become more digital and global, and we are. We have increased market share in a number of our businesses, most notably REA and HarperCollins. We said that we would be acutely and astutely cost-conscious, and we have been and will continue to be. Our costs this year are down, and we will assiduously search for additional savings. We said that technology is a canvas for our content, and that has never been more true than it is today. We said that the percentage of our revenue that comes from non-advertising sources will increase significantly over five years. One year in, we can see that prediction being borne out. In fact, today, non-advertising sources account for more than 50% of our revenues, and that has provided us added support in a sometimes challenging advertising marketplace and an uneven economic recovery. For the year, revenues were $8.6 billion, a 4% decrease, while EBITDA improved 12% to $770 million. Most important, our free cash flow improved by more than $290 million to $365 million. Let me be more specific about our acquisitions, cost consciousness, investments, digital and global initiatives, and the challenges we've faced. Our acquisitions, and we're in an early phase of our expansion, have echoed our determination to grow digitally and globally and show that we will not be rushing naively to overpay for underachieving companies. Just last week, we completed the acquisition of Harlequin, which will give HarperCollins a jump start on international digital expansion and a platform. We believe this was a prudent and disciplined move that will benefit HarperCollins and News Corp. This very day, our HarperCollins executives are in Canada working constructively with the talented Harlequin team. Our first acquisition was Storyful, the world's leading social media news agency, which has already launched FB Newswire with Facebook and last week celebrated one billion views of its videos on YouTube. We are focusing on monetizing that traffic and using Storyful's unique authentication expertise for the benefit of our businesses and of our clients. We also continue to recast our portfolio consistent with our cost-conscious focus. We sold the Dow Jones Local Media Group and the Community Newspaper Group to focus on core branded properties in the U.S. We sold the live events business at HarperCollins early this year, which we viewed as not core to our mission. We are resizing the cost base in News and Information Services with savings that are made more realizable by the extra focus and increased cooperation in the new news. This has been achieved through a combination of operational and back-office initiatives, including a wide range of contract negotiations and health and pension reforms, among many other steps. Bedi will elaborate on these efforts shortly. We also expect to achieve natural efficiencies across our businesses as we migrate to digital, with consolidation of servers and software, and the repurposing of platforms. This trend is evident at HarperCollins, which is well down the path of digital migration, and which will certainly benefit from Harlequin's success and skills online. We have made smart, targeted investments, including partnerships with real estate sites in China and Hong Kong through REA, the leading online real estate services company in Australia. The deals give us a connection with a still-maturing market in China and will bring Chinese investors closer to property opportunities in Australia and elsewhere. Speaking of REA, I'd like to point out their robust numbers and the ongoing benefit from secular tailwinds as agents are increasingly aware of the high ROI that REA can offer. REA recently announced the purchase of a minority stake in iProperty for $100 million. iProperty has burgeoning online property advertising operations in Southeast Asia and just reported revenue growth of over 40%. We are excited about potential global opportunities in this sector. Also this year, we announced plans to add $50 million to our investment in SEEK Asia, a growing employment listings business, as we expand our presence in Southeast Asia, a region which we believe holds tremendous growth potential. Last year, we launched beIN, which offers exclusive soccer highlights from the five major European leagues to audiences in Indonesia, Japan, and Vietnam through desktop, laptop, mobile, and tablet platforms. Also on the investment front, this past year, we successfully launched the global programmatic advertising exchange, which has helped us cut out third-party networks and allowed us to work directly with advertisers who want to reach our premium audiences. Owning our data and protecting the privacy of our customers are imperatives. While still early, we are certainly pleased with the pricing improvement and extra revenue that we've generated. We remain firm believers in the power of print, we are committed to using technology to make our content more accessible, mobile, and profitable. That is why we have been driving digital throughout News Corp. In the U.K., The Sun launched Sun+, the digital version of the country's most popular newspaper, and we are focused on enhancing engagement with the imminent launch of a new tablet app. Our News UK publications have integrated innovative sports video clips and apps and expanded into online luxury shopping, catering to the needs of an extremely desirable demographic. In particular, we've been pleased with The Times, which grew in volume, revenue, pricing, and market share, thanks to great journalism and sustained technological toil. A newspaper launched in 1785 has definitely made a successful transition into the digital age. In Australia, we're pleased to show very strong digital growth for our paid digital subscriber base over the past year, now exceeding 200,000. The Australian, which has just celebrated its 50th birthday, released a new iPad ad. Today, The Australian has more paying customers than at any time in its history and a larger audience than ever, with more than three million readers each month. We are planning to relaunch our paid digital masters in Australia with a simplified subscription offering. We'll also begin integrating these digital publications with a unique form of interactive advertising that will take advantage of the strengths of different formats. No matter how esteemed the publication, our teams are working continuously to improve the experience for our readers and for our advertisers. Also in Australia, Foxtel announced triple play bundling and launched Presto, its new online movie service, which is in its infancy. Foxtel is focused on monitoring market conditions to respond to competitors and to opportunities, and on driving penetration to increase the value of this great asset. Here in the U.S., Dow Jones released key enhancements to Factiva, and The Wall Street Journal bolstered its digital leadership through new video programming and the launch of WSJ.D, along with verticals focused on economics, marketing, and Washington policy. Also in the U.S., I'm particularly pleased to note that in-store advertising has shown impressive growth at News America Marketing. There is much discussion about owning the point of sale, but the point of purchase is crucial, and that is the strength of our in-store team. Amplify launched its new digital curriculum in English language arts for grades 6 to 8, and we are excited about the quality of the offering as we engage with school districts around the country. In publishing, e-book sales at HarperCollins this quarter were 23% higher versus the prior year, thanks in part to the success of the Divergent trilogy, which underscored the power of book blockbusters in a digital environment. HarperCollins was at the forefront of the industry in forming partnerships with online e-book subscription services Oyster and Scribd. Of course, any candid review of the year must include the challenges we have faced, including advertising headwinds in Australia and elsewhere. The ability to make confident forecasts is undermined by the erratic patterns that have characterized trading, particularly in print. Which is seriously undervalued as a platform by advertisers. Print is a concentrated, intense reading experience with unique affinity in our digitally distracted age. Our professional information business at Dow Jones is still in the process of being recast following a period of difficulty about which we've been quite frank. Clients are responding favorably to the new product, pitch, and pricing, but the development work is not yet done. The rate of decline has certainly eased, but we expect some softness for a quarter or two. In balancing the opportunities and challenges, we believe there is more upside in the opportunity than downside in the challenge. Our core message is untarnished and unvarnished. We promised that we would work with restless energy on behalf of investors who understandably expect that creativity is balanced by fiscal discipline, and if the expansion does not just mean an expanding cost base. Despite headwinds, we still experienced significant growth in free cash flow, and we showed stable profit margins, demonstrating the strength and diversity of our asset base. Remain focused on driving top-line performance and generating sustained and sustainable returns for our shareholders. In summary, one year into our existence, News Corp is unified by our pursuit of premium content and the building of iconic brands that are potent platforms in a digital age. We understand the deep affinity between those brands and our audiences. That affinity is the nexus of revenue and of profitability. This is a company where calculated risks are taken, instincts followed, and objectives pursued with passion, purpose, and principle. We are, as our Executive Chairman, Rupert Murdoch, said on Investor Day, an eclectic and unconventional company in an age where such attributes hold great value. We remain fully aware of the challenges we face, whether the vagaries of the macroeconomic cycle in the countries where we work, the ebb and flow of advertising and readership rates, and the mass media and mass migration, which continues to unfold. Those challenges will be met with a focus on costs and on digital and global growth. We are intent upon fashioning an ever more rewarding future for our audiences, our employees, and our investors. I will turn it over to Bedi to discuss the financials in detail. Thanks, Robert, and good afternoon, everyone. As Robert mentioned, we made strong progress in our first year to further digitize our asset portfolio and improve our market share across several business units. We prudently reduced our cost base and held consolidated adjusted EBITDA margins relatively stable, despite continuing advertising headwinds. For the full year, we reported revenues of $8.6 billion, a 4% decrease versus the prior year. Excluding the impact of acquisitions, divestitures, and foreign currency fluctuations, adjusted revenues are 1% lower than the prior year. We reported full-year total segment EBITDA of $770 million, which was a 12% increase versus the prior year. Reported results included costs related to the U.K. newspaper matters, net of indemnification, which were $72 million for the year. Excluding all acquisitions and divestitures, costs related to the U.K. newspaper matters and foreign currency fluctuations, adjusted total segment EBITDA was down 2% versus the prior year and would have been flat excluding the dual rent costs for the London office. Fiscal 2014 reported EPS were $0.41 versus $0.81 in the prior year, which included a significant non-taxable gain in other net related to the CMH acquisition and the sale of our ownership interest in Sky Network Television. As well as impairment charges net of taxes. Excluding the impact of all these and other items, our adjusted EPS were $0.46 compared to $0.62 in the prior year. Free cash flow available to News Corp was $365 million, an improvement of $293 million compared to last year. For the fourth quarter, the company reported total revenues of $2.2 billion, a 3% decrease versus the prior year period, and our adjusted revenues declined by 1%. Fiscal fourth quarter total reported segment EBITDA was $127 million, a 2% decrease versus the prior year period. Reported results included $16 million related to the U.K. newspaper matters net of indemnification. Our adjusted total segment EBITDA this quarter declined by 7%, but was slightly up excluding $13 million of dual rent and other facility costs, mainly related to our London office relocation. With that as a brief overview, let's look at our fourth quarter performance for our key segments. As you can see, we have now added a new reporting segment, Digital Education, to present Amplify separately, which was previously included in the other segment. In news and information services, revenues for the quarter declined $104 million or 6% versus the prior year period. Adjusted segment revenues were down by 5%. Within segment revenues, advertising declined. Looking at advertising performance across our key publishing units, at News Corp Australia, advertising revenues declined around 16%, or 11% in constant currency for the quarter, a slight improvement from the prior quarter. The biggest improvement came from national advertising, where we also saw some improvement, albeit a smaller magnitude in retail. At News UK, advertising revenues declined around 1%, or 11% in local currency, fairly similar to last quarter. Softness was driven by retail, combined with a decline in broadband and mobile ad spending versus the prior year, partially offset by the late Easter this year. At The Wall Street Journal, advertising declined low double digits this quarter, impacted by much tougher year-ago comps and weakness in a few categories, most notably telecom and finance. Total circulation and subscription revenues for the quarter declined around 4%, driven primarily by continued softness in professional information business at Dow Jones, which had a negative $17 million impact to revenues this quarter. This was an improvement, however, versus the third quarter, as we continue to make progress to stabilize trends and retain existing Factiva customers. Total newspaper circulation revenues showed modest growth in local currency, mostly driven by prior quarter subscription and cover pricing increases at a number of our mastheads. It's worth highlighting, as Robert mentioned, that this quarter we saw volume and revenue growth in local currency at The Times in the U.K. and at The Australian. Further tangible evidence that our quality newspapers are benefiting from the migration to digital. At News America Marketing, sales improved 4% versus the prior year period, led by double-digit growth in in-store advertising and modest growth from the FSI business. Segment EBITDA decreased $80 million in the quarter of 38% as compared to the prior year period, adjusted segment EBITDA was down 34%. Included in segment EBITDA was $11 million related to the relocation of our London operations for dual rent and other facility costs. We also incurred much higher expenses at News UK related to specific marketing initiatives, as I had discussed last quarter. We also had higher severance costs in the U.K. this quarter. In Cable Network Programming, revenues declined $10 million or 7% compared to the prior year quarter due to adverse foreign currency fluctuations. Subscription revenues, which account for over 80% of Fox Sports revenues, were flat, but drew 6% in local currency, benefiting from higher digital platform subscribers and higher CPI-linked cable and satellite affiliate fees. Advertising revenues declined modestly and were fairly consistent with the prior quarter, impacted by a soft marketplace combined with the absence of the Lions Tour rugby tournament in the year-ago quarter. Segment EBITDA in the quarter was flat compared to the prior year. Adjusting the impact of foreign currency fluctuations, adjusted revenues were down 2% and adjusted segment EBITDA improved by 11%. In digital real estate services, revenues increased $22 million or 24% compared to the same quarter last year, reflecting higher pricing and uptake of premium products. Segment EBITDA increased $16 million or 35% compared to the corresponding prior year quarter due to the increased revenue. If you exclude adverse foreign currency impacts, adjusted revenue and adjusted segment EBITDA grew 33% and 41%, respectively. Turning to the book publishing segment, revenues improved 10% and segment EBITDA grew 50% versus the prior year quarter. We continue to see very strong performance from the Divergent Series by Veronica Roth, which clearly got a boost from the theatrical release in March and has begun to spread overseas. We sold globally an additional 3.6 million net units of the series this quarter and a total of over 19 million net units for the year. Total e-book net sales for the quarter grew 23%, mainly due to the Divergent Series, and accounted for 22% of HarperCollins' consumer revenue, up from 19% in the prior year period. We have, as Robert mentioned, completed the acquisition of Harlequin Enterprises from Torstar Corporation for CAD 455 million. We expect, as we've indicated before, the deal to be accretive to earnings in fiscal 2015 and to improve our free cash flow. We are just now beginning the integration work with Harlequin, and we will update you on our progress over the course of the year. On an annualized basis, we expect Harlequin will contribute revenues in the $320 million-$340 million range, excluding their joint ventures, but haven't yet factored any material synergies in the current fiscal year. We do expect to incur non-recurring transaction costs of approximately $5 million in fiscal 2015. At our Digital Education, $7 million compared to the prior year quarter, primarily due to lower project-based consulting revenues and Amplify's legacy assessment business, as I had also noted on our last call. Segment EBITDA was negative $53 million and was fairly consistent with the prior year. For the full year, Digital Education EBITDA loss was $193 million. Amplify remains on track to roll out the English Language Arts digital curriculum targeted to grades 6 through 8 for this coming fall. We expect to have approximately 10,000 students for our digital ELA curriculum and 20,000 for our digital math and science supplemental offerings signed up this year. In addition, Amplify will have around 250,000 students signed up for the fall to use its digital hybrid K through 5 program, known as Core Knowledge Language Arts, which is viewed as a bridge to our broader digital product offerings. Finally, our next-generation tablets, designed in collaboration with Intel, are also on track for a fall rollout, with plans to deploy to at least 26,000 students. In our other segment, which primarily includes corporate overhead and our strategy and creative group, excluding U.K. newspaper matter costs, segment EBITDA was negative $49 million, compared to negative $76 million allocated in the prior year. With respect to our earnings from affiliates, Foxtel entered the year with around 2.6 million total subscribers, up 6% versus the prior year, driven by higher digital platform subscribers. Cable and satellite churn improved to 12.5% compared to 14.2% in the prior year. Broadcast ARPU rose 1% for the full year, impacted by a February price increase. Foxtel revenues for the year were up 2% on a constant currency basis, and EBITDA was up 8% similarly. Turning now to cash flow. News Corp's cash flow from operations improved to $854 million, compared to $501 million in the prior year, and free cash flow available to News Corp improved to $365 million, compared to $72 million in the prior year. Just a few additional items to note. CapEx for fiscal 2014 finished at $379 million, which was in line with our expectations. Included in that CapEx was around $100 million related to costs for the London office relocation and HarperCollins headquarters within Manhattan. On our ongoing cost savings initiatives, as I mentioned in past quarters, we have been very focused on reducing the cost base. In the aggregate, we identified over $100 million in annualized cost reductions, most of which were realized in fiscal 2014. The majority of savings are in distribution and production, including renegotiated paper and ink contracts, closing our divestitures of warehouses and printing plants, reduced software technology spend through aggressive procurement efforts, and restructuring of healthcare and pension plans. We will continue to look at further efficiencies in the coming year. Let me now discuss a few drivers that we see for fiscal 2015. At News and Information Services, we will be looking to enhance our paywall offerings with planned relaunches across all regions. We will still have the dual facility expenses related to the relocation of the London office in fiscal 2015 of around $25 million. While the professional information business at Dow Jones remains challenged, we do expect stabilization over the course of the year. Advertising remains relatively weak, but our ad sales teams are cautiously optimistic, and we hope for improvement. We expect continued strong performance at News America Marketing, led by in-store advertising. At Cable Networks, programming costs should be up only modestly given a few additional events this year, including the Asian Cup in January and the Cricket World Cup in February, March. We have no major rights renewals coming up this year. At Book Publishing, given the huge success of Divergent last year, at this point, we do expect HarperCollins to face tougher comps, particularly in the second half of fiscal 2015, before reflecting performance from the Harlequin acquisition. At Digital Real Estate, we expect continued strong performance, benefiting from favorable secular trends and high ROI to the agents. At Digital Education, the focus will remain to broaden its curriculum and drive further sales adoption. Given that the curriculum is now in the commercial rollout phase, we will begin capitalizing some of the content development costs. We expect to capitalize $60 million in fiscal 2015 related to ELA and that EBITDA will improve by at least this amount. We expect, however, our total cash investment spend at Amplify to be relatively similar in fiscal 2015 as it was in fiscal 2014. Corporate overhead and creative and strategy group will likely spend similar levels to fiscal 2014 in a range of $160 million-$180 million. Finally, CapEx for fiscal 2015 should be around $400 million, including the additional $60 million capitalized software cost at Amplify, as well as around $70 million in the U.K. to complete the London office relocation. In summary, fiscal 2014 was a very busy year for News Corp, as we balanced ongoing operational efficiencies with prudent investments and strategic acquisitions to expand our global footprint and digital offerings. We remain steadfast on stabilizing top-line performance and look forward to updating you on our progress throughout the year. With that, let me turn it back to the operator for our Q&A session. Thank you. If you'd like to ask a question, please signal by pressing *1 on your telephone keypad. Please limit yourself to one question to allow everyone an opportunity to ask their questions. If you're using speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press *1 to ask a question, we will take our first question from John Janedis at Jefferies. Thank you. Bedi, now that you've been public for a year, can you give us your current views on return of capital given your free cash flow generation last year? Then on new segments, the decline in EBITDA, at least in the fourth quarter, was a bit more than I would have expected. Are those marketing initiatives going to step down in the next quarter or two, are you starting to run out of leverage to pull on the cost front? Thanks, John. Let me just start by addressing the fourth quarter, where clearly, as we had also mentioned in the third quarter, we expected to see additional marketing costs in London, which indeed did come through. One's view is that they will be beneficial to us in terms of revenue in the quarters to come. The London relocation obviously was also an extra expense in that quarter, the professional information business at Dow Jones was also soft. I think that gives you a sense of the kind of impact those things had in Q4. With respect to your earlier question, I think the way to think about it is we're still very focused on making sure that the business is stabilized, especially in news and information services. We look to additional investments and smart strategic and disciplined acquisitions. Clearly with a view to generating long-term shareholder value per share, which remains kind of our mantra. Operator, we'll take our next question, please. Our next question comes from Entcho Raykovski at Deutsche Bank. Hi, Robert. Hi, Bedi. My question is around Amplify, and you've obviously provided some guidance there into fiscal 2015. Is that contingent on targets being met throughout the year, or are you feeling it's too early in the performance of the business necessarily to be setting targets? It's Robert here. To be honest, a little early in the business to be setting targets. What we're focused on is the development of the curriculum. That's the key part of the investment that we've undertaken at Amplify. We said to you 18 months ago that in 18 months we would have a much clearer indication of the trajectory of the business. I think it's fair to say now that we are getting a sense of that, and we still hold ourselves to that deadline. As the business unfolds over the next 12 months, we'll be keeping you updated about sales, about sales patterns, and about the substance of the business. If I can just add to that, clearly ELA was the sort of production effort, and now it's gone to market. We still have a lot of production effort behind math and science, which will continue in 2015. Sales for those products will start at the end of 2015. It's a significant investment, but it's clearly a significant opportunity. Sorry, if I can just follow up. In the coming few months, do you have specific student targets that you do need to reach? Are you prepared to disclose those? Look, we don't have specific targets. This business, as you can understand, is evolving. It's in the early stage of the evolution. It's evolving quickly. As we pass key metrics, we'll pass those metrics on to you. Okay, operator, we'll take our next question, please. Our next question comes from Justin Didiun, Citi. Morning, guys. Just a question on the news information services business. Given we enter FY 2015 with what's potentially a continuation of these advertising declines, do you think there's scope again in FY 2015 to cut the same amount of costs out of the cost base? Otherwise, we probably need to put in an EBITDA number much lower for this year if you're not able to cut those costs. I just wanted to clarify that it was $100 million spent on the office move in the U.K. In terms of CapEx that we spent in the London building, that was in fiscal 2014. It was $75 million of capital expenditure. We expect somewhere in that sort of region in fiscal 2015 as well, just to fit out the building completely. People have started moving in, but not all the floors are occupied. Justin, on your question about costs and advertising trends. First of all, on costs, clearly because of the concentration, the new focus of the new news, we are finding opportunities to consolidate and to cut costs. That, frankly, is not going to stop. That's separate from trends in the advertising revenue, which clearly, the winds have been buffeting. What we're seeing really are different circumstances in different regions. At the moment, there are indications that the rate of decline has declined in Australia. There are green shoots on the Nullarbor Plain. Part of that is really great work by our team in Australia. We've focused on local advertising, and local advertising revenue trajectory has changed in Australia. The national market is different, but there'll be an increasing focus on that as well. That's a great tribute to Julian Clarke and Peter Tonagh, and our advertising team in Australia. At Dow Jones and The Wall Street Journal, it clearly was a quarter of decline. As we look forward a little bit, you'll see that, for example, WSJ. Magazine, which didn't exist when News Corp took over Dow Jones, in September, it will have two issues, one of them a record amount of revenue. You can count the pages for yourself. Meanwhile, in the U.K., in the last quarter, clearly there was some marketing spend. Now, I know companies like to blame the World Cup for all sorts of ailments. It was clear that if England had progressed beyond the group stage in Brazil, that advertising would've picked up. There would've been momentum. It's also fair to say that the England team failed to exceed low expectations. Operator, we will take our next question, please. Our next question comes from Michael Morris at Guggenheim Securities. Thanks. Good afternoon, guys. With respect to The Wall Street Journal and the value of the content, the fact that I think it's must-have access to for most business professionals, can you talk a little bit about the pricing power there, how you look at pulling levers on pricing and the risk domestically? Also, when you look at that brand outside the U.S., where do you think you are in fully leveraging the brands and content, and what can we be looking for there in the future? Thanks. Well, I think it's fair to say that we haven't fully leveraged the brand, and that Will Lewis, who's been doing a marvelous job since he took the helm, is looking not only at overseas opportunity, but what more, to your point, can be done to leverage and take advantage of the necessity that many people have to read Wall Street Journal content. Also looking at different platforms for delivery of that content. Over the period since the News Corp acquisition, we've been seeing strong year-after-year growth in circulation revenue. There's no reason for that not to continue. Operator, we'll take our next question, please. Our next question comes from Alexia Quadrani at J.P. Morgan. Thank you. When you look at the book publishing business, which has clearly been an outperformer for some time here, and you look at a book like Divergent, which is a multiple-part, there's several books in the series, how long of a tail does that typically have? I know you mentioned more challenging comps in the back half of your fiscal year. For the next couple of quarters, can we continue to benefit from this series, or have you already played it through a bit? Look, it's a little difficult to forecast. I'm neither a bard nor a soothsayer. It's a blockbuster. For example, there are variables that may have an efficacious impact, such as the release of the second movie in the trilogy, which is scheduled for the spring. At the moment, it's fair to say that we're still seeing benefits. Okay, thank you. We'll take our next question, please. Thank you. Our next question comes from Doug Arthur at Evercore. Your line is open, sir. Okay. Your line is open, sir. Please check your mute function. Yeah. Can you hear me? Sorry. Yes, we can. Yeah, Robert, you alluded to sort of stepped up or accelerated rollout of digital content in the news and information group, given the success of The Sun+. I mean, that's not a new strategy, but in terms of this marketing spend, as you do similar efforts in Australia, perhaps more stepped up in the U.S., are we likely to see the marketing spend line go up as a result in line with The Sun? To be honest, Doug, I wouldn't draw too many long-term conclusions from the last quarter. I think one of the advantages we have as a company now is that we learn from experiences in different places. The executives in London, Sydney, and New York are constantly talking about efficient marketing spend. That focus is enabling us to generally, over the longer term, keep the marketing spend to the minimum necessary. Okay. Operator, we'll take our next question, please. Our next question comes from Craig Huber at Huber Research Partners. Yes. My first line of question, please. What was the cash level on your balance sheet at end of the quarter? Also, what is holding you guys back from buying stock and/or putting in place a quarterly dividend? I have a follow-on. Thank you. Our cash balance at the end of the quarter, and obviously the fiscal year, was $3.1 billion. In terms of how we think about deploying the cash As we've said before, we're very focused on making sure that we do smart strategic acquisitions, that we make sure the top line is getting stabilized. We make internal investments in projects such as Ball Ball. That's really the frontline focus, to make sure we build long-term shareholder value at the company. Operator, we'll take our next question, please. Our next question comes from Adam Alexander at Goldman Sachs. Good afternoon. Just a question on Dow Jones institutional business. It's obviously been a drag through FY 2014. You mentioned that you'd seen some stabilization. I'm just wondering if you could give some color around what's the key area of customer pushback there and how you're going about addressing that? To be frank, the key area of pushback was in Factiva, where we had changed the offering in a way that, to be honest, some of the clients found unacceptable. What we've done, we've listened to our clients, we've perfected the product, the pitch, and the pricing, and we're starting to see some positive feedback there. Operator, we'll take our next question, please. Thank you. We'll take our next question from Richard Kass at Wells Fargo. Thank you. With regard to the investment REA Group made in Southeast Asia, can you tell us a little more about that asset and if you think it can move the needle in the segment of already strong growth rates? Secondly, foreign currency has been a big headwind for you in fiscal 2014. It seems like you'll be lapping some of those comps. Do you feel like you may have a bit of a tailwind now in fiscal 2015 as you lap that? It's hard to predict on foreign currencies. Yeah, I think generally speaking, shouldn't be as unfavorable as we saw in 2014. Are you asking about the iProperty acquisition? Sorry, I didn't get the first. Yes part of the question. Right. Yes. We've taken a small stake in iProperty. I think we've disclosed it's 17% or 17.5%. It's really REA that's done that, and I think it's part of their stated objective of expanding outside Australia, but near to Australia in a sense, so that you have the ability to monitor what's going on in a region that's close by. We'll have a board seat on that company for that investment, and I think we'll help them and encourage them to grow. There may be cross-platform opportunities with other things we are doing in the region, such as with SEEK Asia or with Ball Ball, which we haven't fully exploited yet. I think it's fair to say that at the investor day, we indicated that we would increase our presence in East Asia, and frankly, in the U.S. We're keeping that promise. As Bedi said, it's a relatively small at this stage investment, but it's a small investment in a fast-growing region. Okay, operator, we'll take our next question, please. Thank you again. That's star one for questions. Our next question comes from Alice Bennett at CBA. Hello. I have a question around Fox Sports. Maybe just a bit of clarification. Did you say that total local currency revenue was down 2%, but subscription up 6%? If that's the case, what dragged down? Was it just advertising or was there something else that dragged the total revenue down to that negative territory? I think the reported numbers were dragged down by foreign currency, but I think local currency, we were up. Wow, okay. Is that the adjusted number in the? Yes. Adjusted is adjusted for, sorry, yeah, for currency. Okay, operator, we'll take our next question, please. There are no further questions in the queue. Okay. Well, thank you all for participating, and we look forward to sharing with you our progress throughout the year. Have a good night.