Welcome to Muse Corp's First Quarter Fiscal 2023 Earnings Conference Call. Today's conference is being recorded. Media will be allowed on a listen only basis. At this time, I would like to turn the conference over to Mike Florin, Senior Vice President and Head of Investor Relations. Please go ahead.
Thank you very much, operator. Hello, everyone, and welcome to News Corp's fiscal Q1 2023 earnings call. We issued our earnings press release about 30 minutes ago and it's now posted on our website at newscorp.com. On the call today are Robert Thompson, Chief Executive and Susan Panuccio, Chief Financial Officer. We 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 ks and Form 10 Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward looking information. Additionally, this call will include certain non GAAP financial measurements such as total segment EBITDA, adjusted segment EBITDA and adjusted EPS. The definitions and GAAP to non GAAP reconciliations of such measures can be found in our earnings release for the applicable periods posted on our website.
With that, I'll pass it over to Robert Thompson for some opening comments.
Thank you, Mike. While the macro environment is patently more volatile, we believe the resilient foundations of the reincarnated news call Give us a platform for sustained growth and increased profitability. That clearly is evident in our revenue performance this quarter. While revenues were down 1% to $2,500,000,000 that decline was obviously a consequence of foreign currency fluctuations. On an adjusted basis, our revenues grew a healthy 3%, building on the robust results from last year.
Profitability for the quarter was 3 $50,000,000 down 15%, although that reflects the ForEx headwinds and a reset by Amazon of its book inventory levels and warehouse footprint. We view neither factors reflective of core business conditions or of our long term potential. Our results follow 2 successive years of record profits at News Corp. It is important to keep that unprecedented success in mind, especially as we encounter what we expect to be ephemeral challenges. Our company has changed the digital terms of trade and we expect the current situation to be transitory.
We see positive prospects across all our segments And our mix of revenues and geographies is obviously advantageous in a complicated, perplexing world. Turning first to Dow Jones. Q1 was the best Q1 on record since acquisition for revenue, profitability and margin, Affirming the wisdom of our acquisition of Opus and CMA, which have bolstered the Dow Jones Professional Information business. Revenues grew a resounding 16% and advertising was 4%, which compares rather favorably to a number of competitors. In particular, digital advertising at Dow Jones rose 11%, A noteworthy achievement in this complex environment.
In fact, Q1 represents the 9th consecutive quarter of year over year digital ad growth at Dow Jones. In the past year, Dow Jones added 473,000 digital only subscriptions. And as of the end of Q1, 83% of subscriptions at Dow Jones were digital only. At The Wall Street Journal, despite the tough market, paid digital subscriptions increased over $350,000 year over year. During the quarter, Investors Business Daily launched a paid newsletter, Market PM, To attract younger investors and commissioned an options information app that will present new analytics for options trading, a complex but potentially lucrative sector.
With its panoply of premium products, Dow Jones has renewed focus on bundling our premium content, including The Wall Street Journal, MarketWatch and Barron's. These valuable combinations have already exceeded 200,000 subscriptions and we have begun to roll out a bundle featuring WSJ, Barron's and IBD. Revenues at the Professional Information business rose 40% year over year. We continue to clearly see the benefit of risk and compliance in an environment of intensifying Scrutiny by regulators who are insisting that companies minimize risk and maximize compliance. The integration of OPUS and CMA has been proceeding successfully Nate joined a burgeoning Dow Jones Data and Intelligence business, providing an impressive $52,000,000 in combined revenues in Q1 And contributing materially to profitability this quarter.
Opus and CMA continue to leverage their proprietary data and analytics with new offerings including carbon industries and are assisting companies in making sense of dynamic market for carbon offsets. Overall, we are delighted with the tangible progress in our Professional Innovation business, which is providing an increasing level of high yield, low churn digital As usual, we replaced services this quarter, we saw resiliency even though housing market conditions have patently become more volatile, especially in the U. S. REA Group achieved substantial revenue growth in constant currency on the back of higher pricing, increased penetration of the Q Premier Plus enhancement and Strong listing volume, while maintaining its more than 3 fold leading traffic over the competition. There was also notable audience and revenue growth at REA India, which further consolidated its position as the number one property portal in that massive and growing market.
At moveoperatorofvehicle.com, Revenues were down 6%, reflecting relatively similar trends to the 4th quarter. Realtor's unique users have risen 21% since the Q1 of financial 2020, Thanks to product enhancements and increased marketing. To position and equip the business to take full advantage of the inevitable upswing in the market, We are expanding our offerings in rentals and in developing sell side expertise, which we expect will drive profits far into the future. Realtor is also taking decisive steps to streamline and optimize the business while enhancing reinvestment capacity and capitalizing on long Our focus on seller leads, which are the source of most revenue in the Australian market is building on our recently acquired UpNest. The UpNest experience has been integrated into key seller placements across the site, providing sellers the ability to get proposals from multiple agents And offering consumers significantly more choice.
Meanwhile, even in a challenging housing environment with higher mortgage rates, Tied inventory and inflation, home prices have remained elevated and we note that active listings at Realtor improved by 29% in the quarter compared to the prior year period. Realtor remains focused on the long term opportunities in what is an estimated $200,000,000,000 addressable market. As mentioned earlier, the Amazon reset affected many publishers in Q1, including HarperCollins. This reset relates to Amazon's decision to reduce inventory levels And shutter warehouses and accounted for almost the entirety of HarperCollins revenue contraction and the vast majority of its profit decline this quarter. Notably, consumer appetite, which expanded during the pandemic, continued to be robust and provides us with increasing confidence going forward.
And we are absolutely focused on cost control at Abercrombie and the imperative to improve margins in these challenging conditions. Key frontlist titles in the quarter included Portrait of an Unknown Woman by Daniel Silva, Live Wire by Kelly Ripper and Breaking History by Jared Kushner. We are prospering from our global ownership rights to the Lord of the Rings trilogy, given the popularity of the Amazon series, and we are looking forward to the release of the stories we tell by Joanna Gaines And Colin Hoover's next work. Finally, we note that HarperCollins Focus last month acquired Cider Mill Press Publishers, an independent publisher of quality gift books. Cider Mill, specialized in cooking, wine and spirits and humor books and includes Apple Sauce Press, a children's brand.
Its deep backlist should provide an ongoing source of incremental revenue. At Subscription Video Services, Foxtel had another strong quarter, Streaming subscriber penetration continues to expand and costs have been thoughtfully driven. Foxtel has recently renewed or signed Valuable long term sports rights and conduct agreements, including the AFL, WWE and NBC University. We have obvious optionality at Foxtel, where the conversation is no longer about how much capital we plan to invest, but the potential for capital return. Foxtel streaming services obtained 2,800,000 paying subscribers as of the end of September, surging 34% versus the prior year And accounting for 63% of the total paying subscriber base.
Kayo and Binge added nearly 3 quarters of a 1000000 paying subscribers in the past year alone, underscoring the potential of Foxtel in a still expanding Australian market. Foxtel Group delivered record audiences The recent AFLM in our finals, meanwhile motorsport, the Rugby League World Cup and T20 World Cup Cricket Bolstering subscriber loyalty as we near the spring selling season. The News Media segment experienced a revenue decline of 4% It rose a healthy 6% on an adjusted basis when taking into account foreign fluctuations and other items. In constant currency, we saw healthy growth In advertising, circulation and subscription revenue. At News Corp Australia, circulation revenue is improving constant currency Our digital subscriptions exceeded the $1,000,000 mark for the first time, up 13% year over year.
News.com.au asserted its leadership in the free media environment with an audience of 13,000,000 in the month of September. Meanwhile, the New York Post continued to improve profitability, thanks in part to a strong increase in digital advertising revenues. The Post digital network also flexed its muscles with a 24% increase in page views, reaching an average of 129,000,000 per week in Q111,000,000 average monthly units in September. At News UK, The Sun's digital advertising exceeded print for the 4th consecutive quarter and accelerated its growth. And we're delighted by the success of sun.com, which continued to increase its already sizable audience, particularly in the United States.
And The Times, Sunday Times also saw A 23% increase in digital paid subscriptions, reaching 468,000, marking its 2nd best ever quarter of digital growth. News broadcasting, the new name for the radio and television brands of News UK, reported an increase in both reach and listening hours according to the latest Ray Charles report. Pork Sport reached 2,900,000 listeners. We tuned in for more than 18,000,000 hours, up 10% quarter on quarter And we expect the imminent World Cup to be a source of audiences and of advertisers. News Corp is building on a base that has grown stronger, All global and more digital in recent years.
We have seen record profitability in each of the last two fiscal years. By many key measures, our resounding progress has continued. Digital advertising on the rise, streaming surging and subscriptions soaring. Despite the macroeconomic uncertainty, having streamlined and digitized our businesses and reached substantial agreements with the big tech To compensate us for our premium journalism, we are better equipped to generate increasing value to our investors. And our strong cash position Means that we have been able to return capital to shareholders and invest thoughtfully in future growth, while honoring our proud providence.
One last point. As we announced last month, following the receipt of letters from Rivett Murdoch and the Murdoch Family Trust, the News Corp Board of Directors has formed There can be no certainty that the company will engage in such a transaction. We do not intend to comment further at this time. And for that reason, we will not be taking questions on this topic today. We are, of course, Happy to answer your questions about the performance of and prospects for our business, particularly as it relates to the Q1 of this fiscal year.
As always, we thank our investors for their faith and confidence in us and all our employees, advertisers, readers and audiences for their valuable contributions and enduring support.
Now I
turn to Susan to expound and expand on these results.
Thank you, Robert. We have entered fiscal 2023 with a different macro environment, including volatility in foreign currency impacting our headline results Our Australian and U. K. Businesses. Throughout fiscal 2022, we successfully navigated the company to be in a position of strength, guided by our ongoing cost transformation work, which we have balanced with investment and innovation to drive digital expansion.
The Q1 of fiscal 2023 presented some challenges, particularly at HarperCollins, but most of the businesses Well in constant currency and suffice to say that News Corp. Remains well positioned given the strength of our asset mix, healthy balance sheet and the continued diversification of our revenue base. 1st quarter total revenues were approximately $2,500,000,000 down 1%, which included a $153,000,000 or 6% negative impact from foreign currency headwinds. Excluding the impact Total segment EBITDA was $350,000,000 down 15% compared to the prior year, which saw a record profit of 53% growth. That being said, total segment EBITDA this quarter was still up 31% over fiscal 2021, underscoring the material changes in recent years.
Also noteworthy is that the majority of the profit behind this quarter was driven by lower sales from Amazon due to the reset of its inventory levels and the rightsizing of its warehouse footprint as well as foreign currency fluctuations, neither of which we believe are reflective of underlying performance. Adjusted EBITDA declined 13% versus the prior year period. For the quarter, we reported earnings per share of $0.07 compared to $0.33 in the prior year. Adjusted earnings per share were $0.12 in the quarter compared to $0.23 in the prior year. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services.
Segment revenues were $421,000,000 down 1% compared to the prior year. The results include a negative impact of $20,000,000 5% from foreign currency fluctuations. On an adjusted basis, segment revenues increased 3%. Segment EBITDA declined 14% to $119,000,000 impacted by higher employee costs and increased marketing costs, driven by strategic investment activities of both Move and REA together with negative impacts related to currency headwinds. The increase in investment costs at Move was due to the expansion into adjacencies, including Tower Leads, rentals and new homes as we focus on the longer term opportunity.
Adjusted segment EBITDA declined 7%. News revenues were $169,000,000 down 6 volumes reflective of the broader industry trends. Consumer affordability constraints impacted unique lead volumes, which declined 32% in the quarter, although that was a slight improvement from the 4th quarter rate. Those trends were partially offset by price within the traditional lead gen business, higher sell through of our hybrid offering, market VIP, home price appreciation and continued advertising gains. We also had revenue growth from our adjacencies, including the acquisition of UpNest, albeit these revenue streams are still in the early stages of development.
Referral offerings accounted for approximately 30% of total revenues, down from 32% last year, impacted by lower transaction volumes, partially offset by higher home prices. Based on our internal metrics, Realtor's average monthly unique users were 86,000,000 in the Q1. REA had another strong quarter with revenues rising 2% year on year on a reported basis to $252,000,000 which included a $20,000,000 or 9 percent negative impact from foreign exchange. Growth was driven by price increases, contribution from Premier Plus, Favorable debt penetration and product mix and growth in national listings, partially offset by a modest decline in financial services revenues due to lower settlement activity. Overall, newbuy listings rose 5% with Sydney and Melbourne up 5% and 12%, respectively.
Please refer to REA's earnings release and their conference call following this call for more details. Turning to the Subscription Video Services segment. Revenues for the quarter were $502,000,000 down approximately 2% compared to the prior year on a reported basis due to foreign currency headwinds. Importantly, on an adjusted basis, revenue grew 6% versus the prior year, accelerating from the prior quarter rate of 4% growth. Streaming revenues accounted for 25% of circulation and subscription revenues versus 19% in the prior year and again more than offset broadcast revenue declines.
Total closing paid subscribers across the Foxtel Group reached almost 4,500,000 at quarter end, up 16% year over year with the growth rate improving 3 percentage points from the 4th quarter. Total subscribers, including TriLift reached over 4,600,000. Total paid streaming subscribers reached over 2,800,000 increasing 34% versus the prior year and adding 117,000 sequentially with streaming subscribers now representing 63% of FOX Health's total paid subscriber base. Kayo paying and NRL seasons in September. BingePayne subscribers grew a robust 67% year over year to over 1,300,000 subscribers, benefiting from the release of The House of the Dragon and the popularity of the FOXFEL original series, The Twelve.
FOXFEL ended the quarter with over 1,400,000 broadcast subscribers down 10% year over year similar to the 4th quarter rate. Broadcast churn was 14.2% compared to 14% in the prior year, partly reflecting the acceleration of migrating subscribers of cables. Broadcast ARPU rose over 1% to approximately AUD83. Segment EBITDA in the quarter of $111,000,000 fell 3% versus the prior year, significantly impacted by currency with adjusted segment EBITDA increasing 5%. Moving on to Dow Jones.
Dow Jones continued Chipotle's strong performance in the Q1 with revenues of $515,000,000 up 16% compared to the prior year, with digital revenues accounting for 79% of Total revenues this quarter, up 4 percentage points from last year. Results included a full quarter from both the OPUS and Chemical Market Analytics acquisitions. On an adjusted basis, revenues rose approximately 6%. Circulation revenue grew 5%, driven by strong year over year volume gains with the Wall Street Journal digital only subscriptions up 13% to over $3,100,000 and total Dow Jones digital only subscriptions also up 13%. Professional Information Business revenues rose 40% and accounted for approximately 35% of segment revenues, driven by the acquisitions of OPUS and CMA.
Revenues from the acquisitions were progressing in line with our expectations as the businesses benefited from strong demand across numerous industries, including metals, Carbon, plastics, sustainability, biofuels and renewables, while yields continued to rise and retention remained strong. Fiscal Compliance revenues grew 6%, although currency had a 10 percentage point negative impact on revenue growth given the business' higher exposure to Europe and APAC. Advertising revenues grew a healthy 4% to $94,000,000 despite lapping 29% growth in the prior year. Digital advertising revenues rose 11% in the quarter as we continue to see very strong yield improvement and saw growth in all categories, especially in B2B this quarter. Digital advertising accounted for approximately 65% of total advertising revenues, which improved 4 percentage points from last year.
Print advertising revenues were down 6%. Dow Jones segment EBITDA for the quarter rose 19% $113,000,000 as margins continued to improve with 50 basis points expansion year over year to nearly 22%, helped by the inclusion of Opus and CMA. Adjusted segment EBITDA for the quarter was down 1%, reflecting higher employee costs. At Book Publishing, as we flagged during the quarter, results were materially hampered by Amazon's reset of inventory levels and rightsizing of its warehouse footprint, resulting in significantly lower orders and higher returns. Supply chain pressures continue to impact freight and manufacturing costs, but are showing some signs of easing from recent quarters.
As it relates to Amazon, we have not seen similar inventory level adjustments from other book distributors or retailers. And as Robert noted, consumer demand has remained healthy and consumer sales data remained consistent with prior quarters. For the quarter, revenues declined 11 percent to $487,000,000 and segment EBITDA declined 54% to $39,000,000 We estimate Amazon accounted for almost the entire year over year revenue decline and the majority of the year over year segment EBITDA shortfalls. Our backlist contributed 65% of revenue, up slightly from last year, benefiting from the demand of helped by the premier of the Rings of Power on Amazon. Digital sales rose 1% this quarter and accounted for 23% of consumer sales.
On an adjusted basis, revenues fell 7% and segment EBITDA declined 51%. Turning to News Media. We continue to see relatively strong advertising trends, particularly at News Australia. Revenues were $553,000,000 down 4% versus the prior year, largely due to currency, which had a $62,000,000 or 11% negative impact on revenue. Importantly, despite macro uncertainty, adjusted revenues for the segment increased a healthy 6% compared to the prior year due to strength in circulation and subscription and advertising revenues in constant currency.
Circulation and subscription revenues declined 6%, that included a 12% or $32,000,000 negative impact from currency fluctuations. Growth in constant currency was driven by cover price increase in the U. K. And Australia, an increase in content marketing revenues and double digit subscriber gains across News Australia and The Times and The Sunday Times. Advertising revenues declined 4% compared to the prior year, which included a 9% or $22,000,000 negative impact from currency fluctuations.
Growth in constant currency was driven by an increase in digital advertising revenues, primarily at the Sun, where digital revenue yet again eclipsed print revenue, while Australia benefited from strong peak performance led by a recovery in retail and travel, which were impacted by the lockdowns in the prior year. New York Post also posted strong digital gains. Segment EBITDA of $18,000,000 declined 47%, driven by over $20,000,000 of higher costs related to TalkTV and other digital investments together with higher newsprint production and distribution costs across the businesses, which are being impacted by the current inflationary and supply chain challenges. Adjusted segment EBITDA fell 44%. Before we look at the outlook for the next I would like to touch on free cash flow.
1st quarter free cash flow is typically lower due to the timing of working capital payments, and we remain focused on driving strong and positive free cash Turning to the upcoming quarter, we continue to expect higher costs due to supply chain and inflationary pressures. Advertising conditions are mixed and visibility remains limited across the businesses. We also expect ongoing foreign Australian Residential new buy listings for October declined 18% as we lack tougher prior year comparisons. Please refer to REA for more specific outlook commentary. At Move, we expect lead and transaction volumes will be challenged in the short term and we will continue to take steps to mitigate those pressures while balancing ongoing investments with cost discipline.
In Subscription Video Services, we remain pleased with the performance of the streaming product and the ongoing focus of broadcast ARPU and churn as we continue to migrate customers from cable to streaming. At Dow Jones, we remain focused on the integration of Opus and CMA. Advertising visibility remains short term. However, we are expecting a more challenging second quarter. We also expect the rate of investment in the Q2 to be higher than the prior year as we continue to focus on driving consumer subscriptions and enhancing our PIB offerings.
In book publishing supply chain and inflationary pressures continue to persist, albeit showing signs of easing. We still expect headwinds from Amazon in the Q2, although with strong customer demand, we expect any issues to be short term in nature. At News Media, like the Q1, we expect incremental costs in relation to product investments across the businesses, including Talk TV and other digital initiatives, together with ongoing inflationary pressures, including newsprint prices. Before we open for questions, I would like to remind everyone But we will not be addressing any questions related to the special committee and or a potential combination with Fox Corporation, as Robert stated earlier. With that, let me hand it over to the operator for Q and A.
We will now start the Q and A session. Thank you. The first question comes from Kane Hannan from Goldman Sachs. Please go ahead.
Good morning, guys. Am I coming through?
Yes, Kane. Loud and clear.
Perfect. Thanks for the questions this morning. Maybe just on the book publishing side of things, Helpful comments there at the end around Amazon and the broader inflationary pressures. Just give us a sense of, I suppose, the margin decline in the Q1 is some 50 basis points And what you'd attribute to Amazon's impact and what you'd attribute to, I suppose, the inflationary side of things that is probably going to continue for the rest of the year? And then just as a second sort of quick follow on, just talk about how you're thinking about M and A in the publishing space?
And whether you think Harko would have any of the regulatory pushback The Penguin Random House had with their proposed acquisition?
Ken, look, clearly, the supply chain is a factor. But As for Amazon, it's fair to say it's ephemeral, not eternal, but meaningful in the Q1. The combination of both inventory adjustment and warehouse closures Clearly, it created logistic issues, which we trust Amazon will resolve relatively soon. But the demand for books is undiminished, and we certainly have some alluring Titles looming, including Joanna Gaines and Colleen Hoover. So and in the meantime, Brian Murray and his team are resolutely focused on cost control and necessarily improving margins.
As for Simon and Shuster, look, clearly, there is much more work ahead for the lawyers at Both companies, the legal documents must already run to many volumes themselves, but it is appropriate that the judge ruled that the proposed merger would create A book behemoth, a literary Leviathan, a titan of tones that would wield disproportionate weight in the industry. For ourselves, we're absolutely resolutely focused on building the HarperCollins business and continuing the integration of Wharton, Midland, Harcourt.
And Kay, maybe just to frame the Amazon impact. The majority of the EBITDA decrease was due to We had hoped that it would be limited to Q1, but we are expecting to see some impacts coming into the Q2. But Yes, all things being well, we expect the second half to pick back up and the inflationary impacts had been coming down actually. We are seeing them slightly offset by volumes, but we hopefully again expect to see those, subside a little bit in the second half.
Thank you, Kane. Tatiana, we'll take our next question please.
Next question comes from David Karnovsky from JPMorgan.
Hi, thank you. Robert, on the external digital subscribers, can you talk to the sub trends there for the prior 2 quarters? I think you mentioned a tough market. I want to see how you view factors like new cycle or economy. And then Dow Jones, did you guys grew strongly in the quarter?
Is that sort of just associated to the macro? Or would you
Second part of
the question was a little unclear, but on digital subs, they were up 13% for both Dow Jones and The Wall Street Journal. The total subs We're up 8% at Dow Jones $4,900,000 and the WSA is $3,800,000 What we're Seeing with Dow Jones generally is that we're able to take advantage of a massive audience, which is 116,000,000 monthly earnings. And then gradually push people up for the hierarchy of premium products at a premium price. And clearly, as we've taken on more professional information content, the ability To take advantage that opportunity is realized. And secondly, we believe in vertical bundling.
So for example, MarketWatch and WSJ, WSJ and IBD, IBD and Barron's, not what you might call horizontal bundling, which other companies in Belgium. And there's no doubt that you'll see over the next 6 months, the virtue of those bundles that Dow Jones has just begun Marketing, so we'll be able to update you in succeeding quarters, but we have no doubt that these strategies are wise one.
And David, look, I think on the advertising, we didn't quite catch what the question was, but we actually have been really pleased with the performance of We've been growing advertising quarter on quarter for quite a few quarters now, which has been really pleasing and actually has surpassed Our expectations as to how well we've been doing. I did say in my comments that we were expecting it to be a little bit more challenged come Q2. Q2 is one of the biggest advertising quarters across our markets, but still pretty early days and we'll see how that pans out. So we do expect it to be a little bit more challenged in the second quarter.
Thank you, David. Tatiana, we'll take our next question please.
Next question is from Darren Lian from Macquarie.
Just Just a quick one on that is being subscriber growth. So it's up quarter on quarter. Just any feel for how much is driven by the drag on We have reversed this potential offset from cost conscious consumers. Maybe you know why that person is saying that is so that the churn We are very pleased with the subscription Performance at Bijan and frankly at Kayo both have around 1,300,000 subscribers now. And what we're seeing is very uplifting in the sense that even though the Streaming subscription has increased notably, up 35%, while broadcast ARPU is actually higher.
So we're not seeing The feared cannibalization and what it has done with Foxtel, it's given us Optionality, which is a tribute to the toil of Patrick Chavon and the team in Australia. We've secured long term rights for most watch, sports and entertainment in Australia. And I have been working relentlessly to improve the customer experience and the focus Not only on what the customer watches, but how they watch. And that's why the churn performance has been so good.
Thank you, Darren. We'll take our next question please.
The next question is from Brian Han from Morningstar.
Brian? Okay. Tatiana, I think we'll take our next question, please. Sorry, Brian.
Brian just got unmuted.
Hi, can you hear me?
Yes, we can. Thanks, Brian.
Just a quick one. In Digital Real Estate, can you please confirm that News Corp is Still investing in those adjacencies and seller lead businesses in the U. S? Or is cost cutting the main thing now for the division?
Right, very much so. We see a bright long term future for Realtor and that's why we are indeed investing is We're rightly cost conscious, but whether it's rentals, whether it's the sell side as well as the buyer side, We're continuing to invest in products because there is absolutely no doubt about the long term opportunity that digital real estate presents in the United States.
And Brian, just to add to that, our actual core operating expenses at Realtor are flat within the core business year on year and actually the increase that we've seen in costs year on year due to those 3 types of investment.
Thank you, Brian. Tatiana, Thanks, Brian. Tatiana, we'll take our next question please.
Next question is from Johnny Hine from Evans and Partners.
I just wanted to ask about Binge again and then specifically on the ad tier. Can you talk about expectations on ARPU and then also the demand from advertisers as well? Well, generally, we're very pleased with the Binge performance. Bringing in advertising gives us another layer of revenue potential. And I have no doubt that as the team does its So modeling of that potential that we'll be able to update you in coming quarters as it's unfurl to the market.
And Johnny, just to add to that. So I think there's been a couple of questions just in relation to the pricing. We're being really pleased actually with how customers have been retained For Binge and the price rise that's being put through, we're being very, very pleased with that. And as Robert said, we're expecting Strong performance across Binge with the content that we've got and the work that that business has been doing down there.
Okay. Thank you very much. Tatiana, we'll take our next question please.
There are no further questions from the line. Great.
Well, thank you, Tatiana. Thank you all for participating. Have a great day and we will talk to you soon. Take care.