News Corp

NASDAQ:NWSA

Earnings Call Transcript 2023-Q4

[Operator]

Welcome to News Corp's Fourth Quarter and Full Year 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 Michael Florin, Senior Vice President and Head of Investor Relations. Please go ahead.

[Michael Florin, Senior VP and Head of IR]

Thank you very much, operator. Hello, everyone, and welcome to News Corp's fiscal fourth quarter 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 Thomson, Chief Executive; and Susan Panuccio, 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-K 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 the earnings release for the applicable periods posted on our website.

With that, I'll pass it over to Robert Thomson for some opening comments.

[Robert Thomson, CEO and Director]

Thank you, Mike. Before we discuss results for the fourth quarter and full year of fiscal 2023, I would like to acknowledge that we’ve now completed a decade of the News Corp's existence. So this is surely an appropriate moment to reflect on our profound transformation, a transformation faithful to the company's founding principles.

Consider then and the now, our revenue basis changed fundamentally and expanded dramatically. News and information services accounted for 72% of total revenues in fiscal 2014, which included News America Marketing and Dow Jones. By fiscal 2023, News Media was 23% and revitalized Dow Jones segment was 22%. Digital real estate comprised 5% of total revenues 10 years ago, and that has tripled to over 15% this past year, which includes the acquisition of Move, were revenues have more than doubled.

Subscription video services revenues increased from 6% of News Corp's total to 20%, bolstered by the consolidation and control of Foxtel, a business renewed, and Foxtel's imminent completion of a refinancing is expected to facilitate repayments of our outstanding shareholder loans beginning this fiscal year. Candidly, since our reincarnation, we have increasingly digital recurring revenues, higher margins, significantly more free cash flow, robust finances, and bright prospects for long-term growth and value creation for all our shareholders.

A few facts to demonstrate our digital scale today. Based on our June metrics, we had 79 million unique visitors at Dow Jones, 159 million at the Sun, 74 million at Realtor.com, 21 million at Housing.com in India, and 145 million at the increasingly influential New York Post. And that digital momentum is surely gathering pace in the age of Generative AI.

Along with this relentless focus on digitization, we have been intent on simplifying the company and heightening our cost consciousness. That cost discipline was clearly evident during a year that had a complicated plot line for books. While digital real estate was naturally inevitably affected by the interest rate hikes which appear to be plateauing in the U.S.

I would like to pay sincere tribute to Rupert and Lachlan Murdoch and our Directors who have been steadfast in their strategic support, and all our employees and our loyal, insightful investors. Thanks to their collective committed efforts, News Corp achieved its three strongest fiscal years ever in the last three fiscal years 2021, 2022 and 2023.

In fact, fiscal '23, was our second most profitable year following fiscal '22, despite the difficult macro conditions in a couple of core segments, and our fourth quarter profitability was significantly higher than last year. There have certainly been fundamental changes in the media landscape. We have led the quest for appropriate compensation for content from the big digital platforms. And that quest began publicly in 2007 when I testified before the House of Lords about the challenges for publishers, and society in the internet age has entered a new, fascinating phase with the rise of Generative AI.

Clearly, negotiations are well underway with the relevant companies. And once again, News Corp hopes to set precedents that benefit creators, publishers and journalists around the globe. It is crucial for our societies that AI is replete with EI. That re-composition does not lead to the decomposition of creativity and integrity.

We have been characteristically candid about the AI challenge to publishers and to intellectual property. It is essentially a triptych. In the first instance, our content is being harvested and scraped and otherwise ingested to train AI engines. Ingestion should not lead to indigestion.

Secondly, individual stories are being surfaced in specific searches. And thirdly, original content can be synthesized and presented as distinct when it is actually an extracting of our editorial essence. These super snippets distilling the effort and insight of great journalism are potentially designed so the reader will never visit a news site, thus fatally undermining journalism and damaging our societies.

It is reassuring that the prescient executives at the largest digital companies can see these complexities and understand that our shared responsibilities extend far beyond the commercial, that Generative AI cannot be degenerative, that we are paving a platform for future generations and that we will be collectively held to account and not just by accountants.

From the philosophical to the functional, there is no doubt that AI articulations will affect most sections of most companies, whether it be customer service, subscription management, chatbots -- the chatbots, text to audio and audio to video, experiences, efficiencies will be exponential. And we are absolutely clear in our company, there must be a confluence of the technological, the commercial and the cultural.

Last earnings, I mentioned the plight of Wall Street Journal reporter, Evan Gershkovich, unjustly incarcerated by Russia for being a journalist seeking facts, seeking the truth. Both the Journal and the U.S government vehemently deny the allegations against him. Evan has now spent almost 5 months in prison. And we thank the many thoughtful people from all around the globe who have rallied to his cause and sought his release. And we thank those who are continuing to press determinedly for his emancipation, and providing support to his courageous family.

Turning now to our results for Q4 and fiscal year 2023. The aforementioned macroeconomic factors, that is inflation, supply chain complications, and vaulting interest rates along with volatile foreign exchange rates, patently presented challenges, some of which are more ephemeral than eternal. Nonetheless, we still saw significant progress across several segments.

And thanks to our digital and international strategic focus, and acute cost consciousness, including the announced 5% headcount reduction, which we expect to yield more than $160 million in annual gross savings. Not only was this fiscal year the second best ever in terms of profits, we believe we are poised for greater growth in the years ahead.

As for the fourth quarter, revenues were over $2.43 billion, 9% lower year-over-year, though a majority of that decline is attributable to foreign exchange rates and an extra week last year, a 53rd week to balance out the multiyear calendar. Mathematically that one extra week accounts for almost half of the difference, and will obviously not be a factor in the current year.

Profitability in the quarter rose 8%, which is especially notable and that it comes after a 50% rise a year earlier. We are building on our positive performances even when the headwinds are blustery. Full year revenues were $9.879 billion, down 5% on our record prior year, and total segment EBITDA was over $1.4 billion, 15% lower, thought still the second highest profits recorded for the new News Corp.

Dow Jones posted its highest profitability for both the quarter and the full year since we acquired the company, helped by impressive results in the professional information business. In fact, taking a step back, Dow Jones has doubled its profitability in the past 4 years. And for the first time, Dow Jones was the highest contributor profits across all of News Corp in fiscal 2023 as we continue to develop the high margin B2B offerings.

We are focused on Dow Jones as a pillar of News Corp's future growth with significant value appreciation for shareholders. Dow Jones is nearing an important threshold with the lucrative B2B business expected to be the highest contributor to profitability in fiscal 2024 and a key driver for future margin expansion.

Dow Jones has been bolstered over the past year by the acquisitions of OPIS and Chemical Market Analytics, and by continuing double-digit growth of risk and compliance. It is worth noting that risk and compliance revenues have risen six-fold over the past decade. We believe prospects remain decidedly bright, as the corporate imperative to minimize risk and maximize compliance grows in an ever more complex regulatory regime.

We believe the energy transition is an enormous global opportunity for OPIS and we will capitalize on it through new products. The establishment of compelling benchmarks and the generation of must have data, pricing and analytics, whether it be for fossil fuels, hydrogen, solar, lithium, cobalt, EVs, or carbon credits and offsets. The industry relies on OPIS for pricing transparency, which is critical to day by day decision making in a market that is undergoing massive transformation.

Dow Jones digital subscription growth accelerated in the second half, partly helped by bundling of our products to capitalize on our clients need for sophisticated market analysis and analytics. We want to channel Market Watch readers to WSJ then to Barron's and Investor's Business Daily, and from there to our specialists business products, that is a pathway to profits for the company. Moreover, we are increasing our international digital focus for the Wall Street Journal, which currently has only 12% of subscriptions outside the U.S where there is much untapped potential.

Subscription video services reported adjusted revenue and profit growth, which excludes currency impact for the second straight year, and also for the fourth quarter, a remarkable turnaround from the recent past. We have long-term rights for the key Australian sports and the prime international sports for Australians and have created a model that streamers around the world are now trying to emulate.

Our streaming revenue growth again outpaced broadcast declines in both Q4 and the full year, with paid subscribers scaling at a double-digit rate to nearly 3.1 million. So we are particularly confident about Foxtel's future and our optionality given the imminent completion of our refinancing. We were asked frequently in the past how much more capital we would need to commit to Foxtel. But the question now is how much cash we will receive in coming years.

REA continued to be impacted by macroeconomic challenges in the Australian housing market, though we do see an easing of those challenges as the interest rate cycle peaks. Home prices have again started to increase and the auction completion rate cross 70% in June, up from 55% in the prior year, REA's audience share against its nearest competitor continued to expand to north of 3.5x in June, while visits to the site have expanded year-over-year for four consecutive months.

REA did benefit from product price increases linked to improvements in the quality of those products. While India remains a source of ongoing potential given that Housing.com is already the market leader in a country on a positive economic trajectory with a rapidly expanding middle class.

In the U.S., we have new leadership at Move operator Realtor.com. Move experienced much success under David Doctorow and broaden its offerings with the acquisitions of Opcity, UpNest and Avail. We sincerely thank David for his positive contribution, which will resonate for years to come.

Damian Eales brings vast digital experience and fiercely competitive spirit and much knowledge of how to leverage News Corp's powerful U.S platforms, whether that be the New York Post, or The Wall Street Journal, or Barron's to build the brand and expand market share. Damian has just returned from Australia, where the Realtor team spent time at REA and the creative collaboration between the two companies will certainly intensify.

Scale is crucial. And to put our scale in perspective based on June ComScore data, Realtors valuable and engaged audience is well over 2x of that of Homes.com. Not only do we have scale in residential sales, we believe that we can continue to monetize that audience successfully.

For HarperCollins, and for other book publishers, Q4 and fiscal '23 generally was a challenging period with the post-COVID market resetting, logistical issues at Amazon and acute inflationary pressures. Some particular signs of success were joined against Magnolia Table Volume 3, and remarkably Bright Creatures by Shelby Van Pelt. And we have reason for optimism in the near future with books like Tom Lake by Ann Patchett, The Collector by Daniel Silva, and in the T.V.: Big Adventures on the Small Screen by Peter Kay. In Q2, we are looking forward to the next Pioneer Woman Cooks by Ree Drummond Reed Drummond, and The Little Liar by Mitch Albom.

In News Media, advertising trends very distinctly by geography with the U.K and the U.S performing best in the quarter. In the UK, the Sun had a successful year, with digital outpacing print ads again in the fourth quarter and for the full year. This strength was accentuated by the year-over-year growth of the Sun in the U.S., which reported a substantial surge in page views, and even higher yields than the successful U.K site.

The Times and Sunday Times also hit 565,000 digital subscriptions at the end of June and a 11% increase, underscoring the strength of their journalism and the global potential of the brand. News Corp Australia achieved almost 1.1 million digital subscriptions, an increase of 10%. News.com.au was the leading news website in Australia according to the Ipsos rankings, while the Australian was also in the top 10.

In the U.S., the New York Post reported another year of strong profits after decades, if not centuries of endless losses. As I mentioned, the Paper's improved commercial fortunes have been accompanied by growing influence in New York, Washington, and beyond. As the Paper's founder Alexander Hamilton sagely observed, those who stand for nothing for for everything.

In a fiscal year affected by the reverberations of war, inflation, interest rate hikes, supply chain disruption and other macroeconomic challenges, and in a business inevitably impacted by foreign exchange fluctuations, News Corp is proud to report its second most profitable year since its reincarnation a decade ago. Our teams have been tested and have clearly passed that exacting test.

We ended the year on an upswing, with the company returning to profit growth in the quarter with inflation showing signs of abating, interest rates plateauing, and incipient signs of stability in the housing market we have sound reasons for optimism. All specious macro conditions will surely work to the benefit of a company that has become more digital, more global and with more recurring revenues in higher margin segments.

We have navigated the sometimes perilous media waters adroitly and are particularly proud of our provenance, a provenance based on commitment, curiosity, and integrity. We look forward with a sense of genuine of tangible excitement in the potential of our people and our businesses. And we remain utterly determined to deliver positive results for our customers, our employees, and most certainly, for our shareholders.

I will now pass you to our erudite CFO, Susan Panuccio, who will provide more insight into our financial coordinate.

[Susan Panuccio, CFO]

Thank you, Robert. Our second half results show marked improvement from the first half of the year with fourth quarter profitability up year-over-year, highlighting the diversity and durability of our revenue streams, and our ongoing cost efficiencies as we navigated the ever changing macro conditions, supply chain pressures and currency headwinds.

As the company continues to transition to digital, digital revenues now comprise over half of the company's fiscal 2023 revenues. We have also transformed the revenue base away from cyclical advertising revenues to one that is much more recurring and subscription base with strong growth prospects.

We have made strategic acquisitions that we believe have fundamentally strengthened the company. The acquisitions of OPIS, CMA, HMH, Mortgage Choice, and IBD during fiscal 2021 and 2022, have essentially replaced the revenues from News America Marketing, providing a much stronger base for long-term growth.

The company has changed and evolved since 2013, and is well-positioned for future success. We have maintained a very healthy balance sheet, while we strengthen the asset base, transformed digitally, generating healthy free cash flow and continue to improve our operating efficiencies.

Turning to our financials, I'll focus on the fourth quarter performance. Fourth quarter total revenues were over $2.4 billion, down 9% year-over-year, which was heavily impacted by the $110 million or 4% negative impact related to the extra week last year, and the $72 million or 3% impact from foreign currency fluctuations.

Impressively, total segment EBITDA was $341 million, up 8% year-over-year despite very difficult year-over-year comparisons and weak trading conditions at HarperCollins. Margins improved by over 2 percentage points to 14%. Fourth quarter adjusted revenues declined 7% compared to the prior year, while adjusted total segment EBITDA rose 2% versus the prior year. Both revenues and total segment EBITDA were also negatively impacted by the extra week last year.

Adjusted revenue and total segment EBITDA did not exclude that impact. Earnings per share in the quarter were a loss of $0.01 compared to income of $0.19 in the prior year. The current quarter reflects $85 million of restructuring and impairment charges mostly related to our company wide headcount reduction that we communicated on the last earnings call and an $81 million noncash write-down in equity losses of affiliates related to REA's investment in PropertyGuru. The prior year income of $0.19 benefited from $149 million tax benefit. Adjusted earnings per share were $0.14 in the quarter compared to $0.37 in the prior year.

Moving on to the results for the individual reporting segments starting with digital real estate services. Segment revenues were $369 million, down 17% compared to the prior year, impacted by the ongoing macroeconomic pressures, a negative impact of $15 million or 4% from foreign currency fluctuations and $14 million or 3% of negative impact from the extra week last year.

On an adjusted basis, segment revenues decreased 14%. Segment EBITDA declined 11% to $108 million impacted by lower revenues partially offset by the lower discretionary costs, compensation and broker commissions. Adjusted segment EBITDA declined 5%.

REA revenues were $223 million, which declined 11% on a reported basis or down 5% on a constant currency basis. The revenue decline was due to the impact of lower national listings and a decrease in financial services revenue driven by lower settlement activity.

New buy listings for the fourth quarter were down 18% year-over-year with the higher yielding metro areas of Sydney and Melbourne showing improvement each month of the quarter, yet ended down 17% and 16%, respectively. Those declines were partially offset by the annual price increases in the residential and commercial businesses, increased uptake in premium products including Premiere Plus, favorable depth penetration and continued strong performance from REA India, which maintained its audience leadership. Please refer to REA's earnings release and their conference call following this call for more details.

At Move, revenues were $146 million, down 24% compared to the prior year, which reflects the $40 million or 7% negative impact related to the absence of the extra week. Excluding the extra week impact, revenue declined 17% similar to the third quarter results, with lead optimization in the lead generation products partially offsetting lower lead and transaction volume.

Lead volumes moderated to down 14% year-over-year compared to a decline of 30% in the third quarter, while Realtors average monthly unique users declined 20% from the prior year to 74 million in the fourth quarter, based on internal metrics, yet up from 72 million in the third quarter. We remain focused on driving both usage and engagement through continued product enhancements and improvements to SEO, while expanding our core adjacencies of seller, rentals and new homes.

Turning to the Subscription Video Services segment. Revenues for the quarter were $501 million, down 4% compared to the prior year on a reported basis due to foreign currency headwinds. On a constant currency basis, revenues rose 3% versus the prior year, the sixth consecutive quarter of growth in constant currency. Streaming revenues accounted for 29% of circulation and subscription revenues compared to 23% in the prior year.

OTT revenue growth again more than offset broadcast revenue declines benefiting from both increased subscribers and price increases at Kayo and BINGE. Total closing paid subscribers across the Foxtel Group improved to over 4.6 million at quarter end, up 5% year-over-year. Total paid streaming subscribers approached 3.1 million, increasing 14% versus the prior year and accounted for approximately 66% of Foxtel's total paid subscriber base.

Binge continued to expand advertising inventory on the basic product, generating both modest incremental revenues and some upgrade activity to the higher tiered subscription offerings. Foxtel ended the quarter with over 1.3 million residential broadcast subscribers, down only 9% year-over-year. Broadcast churn continued to improve, down more than 260 basis points year-over-year to 11.1%, the lowest level since fiscal 2016, while broadcast ARPU rose 2% to over A$84.

Foxtel announced a price rise beginning in July across some of the broadcasters, the first since fiscal 2019 which will benefit the fiscal 2024 results. Segment EBITDA in the quarter of $78 million was down 4% versus the prior year, but was up 4% on an adjusted basis despite higher programming costs, mostly related to contractual escalators across key sports rights.

On the product front, following the successful growth in streaming, the business will be launching a streaming aggregation device leveraging the Sky Glass technology. expectation is for a commercial launch later in fiscal 2024 and we will keep you updated on our progress.

Moving to Dow Jones. Dow Jones had another strong quarter with revenues of $546 million, down 3% which includes the negative impact of $40 million, or 7% related to the absence of the extra week from last year. We let the OPIS acquisition in March and CMA in June.

Digital revenues accounted for 79% of total revenues this quarter, up 3 percentage points from last year. Circulation and subscription based revenues represent over 79% of total revenues, up over 2 percentage points from the prior year, underscoring the stability and recurring nature of the revenue base.

On an adjusted basis, revenues declined 6%, but would have delivered a modest improvement excluding the extra week. We are continuing to see strong momentum in our professional information business with revenues rising 10% year-over-year, benefiting from the continued integration of OPIS and CMA, coupled with strong revenues from risk and compliance. Results were partly offset by the extra week last year, which led to a $14 million or 8% negative impact on the performance.

Excluding the extra week, PIB revenues grew 18%. PIB revenues this quarter accounted for 37% of segment revenues. And while we don't disclose specific margins, PIB margins are higher than the overall Dow Jones margin and are contributing strongly to segment EBITDA, underscoring the uniqueness and durability of the Dow Jones asset mix.

Risk & Compliance revenues rose 10% despite the extra week in the prior year, and continue to grow at a high-teens rate on a like-for-like basis. While 60% of the customers are in the financial services sector, the fastest growth is now coming from corporates with demand driven by the anti-money laundering, financial corruption and ESG screening and monitoring products. Retention remains over 90%.

OPIS and CMA's revenue performance remains robust benefiting from price escalators, new products and new customers. Retention rates for OPIS and CMA subscription products remain in the mid 90s, which is underpinning the transformation of Dow Jones revenue base. Circulation revenues declined 6% due to the absence of the extra week, lower print volume and weakness at IBD as we noted in the third quarter.

Excluding the extra week impact of $17 million, or 7%, circulation revenues were up 1% year-over-year, which is slightly higher than the third quarter rate. Total Dow Jones digital-only subscriptions grew 12% year-over-year or by 163,000 sequentially, with the year-over-year rate improving from last quarter.

Advertising revenues declined 14% to $100 million and accounted for 18% of Dow Jones revenues this quarter with digital down 10% and print down 18%. Excluding the negative impact from the absence of the extra week of $9 million or 8% the decline rate moderated from the third quarter to down 6%.

Dow Jones segment EBITDA for the quarter grew 25% to $133 million, as cost growth moderated from the first half. Margins improved to 24%, up from 19% last year. Adjusted segment EBITDA for the quarter increased 17%, a notable improvement over the third quarter and the full year performance.

At book publishing, both HarperCollins and the industry more broadly faced challenging headwinds in the quarter. Revenues fell 13% to $446 million, which included approximately $20 million, or 4% of negative impact from the absence of the extra week. Consumer demand slowed in the fourth quarter more than we initially expected, leading to lower friendly [ph] sales and higher returns, particularly in Christian publishing and general books. Most of the weakness was in North America.

Segment EBITDA declined 66% year-over-year to $60 million or 4% segment EBITDA margin. Segment EBITDA was impacted by the week top line performance as well as higher than normal levels of royalty write-offs due to the underperformance of certain titles, further compressing profit margins.

Despite some unusual headwinds, we are seeing moderation in freight and manufacturing costs, while headcount reduction initiatives are expected to exceed the 5% target. The backlist represented 59% of revenues for the quarter, up 3 points from last year, but down slightly from Q3. Digital sales declined 10% this quarter mostly driven by lower e-book sales and accounted for 25% of consumer sales, up from 24% last year. On an adjusted basis, revenues fell 13% and segment EBITDA fell 70%.

Turning to News Media. Revenues were $571 million, down 9% primarily due to the absence of the extra week, which negatively impacted revenues by $36 million, or 6% and the impact from foreign currency of $80 million or 3%. Adjusted revenues declined 7%.

Advertising declined around 15%, reflecting a $15 million or 6% negative impact related to the absence of the extra week and a $6 million or 2% negative impact from foreign currency fluctuations. Excluding the impact from the extra week and currency, advertising revenues declined approximately 7% due to weaknesses at News Australia, which was impacted by last year's Federal election, and some softness in real estate and retail. News UK and New York posts were relatively stable versus the prior year.

Circulation and subscription revenues decreased 7% due to the absence of the extra week negatively impacting revenues by $90 million or 6% at a $9 million or 3% negative impact from foreign currency. Excluding the extra week and currency impact, circulation and subscription revenues rose 2%, with growth driven by cover price increases in the U.K and Australia and double-digit subscriber growth across News Australia and the Times and the Sunday Times.

Segment EBITDA of $45 million rose 36% due to a 12% decline in costs driven by ongoing cost saving initiatives and lower costs related to TalkTV and other digital investments. Adjustment segment EBITDA rose 42%.

Turning to the outlook. Market trends remain mixed geographically. That said, we have taken aggressive action over the years to improve our asset base, including a shift to more recurring and digital revenues coupled with strong cost initiatives and focused reinvestment in our core pillars. We still expect some inflationary pressures, but are hopeful that they will be at a more modest rate. We exited the fiscal fourth quarter with a return to total segment EBITDA growth and we hope to see improvements in fiscal 2024.

Looking at each of our segments, at Digital Real Estate Services, Australian residential new buy listings for July declined 5%. REA should benefit from double-digit residential lead growth as price increases have been successfully implemented. Please refer to REA for more specific outlook commentary.

At Move, while we anticipate improvements in lead volume and transactions across the full year, they will likely remain challenging in the short-term. We also expect higher marketing spend compared to the fourth quarter together with ongoing investment in adjacencies, which we will balance with cost reductions.

In Subscription Video Services, we remain pleased with the performance of the streaming products and the ongoing focus on broadcast ARPU and churn as we complete the migration of customers from cable in the first half. We expect modestly higher expenses for the full year driven by sports rights and product investment, which will be more weighted to the first half. We expect full year CapEx and profitability will be relatively stable in local currency.

At Dow Jones, we hope to see improvement in advertising declines. But as is typical, visibility is limited. We also expect to see continued strong growth from PIB. We expect modestly higher overall expenses in the first quarter and for the full year in contrast to the fourth quarter.

In book publishing, HarperCollins in the industry exhibited more volatility last year than normal. That said, July was encouraging with a return to revenue growth. EBITDA margins lifting from the fourth quarter lows and prior year comparisons are easing. At News Media, July advertising trends remain mixed geographically. We expect TalkTV costs will be similar, if not lower from the prior year in local currency. We have also seen moderating newsprint cost pressures in the U.K.

We expect CapEx in fiscal 2024 to be moderately higher than in fiscal 2023 primarily due to digital reinvestment. That being said, our CapEx came in notably lower than we expected this fiscal year. And we will be monitoring it closely with respect to macro and business conditions as we did during the current year. We expect to generate strong cash flows and expect to return a high percentage to shareholders in the form of buybacks and dividends.

With that, let me hand it over to the operator for Q&A.

[Operator]

[Operator Instructions] Our first question comes from David Karnovsky from JPMorgan. Please unmute yourself to ask question.

[David Karnovsky, JPMorgan]

Thank you. Maybe, Susan, just on the cost initiatives. I don't know if there's a way you could frame how much that was contributor in the quarter. And then I think last earnings, you'd stated, you thought the majority of the benefit would come through in the fiscal first quarter. Is that still the case? And then just on the other segment EBITDA that was better sequentially. Is that from the cost savings? And should we think about that line is sustainable?

[Susan Panuccio, CFO]

Thanks, David. Look, I think we did have a really good quarter in Q4 in relation to the cost savings, and that certainly helped some of the segments, particularly News Media, you can see that coming through in the results. And yes, I did say last quarter that we would expect to see the full benefit coming through into fiscal 2024. I think that still is the case, as we sit here today. We do expect to exceed that $160 million of gross cost savings from the 5% headcount reduction.

But I would note as we go into 2024, we will have some inflationary pressures related to wages, newsprint prices, and manufacturing costs. And we will continue with our digital reinvestment initiatives across the various businesses. So that number quoted was gross cost savings, and that will help offset those increases in investments.

Just in relation to the other segment, there are a couple of things going on. We had the NAM settlement, the legal fees in the quarter last year. So we got the benefit of that in this quarter. We also had lower bonus accruals coming through in this year than what we did relative to the prior year. I think if you want to think about the next year, I probably have a look at the Q3 rate as sort of an indicative performance for going forward.

[David Karnovsky, JPMorgan]

Thank you.

[Michael Florin, Senior VP and Head of IR]

Thank you. Leila, we'll take our next question, please.

[Operator]

Our next question comes from Alan Gould from Loop Capital. Please unmute yourself to ask your question.

[Alan Gould, Loop Capital]

Hi. Yes, thanks for taking the question. Robert, I've got two actually. On the Generative AI, can you give us an indication of this consortium? Are you in a consortium? What the process is? Is there any legislative movement? And secondly, can you give some discussion on Simon & Schuster? I realized that they had one author that speak very talkative, but it seemed like the multiple was expensive.

[Robert Thomson, CEO and Director]

Yes. Alan, look, first of all, on AI you're right by instinct that this is an important moment in the history of news and knowledge, with commercial and social implications and profound impact on creativity and integrity. If fake news and deep fakes are a concern, the potential for sophisticated forgeries for counterfeit content is almost endless.

And separately, Generative AI has the potential to recycle itself in what you might call endless, perfidious permutations, and that's why the provenance of the archival base is so crucial and why refreshing daily weekly with incremental improvements is imperative. But -- so the potential is enormous, but garbage in garbage out, garbage all about.

We've invested billions of dollars in knowledge creation, actually tens of billions of dollars, and that content certainly has a value in this editorial epoch. And for almost two decades, we've genuinely led the digital debate about provenance, which is echoed in Washington and London, Brussels and Canberra and Tokyo and Rome. For us, what gives me confidence for our company and our community is that the leaders of the largest digital companies are clearly sincerely focused on the issue. They understand our collective responsibility, and we are actively individually engaged in fruitful discussions. So I can't be more specific at this moment. But we see a positive financial result through consensual negotiation, not through litigation. We would like to reward journalists, not lawyers.

As for Simon & Schuster, normally we don't speculate on speculation about M&A. But candidly, as you intimated, we wouldn't be prepared to go that high given that in our case, you could reasonably expect 18 months of scrupulous scrutiny by the antitrust authorities, with all related legal costs and the financial opportunity cost. We obviously have great respect for the company and its authors. But given the regulatory risk, we were quietly hoping that, frankly, Simon & Schuster would be reminded, and that we would get the company for a bargain, but it obviously didn't end up in the Barnes & Noble bargain bin.

[Michael Florin, Senior VP and Head of IR]

Thanks, Alan.

[Alan Gould, Loop Capital]

Thank you.

[Michael Florin, Senior VP and Head of IR]

Thanks, Alan. Leila, we'll take our next question, please.

[Operator]

Our next question comes from Kane Hannan from Goldman Sachs. Please unmute yourself to ask your question.

[Kane Hannan, Goldman Sachs]

Good morning, guys. Just on Foxtel, should we still think about the 5 million subs, $3 billion revenue target you guys set out for next year back at the Investor Day? And just given those CapEx comments, does that -- I mean, do we still think it will eventually come down to that [indiscernible] target or something changed there?

[Robert Thomson, CEO and Director]

Okay. We're certainly aiming high when it comes to Foxtel. And you can see from the success that we've had in streaming, total streaming subs rose 14% to 3.1 million, and our streaming revenues rose 26%, so that's also healthy growth ARPU. At the same time, broadcast churn fell sharply and was 11.1% in the quarter compared to 13.8% in the prior year, while broadcast ARPU rose 2%. So where else in the world are you actually witnessing a decline in the broadcast churn rate while experiencing a continuing surge in streaming, that really is the Foxtel success story.

[Susan Panuccio, CFO]

And Kane, just in relation to the CapEx, yes, we still think that's a relevant target over time. As I've mentioned in my comments, we expect CapEx to be relatively stable in the coming year because we've got the reinvestment in relation to the aggregation service that we're about to launch.

[Michael Florin, Senior VP and Head of IR]

Thank you, Kane. Leila, we'll take our next question, please.

[Operator]

Our next question comes from Entcho Raykovski from Evans & Partners.

[Entcho Raykovski, Evans & Partners]

Hi, Robert. Hi, Susan. My question is around the Foxtel shareholder loan. Obviously, you flagged the intention for it to be repaid. Just interested in once that's repaid, do you expect any recourse to News Corp from lenders? In other words, will you have to guarantee any of the Foxtel refi? And I guess as part of answering that question, is there anything in particular which has driven the ability of Foxtel to refinance, particularly if you're not guaranteeing the loan. And sorry, I will just extend it a little bit further. Should we read this into a preparation for a potential spin out of Foxtel down the track? Obviously, that's been speculated for a little while. Thank you.

[Susan Panuccio, CFO]

Entcho, maybe I'll take the first couple. So no, we don't have a guarantee on there. And no, we don't expect that there will be anything to do with the guarantee going forward in relation to the refi. Actually, the reason that we could refi it so successfully is really because of the underlying business performance of Foxtel. They've had a great couple of years and really reinvented themselves. And it's a real credit to the team down there that they've got themselves into this position. So that's really what's driving the strong refi outcome. And maybe I'll hand over to Robert to comment on the IPO.

[Robert Thomson, CEO and Director]

Yes. Entcho, obviously, we can't comment specifically about an IPO. But what I can say with absolute certainty is that the success we've had with Foxtel has given us absolutely the option of optionality.

[Entcho Raykovski, Evans & Partners]

Okay. Thank you.

[Michael Florin, Senior VP and Head of IR]

Thank you, Entcho. Thanks, Entcho. Leila, we will take our next question, please.

[Operator]

Our next question comes from Craig Huber from Huber Research. Please unmute yourself to ask your question.

[Craig Huber, Huber Research]

Great. Thank you. Book publishing, obviously, the margins and the profit dollars there were much lower than I think most people expect it certainly me, but also they are much lower than what the pre-COVID stuff. Is there any reason to think this environment that the revenue performance and the margins won't continue for at least a few more quarters? This is my question.

[Robert Thomson, CEO and Director]

Craig, look, obviously, the 53rd week comparison exaggerates the decline, but the inflationary pressures are beginning to abate and some of the costs around royalty write-offs were relatively unique. So the team has Collins have obviously been taking a remedial action to improve our fortunes for this fiscal. We've implemented a price rise across various categories. And actually, the team is particularly confident about the impact of our current releases. And it's safe to say that our expectation, our firm expectation is that there will be significant margin improvement this year.

This very week we have 3 of the top 10 fiction bestsellers in the U.S. with the #1 seller, Ann Patchett's Tom Lake, which has already sold more than 100,000 copies across print and digital in the first week on sale. As well in that top 10, we have Demon Copperhead from Barbara Kingsolver, and The Collector by Daniel Silva. Now that success in the top 10 will be reflected in the bottom line.

[Michael Florin, Senior VP and Head of IR]

Thank you, Craig. Leila we will take our next question.

[Operator]

Our next question comes from Lucy Huang from UBS. Please unmute yourself to ask your question.

[Lucy Huang, UBS]

Thanks, Robert, and thanks, Susan. I just had one question on Professional Information Services. Are you able to talk through kind of what drove the growth over the fourth quarter. Is it -- or what's the contribution from subscriber growth versus price growth in that business? And I guess maybe if you can talk through some of your margin expectations coming into the fourth quarter. Is there expected to be more incremental investment in this space? Or could we see margins continue to expand into next year? Thanks.

[Robert Thomson, CEO and Director]

Well, Lucy, safe to say we're delighted with the progress in the Dow Jones B2B business. You can see the impact on our margin more broadly at Dow Jones and longer term, you'll see it at News Corporation. In the fourth quarter of 2022, the EBITDA margin at Dow Jones was 13.8% [ph]. In the last quarter, it was 24.4%, and the overall margin at News Corp rose from 11.8% to 14% in a year where we were presented with real macro challenges.

Net margin increase is, of course, a measure of growing profitability, but it's also a measure of our robustness. So quarter-after-quarter, year-after-year, we've seen double-digit growth increases at Risk & Compliance. We now expect the same for OPIS and CMA and we are frankly, delighted with the speed of integration of both OPIS and CMA and ensuing quarters, you will see the benefits of that.

[Michael Florin, Senior VP and Head of IR]

Thank you, Lucy. Leila, we will take our next question, please.

[Operator]

Our next question comes from Brian Han from Morningstar.

[Brian Han, Morningstar]

Hi. On the Wall Street Journal, can you please provide some color on digital subscription pricing in terms of how much it rose in the June quarter and what the outlook may be for '24?

[Robert Thomson, CEO and Director]

Brian, difficult to be too specific. What you're seeing in the circulation patterns at Dow Jones is partly a matter of phasing and a modest decline in print subscriptions. The emphasis is on the digital bundle with the combination of Mark Wash Barns and the Wall Street Journal. And sometimes in the shorter term, that means the average price of age is a little lower, but we are building loyalty and reducing churn in each of the products and in the long-term, increasing the price elasticity. I mean, the biggest problem for any [indiscernible] business, apart from acquisition itself is churn.

[Michael Florin, Senior VP and Head of IR]

Thank you, Brian. Leila, we will take our next question, please.

[Operator]

Our next question comes from Darren Leung from Macquarie. Your line is open. Feel free to unmute.

[Darren Leung, Macquarie Research]

Hi, guys. Thanks for the [indiscernible]. Just a quick one on Move, please. It looks like the revenues declined 24%, but listing is obviously only down 20%. So I just wanted a bit of clarity in terms of essentially the first period where we've actually seen revenue growth decline more than volume growth. So I just wanted a clarity as to what's happening to the yield and other products space, that's usually been a bit of an offset for the business, please?

[Robert Thomson, CEO and Director]

Obviously, the housing market slowdown in the U.S. is having a profound impact on all digital property companies. And that is being reflected to a certain extent at Realtor. But I have to say the company is core to News Corporation, it's complementary to other assets. And you're going to see that irrefutable fact in coming months with the impact of Damian Eales, who knows company intimately.

And what you will see with a lot of digital property companies is the cost of marketing. And we're remaking our marketing and have strong plans for leveraging our platforms. And look, we're talking about enormously influential digital platforms. It helps the Wall Street Journal, by the way, to have exposure in Florida via Realtor. And it helps Realtor to have the Florida audience in the New York Post, which is in the many, many millions.

As I mentioned, the post has about 145 million monthly uniques. We have about 80 million at Dow Jones. And in the U.S. alone, about $110 million at the Sun depending on the month. And so in building both listings and yield, we're going to be obsessively focused on leveraging that comparative advantage.

[Susan Panuccio, CFO]

And Darren, there's a little bit of noise in the numbers because of week 53. If you exclude the week 53 impact, it was actually down 17%, which was consistent with what it was down last quarter.

[Robert Thomson, CEO and Director]

And I would just make one further observation about the Australian property market, as Susan alluded to earlier. I would say that we are seeing some particularly positive signs in the Australian housing market, which will surely benefit REA and us. There's no doubt that activity has already picked up this quarter, and that should be reflected in our results. It's a very transparent market. Anyone can track listings and the auction completion rate. So I would encourage investors to do the math in coming weeks. Sometimes we've gotten that, thanks to Lachlan Murdoch. REA is an integral part of News Corporation, and it has a market cap today of around A$21 billion.

[Michael Florin, Senior VP and Head of IR]

Thank you, Darren.

[Darren Leung, Macquarie Research]

Thanks, guys.

[Michael Florin, Senior VP and Head of IR]

Thanks, Darren. Leila, we will take our next question.

[Operator]

The Next question will be a follow-up from Craig Huber from Huber Research.

[Craig Huber, Huber Research]

Great. Thank you. I appreciate the much better results in this quarter and you guys have had some really good results you ever since COVID happened, in particular. But it comes up all the time with investors, why is this company News Corp so complicated. And is there any potential movement here to simplify the company going forward? I just -- I guess, I'd love to have updated thoughts on that with what you can tell us. Thank you.

[Robert Thomson, CEO and Director]

Look, we are constantly reviewing our structure to ensure the optimal use of resources and the best outcomes for investors. That's why we were prepared to contemplate the sale of Realtor for rather generous price. And why we've done much underlying structural and regulatory work that gives us more flexibility in our collective decision making. So we are conscious -- acutely conscious of our responsibilities to investors, but also acutely aware of the value of our assets. And we've been building a portfolio for a reason.

You can see -- since our split, annual print-related revenues have decreased almost $3.2 billion. That is correct, $3.2 billion. And we've more than replace that number with digital growth and made the company far more profitable with far greater free cash flow. So we know that we do need to provide more transparency so that the value and the potential of our assets are better understood as you make clear. That's why we break out Dow Jones. And you can see the rapidly increasing revenues, particularly in the professional information business, which was the largest contributor to profitability this year. And that has already been noticed by investors.

[Michael Florin, Senior VP and Head of IR]

Thank you, Craig. Leila, we will take our next question.

[Operator]

At this time, we have no further questions. So I'll hand over to Michael Florin for closing remarks.

[Michael Florin, Senior VP and Head of IR]

Great. Well, thank you, Leila, and thank you all very much for participating. Have a wonderful day, and we will talk to you soon. Take care.