News Corp (NWS) Q1 2024 Earnings Call Transcript

Welcome to News Corp’s First Quarter Fiscal 2024 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. Thank you very much, Operator. Hello, everyone. And welcome to News Corp’s fiscal first quarter 2024 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 I will 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 the 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 will pass it over to Robert Thomson for some opening comments.

Thank you, Mike. In a world filled with uncertainty, News Corp is pleased to announce rising revenues and increased profitability in the first quarter of fiscal 2024. These positive results come despite challenging macroeconomic conditions, such as high interest rates and adverse foreign exchange fluctuations. We anticipate that our profitability could improve even further when the economy stabilizes. These results follow three of the most profitable years since the formation of the new News Corp, and our digital transformation continues to be robust. We believe these results clearly demonstrate the gap between our company's value and our share price, which does not accurately reflect our current profitability or the potential of our rapidly growing businesses. We are focused on enhancing long-term value for all investors, leveraging our valuable assets, whose worth we see increasing. We are also carefully reviewing our structure to optimize this value. Our first quarter revenues increased modestly to $2.5 billion, with profitability rising by 4%, marking our second consecutive quarter of profit growth in these tough conditions. We see these encouraging results as a sign of our medium- and long-term potential. We expect to keep pushing our digital growth, which has been transformative over the last decade. In 2014, print-related advertising constituted 39% of our revenue, but it is now projected to decline to less than 5%, while digital revenues surpassed 50% of our revenues last year, up nearly 300%. Our committed investors recognize the intrinsic value of our assets and the extent of our significant transformation. However, we feel the market has not yet fully appreciated the scale of this change or the future potential of our platform. We have been and expect to continue generating substantial free cash flow this fiscal year, and we have a $1 billion buyback plan already in progress with great opportunity for strategic action. We have demonstrated effectiveness in our acquisitions of OPIS and CMA for Dow Jones, converting them into high-margin digital businesses with recurring revenues that have significantly enhanced our profitability. Their contributions are pivotal for our Dow Jones operations. The B2B segment at Dow Jones is now surpassing the B2C segment in profitability and at much higher margins. Consequently, we foresee both Dow Jones and News Corporation evolving to be increasingly profitable, more digital, and less reliant on advertising's ups and downs. This is why we are emphasizing Dow Jones results today and will be providing more visibility in the coming year, enabling potential investors to fully recognize the value of our assets, while we work on improving our structure. Dow Jones profitability has more than doubled since we re-segmented in fiscal 2020, nearing $500 million in segment EBITDA last year, with strong growth ahead. The EBITDA margin has seen substantial improvement, from about 9% in Q1 fiscal 2018 to 23.1% this fiscal year. We agree with insightful analysts who believe News Corp is undervalued and its asset quality is overlooked. Our Board, leaders, and teams deserve commendation for adeptly navigating the turbulent media landscape over the past decade, which has posed significant challenges for many media companies. We always aim to maximize value for all shareholders. Additionally, we are looking to the future to enhance the value of our premium content for AI. We are in advanced discussions with various digital companies expected to yield substantial revenue in return for our exceptional content sets. Generative AI technologies require sophisticated inputs and ongoing updates to remain relevant, and we are proud to collaborate with responsible AI developers and their forward-thinking leadership. Regarding Generative AI, we often hear discussions about misinformation and disinformation, which have become politicized. The risk of propagating incorrect information could rise with the continuous advancement of artificial intelligence. However, fully artificial intelligence cannot replace quality reporting and authentic journalistic talent. I would like to applaud our reporters in the Middle East and Ukraine who take calculated risks daily to deliver critical insights to readers globally during this volatile period. I want to draw attention to Evan Gershkovich, the Wall Street Journal reporter unjustly imprisoned in Russia for over seven months, merely for performing his journalism duties. Moving on to our increasingly valuable PLS Dow Jones, revenues increased by 4% in Q1, despite advertising market volatility, while segment EBITDA grew impressively by 10% thanks to expanding contributions from our professional information business. Dow Jones offers various unique services and products for global business users and readers. Consequently, many customers engage with Dow Jones products multiple times a day, not limited to just the Wall Street Journal, Barron’s, MarketWatch, and Dow Jones Newswires, but also in risk and compliance, Dow Jones Energy, and Factiva. Risk and compliance revenues soared by 23%, driven by heightened demand in financial and corporate sectors aiming to mitigate risk and enhance compliance. I trust all organizations on this call share those commendable ambitions. RNC has increased revenues by over 600% since we relaunched News in 2013. It's also noteworthy that this business is fully digital, boasting retention rates that exceed 90%. Dow Jones Energy, which incorporates OPIS and CMA, continues to show strong double-digit revenue growth, exceeding our initial expectations, driven by the global energy transition and emerging opportunities in renewable energy along with continued reinvestment. Our customer base continues to expand as we unveil compelling products and develop critical pricing benchmarks. We are genuinely impressed with the enthusiasm, drive, and initiative exhibited by our new colleagues at both OPIS and CMA. Factiva is reaping benefits from its innovative collaboration with Cision and is positioned as a vital component in the AI future due to its extensive database of 33,000 sources in 32 languages across more than 200 countries and territories. This impressive content collection complements our real-time news offerings aimed at serving corporate, professional, and consumer audiences. Throughout Dow Jones, subscription engagement remains strong, with digital subscriptions reaching 4.6 million, a 12% increase, while total subscriptions climbed to 5.3 million, reflecting an 8% rise. Our teams are dedicated to minimizing churn and maximizing each subscriber's lifetime value. In terms of advertising, we noted a specific improvement in trends, with declines from previous quarters slowing and digital advertising decreasing by just 2%. In Digital Real Estate, this quarter offered a mixed picture, with the Australian property market improving significantly while the U.S. market still struggles due to high mortgage rates suppressing demand. However, it's accurate to assert that the revenue upswing in the Australian market has notably outpaced the sluggish performance in the U.S. REA reported robust growth in listing volumes in Sydney and Melbourne, with value-add clients eager to subscribe to premium offerings, thereby enhancing yields. Moreover, we witnessed remarkable topline performance, and volumes remained strong in October. REA India has become the leading property portal in a rapidly growing middle-class market, with both audience and revenue increasing significantly during the quarter. According to REA, the total audience in India rose by 16% year-over-year and revenue was up 25% from the previous year. Given India's relative political stability and ongoing economic growth, REA India stands out as a valuable asset. In the U.S., realtor.com, like the industry, has been impacted by the higher interest rates, which seem to have stabilized and are expected to decrease in the coming year. Nevertheless, these short-term conditions do not sway our long-term optimism for realtor's ability to adapt to the ongoing digitization of the largest property market in the world. Acquiring transient traffic can be easy and may lead to a temporary spike, but that leads to unsustainable practices. We remain committed to all Americans buying and selling homes and to real estate professionals. Furthermore, we can leverage our unique media platform, which includes wsj.com and the New York Post, among others, boasting a combined monthly audience of over 200 million unique visitors in September. These figures are verified and authenticated, not just exaggerated estimates. Under Damian Eales' dynamic leadership, realtor is building on the foundations laid by his predecessors while concentrating on core markets, clients, and profitability. Our publishing segment saw remarkable transformation in Q1. Following a few challenging quarters, HarperCollins' segment EBITDA jumped by 67%. Revenues increased by a healthy 8%, and this growth, combined with strategic cost-cutting measures undertaken over the past year and easing supply chain inflation, recalibrated HarperCollins’ performance. The logistical issues with Amazon have subsided, return rates have significantly decreased, and both new and existing titles showed gains this quarter. Among our many successful titles were Tom Lake by Ann Patchett, Demon Copperhead by Barbara Kingsolver, The Collector by Daniel Silva, and Remarkably Bright Creatures by Shelby Van Pelt. We also saw significant success in our Christian book line, including Reba McEntire’s Not That Fancy, a title that clearly defies that description for HarperCollins' performance. Moreover, we look forward to releasing a new book by His Holiness Pope Francis next spring. I want to emphasize our new partnership with Spotify aimed at expanding the reach of audiobooks. This was an initiative we've discussed for some time with Daniel Ek, who shares my passion for books and our mutual support for the Arsenal Football Club. This new collaboration has begun in the U.K. and Australia, and was recently announced in the U.S. We are genuinely optimistic it will yield positive results for both companies, authors, and literature enthusiasts. This market certainly needed a strong new player, and Daniel and his team are among the most skilled in the field. In Subscription Video Services, revenues have risen in constant currency for the seventh consecutive quarter. The expected decline in EBITDA was primarily due to increased sports costs and foreign exchange variations. Nevertheless, we firmly believe our streaming strategy has proven effective, especially when other companies are facing challenges in their markets. Overall, paid streaming subscriptions rose by 8% compared to the same quarter last year, while broadcast churn decreased from 14.2% to 11.4%, demonstrating the complementary nature of both products. However, the Foxtel team remains proactive and is set to launch our new streaming aggregation product, Hubbell, which will significantly improve the process of finding engaging entertainment and sports from both our own offerings and those of our valued partners, benefiting viewers overall. The News Media segment faced headwinds from macroeconomic factors and volatility caused by changes in algorithms at major platforms, but these trends are more temporary than permanent. The Times and Sunday Times have seen subscription increases, with an 8% rise in The Times, while News Corp Australia reported a 4% increase in digital subscriptions. As previously stated, we are becoming less reliant on advertising, which now represents a smaller portion of our total revenue as we focus on digital recurring revenue streams. We also observed strong performance at Wireless in the U.K., achieving a record 45 million listening hours over the April to September period, indicating a 17% increase from the previous year according to RAJAR, particularly driven by sports and news. Our teams in the U.K. and Australia have been highly cost-conscious, and we are restructuring to align with current and future initiatives, including printing operations, advertising networks, and back-office expenses. Rebecca and our teams in the U.K. have been pioneers in establishing programmatic advertising partnerships, enabling increased revenue and valuable data collection. This was indeed a historic quarter. Our Executive Chair, Rupert Murdoch, announced his transition to Chairman Emeritus next week at our Annual General Meeting. I can personally confirm that his level of curiosity and energy remains high, and his extensive experience will continue to serve as a vital resource for the company. All of us at News Corp benefit from standing on the shoulders of a giant. I am genuinely looking forward to Lachlan stepping into the role of sole Chair next week. His thoughtful engagement with our teams is already enhancing our business every day, and his commitment to principled journalism is clear to everyone who works with him. Lachlan’s multidisciplinary expertise and ethical values will be crucial as we navigate the next phase of our important journey.

Thank you, Robert, and good afternoon, everyone. As Robert mentioned, we are pleased with the positive start to the new fiscal year, returning to revenue growth and posting the second consecutive quarter of profit growth despite the macroeconomic conditions. We have been diligently executing on our long-term plan to drive greater value for our shareholders and believe this is yet to be reflected in our current market value. Our first quarter total revenues were $2.5 billion, up 1% compared to the prior year, marking the first year-over-year revenue growth since the fourth quarter of fiscal 2022. Adjusted revenues also grew 1% compared to the prior year. Total segment EBITDA was $364 million, up 4% compared to the prior year. HarperCollins was the largest contributor to the profit improvement, which is encouraging on the back of last year’s challenging results. Adjusted total segment EBITDA grew 5% versus the prior year. For the quarter, we reported earnings per share of $0.05, compared to $0.07 in the prior year. Adjusted earnings per share was $0.16 in the quarter, compared to $0.12 in the prior year. Moving on to the results for the individual reporting segments, starting with Digital Real Estate Services. Segment revenues were $403 million, down 4% compared to the prior year, a notable improvement from the fourth quarter rate. On an adjusted basis, segment revenues declined just 2%. Despite the revenue decline, segment EBITDA rose 3% to $122 million due to higher contribution from the REA Group and cost-saving initiatives that move, that were partially offset by revenue headwinds. Adjusted segment EBITDA rose a healthy 8%. REA had a very strong quarter with revenues rising 4% year-on-year on a reported basis to $261 million, which included an $11 million or 4% negative impact from foreign exchange. Growth was driven by residential yield increases and growth in national listings, along with 25% revenue growth at REA India. Results were partially offset by a modest decline in Financial Services revenues due to lower settlement activity. Overall, new buy listings rose 1%, with Sydney and Melbourne up 16% and 14%, respectively, enabling upward pressure on yields. Please refer to REA’s earnings release and their conference call following this call for more details. Move’s revenues of $142 million were down 16% compared to the prior year, relatively similar to the fourth quarter trend absent the 53rd-week impact. For the quarter, Real Estate revenues fell 20%, driven by lower lead and transaction volumes reflective of the broader industry trends. Lead volumes fell 11% year-over-year, while realtor’s average monthly unique users declined 12% from the prior year to 76 million in the first quarter based on internal metrics, but improved from 74 million in the fourth quarter. As Robert mentioned, despite challenging market and competitive conditions, we have made solid progress in Q1 across a number of strategic areas including SEO improvements, expanding our sell-side offerings into the launch of a listing agent toolkit, deepening our collaboration with News Corp’s powerful global platform to drive further reach and the recent launch of a new brand campaign. Turning to the Subscription Video Services segment. Revenues for the quarter were $486 million, down approximately 3% compared to the prior year on a reported basis due to foreign currency headwinds. Importantly, on an adjusted basis, revenues rose 1% versus the prior year, the seventh consecutive quarter of growth. Streaming revenues accounted for 30% of circulation and subscription revenues versus 25% in the prior year, and again, more than offset broadcast revenue declines benefiting from both a year-over-year increase in subscribers and price rises at Kayo and BINGE. Total closing paid subscribers across the Foxtel Group reached almost $4.6 million at quarter end, up 2% year-over-year. Total paid streaming subscribers were 3 million, increasing 8% versus the prior year, although declining sequentially impacted by less output at BINGE related to the strikes in Hollywood, as well as typical seasonality at Kayo due to the end of the winter sports codes in September. Foxtel ended the quarter with over 1.3 million residential broadcast subscribers, down 9% year-over-year. Broadcast churn continued to improve, down 280 basis points year-over-year to 11.4%, while broadcast ARPU rose 3% to over A$85 helped in part by a price rise for non-platinum subscribers implemented in July. Segment EBITDA in the quarter of $93 million was down 16% versus the prior year driven by contractual price escalators in Foxtel sports rights agreements. Adjusted segment EBITDA declined 13%. We completed the debt refinancing in the first quarter, which included securing a new A$1.2 billion credit facility. As we said last quarter, given the improved performance and the completion of the refinancing, this provides a pathway for repayment of our shareholder loans. Moving on to Dow Jones. Dow Jones had a strong quarter with revenues of $537 million, up 4% year-over-year despite fully lapping recent acquisitions. Digital revenues accounted for 81% of total revenues this quarter, up 2 percentage points from last year. Circulation and subscription-based revenues represented over 81% of total revenues, up approximately 1 percentage point from the prior year, underscoring the stability and recurring nature of the revenue base. On an adjusted basis, revenues grew 3%. We are continuing to see very strong growth in our Professional Information business with revenues rising 14% year-over-year driven by risk and compliance and strong gains at Dow Jones Energy. Factiva posted modest growth benefiting from a new licensing deal. Retention across B2B offerings remains at over 90% with nearly all of the revenues recurring. Risk and compliance revenues rose 23% with consistent growth between financials and corporates. Europe remained the largest territory at over 50% of revenues and also the fastest source of growth. Secular trends remain very favorable with global corporations navigating complex sanctions and trade guidance, particularly as it relates to Russia and China. We were really pleased with the 20% growth at Dow Jones Energy, which benefited from price escalators, the rollout of new products and new customers. The results also benefited mid-single digits from one-time items and the World Chemical Forum, a new annual event this quarter, which leveraged the wider Dow Jones experience in corporate events. Circulation revenues gained 1% versus the prior year with digital-only subscriptions growing 12% year-over-year or 101,000 sequentially, which was principally driven by an increased focus on Dow Jones' bundling offer as they look to better leverage subscription acquisition costs across multiple products, capitalize on minimal overlap between products and drive greater engagement from customers. We believe that in the medium-term, bundling will drive higher ARPU per subscriber and reduce long-term churn. Advertising revenues declined 3% to $91 million due to 6% and 2% declines in print and digital advertising revenues, respectively, with trends improving from the fourth quarter. Advertising accounted for 17% of total revenue with 66% being digital, up 100 basis points from last year. Dow Jones segment EBITDA for the quarter grew 10% to $124 million with margins improving 120 basis points to 23.1%, the highest first quarter margin since News Corp’s acquisition of Dow Jones, driven by the strong B2B performance, which is on track to be the largest contributor to Dow Jones profitability in fiscal 2024. At Book Publishing, we saw a big recovery from fiscal 2023 results. Revenues were $525 million, up 8%, while segment EBITDA improved 67% to $65 million compared to the prior year. Margins improved over 400 basis points to 12.4%. You will recall the results a year ago were significantly impacted by the Amazon reset of inventory levels and rightsizing of its warehouse footprint. The strong performance this quarter benefited from the success of some key frontlist titles, as Robert mentioned, and also saw improvement in backlist sales, including a notable increase from Christian Publishing. Return rates improved materially, while inventory levels appear to have normalized. Inflationary costs are beginning to moderate with lower manufacturing costs helped by product mix and lower freight and distribution costs this quarter. The backlist contributed 61% of revenues, down from 65% last year, while digital sales rose 3% this quarter and accounted for 22% of consumer sales, within the 22% downloadable audio accounted for 45% of digital revenues. On an adjusted basis, revenues gained 6% and segment EBITDA rose 59%. Turning to News Media. Overall trends continue to be mixed geographically. Revenues were $548 million, down 1% versus the prior year, while adjusted revenues declined 2%. Advertising declined 5% and was down 6% in constant currency, while circulation and subscription rose 2% and was flat in constant currency. At News Australia, advertising saw some improvement compared to the fourth quarter, while the U.K. weakened notably in digital. As Robert mentioned, we did see declines in our traffic at several mastheads related to changes in algorithms at the large platforms which we are monitoring closely and have been felt across the wider publishing industry. Segment EBITDA of $14 million declined $4 million, results included approximately $3 million related to one-time costs as a result of the proposed combination of printing operations in the U.K. with DMG. This initiative demonstrates the continued focus on driving cost efficiencies across our News Media businesses. Before we look at the outlook for the next quarter, I would like to touch on free cash flow. First quarter free cash flow is typically lower due to the timing of working capital payments, including sports rights payments at Foxtel, and this year, it was also impacted from the lower HarperCollins sales in Q4 of the prior year. We anticipate generating strong and positive free cash flow for the year weighted to the second half, consistent with prior years. As for the outlook, similar to our comments last quarter, we are continuing to operate in a difficult environment that remains unpredictable in the short-term. That said, we expect the second quarter to continue to show an improvement in revenues and profitability. Looking at each of our segments. At Digital Real Estate Services, Australian residential new buy listings for October grew 16%. Please refer to REA for a more specific outlook commentary. At Move, U.S. housing conditions remain challenging and we are expecting some reinvestment in marketing to improve share of voice levels, including the recently launched advertising campaign and also in product development to ensure we are best positioned to take advantage of market conditions when they improve. In Subscription Video Services, as mentioned last quarter, we continue to expect modestly higher expenses for the full year, driven by sports rights and some costs related to the launch of Foxtel streaming aggregation service, Hubbell, but remain on track to deliver relatively stable results for the year in local currency. At Dow Jones, we hope to see continued improvements in advertising declines, but as typical, visibility is limited. We continue to expect modestly higher overall expenses for the full year and strong revenue growth in B2B revenues. At Book Publishing, while we expect year-over-year improvements versus the prior year, revenue, and profit growth is expected to be more modest than the first quarter given overall industry trends and the normalization of return rates. At News Media, revenue trends remain mixed geographically and we will continue to focus on ongoing cost efficiencies. With that, let me hand it over to the operator for Q&A.

Thank you. Our first question comes from Lucy Huang from UBS.

Hi. Good morning and thanks for taking questions. My one question is in relation to Move. So I just wonder if you can give us an update into the competitive landscape in the U.S. And just any early thoughts on the recent U.S. court ruling around agent commissions, like do you think this could have an impact on industry dynamics more broadly, and I guess, for the Move business longer term? Thanks.

Yes, Lucy. Well, first of all, we will have to see what transpires on appeal in that particular case. But it’s clear that the U.S. property market has already been evolving if rather incrementally. I mean our focus is solely on providing the best possible service for vendors, for purchases and for Real Estate professionals, and we will continue to build audience through the use of our rather large media platforms. We have been taking advantage of the present downturn in the market to build out our sell-side operations and there is definitely a downturn in existing home sales when you have an annual rate of $3.9 million, which is well below the normal average of $5.5 million. We certainly foresee stronger activity longer term on the sell-side, a bit like the Australian market, and we have acquired a company UpNest, which is particularly strong in that area. And there are interesting lessons for the U.S. market generally from Australia about what happens when the market turns. There’s patently much suppressed demand here at the moment. In Australia, we saw listings in Melbourne and Sydney surged 14% and 16% in the last quarter, and those numbers were even higher in October, Melbourne listings surged 32% and Sydney saw 33%. So we look forward to similar surging and soaring in the U.S. market when mortgage rates moderate.

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

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

Thank you. Robert, I was wondering if you can get into a little bit more detail about this residulously reviewing our structure? And secondly, if you could comment on how the recent Real Estate lawsuit might affect realtor and Move? Thank you.

I think, Alan, I answered the second question just now. So we will have to wait for the appeal there. The market itself is still obviously suffering from the heavy burden of mortgage rates here in the U.S. As for structure, look, we agree with the general thesis that the company has been transformed over the past decade and the full value of our incomparable assets is not fully represented in the share price. And that’s a tribute to the leaders of all our business from Rebecca in London to Patrick at Foxtel and to all our teams who have navigated through fundamental changes in each of their sectors and through the pandemic and the subsequent surge in interest rates. And as you can divine from today’s numbers, we are in a truly different position to most media companies with a robust balance sheet and are poised for even greater growth and profitability in the coming years when the economic heavens return to equilibrium. But at the same time, we are consciously and constantly reviewing our structure and have already taken tangible steps to clarify internal corporate structures to ensure that we have maximum flexibility in that overall structural consideration.

Thanks, Alan. Laila, we will take our next question, please.

Our next question comes from David Karnovsky from JPMorgan. Your line is open.

Yes. Hi. Thank you. This is Ted on for David. I wanted to ask if you could give us an update on digital ad trends. Any color you can share on the quarter and expectations moving forward would be appreciated? Thank you.

Sure. Obviously, the trends across the mastheads vary by segment and region and algorithm changes can have a short-term impact. Though we do have a strong relationship with both Google and Facebook, and they tend to respond thoughtfully to any inquiries that we identify and I’d particularly like to call out Sundar Pichai and his trustee team, who are conscious of the importance of journalists and journalism. Specifically, at Dow Jones, advertising was down 3%, which was a marked improvement after a 14% decline in the prior quarter, both digital and print reported improvement in trend lines. And there was a more modest decline of 8% in the U.K. But most of that was actually in print, as digital advertising was flat compared to the same quarter last year. And the New York Post, while flat overall, actually saw an increase in print-related advertising as the paper continued to expand its social, political and commercial reach.

Thank you, Ted. Laila, we will take our next question, please.

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

Hi, Robert. Hi, Susan. So, firstly, I just wanted to ask, given that there have been some public comments from a shareholder over the past month about a proposal to spin out REA, interested in your comment as to whether you see merit in that proposal and is that something you are willing to explore or are you looking at other ways, as you have spoken about of closing the valuation gap? And if I can quickly throw a second one in there as well, hopefully, a straightforward one. Given that Foxtel refinanced over the quarter, when do you think the shareholder lines will be repaid? Are there any other impediments or hurdles to that repayment taking place now? Thank you.

Entcho, it would obviously be inappropriate to comment on any shareholder in particular and actually inappropriate to comment on any shareholder comment. But as I have made clear, we are conscientiously reviewing our structure and have taken steps corporately to ensure that we have maximum flexibility that of itself reflects the constant institutional introspection that characterizes the way we oversee these very valuable assets.

And Entcho, just in relation to your question on Foxtel, we expect a modest return this year and anticipate the bulk of the repayments to come over the next few years. That’s obviously dependent on the current plans and cash flow position.

Thanks, Entcho. Laila, we will take our next question, please.

Our next question comes from Craig Huber from Huber Research. Craig, your dial star six on your keypad to unmute.

Thank you, Robert. It's encouraging to hear that you are reviewing your structure. I've been discussing this for the past decade. The company is quite complex from an investor's perspective. I'm pleased to know you are taking this seriously. When I analyze the stock, I notice a 35% to 40% conglomerate discount built into the price, which accounts for the stock being in the low 20s. I'm hopeful that something significant will occur in this area. Regarding books, it's nice to see the recovery from last year. Are you observing anything on the cost or revenue side that would prevent you from returning to your EBITDA levels in the low 300s, as seen in fiscal 2021 and 2022? Thank you.

HarperCollins has navigated through a unique period of challenges, including the pandemic, logistical issues at Amazon, and cost pressures. It has emerged from these complexities with improved performance, increasing margins from 4% in the last quarter of the previous fiscal year to 12.4%. This margin growth is already noticeable. Additionally, the entry of Spotify into audiobooks is generating excitement. Audiobooks have been the fastest-growing sector in recent years, and Spotify has significantly changed the streaming experience. Daniel Ek and I have worked together on an agreement that benefits orders, book lovers, Spotify, and us. Early indications from the U.K. and Australian markets are encouraging. If these trends continue, the audio segment, which currently accounts for about 45% of digital sales, is expected to grow significantly, leading to higher revenue and an improved EBITDA.

And Craig, maybe just to add, we do expect continued profit growth in the balance of the year given certainly the prior year compares subject, of course, to that consumer demand that Robert talked about, but we expect it to be at a more modest rate than Q1. And we are hopeful that the EBITDA margin can remain positive to last year and in the low double digits for the full year having delivered the 12.3% in Q1. So I expect that margin rate will be more over the medium-term when we look to lift it.

Thanks, Craig. Laila, we will take our next question, please.

Our next question comes from Brian Han from Morningstar. Please unmute yourself to ask a question.

Robert or Susan, can you please clarify, did you guys say in Dow Jones B2B earnings are larger than B2C earnings or did you mean its contribution to growth is now larger than B2C?

They are larger and on track to be larger for the full year. So, yes, we did say that.

On track to be larger?

And they were for the quarter and they are obviously a higher margin digital high retention rates.

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

Our next question comes from Darren Leung from Macquarie.

Hi, everyone. Thank you for the chance to ask a question. I have one regarding Move. The Real Estate revenues were down 20%, and you noted that listings decreased by 11%. This seems to suggest that the average yield dropped by about 9%. Could you explain the factors contributing to this and how we should consider the yield moving forward for the rest of the year? Thank you.

Darren, we don’t, as you know, give out specific yields. You may recollect that actually over the course of probably the last 18 months, we have been seeing increases in yields that have helped us offset some of those declines. You could imagine in the current market it’s obviously challenging to be pushing yields up in the U.S. So look, I think what we would say is that we just continue to balance where we think we can push yields in certain markets with the current macro environment. That’s probably all we can say on that.

Thank you, Darren. Laila, we will take the next... Sorry, Laila, we will take our next question, please.

We can go to Craig Huber with a follow-up.

I have a follow-up question about realtor.com. Could you elaborate on your plans regarding costs for the remainder of the fiscal year? I understand there is pressure on revenue, but where do you see profits for realtor.com heading? It seems like you want to increase investments in research and development and marketing. Thank you.

Craig. Look, if you think about the next quarter, you could probably expect costs to be relatively in line with what we have seen in Q1. As we mentioned, we do want to continue to invest in that business. We see a huge opportunity in that business when the market picks up. We want to make sure that we are in the best position to take advantage of that. Some of the investment areas that we are looking at are building our product investment, having a look at marketing, obviously, just given the competitive position there. It’s really important that we do that. So we will probably back in some of those cost investments depending on how revenue trends.

Thank you. Thank you, Craig. Laila, any other questions?

There are no further questions on the line at this time.

All right. Well, thank you all for participating. Have a wonderful day and we will talk to you soon. Take care.