News Corporation (NWSA)

Investor Day Conference

May 28, 2013 1:00 pm ET

Executives

Michael Florin

Keith Rupert Murdoch - Co-Founder, Executive Chairman, Chairman of the Media & Entertainment Arm and Chief Executive of the Media & Entertainment Arm

Robert J. Thomson - Chief Executive Officer

Lex Fenwick - Head of Dow Jones

Mike Darcey - Chief Executive Officer of News International

Paul Carlucci - Chairman and Chief Executive Officer

Kim Williams - Chief Executive Officer

Brian Murray - Chief Executive Officer of Harpercollins Publishers Worldwide and President of Harpercollins Publishers Worldwide

Joel I. Klein - Executive Vice President and Director

Bedi Ajay Singh - Chief Financial Officer

Reed Nolte - Senior Vice President of Investor Relations

Analysts

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Richard Greenfield - BTIG, LLC, Research Division

Barton E. Crockett - Lazard Capital Markets LLC, Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

Anthony J. DiClemente - Barclays Capital, Research Division

Michael C. Morris - Davenport & Company, LLC, Research Division

Todd Juenger - Sanford C. Bernstein & Co., LLC., Research Division

Alan S. Gould - Evercore Partners Inc., Research Division

Tuna N. Amobi - S&P Equity Research

Jaison T. Blair - Telsey Advisory Group LLC

Matthew J. Harrigan - Wunderlich Securities Inc., Research Division

Craig Huber

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

Presentation

Michael Florin

Good afternoon, and welcome to Investor Day for the new News Corporation. I'm Mike Florin, the Head of Investor Relations and I'm very excited to be here today and to be able to share our story with you. We have a lot to cover, so I'll just quickly review the agenda. We'll have opening remarks from Executive Chairman, Rupert Murdoch, to be followed by the new News Corporation Chief Executive, Robert Thomson, who will provide an overview of the company and some of the pillars to value creation. We will hear from each one of our CEOs from major operating units. We'll first hear from Dow Jones CEO, Lex Fenwick. We'll hear from News International CEO, Mike Darcey. It's our U.K. operations. We'll hear from News America Marketing Chairman and CEO, Paul Carlucci. We'll then take a 15-minute break. I know there'll be refreshments, snacks, but also check out -- there's a kiosk out by registration, which will have -- will be demoing with a number of products. So the -- well worth your time to check that out. We'll return to hear from News Limited CEO, Kim Williams. That's our Australian operations. We will hear from HarperCollins CEO, Brian Murray. That's our book publishing business. We'll take another 15-minute break, return to hear from Amplify's CEO, Joe Klein, and we'll hear from the new News Corporation CFO, Bedi Singh, to provide a financial overview of the company. We'll conclude with a Q&A session of all the executives back up.

Now I think, there'll be a Safe Harbor, which I will refrain from reading until the first earnings call. So you have it there for you. We will also be giving out the deck at the end. So from a note-taking perspective, you can wait. You don't take notes on every slide. So with that out of the way, it is my pleasure and my honor to introduce the first speaker, Executive Chairman, Rupert Murdoch.

Keith Rupert Murdoch

Thank you, Mike. Thank you. Well, good afternoon. Thank you, all, very much for being here today. This is really a very, very exciting day for me. With the split of our company and the birth of the new News Corp., I've been given an extraordinary opportunity most people never get in their lifetime: the chance to do it all over again. So I don't want to sound boastful, but I have you all here as a captive audience, so I'm going to take just a minute to take advantage of that.

When I began on the journey of creating News Corporation 60 years ago in Adelaide, I pretty much had one small newspaper and a very overdeveloped ambition. Well, today, the company is worth $77 billion. I'm not saying I didn't make many mistakes along the way, even some spectacular ones. But not as many as everyone predicted, thank God. Now I'm proud to say that again, and again, we've confounded expectations. When we moved to Sydney, our competitors boasted they would run us out of town. When we bought the London Sun in 1969 and converted them to a tabloid, The Daily Mirror, the great leader, just laughed. Well, today, The Sun sells 2.25 million copies everyday to the Mirror's 900,000. And after 15 years of industry frustration, we opened a new printing plant, winning the first private sector strike in 50 years and giving new life to all newspapers in Britain.

Let me start at the FOX Network. Then in 1986, people thought that Barry Diller and I were just positively mad and said that no one can compete with the big 3. And of course, when we came up with The Simpsons, people would say, "Animation was just for kids." Today, it's longest-running comedy in prime time in American history and has made us and a lot of other people a fortune.

When we launched Sky, people said the public don't need more choice and that we would bankrupt ourselves. The BBC should alone decide what was good for viewers. In retrospect, I could have done without the stress of nearly bankrupting the company and my family. But today, BSkyB has over 10.5 million customers and is still growing and making a lot of money. And when we launched Fox News, no one thought we could take on CNN. Nobody. Even Ted Turner bragged that he was going to squash me like a bug, and a lot of other things. But with hard work and the genius of Roger Ailes, Fox News has been #1 in cable news for 11 straight years, and now its annual operating profits are more than $1 billion.

So given that success story, you may be wondering why I want to do it all over again. The simple answer, there is opportunity everywhere. The companies that make up the new News Corp. has some of the most extraordinary and brilliant brands in the world. Yes, and some certainly had challenges, but they are undervalued and underdeveloped. But that all changes starting today.

I will admit it feels a hell of a lot better starting out with $3 billion cash in the bank and 0 debt in Adelaide. But there is something else we have today that is even more valuable. It makes me confident that what we will do with the new News Corporation: talent. We have an extraordinary team of executives who you will hear from today, who have strong teams around them in our own -- in our businesses here in the U.S., in the U.K. and in Australia. We've always been an eclectic and unconventional company, so you should not expect that will change. I've told each of our CEOs to be themselves even as we set out to tell you about the new News Corp. What we share is our core belief, and I think you will see it as the common thread here today. Knowledge is the most valuable commodity in the world, and never has a more ravenous appetite for knowledge existed than today. So we will create new businesses and new products, tell new stories and inform and educate the public in new ways. And above all, we will continue our own transformation and embrace the mobile future, disrupting some industries on the way.

My goal for the new News Corp. is to compress the success time line of the original News Corp. from 60 years to 10 years. And you may think that's crazy, too. But back in the 1950s, we only had lead pencils and typewriters. Today, we have WiFi, 4G and digital compression.

So now, it's my pleasure to introduce Mr. Robert Thomson, who we are extremely lucky to have as our Chief Executive Officer. I've known Robert for many years and have seen him excel as a senior news executive for 2 of the most storied publishing enterprises in the world. He not only knows the publishing business, he's mastered it and chartered new paths for growth within it. Robert has covered corporations and industries around the world for 30 years, and leveraged that knowledge into the skills and vision necessary to operate, transform and expand powerful global brands. Under his leadership, The Wall Street Journal became the largest daily circulation newspaper in the United States. That achievement stands alongside the expanded reach and revenue stream he created through the wsj.com. Today, the global platform of dedicated subscribers is helping fuel the growth of Dow Jones.

And at a time when many in traditional media played defense, Robert has smartly played offense in untraditional ways, growing circulation, revenue and profitability. Few in the business can say that. Earlier in his career, Robert successfully recreated The Weekend Financial Times, having the foresight to anticipate the desire and create something valuable for consumers. And unfortunately, before I met him, Robert also have built the FT in the United States, tripling its circulation at a time most traditional news operations were losing subscribers. It's this kind of fearless yet brilliantly executed transformation that Robert will bring to this company.

Let me close by saying, on a personal level, there are few whose wisdom I have found to be as valuable and as important as Robert's. I've turned to him for insight in the markets and industry, to business counsel and a critical eye. One that is informed by his having worked underground in Australia, Europe, Asia and the U.S., [indiscernible] the new News Corp. has targeted for growth. We are thrilled to have Robert as our Chief Executive, where I believe investors will come to appreciate him. I know they will as much as we do. So thank you very much. Robert, would you like to come up?

Robert J. Thomson

Thanks. Rupert, thank you very much. The problem with such a lavish introduction is that the reality is that much more mediocre. Rupert, I'd like you to read the eulogy at my funeral, and I don't think anybody in this room has any doubt that you'll be around to do it.

Rupert has just described to you an extraordinary journey. One asks, as Churchill once did in rather different circumstances, is that the end of the beginning? No, it's a new beginning. The new News is an extraordinary company of scale and reach and opportunity, but it will have a sensibility of a start-up. Now I'll let the invisible hand go to work. That hand is signing off on the launch of the new News, a company with a remarkable providence. But that providence will be a platform for the future. There will be restless energy and insatiable curiosity. There will be opportunism and experimentalism. There will be alchemy. There will be Murdochian [ph] magic, a permanent start-up sensibility. We will be relentless in our cost-cutting and in our pursuit of profits. But we will also be a resolutely creative company.

But we'll also be a resolutely creative company. Creativity will not be the preserve of the few, but the mission of the many. Now you'll soon be hearing from our extremely capable division heads, and they'll be able to furnish you very, very ably with both strategy and fine detail. And then we'll give you a textured sense of a company with of global reach and national depth. You will see that we are focused, very focused on free cash flow, obsessed by it and on the prudently opportunistic and strategic use of our cash flow.

But before they take you on a narrative tour of those businesses, I think it's important for you to get a sense of the context in which the company will develop. The new News does not exist in splendid isolation. Unless we comprehend the context, we will not fully understand the scope of opportunity or fully serve our shareholders and potential investors. Now some of this will be a little obvious to most of the erudite people in the room, so please bear with me.

The 2 most profound trends of our time, trends that will determine the fate of the majority of large companies, are globalization and digitization. These powerful currents are particularly influential for content companies, and that is where the structure of the new News gives us a clear comparative advantage. As I said, that is the global reach and the national depth. These trends, globalization and digitization, were obvious when I was writing about the Chinese economy in the 1980s and analyzing Japanese semiconductor companies in the early 1990s. So these are not new trends, but their impact is growing with each passing year. And we must understand precisely how powerful these trends are, not just as an abstract concept but in the way markets are changing.

So what are markets? Markets are an aggregation of people's desire, demands, needs and aspirations. Customers' needs are changing, how they read and watch and communicate and learn. These changes to lifestyle are exponential. Who would have imagined, as we discovered today, that a Chinese company is bidding to take over a French icon like Club Med? So the opportunities for companies and investors that actually understand the trajectory are virtually limitless.

A small example: taste, our food website in Australia. 26 million recipes were downloaded and printed in the festive season last year. Look, when I was a child in Australia, a sandwich with mayonnaise and not on white bread was regarded haute cuisine. And vinaigrette dressing on a salad was seen as a little too, shall we say, continental. Now 49% of taste's users are accessing the site from their mobile device. 22% of taste's traffic is international, and that is growing at 40% annually. In this period of extreme transition, our complementary strengths give us a definite advantage. Having companies involved in different but adjoining sectors means that we are really are able to learn from each other, because we are coming at the same goal from different angles. And don't forget that technology, not content, is a commodity. Technology is a canvas for our content.

So the next crucial part of context for the new News is that we are, indeed, a content company. We are acutely aware of the 3 principles that determine our success or failure. We have to create great content, deliver great content and price and sell great content. The first backdrop means having an environment in which you can anticipate customers' interests and that you share that quickly. The scale of the new News will have a focus that makes such sharing easier. We now have a rule that if you make a successful ad pitch in London to a client, that you must share that intelligence within 24 hours to ad managers around the world. Not to do so is to squander scarce capital and to let down our investors and to make me somewhat angry.

Editorially, we're also installing a common publishing system for our newspapers around the world, so that the photos and stories can be easily shared, for digital and print, and duplicated expenditures done away with. We want a single cost of content and multiple opportunities for profit from that content.

The delivery of great content. We will have the ability to influence the form and content for smartphones in the same way that some of our apps were templates for other publishers in on iPad. We are still at an early stage of a second great migration: from print to web and from web to mobile. And that is as true for both our [indiscernible] at News America Marketing, our coupon business as it is, for Amplify [indiscernible].

One of our foremost ambitions is to run in a second screen, to create content that complements or even redefines that event. Whether it be a football match or a British elections, the second screen is a first priority. And our Australian broadcast businesses will play a crucial role, culturally and technologically, in helping us to exploit the opportunity.

Now as I speak of platform permutation, let me be very, very clear. Print is still a particularly powerful platform. 43% of Wall Street Journal readers are millionaires, and the other 57% will be millionaires if they continued to read the Journal. In this age of endless digital distractions, if I told you that you could have the undivided attention of 2.6 million British households every morning, what is that worth? You can't multitask with a newspaper in the morning other than drinking coffee. You can't open a second, third, fourth or fifth screen. There is an intensity to the print relationship that is unique in modern media. I do think that will become more obvious to advertisers, and it's our job to make it so.

The pricing and selling of great content. Gone are the days when flat earthers insisted that all digital content must be free all the time. Whether it be e-books at HarperCollins, where Brian Murray and his team have developed wonderfully sophisticated algorithms to maximize revenue, to the pricing of B2B intelligence at Dow Jones, which Lex Fenwick will take you through in detail. There is a rising tide of charges, and premium content will attract ever more premium prices. Later, Mike Darcey will explain the logic behind the imminent payment strategy for Britain's best-selling newspaper, the legendary Sun, which involves not only charging for the content, but the building of loyal communities.

There are 2 particular factors of content character that have become obvious to me in the 17 years I've been developing content businesses in one guise or another. I would argue that they are useful to you in analyzing our earnings prospects and those of any other media company. The first is the content curve. It's rather crude. It's suppose to be. It's obvious enough to say that the value of content changes over time. But it's not understood well enough how much the timely delivery of content and the ownership of an event can maximize revenue. That is, that the initial ownership of the event and then the ownership of the unfolding of the event. If one of our intrepid Dow Jones reporters breaks the story about fiscal easing in Japan or a tightening of the Federal Reserve, for a minute or so, that story's worth millions, tens of millions, hundreds of millions to a forest of bond traders. That value diminishes quickly as the story becomes popular and known. The challenge of content creators and knowledge builders is how to plan the unfolding of a narrative so that the content is not quickly modified. And that can only be done when content is commissioned and only if the journalists have a clear understanding of the value of the story to readers and clients. One consequence, there will be more and more windowing of content in a way that it is conceptually now, as I said, with the film industry, and there will be more revenue for more windowing. And that there will be extra emphasis on owning big events, so called, even if you do not have first rights to that event.

The second slide is again binary in its simplicity, but profound in its conflict. You can see from the low-end production values -- no, I'm rather cross [indiscernible]. There are 2 factors in a relationship between a reader and a user and the content: the functional and the emotional. One of my early tasks, as Rupert mentioned, was to recast and relaunch the weekend Financial Times. What normal person, I mean, I can presume this room is mostly full of normal people, what normal person would want to read a business newspaper on the weekend? There has to be an emotional link above and beyond the practical provision for business news. So the weekend Financial Times, it became the Weekend FT. And now with the Journal, we have the WSJ on Saturday, which has become the paper's best-selling issue. Frankly, when we took over Dow Jones in late 2007, there was a proposal put to us to close that edition, which was ailing at the time.

We're certainly not just about print. FOX Sports in Australia has ingenious and compelling broadcasts of Aussie royals [ph], actually, but is also crafting emotional content to fill the awkward gap between great games. So now, it was replete with sage analysis, better commentary and that absolutely crucial ingredient, wit. Think of the enormous cultural and emotional importance of The New York Post in New York. Under Jesse Angelo's inspired and astute leadership, we are cutting costs but also building our digital vertical. The aim is to increase its affinity with the city, yes, but also to relieve -- realize its potential to build much bigger communities of interest outside the purely functional delivery of New York news.

Another example. Google is preeminent in the functional success of search, but it's constantly looking for emotional stickiness with new products. At Bloomberg, beyond the bond chart, user chat was obviously a huge promotional plus to them, or at least up until recently.

We will delve into far more detail later today, but it's worth a quick overview of the geographic spread of our revenues. Some of the preconceptions about the company are a little misconceived. What we see is an Australian business that is important as part of the heritage of the company and its contemporary engine of revenue. When we say Europe, that is mostly the U.K. and not the benighted Eurozone. What you will likely see 5 years from now is continuing growth in the U.S. and a tangible broadening of the other category, in particular, growth in Asia and Latin America. And the composition of our revenue, again, there's a presumption that we are heavily advertising dependent. But almost half of our revenue comes from nonadvertising sources, and that proportion will increase significantly over the next 5 years with the rapid introduction of digital subscription, the development of B2B at Dow Jones, and the expansion of the education business by Pete Gorman and his team.

But to for other changes to the character of the revenue mix, just one minor example: data. There is now endless discussions of data. And data has gone from just of plain data to big data. There is no doubt that intelligent data is a rich thing of value. But given the premium quality of our digital content, there has been a proliferation of companies trying to harvest our data. Now I would be surprised if the advertising model does not change. The way readers, our readers, have permissioned to the gathering of data, we will consider charging the data harvester a fixed premium for the privilege. The third-party aggregation of data about our first-class audience will become a much more expensive proposition.

So what is it that unifies the new News? Premium content and iconic brands. Brands are a platform in the digital age. It will be our responsibility to ensure that these companies converse and collaborate to generate more revenues and keep costs to a bare minimum. These brands are household names, which gives us access to even more households.

And Digital, let's get a little more specific about the digital character. At HarperCollins, the share of digital revenues doubled from 2011 to 2012, from 10% to 20% of the total. For some published titles, digital comprises now over 50% of this revenue. And obviously for pure e-books, it is 100%. At the Wall Street Journal digital network, there are more than 0.5 billion page views every month, and these are viewed by a very desirable demographic. At Amplify, we announced a contract this very day to supply schools in the district of North Carolina. There'll be many more contracts to come. At REA, total time spent on the site by visitors is 4x that of the nearest competitor. So what does that mean in real estate reality? I visited a real estate agent in Geelong near Melbourne a few weeks ago, and he said that more than 90% of his leads are coming from REA.

And these companies and brands are not just influential, but market leading, #1 in English news publishing in 3 continents. And I ask you to ponder the non-English for a moment. How valuable are the Chinese, Korean, Bahasa, Turkish and soon-to-be Brazilian WSJ website? Ponder the demographic that uses those sites. It's the virtual homepage of the People's Bank of China, their central bank. Ponder the difficulty of reliably reaching that demographic in those countries. Ponder the potential of selling other high-end local language products on those sites. We're #1in Australian sports program, the #1 in subscription TV provider in Australia in partnership with Telstra, the #1 in real estate and with free standing interest in New York, #2 in English language book publisher. We'll obviously have to do something about that.

And in Australia, an evermore integrated media business that is the country's leading franchise. Increasingly we have FOX Sports videos on the page's website, the newspaper journalists appearing on FOX Sports, and REA coordinating with other businesses and providing us with the expertise and software necessary for further global expansion in the classified market. Last month, news.com.au became the country's largest portal, gathering content from around the continent and driving readers to individual sites in scale. Again, these are mighty powerful platforms, and Kim William's team and his background in television are allowing us to leverage the brand and their content.

So globally, how do we become even more than the sum of our distinguished parts? Let's look at the Premier League real life footballers, as you call it, your soccer's highlight rise, my first investment as CEO. Think about being in a supermarket in Britain on a Sunday, Manchester United playing Arsenal in 2014. Arsenal has just scored their third goal. So you get an alert and watch that goal moments later on your phone, if you're a Sun or Times subscriber. And the fans share the magic moment because you've built a community of Arsenal fans, who are also Sun subscribers. And we have every conceivable stats, post-match analysis tracking the sad decline of Manchester United. Words, images, moving images, user-generated content and importantly, humor, put all that together, the News International team has been working with FOX Sports, and even the WSJ's quirky sports editors, to develop a different kind of content feed to smartphones. Now the way to look at this development is that it is soccer-specific but smartphone-generic. There will be lessons from this project that influence our smartphone applications around the world. And it also raises a prospect of being able to similarize and repurposing the same content flow, words and images in other languages, again, keeping costs down and redeploying content to create multiple opportunities across it. That is what scale gets you.

And you can imagine if we chose to pursue a project in business English, the world's true second language. Fresh lessons in that day's Journal, truly contemporary content each day for students, not just in case studies from 20 years ago. The teaching tools of Amplify and the language expertise at HarperCollins, a product that would truly be more than the sum of distinguished parts.

Now we're certainly not naive about the challenges facing some of our newspapers. The advertising market has been volatile and print sales have certainly declined in Australia, in part because our team has been removing what I politely called lower-yielding content. We are in the midst of a transformation of those businesses. Costs are being confronted and cut, and the markets are being reoriented. That transformation will take longer than a couple of quarters. That is obvious. And the new News itself is in a midst of a transformation, both as a corporate entity and in many of the sectors in which we operate, from the disruptive energy of Amplify to the savvy user of smartphones. We are being frank with you about that transformation imperative. All investors should understand that [indiscernible]. But we are also candidly and decidedly optimistic about the prospects for the company in revenue growth and in margin expansion.

And we have a very strong balance sheet that will be the cornerstone of our future and for future investment returns. We are focused on increasing free cash flow and using that cash flow long-term to strike a balance between further expansion and the return of capital. We are not here for the short term.

News Corporation has been a remarkable success story because of long-term [indiscernible] momentum. Risks are taken, instincts followed and objectives pursued with passion and purpose. The new News will inherit that sensibility and will strive to build on that success.

Now to provide insight into the transformation of Dow Jones, I give you Lex Fenwick.

Lex Fenwick

Ladies and gentlemen, good afternoon. My name is Lex Fenwick. For the next 20 minutes or so, I would like to talk to you about a fabled company, a company created over 100 years ago but with as much relevance today as it always has, a company in transition and a company that is doing infinitely more than you would ever expect and a company with a burning ambition to succeed.

[Presentation]

Unknown Executive

At Dow Jones, we have 2 major brands, the Wall Street Journal, the largest selling newspaper in America, 138 million monthly visits to our digital network; Dow Jones, a supplier of business information to the financial, legal and corporate world. Three distinct revenue streams: advertising, consumer subscription and institutional subscription. We have an unrivaled audience. Robert has already touched on this a little bit but to reemphasize, 3.5 million read The Wall Street Journal every single day. We have -- because our content really matters to our readers, we have been able to expand geographically in 6 different countries. And our demographic, the quality of those readers, be it here in the U.S. or in the 6 different countries we've already expanded to, unrivaled. $124 billion is spent by our readers every year in consumer expenditure. Our readers are the #1 buyers of fashion, jewelry and travel. And as Robert more eloquently and amusingly said, 43% of our customers are millionaires.

Look at our reputation. 35 Pulitzer prizes and voted by the Pew Research Center 27 consecutive years as the most trusted newspaper in America.

When we started over 100 years ago, we were a business and financial newspaper. Since News Corporation bought Dow Jones over 5 years ago, we have expanded enormously our breadth of content. We now cover politics, real estate, fashion, luxury, personal wealth and a whole host of other topics. In the last 15 years, when you think about the innovation in the digital business, just look at what we have done. We were the first people to put up a paywall. And in our first year of doing that, we attracted 200,000 subscribers to pay for our content digitally. We were one of the very first people to provide the content on a tablet device. We built WSJ Live with a whole host of video content. And earlier this year, we created and built a unique first WSJ portfolio application, which we'll talk to you a little bit about in a second. We are also the first people in our industry to launch a live scope.

Through all of this, we have increased our circulation consistently. We have every year increased our circulation over the last 5 years with an average revenue growth of 8% a year. Because our content really matters to our readers, we have been able to expand into many different geographies. We are, locally, [indiscernible] in the Chinese language. We are in China, Japan, Germany, Korea, Indonesia and most recently, in Turkey. Our ability to take our content to repurpose it into those languages which, by the way, is a little cheaper to do if you translate. But people care about business. Several weeks ago, most of us in this room and a very large number of people in the world were reading about Cyprus. It's a wonderful place but not many of us would be interested in the politics of Cyprus or the sports of Cyprus or the culture of Cyprus or much else about Cyprus, with the greatest of respect to anybody who's cypriots. But we were all obsessed with Cyprus. Our content matters and it travels extraordinarily well around the world.

In the last year, 20% of our digital traffic has come to us from the international sites that we've already launched. We have pricing power. Because the content we create really does matter to our customers, we have the ability to raise our price. We've looked at how we're going to continue to increase the number of subscribers, both by broadening geographically and by broadening the types of content that we create. Both of those things allow us to increase the number of subscribers that we have and we will have. If you look at any of our competitors -- and I'm not going to call them out, you know who they are. If you look at any of our competitors and the prices they charge to subscribe compared to ours, you'll see that we are cheap. We have the ability to increase our price and we have an increasing number of subscribers.

We're building a platform. We're no longer a place where you come and read the news. When you come and read your news and look at our content, you'll be able to start doing many other things on our site other than just reading the news. If you build applications and you become a platform, it does lots of magical things that help us. It increases the customer's stickiness. It means that customers spend longer on the site than he or she previously was. It allows targeted advertising as you start to understand more about your customer and what their interests are or what they make care about. It will allow us to start building a networking business. And it also gives us this extraordinary leverage to what we call the institutional business, such as our customers are the buy side for a large part of the institutional business.

WSJ Portfolio launched 12 short weeks ago with little fanfare, little press, no great publicity, has already attracted in those 12 weeks, $12 billion of assets on to our platform. You can sync your brokerage account, you can look at your brokerage accounts in aggregate and look at their historical performance, and see all of the news and the content in real-time come to you over email from The Wall Street Journal, Barrons and MarketWatch.

WSJ Profile. This is coming to you in a couple weeks. And we know that you're all going to be excited for you to have your own WSJ profile. Just think about that. You're going to be able to load your research, load page posts, load information about yourself, show people your job, photographs of yourselves. And we will be able to build a network of like-minded people around the world into a community.

I just want to take a few more minutes to talk to you a little bit about our institutional business. We have 4 great brands today which some of you may be familiar with: Dow Jones Newswires, Factiva, a Dow Jones private equity CC database, and a Risk & Compliance business. We have recently brought all of these products together in a brand-new product code-named DJX, one product, one price and one standard contract. We already have in the institutional business, 41 of the world's governments, many of the world's central banks, 70 of the top Fortune 100 companies.

Some of the interesting things we're going to be doing with DJX. First of all, we're going to deliver this product over a browser, over the Internet. That means that when you write a function or an application, it immediately scales and works on a mobile device, such as a tablet or a mobile phone. So every single time we write a new function, we don't have to rewrite it. It just works immediately on a mobile device. And in fact, if any of you would like to, we have a display out back where you can go and look. We're going to build, and in fact, have already built and are using internally a proprietary messaging platform, a messaging platform where you can talk with each other but we don't have any of the content at Dow Jones. It is strictly stored on your servers, and we can't see what you're saying to each other, that's a first.

DJ Dominant. This is going to be one of the most disruptive newswires you have ever seen. This is the best of what The Wall Street Journal and Dow Jones do every single day with a 2-minute time advantage. Robert talked about the great value of content and how it diminishes over time. Our customers at DJX will get the new DJ Dominant newswire. And so the 2,000 reporters around the world, when they break news or they have something that is unique, a scoop, analysis, that will go first to DJ Dominant.

Supreme customer service. We've already built it. We've got it. It works 24 hours a day, 5 days a week in many different languages, and we're ready to go and ready to serve our customers. We really will tell people and the world how to do customer service. And we're going to sell this product directly to the end user, the greatest prospect, not to a purchasing person or to a market data person, we're going to go directly to the portfolio manager, the hedge fund guy, salesperson, trader, whomever it is.

We have a technology department that is ready to create new functionality and to have rapid intuitive technological evolution. And we have a global sales force that is in place today around the world that know how to do this.

Most of all, we know how to do this business. We know how to build these products. We know how to provide customer service and we know, or we think we know how to sell. I was at Bloomberg for 25 years. I was the first salesperson in Europe, and I ended up running the company. At Dow Jones, we do know how to do this.

Here's a little snapshot of what our product looks like today and we are already selling it. We'd love to have demos with [indiscernible]. The institutional market represents this enormous opportunity. It is a proven documented $40 billion institutional spend every single year. We currently today have less than 1% of that.

Let me just summarize our long-term growth drivers for everybody to just pick up. We have a real opportunity to grow the number of consumer subscribers through our geographical expansion. We think we have real pricing power. We are low priced. And as we grow the number of subscribers, we can grow our price and the revenue from consumer circulation by building the applications we've already started to build. And you can see on the site today the stickiness and our ability to serve more ads while a customer is on the site for a longer and longer amount of time, and our ability to much better understand that customer and hence, target them. It's getting better as we build more and more applications.

By launching WSJ Profile, we've got a real opportunity to go up to our networking business. A networking business is a very, very, very exciting prospect for us. And if we can just take a little bit more of that institutional spend by building DJX and creating products that really help people do their jobs more efficiently, more profitably and if we can deliver that product, and with real value, there's a real opportunity for us to increase our market share with that very large institutional market.

Thank you very much for listening, and I would now like to hand over to my great friend and colleague, Mike Darcey.

Mike Darcey

So to the U.K., good afternoon, everyone. My name is Mike Darcey. I'm relatively new to News International and to the newspaper game, in fact, having joined in January of this year after 15 years at BSkyB. When Rupert rang me and asked me if I would take this role, I reminded him that I haven't worked in newspapers before and that I was really a pay-TV guy. He said that was perfect. He said that was because that I knew about the importance of distinctive content, about selling paid-for content against free alternatives, about subscriptions and about customer service, about brand extensions and bundles. And also about bidding for football rights, which you all so seem to want to talk about. So I knew straight away, right from the beginning, that he was thinking about the business' news brands going forward in quite a different way than perhaps have been the case in the past. So here I am. Anyway, it's great to be here today, and I'm grateful for the opportunity to speak to you about some of the exciting initiatives that we have underway across the Atlantic.

To begin, just for those who are not familiar with our news brands, I just wanted to take a moment to introduce our core editorial compositions.

The Sun, our offering in the so-called popular segment, is the single most popular newspaper in the U.K. In February of 2012, we launched The Sun on Sunday, which quickly became the #1 Sunday newspaper in the market. The Sun print franchise reaches around 7 million readers per day, around 12 million unique U.K. readers each week, and that's close to 20% of the total U.K. population.

The Times is our daily offering in the quality segment and is read by around 1.3 million people per issue Monday to Saturday. A few facts about The Times that some of you may not know. It was the first newspaper in the world to bear that name, originally in 1785, and the name has since proven to be a popular choice here in the U.S., in Los Angeles, Seattle and of course, here in New York. The Times is the newspaper that developed the Times Roman font that anyone who uses Microsoft Word is likely to find very familiar. And then, The Sunday Times is our Sunday national quality offering read by around 2.5 million people per issue.

Now this portfolio represents a real advantage that is key our unrivaled leadership position in the U.K. market. The Sun is the #1 newspaper in the U.K. by a fairly significant margin across all 7 days. We're #1 during the week, #1 on Sunday and our Sunday supplement, the Fabulous magazine

is also the number one as well. The Sunday Times is #1 in the Sunday quality segment, with more than double the sales of the #2 title in that segment. Leadership in the quality daily segment is disputed. When you look at total sale, including print casual, print subscription plus digital subscribers, we're either #1 or #2. It's too close to call. What is clear is that both The Times and The Sunday Times continued to win numerous awards. The Times won the Newspaper of the Year this year, and are recognized as the most read papers by business readers in the U.K. quality segment.

Then, when it comes to advertising, our leadership or close to leadership position in all the key segments translates into a strong leadership position, overall, in national print ad sales. We operate as a single sales house across all titles, so when we face up to the major agencies, we account for around 35% of all national print ad spend. So we're pretty hard to ignore.

So that's where we are today, what about where we're going? Well, in the U.K., we are well aware of the wings of change that have been reshaping our industry in recent years, and we've been a frontrunner in taking decisive action to respond and to adapt our business. But while there is naturally much talk of change and the nature of competition is certainly involved, some things do remain the same. One such constant is that a core pillar of our strategy continues to be an unwavering focus on creating and delivering valuable editorial content that is distinctive and differentiated. The depth of our news, the distinctive voice of our commentary and opinion, these are what set us apart. Now of course, many news businesses will say that, but there is, here, a U.K. angle that is worth noting. Now the U.K. has a bit of a reputation for regulation, but happily, in this context, it is helpful to us. In the U.K., all television news is required to be useful or impartial, which tends to translate a little bit into being a bit bland. This also flows into radio news because the 2 main radio news providers are the 2 main TV news providers, and their TV blend is very efficiently re-purposed for radio.

And this, in turn, means that comments, opinion and a distinctive point of view has long been the preserve of newspapers in the U.K., and this remains a core strength today. At the same time, we are placing ever greater focus on deepening relationships with our readers through subscriptions where possible, either print or digital, but also otherwise, other like or forms of customer relationship, where we know who the reader is and we know something about them. And then, with this shift comes the greater insight into the nature of our customers, providing an opportunity to deliver better targeted content, to design better subscription bundles with additional services and offers, and also, to enhance our advertising proposition.

Of course, the goal of all of this is to generate sustainable profit growth, an aim which is further advanced by our progress in ancillary revenues, and emphasis on cost control and efficient processes.

So I talked about our leading brand and I talked about the broad strategies that we are pursuing. Now I want to turn to how we're taking our strength and applying those strategies and turning them into tangible results. The first progress report I'd like to take you through relates to the tremendous advantages we've been making, and continued to make, at The Times and The Sunday Times. Much like Dow Jones did with The Wall Street Journal, we were pioneers in the U.K. in affirming The Times and The Sunday Times as paid-for propositions in all formats, starting in the summer of 2010. The results of this approach have been very pleasing. We focused on total paid sales which is print casual, plus print subscription, plus paid digital subscription. And on this basis, we think we're doing pretty well. As you can see from the chart, total paid sales for The Times is above the level it was before the free web option was removed. And this boxed the trend in the U.K. market, where economic conditions continued to be challenging and others have experienced continued decline. The mix has changed over this period, we're now around 50% casual sales, 50% subscription, with around 1/4 of the total being paid digital subscription.

So what do we know about these subscribers? Well, we know that our readers are highly engaged with our content and our subscribers are the most committed among them and the most engaged. This is important for retention and for pricing power, but it's also good news for our advertisers.

I'm looking at our digital subscribers, our tablet subscriber to The Times spends around 40 minutes with our product, on average, very similar to the amount of time they spend with the printed products. So this is a fully immersive experience, not just clicking around associated with many other news website. We also know that our iPad Times readers are affluent, with average individual incomes of around GBP 70,000, a very attractive audience by U.K. standards.

And then, underpinning our subscription offerings is our Times plus package of extras, including a wealth of events and offers, which will soon expand to include highlight clips for English Premier League football, on which I will say more in a moment.

Onto progress report number 2, from The Sun. So at The Sun, we're taking advantage of our experience and success of The Times and The Sunday Times, and preparing the move to a fully paid-for proposal starting in August. We are assembling a strong package of benefits and extras to combine with the 7 days of The Sun, and we're offering all of this for GBP 2 per week across web, mobile and tablet, which we think will be attractive to our most engaged online readers.

We also expect to see upsizes to our print buyers drifting over to relying on a free website, and we might even see some of the heaviest online users returning and paying for print when the free option is removed.

And we're supercharging our package of extras with exclusive web and mobile video clips from every Premier League match for the next 3 years.

And I'd just like to take a moment to highlight the importance and the value of these video rights. Now here in the U.S., you might say that you have 4 major professional sports. In the U.K., I would say that there really is only 1 major sport, and that is football, or what you might call soccer, and the EPL is preeminent.

So what are these rights that we bought? Well, the Internet clip rights are for the day after, for all 380 matches in the season. But unlike many U.S. sports, for the EPL, only about half the games are televised, so highlight rights provide a great chance to see the key moments from the other non-televised matches. But the mobile rights for tablets and smartphones are even more exciting. For the half of matches that are on TV, we'll have in-game and live highlights direct to your mobile device. And given that only about 1 in 4 U.K. homes have access to the live game on TV because it's on a premium channel, this is very interesting for many people. For the other half of matches, on a Saturday afternoon, there is no live video coverage available anywhere, more of that famous U.K. regulation helping us out, and we'll be the first to offer highlights straight after the game to your mobile device about 5 hours before they appear on TV.

So we'll be embedding these clips into our digital products, integrating with -- them with our sports journalism, linking across through our fantasy games, The Sun's Dream Team is the largest fantasy game in the U.K. And we'll be sending push notifications to our subscribers to let them now there's something that they really do need to see right now even though they're out shopping with their family.

And while we think our video offering will be great in its own right, even more important is the role it will play in catalyzing our move of The Sun to being clearly paid-for in all formats. And this initiative is a great example of the opportunity to leverage the strength of the businesses across the new News Corp. portfolio.

Our colleagues in Australia, with their insights from Fox Sports Australia, were invaluable in helping us to plan and execute on this, including designing and developing the customer experience, to putting in place the production processes.

Now before moving on, I did also just want to mention that we're keen not to exclude our loyal print purchases from all this soccer excitement, and we're engineering a way for them to enjoy Sun Plus, including the EPL goal clips as well. This way, as well as driving the digital growth, we also set ourselves up better to maintain print volumes.

So I talked about our core titles and the key initiatives that we're pursuing to take each of them forward. Now I just want to take a moment to talk about the other ways in which we're further monetizing our core assets and improving our profitability. One of the areas of increasing emphasis in the business is to take advantage of our well-defined franchises, growing direct customer relationships, and still growing data about our customers and to offer them additional products and services. The most established of these is Sun Bingo, a popular and profitable gaming site that continues to grow. Going forward, we're working on plans to augment this activity with Sun Bet, which will further leverage our sports heritage, the opportunity presented by the Premier League clips and the 850,000 people who play our fantasy football game every year. Another rather more tangible asset is our market-leading printing capability. News International invested at scale in state-of-the-art print facilities in 2007, that's gradually become the largest contract printer in the U.K. As other publishers phased their print assets or other arrangements coming to the point of requiring renewal, many prefer now to bring their print business to us. And we have continued to fill our presses, and we are painting more today than we were in 2009.

And of course, we're also -- we're always looking for ways to work more efficiently, whether as a stand-alone publication or in the context of a global news media organization. We are particularly excited about the latter, as we implement initiatives like Newsroom 360, which are transforming our newsrooms to modern ways of working, removing duplications and simplifying processes.

In this context, it has been of huge value to learn from The Wall Street Journal, which is further advanced in this area than we are. And the teams that we have sent over to learn the art of the possible from The Journal have, without exception, returned as inspired evangelists.

So what would I like you to take away from our brief time together? Presently, we're focused on continuing our transition to a business model which delivers sustainable profit growth, and we're well placed to continue to succeed. Why? Well, 3 simple reasons. First, we have the best news assets in the U.K., starting with our heritage in distinctive editorial propositions but also, as this translates into a strong market position with our readers and with our advertisers. Second, I think we're the most dynamic news organization in the U.K. and the most advanced in transforming the business model, our customization propositions and our business processes. And third, there are many additional levers that we have available to us to drive profitability of both the revenue and the cost side.

In closing, I just like to say that there is a real sense of excitement in the U.K. business around the separation, our recent initiatives and the common focus that we share with the other businesses throughout the new News Corp. I hope I've been able to share some of that excitement with you here today. Thank you very much.

And now we're going to be continuing our tour of axioms of the world, and we now move from New Zealand to Queens, as I welcome Paul Carlucci to the stage for our News America Marketing.

Paul Carlucci

Thank you. A very clever line. Thank you. Thank you for staying seated everybody. That's the last time I'm going to have Lex write my opening joke, nobody responded to that. That's it for you, Lex. News America Marketing, I've been doing this for over 22 years, I've enjoyed it very, very much. Our business is broken down, we group it into 4 business segments. The first, SmartSource Magazine, referred to as FSI, free-standing insert, represents 47% of our total revenue. Our in-store advertising and promotion business represents 25% of the total revenue. 6 businesses combined: digital, Merchandising, agency, Custom Publishing and direct mail, represent 22% of the total revenue. And international, which is totally Canada today, is 6% of our total revenue.

Source -- SmartSource Magazine has a circulation of 74 million in the United States. It has 173 different editions, and is published 44 times per year. The national adult range is 68% and the distribution, 95% of it, is through 3,600 newspapers, mostly ABC ordered it in the United States. And in addition, we have a small TMC, total market coverage, and we have some community newspapers in that 95%.

5% is in shared mail. The average page size of the book is 34 pages and our market share is 65%. There is no editorial content. The content is made up of packaged goods, 68%, mostly coupons; direct response, 16%; and general advertising -- and accounts that come into the general advertising category include DIRECTV, eyeglasses, banks and credit cards.

The uniqueness of the business is category exclusivity. In the 44 issues, if you are a tomato sauce and you choose to run in a particular issue, you are the only tomato sauce in that issue. We have national media with geographic target -- targeting capabilities. And the low -- a very, very low CPM. For $350,000, you could hit 74 million households in the U.S.A. Two interesting facts. And the first one is probably not well received by some of the editors in the room, is the FSI is the most read section in the Sunday newspapers. Last year, 300 billion coupons were distributed in the United States and 89% of them were in the FSI. Our in-store business, we have the rights to sell advertising and promotion in 50,000 stores that we have under contract. We have 13 4-week cycles that we sell into. Some of our products include coupon machines, cart ads, floor ads and at-shelf products. Of the 50,000 stores we have contracted, food and drug have both over 16,000 stores. We have 10,000 stores in the dollar category, through Dollar General, and other, we refer to as new class of trade. They include Kmart, Circle K, Staples and Bed Bath & Beyond. The 46% ACV means 46% of all commodity volume, which in essence, means 46% of the food that is sold in the United States, we have those 46% with the 16,000 stores under contract. The uniqueness of this business, again, category exclusivity through each cycle. That causes, in essence, in many instances, category tension, because a lot of the people in the packaged good companies have seasons, it's air freshener season, it's allergy seasons, it's yogurt seasons, and so they battle, and in many instances, we have an upfront commitment. Much of the business that is run in this fiscal year up to this day was contracted over 2 years ago, and that will continue and has for many, many years.

Brand message is delivered at a point-of-sale, and the chart on the right, our in-store sale trend is up 25% in the last 46 weeks. We have 25% more in-store sales than we had the previous year day-to-day for the current fiscal year. This gives us great optimism in our business. The sales trend is really based on the recovery from what we thought was faulted research in the marketplace.

We have 12 sales offices across the United States and Canada. We have over 120 salespeople. They are required to make 10 sales calls per week. They also have the ability, and in most instances, those calls are direct to client. Our largest clients are: P&G, Kraft, Colgate, Campbell's, J&J and SCJ. Growth in the other business segments include digital. We have 3 main digital outlets. One is SmartSource.com, which is a print-at-home solution. We've been in business in that business for over 10 years. And the business is profitable and the business is growing. But it also has something that may not be a long-term behavior pattern, it's printing coupons at home and bringing them into stores. So we developed 2 other areas, we have an iPad and an iPhone app. Those apps are in 3,200 contracted stores. There's a onetime registration. And what happens is, you turn the pages on your app, you could have recipes, you could have commercials and you could have coupons. If you see a coupon that you desire, you touch it, the word clip comes across the coupon, it automatically downloads to your loyalty card in any store that you shop, onetime registration. And that goes through AOL shortcuts. And so therefore, at point-of-purchase, you have a paperless coupon. You'll also have a shopping list on your mobile device, which tells you all the coupons you clipped, when they expire and the dollar value of each coupon. We're in 3,200 stores as we said, currently, and when we get to 10,000 stores, it's going to be a very, very profitable business.

The third area of digital, eFSI. Many newspapers, both on their apps and on their websites, are now taking PDF versions of inserts, Target, Macy's, a whole array of different inserts they're putting on the bottom of the front page. They have print-at-home solutions and they also have the ability to download to their cards. We are developing this. We should be out by the end of the year with this. And we think this is going to be a very important business. The reason we are taking a little longer in development, we need security that you can't change the value of the coupon and you can only get 1 coupon downloaded in any method that you desire.

In Merchandising and agency, we have a limited variable cost. In Merchandising, we have 3,500 part-time workers. Those workers install all the things that we sell in the in-store system. We are now pursuing both retailer and manufacturer to do additional merchandising in the stores that we're in. The business is growing and it's quite profitable.

Agency, we also have -- because we place ads or flyers in 3,600 newspapers across the United States and Canada, we have a relatively sophisticated advertising, the ability to negotiate and place those ads, and we developed advertising agency business. We are now the advertising agency for both Dollar General and for Far Below. Custom publishing, Custom Publishing is defined as a book that's owned by 1 company that's inserted into the newspapers. We have the Custom Publishing rights to Brand Stable, which is the P&G book. We also do Dunkin' Donuts, General Mills, Dell and Dollar General. Dollar General, interesting story, we started by doing one piece in Custom Publishing. It led to becoming the advertising agency for them. And after a year of doing business through Custom Publishing and placing their ads, we now have an in-store business with them, which is over 10,000 stores.

The last area, direct mail. We buy data from retailers, we resell it to manufacturers and we sell that either to promote or sampling products.

We have many growth levers across our segments and we're very optimistic about them. On the free-standing inserts, the digital business, we think the apps and the eF -- the electronic FSI are going to be growth businesses. And the Custom Publishing and agency models that we just spoke about, we have momentum, and now we have more emphasis.

General advertising. And general advertising is a great opportunity. At one time, the largest advertiser in the FSI, when I first got here, was tobacco. And then, it shifted to -- without losing any pages, it shifted to cereal. And we think because we have the ability to have a mass product at a very low CPM, that we have an opportunity to sell general advertising. We are currently pursuing mutual funds, banks, insurance companies, both life insurance, auto insurances, and make another alternative for them to supplement television and have a broad reach at a very inexpensive cost. International, we're going to go to our partners in England and Australia, and we're going to try to see if we have an opportunity to launch a free-standing insert in those countries.

On the in-store side, Merchandising, significant growth, great margins, again, we have a very limited variable cost to growing that business. New class of trade, we think the new class of trade going after the auto industry, the hardware industry, the big box industry, expanding our office supply relationships and our convenience store relationships.

Internationally, our business in Canada is growing because we recently signed Loblaws. In the United States, we have regional food retailers. And in many countries, we have national food retailers. In Canada, there is only 3 major food retailers. Loblaws represents 42% ACV. So if you get one of the 3, you're in business. In Australia, there are 2 major food retailers. We need 1 of the 2. And in England, we need 1 of the 3. So we think there is great opportunity to expand our business internationally in all 3 -- all 2 additional countries.

In summary, we are enthusiastic about the SmartSource Magazine business, the exclusivity, the low cost per thousand, the vast audience. The page group growth trend has been very, very strong over the last 10 years. It continues to go up in pages. It functions and does well in a poor economy, and it does well in a good economy.

General advertising, we think, is a tremendous opportunity for us, and we have taken our very best and top salespeople and just recently assigned them to all the accounts that we are targeting in that area.

On the in-store side, exclusivity. Again, an important driving force, high ACV, all commodity volume. New class of trade expansion, we are aggressively going after the new trade. New products, this year, we launched an at-shelf video product, and we are developing other products to launch in future years. And we think that there is a tremendous characteristic, the decision of point-of-sale, and that characteristic is impulse. Many of us, myself included, have become people who use products that their family use. When you go out on your own, if your family used Colgate, you end using Colgate toothpaste, you don't develop the -- tube press. 50 years ago, my mother gave me Secret deodorant, and that's a woman's deodorant, and I'm still using it 50 years later. And what happens is, you go in, your family drinks Tropicana orange juice for 20 years, and you come out with simply orange, and what happened? Well, hopefully News America Marketing had some type of impact on your impulsive decision.

Our digital business, our Merchandising business, our agency business, our international business and our Custom Publishing business, all the segments are profitable, all the segments are growing. We have a high free cash flow. We have steady revenue and disciplined cost management. We have 5 major expense tenets, those are: printing, retail fees, FSI inserting fees to newspapers, field expense and the cost of paper for printing the FSI. Four of those are driving and going down for the second consecutive year. The only one that is a difficult one and an unpredictable one is the cost of paper. We have the ability to buy paper long in advance and store it. But we have the other expense tenets that we could bring down to offset the cost of any additional paper increases.

The low capital requirements, our cash flow is actually higher than our operating profit. And that's because we have a very low capital requirement.

And I thank all of you. It was a pleasure to talk about News America Marketing. And the most memorable thing I want to say today is coming up now, it's time for the break. We will see you back here in 15 minutes when we introduce the delightful Kim Williams, CEO of Australia. Thank you very much.

[Break]

Michael Florin

All right. I hope you all are refreshed. We're going to take a trip to Australia now. It's my pleasure to introduce News Limited CEO, Kim Williams.

Kim Williams

Thanks, Mike. Good afternoon, everybody. It's a privilege to be here. Today, I'm going to talk to you about the Australian operations of the new News Corp. Broadly speaking, News Corp. Australia has 3 parts to it: publishing, broadcast television and online real estate. And as you will see, they are far from distinct entities. They have close symbiotic relationships that make the whole much more than the sum of its parts. Before we start, I'm going to play you a short video that we put together to introduce the Australian businesses.

[Presentation]

Kim Williams

I'll now go into more detail on our publishing operations. To start with, I think it's worth understanding the context in which these businesses operate. First, there is a structural adjustment with the new multi-platform media in Australia, which moves experience in the U.S. and the U.K. We are all now operating in a vast whole multi-platform world. Online delivery is central to multimedia platforms. The rates and stand-up performer in all of this is, of course, that friendly computer in your pocket, the smartphone. While online is still a dominant platform, mobile is rapidly growing in shared [ph] media consumption. Mobile operation impressions have gone sixfold as of the past 2 years, January 2011 to January 2013. This is a terrific opportunity for News because, as you will hear later, we have the biggest mobile news network in Australia.

In this environment, overall share of print advertising has declined over the last 10 years. Meanwhile, the placement of ad sellers [ph] in multi-platform domain continues with an annual compound average growth online of 18% over the past 5 years in Australia.

Second, the aggressively weak government leadership has generated pronounced consumer and business uncertainties. This has tempered [ph] the generally strong economic outlook resulting in restrained consumer confidence. These confident settings will not change before the next election in September and may take some time to abate after a generally anticipated change of government.

Third, in this restrained consumer confidence environment, media players have been experiencing subdued revenues and declining print circulation. We are not exempt from this and have been responding resourcefully. This has included the progressive elimination of low value print copies, as Robert mentioned, and a myriad of other operating efficiency initiative. What is certain is that our competitors are having a tougher time of it than we are. That said, the ad environment remains rather challenged as we indicated in the most recent News Corp. earnings release, and we're responding accordingly.

This environment also, of course, offers a variety of strong opportunity for News. Our leadership positions in key categories, such as news, sports, business, style, health and parenting means we are well placed to take advantage of the continued multi-platform evolution. We have also recently launched new digital subscription products, which I will cover later.

Also FOXTEL, Fox Sports and REA are among several companies that are performing particularly well in this market. They are market leaders with solid growth prospects.

Let's take a closer look at the business. As I mentioned, the Australian operations fall broadly into 3 categories: publishing, digital platforms and broadcast. Together, they are the leading portfolio of media brands in the country and make us Australia's largest media organization by advertising sales. We are the #1 in newspaper circulation, the #1 in sports programming, the #1 subscription television provider, the #1 in online real estate and we are the category leaders in food, parenting, style, health and premium business.

I'll first describe our publishing operations. News is Australia's leading publishing company with many of Australia's most recognized newspaper and magazine brands with healthy digital product extension. We published over 17 million print copies of over 120 national, regional and community newspapers every week. Around 10.5 million of those are paid-for copies representing a 63% share of all paid circulations. The balance through [ph] our 3 community titles, which operates in a suburbs of Sydney, Melbourne, Adelaide, Brisbane and Perth. We published the internationally distributed broadsheet newspaper, The Australian. We published a metropolitan newspaper in 8 of the Australian state capital cities in Sydney, Melbourne, Brisbane, Adelaide, Perth, Hobart and Darwin, as well as in the key regional cities of Cairns, Townsville, the Gold Coast and Geelong.

We publish the biggest selling weekday newspaper in the country, Melbourne Herald, Sun; and the biggest selling newspaper of all, Sydney's Sunday Telegraph. In total, our Sunday printed newspaper network reaches 4.7 million Australians every week, the largest single wins in Australia in any medium.

We also published 12 leading magazine titles, including Vogue, GQ, donna hay and delicious. Together, they are read by over 2.5 million Australians every month. In addition, we publish 11 newspaper insert magazines across Australia, which are read by nearly 5 million Australians every month. This unrivaled portfolio of respected media brands is thriving in the digital world, and together, with some digital pure player sets we owned, makes us leaders in the most valuable stable growth categories.

We have expanded these great prints and magazine assets digitally to create strong, new digital products that connects with consumers. For instance, in news analysis and opinion, there is no deficit of digital brands in the country. We now have a total of around 6.7 million Australians visiting our digital network every month. I'm delighted to say that our digital only news brand, news.com.au, has moved into the top spot as Australia's #1 news site according to the most recent Nielsen online ratings for April 2013. It's consistently being #1 in the 18 to 34 audience, but thanks to year-on-year growth of 16.5%, it has now taken the overall #1 position. news.com.au will play a key role in the future about online ecosystem that will continue to attract a much younger demographic and compete vigorously for advertising dollars in its market. It will also continue to play a vital role in referring traffic to the rest of our network and acts as a marketeer for our subscription offerings on which I will speak further shortly.

We acquired the online assets Business Spectator and Eureka Report last year -- I'm sorry, last year, to both through [ph] our business proposition when combined with local assets, such as The Australian; and international products, such as the Wall Street Journal. We have a powerful business proposition which stands head and shoulders above anything else in the local Australian markets. Their combined audience stands at 1.6 million unique [ph] and having the 32 million page views every month.

Our lifestyle division, NewsLifeMedia, which has as much so powerful brands as taste.com.au, kidspot, BodyandSoul, Homelife, bestrecipes, Sunday Style, donna hay, and as I mentioned before, Vogue and GQ, also offers compelling digital products. Together, these brands reach around 7.2 million Australians every month in print and digital. That 7.2 million Australians who choose to engage with their passions through our brands on multiple occasions across every month. They also concern category-leading positions, include parenting, style and health.

For example, taste.com.au is Australia's #1 food destination. And take kidspot, this is also a truly remarkable brand. Its online offering, along with the sister site, birth.com.au, teaches every resource a parent need from practical advice on raising kids, information about food and health and an award-winning directory of services, activities, shop, education and learning. It also has a very active circle community with lively forums and social groups where parents blog and discuss current issues. It's no surprise kidspot is the #1 parenting source in Australia and New Zealand. This, of course, is very attractive to advertisers who want to reach parents through display advertising and product sampling.

Take also BodyandSoul, it is Australia's most read health and well-being publications with 6 million prints and digital readers. We are strengthening BodyandSoul's digital offering and footprints to solidify our position as Australia's biggest and most powerful health and well-being brand.

That completes an overview of our publishing businesses. Now I'll take you through some of our key plans to manage performance in these parts of the company. We have taken a number of initiatives to drive these businesses appropriately. They include: continuing to invest in high-quality premium content; leveraging our brands to expand content across new digital products and platforms; integrating our media offering to strengthen category leadership position; improving operating results through advertising integration and operational efficiencies; and increasingly supplementing advertising with subscription revenue and fresh revenues from special product offers, including e-commerce.

I'll now go into a little detail on each of these points. We will continue to invest in high-quality products and content. This includes investing in the platforms that enable us to provide this content. We're currently completing the rollout of the new $60 million digital journalism management system, Eidos Methode. This enables News to even better utilize our workforce and service our customers by creating ones [ph] publishing many times across all platforms, prints, online, mobile and tablet. It will allow us to both create better journalism products and allow us to showcase and exhibit our existing content across a wide range of devices. We accelerated the delivery of this new system from the original 3-year timetable to around 12 months. By the end of June, we will have 90 titles using the technology. Our key metro titles will go live in July and August.

Last year, we acquired Business Spectator and Eureka Report, which as I noted earlier, has consolidated our position as the leading Australian publisher of online business news and analysis. With the acquisition of the James Packer controlled Consolidated Media Holdings in November 2012, we achieved 100% ownership of Fox Sports and doubled our stake in FOXTEL to 50%, which are both powerhouse content businesses. Full ownership of Fox Sports gives us 100% of our business with extremely strong sports rights from the best sports channels in the world and the depth of programming talents. I'll talk more about those terrific businesses in the next section of this presentation.

Second, we are leveraging our brand, expanding content with new digital products and reaching consumers across multiple platforms. Last month, we began the rollout of a new set of websites and msites for our metro newspaper titles. The designs have been thoroughly market-tested with thousands of consumers. They are fresh and contemporary and have been specifically tailored for each user platform.

Our mobile side has also been refreshed and are now faster and easier to navigate. We've also optimized the website for tablet viewing from the get-go. For advertisers, we now offer consistency across our network in ad placements and shape, driving down production costs and ease of transacting with our networks. The new sites also drive deeper user engagement, and the subscription environment we are introducing offer many premium advertising opportunities. And we now provide great broadcast style advertising possibilities to online and mobile delivery equally.

Third, we are leveraging our brands to consolidate our leadership positions in key categories. For instance, this slide shows that combining Fox Sports digital numbers, with the digital numbers to the sports section of our market with the millions of people who watch Fox Sports and visited website, makes us #1 in the sports category by a large margin. We're also offering integrated advertising packages across these assets, including broadcasting. Similarly, the integrated digital business offerings of the Australian Business Spectator, the WSJ and Dow Jones, make us the #1 business destination. kidspot, taste.com.au and Vogue make us the #1 destination in the parenting, food and style categories.

Fourth, in terms of key initiatives, we are driving integration and operational efficiencies to prudently manage cost. Already, we've streamlined the business moving from 19 divisions to a slender new divisional structure built on geography and product. We're rolling out shared services across all support areas in technology, finance and HR, and from that, have identified and implemented a number of operational improvements throughout the enterprise.

We've made fundamental changes to our editorial operations ensuring we have strong customer focus for our journalism. For example, we've introduced integrated 7-day newsrooms with new super news desk, which cover major capital cities and states. This enhances editorial coordination and provides greater flexibility for editorial teams with a consumer-first publishing priority. We're also completing an extensive ad sales transformation resulting in a leaner, more client-responsive, customer-focused approach.

Finally, in terms of key initiatives, we are driving direct revenue by energetically promoting subscription products across the group. As you can see from this slide, we have many sources of strong subscription revenues. Already, our businesses and investments derived over $2.7 billion in subscription revenues from FOXTEL, Fox Sports and digital offers through REA, the Eureka Report, The Australian, the Daily Telegraph, the Herald Sun and diverse magazine digital apps. We also drive large subscriber revenues up close to a couple of hundred million dollars in our print products.

In our masthead, The Australian now has over 250,000 digital subscribers, which is a remarkable achievement given it's Monday to Friday circulation is around 120,000. It's been growing strongly quarter-on-quarter, and last month, we launched our new digital subscriptions brand, news+, to Sydney's Daily Telegraph and Melbourne's Herald Sun. This supports our new masthead model through our mixture of titles and their progressive movements into the digital subscription demand. Shortly, we will launch Brisbane's Courier-Mail and then the Adelaide Advertiser digital subscription product. Thereafter, other titles across our extensive network will follow.

news+ offers a compelling example of an integrated media offering, driving both print and digital subscriptions. We combined the extraordinary popularity of our mastheads with compelling sports, lifestyle and other contents and our scale to create a unique and compelling consumer proposition. The news+ brand that brings together the power of our unrivaled national coverage and distinct focus localism and bracks [ph] innovative ways to capture consumer attention. Subscribers to news+ get access to our great mastheads, which publish over 2.5 million stories each year. The content reflects the best news, analysis and opinion from some of Australia's most large and respective journalists. It's the only truly national commercial news network. We have the best sporting coverage bar none, and we have a wide range of exclusive content in a wide variety of lifestyle and entertainment segments. We'll continue to enhance the value of news+ by progressively launching exclusive content, products and offers firmly targeted at making consumers' aspirations and needs.

As well as the revenue we derive from our subscription products, we will, of course, be collecting a huge amount of highly valuable data. We are creating a national database, which will have more demographic and behavioral data about our consumers than we have had ever before. It will enable us to meet the demands of contemporary advertising briefs [ph], which require rich segmentation and the ability to purchase by audience not buy a product or platform. Having such impact [ph] into our consumers in their behaviors will also enable us to iterate our products more quickly to meet their needs.

We are also looking forward to the launch of The Readership Work, new reporting product called accurately measuring consumption and engagement across all delivery platforms. It is then composed after extensive testing by the internationally respected independent research company, IPSOS. In the first quarter of the next financial year, IPSOS will launch this new independent news media industry and magazine accountability standards. This new methodology will provide the most relevant and contemporary leadership measurement. It will capture the true picture of media consumption across news, media and magazine, prints and digital platforms. It will also provide details on engagements and consumption comprehensively on a monthly basis rather than a current outmoded quarterly reporting timetable. The data that will be available is deeper with rich insights bringing information about publishers' products and their close connection with consumers. This new approach follows extensive investment from The Readership Works with constant development efforts, research and testing from all the research experience of IPSOS over the last couple of years. It will start to demonstrate the errors and inconsistencies with other reporting approaches. It will provide advertisers with better opportunities to engage audiences with more creative, innovative solutions backed with comprehensive accountable data. This rich data set will be provided to facilitate informed decisions on campaign planning and better utilization [ph] of performance delivery.

In summary then, as in other countries, we are seeing a shift in audiences from print to multi-platform consumptions. Advertising is following consumers. We are proactively transforming our business, addressing these movements in technology and responsive consumer behavior. We are investing in innovating our existing publications, platforms and processes. We are integrating them so they work well to deliver for our customers, and we're launching new products. We're doing all of these to better serve our consumers and advertisers equally while striving better efficiencies.

I'll turn now to broadcasting and television. As in other markets, digital technology and changing consumer expectations have driven significant changes for the landscape in recent years. We have seen a big increase in the number of free to air broadcast network channels from 5 to 17 channels, which are marketed selectively under the free view brand. FOXTEL has continued to expand the number of channels it offers from around 150 six years ago to over 200 today. It's been a record move to providing television over IPTV and to tablets, and there's an active on-demand environment with catch-up and single program or from transactions action now being common place. These present consumers, like their counterparts in other markets such as the U.S. and the U.K., now expect to consume what they want, when they want this over the device of their own selections.

Sports FOXTEL, Australia's leading subscription television provider; and Fox Sports, Australia's leading sports broadcaster, have been fundamental in driving and making this evolution and consumer aspiration and expectation. They are both outstanding businesses. This is why in November 2012, News Corp., with the CMH transaction, increased its holdings in both FOXTEL and Fox Sports. Post the transaction, News now holds 50% of FOXTEL. Our partner in FOXTEL is Telstra, Australia's renowned leading telecommunications company. We similarly increased our shareholding in Fox Sports that we now have of 100%. In making these acquisitions, we have not only acquired 2 highly innovative and financially strong businesses, but businesses allow us to provide customers with integrated products, which leverage our scale and extend our offering range.

I'll talk first to FOXTEL. As I said, FOXTEL is Australia's leading subscription television provider. FOXTEL provides services to over 2.3 million Australian households, or around 30% of occupied homes following 2012 successful acquisition of the listed regional operator, Austar. Austar was formerly majority controlled by Liberty Global Media. FOXTEL distributes across a wide range of platforms, including satellite, cable, IPTV and mobile network to a wide range of devices including televisions, personal computers, mobile phones and tablets. It has strong ARPU at USD 99 per month at customer household and comparatively low churn of around 14% as of the last 9 months.

One of the key reasons that FOXTEL has performed very strongly is that it has invested and innovated always moving with consumer trends. Prior to going digital in 2004, FOXTEL offered -- choose out 46 analog channels as a cable and satellite. Fast forward to 2013, and it offers over 200 channels across multiple platforms and to multiple devices. It is a digital and consumer innovator in Australian television and has choked up a series of first, including being the first Australian media company to broadcast fully digital and interactive services to all its customers. It was the first Australian media company to offer customers a personal digital recorder for the simple intuitive [ph] electronic programming guide, which transform the experience of television. The PVR now enjoys 80% customer uptake.

FOXTEL was the first Australian media company to broadcast every game, every week of the highly popular Australian Football League, uninterrupted by ads and in HD. It was the first company to broadcast the 3D sports match in Australia. It was also the first Australian media company to offer a wide suite of channels across mobiles and then other tablets devices. You get the message, it is the innovator in Australian television.

FOXTEL has always invested sensibly in strong programming and is the premier phase [ph] for most movies, premium sport and live event programming in Australia. It holds the rights to a wide range of compelling shows, series and sports. Outside of sports, this includes quality international dramas, such as Game of Thrones and House of Cards; highly popular international franchises, such as Selling Houses Australia and Australia's Next Top Model which talks [indiscernible]; and locally produced shows such as River Cottage Australia and Aussie Pickers, that resonated strongly with Australian audiences. It has most of the major channel and entertainment brands known and loved worldwide.

The strong history of innovation, the quality of FOXTEL's programming and the choices offers [ph] customers means that FOXTEL connects strongly with Australian audiences. As this slide illustrates, FOXTEL is the highest rating television provider when compared with the 4 major [indiscernible] networks and their channels in the major capital cities. FOXTEL ended 2012 with a 23.2% share of viewing in all metropolitan homes. This was FOXTEL's highest viewing share ever. It was 1.6 share points above its newest rival, the Seven Network, which had a 21.6% share across the 3 channels.

Investments, innovation, great shows and catering directly to consumer needs have all delivered strong financial results for the company. In the 9 months to March 31, 2013, FOXTEL generated USD 2.4 billion in revenue with an EBITDA of USD 675 million. This was driven by the strong ARPU I mentioned, and when compared with U.S. counterparts, relatively low churn of 14% average across the 9 months to March. External company did stand with USD 2.1 billion that has been driven principally by the Austar transaction mentioned earlier. Debt-to-EBITDA ratios are well within a comfortable [ph] range, overall, a strong financial results.

The company is not risking on a slow [ph]. It is continuing to innovate, it is continuing to acquire strong content and to cater to changing needs of customers. For example, late last year, FOXTEL acquired exclusive access to new HBO series, miniseries, comedy specials and documentaries. FOXTEL recently acquired the exclusive rights to BBC premium drama and comedy programs that were traditionally shown first on the government broadcaster, CIBC. This gives FOXTEL access to almost all of ABC's output exclusively for 12 months before it's available anywhere else. FOXTEL also continues to invest in new ways that consumers can enjoy products across platforms. For instance, last year, we've launched FOXTEL Go, which allows subscribers to watch their favorite shows on tablets, to name but one of the company's many recent innovations.

In summary, FOXTEL is a strong subscription television business that generates good ARPU, its churn is comparatively low, it has a history of building products and offering programming that connects strongly with consumers. It is a business that News Corp. built from inception along with our partners at Telstra and its settings are right for the time.

A key part of FOXTEL's success is the outstanding sports programming provided by FOX Sports. I turn now to this investment. Australians, like Americans, love their sports. There are arguably 5 primary sports competitions in a country of 23 million people and wait for them all. First, our indigenous game, the Australian Football League. This was traditionally played in the southern states, but is today played nationally. If I could be Crowfield [ph] just for a moment, it's a marvelously free-flowing game of great skill and athleticism, which you should watch if you ever get the chance to.

Second, Rugby League, which is hugely popular in big states such as New South Wales and Queensland. It is gaining in popularity in other states such as Victoria, where the Melbourne Storm won the Premiership last year.

Third, soccer is popular throughout the country and is played by more young people than any other single sports. We've been the foundation partner in building the Hyundai A-League over the last 8 years.

Fourth, Rugby Union, which is very popular with key demographics and in important states such as New South Wales and Queensland. And finally, cricket. The traditional form of this game goes over 5 days, which has been described to me on many occasions by American friends as baseball on Valium. Nevertheless, it is highly popular and new forms of the game are much faster. FOX Sports is Australia's leading sports programmer. It competes with the free-to-air networks, ESPN and some telecommunications providers, for programming and audiences. The sport is, as I've mentioned, hugely popular with Australians.

As I said before, in November last year, we increased our shareholding in FOX Sports to 100%. We put up a great business. It holds exclusive broadcasting rights to a wide range of highly popular sports programming. It provides more hours of sports programming than any other broadcaster in Australia and averages 23 hours a day of live sports. It provides more sports channels than any other broadcaster, with 7 standard definition digital channels, 5 of which are also available in HD. The popularity of FOX Sports programming is also found in the fact that around 80% of the FOXTEL customer base take the sports gear. Like FOXTEL, FOX Sports has a strong history of innovation to consumers. It has been the innovation in Australian sports broadcasting from its superb new broadcasting studios to a wide range of broadcasting innovations, which brings a whole new dimension to how sports are broadcast. This reel captures some of the innovation.

[Presentation]

Kim Williams

FOX Sports has secure hold over the -- to a wide range of the sports I mentioned earlier. It holds live rights to every AFL game, excluding the grand finals. AFL is extraordinarily popular with Australian viewers, and they thrive to secure it up until the end of 2016. It holds the rights to hold Rugby League games, including exclusive live rights to 5 games out of the 8 games played each week. These rights are secured until the end of 2017. It holds the rights to every game of the domestic soccer competition, known as the A-League, the international Australian teams games and the Asian Champions League. These rights are secured until 2017. It holds exclusive rights for the entire English Premier League. It has secure rights for the Rugby Union, including the premium Super Rugby, a contest between Australia, New Zealand and South Africa. It also has rights to a wide number of other sports that are popular with Australians including importantly, tennis, cricket, motorsports and net board [ph] to name but a few.

The popularity of our sports programming takeup of the sports tier on FOXTEL and FOXTEL substantial customer base all combine to name that FOX Sports generate strong revenue and good EBITDA margins. For instance, FOX Sports had revenue growth of 19% between FY 2010 and FY 2011, from $373 million to $444 million. It showed [ph] growth between FY 2011 and FY 2012 of 9%. It has continued to enjoy good revenue growth, notwithstanding the consumer share settings that I described earlier this financial year with growth of 5.6% over the last 9 months.

Notwithstanding recent competitive pressure of the rights renewals, FOX Sports retained all key rights. As you can see, there was a modest bottom line impact due to reasons that I might term risky pricing. The major rights negotiations are now complete for at least the next 3 to 4 years. We've also recently completed capital investment for the new HD state-of-the-art broadcast facilities in each of the major cities of Sydney and Melbourne.

The EBITDA figures for FOX Sports are strong and stand at around 30% margins across FY 2012 and FY 2013 over the last 9 months. All the key drivers of the business are strong and pointing in the right direction. We have secured programming rights, we have expanding distribution deals and we're looking at new innovative ways of combining the FOX Sports offering with our other digital publishing offerings to drive revenue. As I outlined earlier, we offer a wide range of premium FOX Sports content with News Plus. Like FOXTEL, it is a great business and we're happy it would increase our stake to 100%. Like FOXTEL, it is also a business that News Corp. has built from inception against very strong opposition from both the incumbent broadcasters and some unfavorable domestic policy settings. But as with other News Corp. businesses around the world, we've been able to build a great business in the face of opposition.

In summary, FOX Sports is a great business. It has very strong programming rights along with creative [ph] innovations and a large dedicated customer base. We're increasingly integrating its offerings with our publishing product to create compelling, new multi-platform product for consumers that will drive subscription revenue and competitive differentiation.

I now turn to REA. REA is Australia's leading real estate digital advertising business. We hold a 61.6% share in the company. It's a powerhouse. It operates the largest residential property website in Australia. It has generated 40% net profit aftertax compound annual growth over the last 10 years. It also operates marketing leading sites in parts of Europe and Hong Kong. The company has positioned exceedingly well in the Australian market. It outperformed competitors significantly on all key indices, as Robert mentioned. It has 3.4x more visitors that we in total spent 4x more time on REA than on the nearest competitor. All this adds up to REA being Australia's #1 site. As you know, in a pure digital world, there is very significant upside for being the #1 player.

REA has 3 distinct users and is essential for the commercial life or activities of each: Consumer or the buyer of property; customers, realtors, banks, financial institutions and telcos, et cetera; and vendors that sell out the property.

As you would expect from such a good business, it operates across the property lifecycle, providing consumers with exactly what they may define by lease, renovate and finance their property. Central to this is the data and analytics that allows it to better serve old users and continually enhance its product offering. As you will appreciate, the product and data are highly valuable of wide range -- to a wide range of segments, including, naturally, realtors, property owners and purchasers and vendors, of course. Thanks to the finance institutions, utilities, telcos, real estate agents, insurance companies from [indiscernible] and homeware-related retailers also have a close interest in REA product development.

The company offers a wide range of products. These broadly fall into 3 categories: Subscription products for realtors; listing products, which meet the needs of vendors; and the brand products for a variety of user needs. Each of these connects very strongly with their diverse users.

REA has a strong history of product innovation in the best traditions of digital innovation. It holds a leadership position in real estate, and it offers products that are valued as usage data and profitability at hand [ph].

This all translates into a good financial story. REA's revenues have more than doubled since 2008 to USD 286 million in the last financial year. As you can see from this slide, its EBITDA margins have risen to 45% in FY 2012. Revenue growth has been consistent across all of its key markets. These figures represent impressive growth, particularly at the time when real estate markets in Australia have been subdued.

The company has a clear focus on the future and strategies are moving forward. It will, first, remain a market leader through a focus on continuous innovation and investment in technology; second, focus on growing average revenue per agent by rolling out value-added products; third, focus on mobile functionality and magnetizing mobile traffic, given mobile is very much the current wave of the digital revolution; fourth, continue to invest in customers through product development, driven by data and focus on increasing customer satisfaction; fifth, rigorously focus on cost and operational excellence and efficiency; and finally, deliver EBITDA improvements from its operations in international markets.

The REA business is well positioned to continue to benefit from the structural move from print real estate advertising to digital. It provides an excellent center of product knowledge and innovation that will be a benefit to the wider News Corp. group as it builds on its own real estate product. And it generates good cash flow to the Australian business, as well as providing opportunities for bundled and integrated product offerings.

We believe that the strong financial position of the business, coupled with the clear strategy to move with the consumers to continue to innovate and to focus on efficiencies will all drive the business offered toward long-term opportunities.

In summary then, the Australian operations told the series of great print, digital and television assets. The company is continuing to invest and innovate. It holds a leadership position across key categories, offers integrated products and has many sources of subscription revenue. Its financial performance as a whole is strong, and it retains a laser-like focus on profitability, growth and operating the business very efficiently.

Thank you. Now it gives me very great pleasure to pass over to my friend and colleague, Brian Murray, the CEO of HarperCollins.

Brian Murray

Thank you, Kim. Today, you've heard about the digital transformation of our other publishing businesses. Now I'd like to tell you about the digital transformation of the consumer book business. By the end of this presentation, I hope you'll agree with me that the book industry is on solid ground and specifically, HarperCollins is ideally positioned to excel as a digital and profitable leader in the book business. There's 2 clear themes that give me confidence and make me very excited about the future of books. One, there's increasing demand for and consumption of books; and two, digital leads to improving margins, cash flow and sources of working capital. But more on all of that later.

So who are we? So HarperCollins is the second largest English language book publishing company in the world. We have wholly owned publishing operations in the U.S., Canada, U.K., Australia and India. We hold leadership positions in popular categories, including Christian and children's. And in fact, we're the #1 Christian publisher based on revenues, and we're the #1 children's publisher based on the number of bestsellers that are charted each year. We generate over $1 billion annually, and we have a large and diverse catalog of 100,000 print and e-books combined. Each year, we'll publish more than 200 bestsellers and win dozens of literary awards. And we're a first mover in digital, innovation and of last -- and as of last year, as Robert mentioned, 20% of our revenues are digital and it continues to grow.

With nearly 200 years of literary heritage, we pride ourselves as the house of Mark Twain, Charles Dickens, Herman Melville, John F. Kennedy and Martin Luther King, Jr. We hold exclusive rights to publish some of the world's most popular books, from literary works to commercial fiction, to narrative nonfiction and self-help titles. And we publish over 3,000 titles each year across the English language markets. Some of our best-known contemporary authors are listed here and include Paulo Coelho, one of the world's most widely read authors; George R.R. Martin, the author of Game of Thrones; and leading business writers, Peter Drucker and Jim Collins. And we have numerous #1 best-selling authors that we publish year in and year out.

For 12 consecutive years, HarperCollins has published more bestsellers than any other children's publisher. Our children's team has honed their editorial and marketing skills to identify new talent and launch book brands consistently. No other publishing company comes close to achieving these consistent results. Some of our best-selling children's books are listed here, and many of these books are classics that are given across generations and sell year in and year out. But the most exciting potential of our list is how our books are more often translated into television or film properties. Examples include The Last Apprentice book series, which will be a film out by Warner Bros. this fall called the Seventh Son; and Veronica Roth's Divergent series, which some critics are calling the next Hunger Games, will be a major motion picture of next year. And we have book series that are tied into television series such as Pretty Little Liars or the Vampire Diaries. I'm going to discuss a little later about how at HarperCollins we're going to take advantage of these trends to build our children's business.

And at HarperCollins, we are also the largest Christian publisher in the world, which is comprised of Zondervan and Thomas Nelson, which we acquired in 2012 for $200 million in cash. Following this acquisition, we formed a new Christian publishing division with strong and respected management team to focus on all the opportunities in this special space. Our Christian division is extremely well positioned in its market. For example, it's the world's largest Bible publisher selling more than 10 million units of Bibles every year across 16 different translations. We also own the world's largest Christian website, BibleGateway.com, with 18 million unique visitors each month and over 140 million page views monthly. Of course, we are the #1 Christian book publisher, and we publish general consumer books, as well as inspirational books, as well as academic resources and curriculum and other digital content. And this business maintains unrivaled special sales channels for the Christian bookstores, and we also have a direct-to-church channel where we sell directly to pastors. And strategically, this category is less reliant on e-books and online sales, which in some ways benefits HarperCollins globally by diversifying our revenues beyond our top 2 or 3 retailers.

Now let's talk about some of the trends the industry is experiencing. Thanks to digital technology, overall book consumption is up. The number of books purchased and consumed is increasing on a domestic and global basis. E-book growth rates are very high and are offsetting declines in print sales. The result is top line revenue projections going forward, for total print and digital sales are going to be steady and growing. From a financial perspective, this means that while revenues are steady, overall profitability is increasing based on more attractive unit economics of digital publishing, which I'll get into in some detail shortly.

So our industry is undergoing this massive digital transformation. E-readers, tablets, smartphones have led to a new wave of global distribution channels for books. The 5 major e-book players: Amazon, Apple, B&N's Nook, Google and Kobo have hundreds of millions of customer accounts that allow for 1-click purchasing of e-books. Growth is coming from these global tech companies at the expense of less efficient and traditional booksellers like Borders. As a result of this tech trend, every consumer with a smartphone has a bookstore and an e-reader in their pocket, and impulse purchase is only a click away from any number of these digital retailers.

All of them are competing aggressively for the consumers' dollars. This digital ecosystem is very good news for publishers. The fact that these competitive storefronts are only inches away from one another on tablets and smartphones gives us more opportunities to promote our books and greater leverage in negotiations. Over the last few years, you can see on this chart, U.S. e-book sales have grown 350%; and U.S. tablet users, 500%. Looking forward, the number of e-books storefronts, these are stores where there's local pricing and local currencies and local merchandising, are expected to double from 70 storefronts today to 150 just over the next 12 months, serving markets around the world. These tech trends create solid tailwinds for global publishers like HarperCollins.

And as you can see from this chart, these are the projections for the global market for consumer books, and we see -- you see that they're steady and growing, so with a continued transition away from print and towards digital.

Now at this stage in the digital transition for consumer books, it's clear to us that the book industry is not going the way of the music industry, where digital consumption of $0.99 music tracks cannibalized higher-priced physical CDs. If that were true, we would have seen significant erosion by 2012, and that clearly isn't what's happening. So how will this tech disruption in our industry impact all the stakeholders? Well, for publishers, we see more books being published, reaching more global readers and more efficiently than we could ever reach them in print. And we see new digital product opportunities with interactive tech-enabled books or even bundling. And for readers, it's a win readers. There's greater choice, there's more functionality, they can access books faster, cheaper and more conveniently than they could before. Now for brick-and-mortar retailers, that's not without their challenges. But they, too, are finding some opportunities. Look at Nook, which came out of Barnes & Noble, and the independents are growing for the second straight year. So our view is that physical retail will stabilize eventually and print books will coexist with e-books, but we have a lot more runway on the e-book train. We project a very favorable transition for publishers as we go forward.

So HarperCollins, we feel, is very well positioned to capitalize on this evolving publishing landscape. We were the first publisher to digitize our content, the first to develop new capabilities like dynamic pricing for e-books. Our leadership position across many segments and geographies provides authors with a seasoned and trusted partner. Self-publishing models are emerging, but our experience is that authors choose HarperCollins because they benefit from a brand and professional resources that promote, market, publish and help monetize their content before and after a book is published. We also, at HarperCollins, have relationships with a broad range of distribution partners with little concentration across any given partner. For example, our top 15 customers account for only 66% of our revenues. And we sell and license books to partners in foreign markets, with foreign translations and books reaching over 100 countries every year. So as much as Amazon is an important partner for us, we believe we are less dependent on Amazon than our competitors because of the size of our Christian publishing division, which is less consumed through electronic format.

So what are our core strategies as we look forward? Well, there's 4, and I'd like to spend a little time talking about each one. The first is to invest in fiction, children's and religion; the second is to grow through this digital transformation; the third is to expand internationally; and the fourth is to drive profitability in our core print business.

So first, let me talk about the organic investment. As we discussed earlier, there are tremendous opportunities in the categories where we focus. As you know, some children's book properties have become billion dollar global entertainment brands that transcend the book category. At HarperCollins, we've introduced the new business model that involves the creation and exploitation of HarperCollins' developed and owned intellectual property. A staff of HarperCollins editors is devoted full-time to creating story concepts and then partnering with new and experienced writers to develop these concepts into books and related digital media. Currently, we have 100 of these properties signed and soon-to-be published; 3 of them have already been optioned for film and television development and 1 book series has already become a New York Times bestseller. If these series work, the upside for HarperCollins is far bigger than the typical publishing model because of the broad rights that we own.

The other example I want to talk about is in the Christian category. We are focused on seeing through the integration of Thomas Nelson following the acquisition last July. This acquisition has exceeded our expectations. We've realized more than $22 million in cost synergies while maintaining the editorial differentiation between Zondervan, which publishes specifically in the evangelical market, and Thomas Nelson, which publishes more broadly. Focus now is on taking full advantage of revenue synergies such as selling Thomas Nelson product through Zondervan's direct-to-church sales channel, and we have opportunities to build on our digital assets and to convert our traffic to digital revenues. So this acquisition proves that tremendous operating synergies can be realized when the right publishing assets are combined, and our team knows how to deliver those results.

And third, in the fiction segment. This is the largest market segment in the book market, and it's increasingly digital and global which suits HarperCollins. We continue to build house authors using our digital expertise in pricing and promotion, and we are attracting and signing #1 best-selling authors from other houses. Recent examples, just in the last few months, include Mitch Albom, Wilbur Smith and Amy Tan.

The second pillar of our strategy is to drive long-term growth through digital transformation. This is an area of tremendous focus for HarperCollins, and I could spend an hour just on this, but I'm just going to talk about a few things that I'm very excited about. First up is our digital first publishing program, which we branded Impulse.

Focus now is on taking full advantage of revenue synergies, such as selling Thomas Nelson products through Zondervan's direct-to-church sales channels. And we have opportunities to build on our digital assets and to convert our traffic to digital revenues. So this acquisition proves that tremendous operating synergies can be realized when the right publishing assets are combined, and our team knows how to deliver those results.

And third, in the fiction segment. This is the largest market segment in the book market, and it's increasingly digital and global, which suits HarperCollins. We continue to build house authors using our digital expertise in pricing and promotion, and we are attracting and signing #1 best-selling authors from other houses. Recent examples, just in the last few months, include Mitch Albom, Wilbur Smith and Amy Tan.

The second pillar of our strategy is to drive long-term growth through digital transformation. This is an area of tremendous focus for HarperCollins, and I could spend an hour just on this. But I'm just going to talk about a few things that I'm very excited about. First up is what -- is our digital-first publishing program, which we've branded Impulse. This program is designed to allow us to partner with and publish thousands of new authors to try to build their audiences first with eBooks. As we achieve digital success with authors, then we migrate their books into our traditional publishing programs. This is a much more cost-effective way to invest in writers in new fiction, and it takes full advantage of digital platforms like the Kindle platform and NOOK platform. This strategy and program, in some ways, is our answer to self-publishing.

Second, our global eBook catalog is 40,000-title strong. One of the most exciting capabilities HarperCollins has developed is industry-leading dynamic pricing for our eBooks. By applying the latest data and analytics technology across our global eBooks, we've learned dozens of techniques to adjust the prices of our titles over time and to increase our revenues as well as authors' royalties. This deep understanding of digital pricing in the book market has led us to successfully note -- to successfully negotiate increased wholesale prices for our new releases with all of our major eBook retailers, proving that pricing power of exclusive quality content still rests with the publisher. And third, our creative and digital teams are dreaming [ph] up new products every day, including enhanced eBooks, interactive eBooks and apps based on our books and our authors' works.

I'd like to share a video with you that shows some of the digital innovation that's taking hold at HarperCollins.

[Presentation]

Brian Murray

So this video -- excuse me, this video shows why I'm so excited about digital books. But I'm also excited because the financial profile of the book business is changing for the better, as a result of digital.

Here's an illustration of a new hardcover book that shows, as eBook units replace print books, the financial returns for publishers improved. Specifically, revenues were slightly declining on a title-by-title basis. However, margins and profits increased significantly.

So here's -- take an example of a $28 hardcover book. The publisher's share is just about 50%. Manufacturing costs can be close to $2. And returns in the print business, traditionally, new titles would be printed, shipped out to retailers and 1/2 of the books would come back. So there's another $1 -- $1.17. Then we have to store the books, pick pack [ph] and ship all over the country. That's close to another $1. In the print world, the publisher might be left with $5.60 of contribution profit or about a 41% contribution margin. Well now, that same book at the same time maybe priced -- a typical price would be $14.99. A bestseller could be priced higher than that, but let's go with the $14.99 example. The publisher's share is 70%. So it's 20 points higher than it was in the -- for the print book. And you can see, obviously, that manufacturing costs, returns, distribution, freight, all of those costs go away, leaving $7.80 as a contribution profit. It's a 40% improvement per unit, and our contribution margin increases from about 41% up to 75%, excluding unearned royalties. And our working capital needs are less due to faster payment of eBooks and the fact that we don't have to carry all of this inventory in the print world.

So you can see, while some observers of publish -- of the book publishing business see digital and self-publishing as a threat to company like HarperCollins, we see big opportunities, and we are already executing and growing our business in new ways while these observers keep talking. And financially, we're transitioning from what was a very inefficient print value chain for books into a far more efficient digital value chain. And HarperCollins' size and scale positions us to win in this digital transition.

So the third key pillar of our strategy for growth is to expand internationally. With the new News Corporation's already expansive and solid international presence, we plan to leverage both our own experience globally, as well as those of our other businesses to continue to grow.

In India, we recently acquired the remaining part of the business that we did not own. So we have 100% of that business. This allows us to leverage our U.S. and U.K. digital catalog, and it takes full advantage of the Indian market that's growing more than 10% per year. We're also looking to build on resources and minority investments that we have in Mexico and Brazil. And we're also working with our colleagues at The Wall Street Journal to expand internationally. As Robert mentioned, we're developing a business English product that leverages our Collins languages content, and we're beginning to work with The Wall Street Journal's local language sites that Lex mentioned, so that we can promote our eBooks in their markets.

So our fourth and final strategy, as I mentioned, is to drive profitability in our core print business, as we expect the continued decline in print volumes. We've realized over $10 million in warehouse efficiencies and rent reductions by reducing the number of book warehouses that we own and run from 9 to 4. And in each region, we're deploying print-on-demand or short print run capabilities to allow us to hold less inventory, yet still print to meet a bookseller's demand. We want our investment dollars to go into talent, the acquisition of content, editorial and marketing, not into our physical infrastructure.

So we feel good about our success to date and our momentum going forward, both in moving first in digital and second in managing the cost structure across all of our businesses. You'll see that our revenues increased over the last 9 months year-over-year due to the acquisition of Thomas Nelson. As mentioned, revenue was slightly declining, as the contribution from digital book sales increases, which is apparent in our annual revenue from 2010 to 2012. You'll also remember that we said digital would help margins increase. Excluding the impact of litigation settlements, we have more than doubled our EBITDA margins between 2010 and the 9 months ended in March 2013. We expect this trend to continue, as we accelerate our digital strategy, invest in categories where we have leadership positions, develop new digital capabilities and products and lower manufacturing costs and returns and to improve on the working capital dynamics of the business.

So over 5 years as CEO and 16 at HarperCollins, I've never felt better or been more excited about our long-term prospects than I do now. So at this point, I'd like to invite you all to take a second 15-minute break. And then following the break, my colleague, Joe Klein, will be up here. Thank you very much.

[Break]

Michael Florin

Well, I think it's time to get educated on education. It is a pleasure of mine to welcome up on stage, Amplify CEO, Joel Klein.

Joel I. Klein

Thanks a lot, Mike.

Michael Florin

Yes. Thank you.

Joel I. Klein

Thank you, all, and thank you for the opportunity to talk to you about Amplify, the most exciting thing that's happening in K-12 education today. My colleagues have talked today about how technology is disrupting traditional media and publishing businesses and the creative and dynamic ways they're responding to the opportunities and to the challenges. But I want to shift gears because, remarkably, education, the second largest segment of our economy, has basically been immune to technological innovation. Think about the implications of that, but I believe that's changing and changing dramatically and rapidly. You can hardly open up a newspaper today without reading about MOOCs, massive open online courses. People are taking them. Indeed, just a couple of weeks ago, Georgia Tech, a leading school in terms of engineering and computer science, is now offering a credentialed master's degree for $7,000. Think how disruptive that is going to be all online. And I believe -- and we at Amplify are convinced that, in K-12, we're going to see a similar, rapid, technological shift that's going to change the delivery systems, improve outcomes and really have dramatic effects. And most exciting for us, we believe Amplify is going to be on the front foot of that movement, driving those changes and benefiting as the market shifts towards our products and services.

Let me show you why it's clear to me that you're going to see -- look at this chart. This explains K-12 in America in 1 chart and why we need disruptions. If you look at it, you'll see in real dollar spent from 1970 to 2008, we have more than doubled, 2.5x increased the amount of money we're spending. In 1970, we had 1 teacher for every 26 kids. Today, we have 1 teacher for every 15 kids. We've added counselors, psychologists, teacher's aides. We increased dollars. And then look at the bottom line, those are our national scores on well-respected NAEP tests. Those are our national scores for 12th graders in math and reading. So for all the investment, we are flatlined in achievement. No business would survive that way. That is the delivery model that has to be disrupted.

What you see, of course, here is, that despite performance, the school system is basically even the same. It's 1 teacher and 25 kids, textbook model and it's not working. Disruption is not just desirable, it's essential. I want you to understand this a big play. It's a huge market. K-12 alone, 50-plus-million kids in America we're talking about, is now almost $700 billion market. And of that, about $40 billion goes into products and services and $17 billion on instructional materials and technology. So right there, the addressable market is huge. And an independent study by The Parthenon Group shows, which everybody thinks, as you blend technology with human [ph] capitals, you will see savings. So on a $10,000 per student in this market, what you're going to see is somewhere around $1,100 in savings on a per kid basis. If you take 1/2 of that and put it into a technological market we're trying to move into and exploit, what you're going to see is somewhere around $44 billion. So this is $17 billion and growing.

Now the 64 dollar question, why now? Aside from performance, there are 2 key drivers, the top 1 and most profound, for the first time in America, we're going to have a whole new set of national standard tests to come in behind them. And as a result of that, right now, you'll see all those orange states. So these 45 states, in a year from now, are going towards all common core standards. 2 things that are critical for our work: One, they are common, so you can write curriculum, you can write tools and things for all the various states. But more importantly, they're core and different. If you saw in Today's New York Times editorial, what they said is profound and it's right, common core is going to change just about everything for these states, curriculum, the way we train teachers and principals and our textbooks.

This is going to be a radical change, and we're anticipating that we are now building products and services to anticipate that change so when the states are ready and they're starting to get ready now, we will be ready for them. Second big change is the graying and greening of our teaching force. We're going to have many, many, more young millennial teachers who will become comfortable in a digital space. So a whole new set of expectations and a whole new cast of characters. Best predictions are, in the next 5 years, we'll have about 30% new teachers coming to this system. So this confluence positions us to take advantage, get ahead of the market and drive real change.

Now our solution is basically a 3-part solution. It's important to understand all 3 legs in the tripod. We're building on a company News Corporation acquired a few years ago called Wireless Generation, which was a 12-year-old business in the K-12 [ph] phase and known as a cutting-edge ed tech innovator. That business is now called Amplify Insight. And what it is, is assessment data and analytics to make people a whole lot smarter about education. We can figure out whether a kid knows decimals or knows fractions or doesn't, and we can then customize and tailor the learning experience. For those kids who need remediation, we can make sure they get remediated rather than what happens all too frequently is continue to pass them alone. For those kids who need to be advanced, we can accelerate them. We have the systems in place, and you'll see that in a second.

Building on top of that core business, everything we do is driven by data and analytics. For the first time in education, we're constantly getting smarter. On top of that, we have 2 new divisions, one is called Amplify Learning, which is a K-12 curriculum we're developing, that's going to be like nothing you've ever seen. If you have another chance [indiscernible] a lot of these eBooks, what you're going to see in math, in science, in English and language arts is building the best of technology and blending it with great teaching, the tools, the contents, the games, the whole 9 yards and a robust kind of student engagement. Everything it's all about is empowered teachers and engaged students. If you empower teachers and engage students, you get different outcomes.

And now, our third division is called Amplify Access, which is fundamentally a platform business. We thought that the tablets that we develop for the consumer markets are not going to work effectively in the K-12 market. For years [indiscernible] in New York City, I saw what computers did, and computers did virtually nothing. We've created -- this is not about hardware. We've created a learning device. We've got software in there that is fundamental to the way you educate kids. We've got curated content in there that's important to schools and kids. We've got mobile device management, 1 click teaches and fits [indiscernible] the eyes are on the teacher. So we didn't create a tablet, we created a learning platform, a learning ecosystem that will facilitate teaching and learning in the classroom. That makes this an entirely different play. I was -- excited as I am to describe our product to you, what I really want to do is give you a glimpse, so you can see the future of education and how these 3 legs of our tripod will come in together to create a digital transformation in K-12.

[Presentation]

Joel I. Klein

Well, let me pick up on what the teacher said because I think, in what she said, there is a profound truth that drives everything that Amplify is doing. This is not tech for tech's sake. This is not about devices. It's not about hardware, it's about changing the teaching and learning equation. And all 3 aspects of what we're doing, our insight, our learning and our access, are all about that.

Now let me start and go through each of the 3. The first, as I said, is Amplify Insight, which is previously Wireless Generation. News Corp. bought that for $390 million in 2011, and it was known and is a market leader in analytics and assessment and in using intelligence to inform the teaching function. Right now, we serve over 3 million kids throughout the United States. We have 3 main lines of business in that Amplify Insight. The tech [indiscernible] in analytics, lots of information so that you know where the kid is, how to accelerate, how not to, when he needs remediation. That is all software licensing business. The next is an enterprise data system. We just finished building one for almost $50 million, multistate, lots of data and information. That's a work-for-hire business for us and is very professional services. One of the things we're big on is you don't just drop this stuff in the school, you work with the schools. Right now, we've got, for example, in Delaware, data coaches doing a remarkable job. That's a fee-for-service business. Those 3 businesses are already out there in the field serving literally millions of kids in America today, and we're going to build on top of that. Amplify Learning is the curriculum, and this is the thing that, in the end, will engage kids deeply. Because what you saw up there was a glimpse of something that's very powerful. The way you get kids to read more, for example, is to give them the tools. We've done some dramatic readings by famous actors, and we've studied how much time a kid will spend once he's heard the first chapter or she's had the first chapter read to them by somebody really good versus ones that don't. And we're constantly getting information on which things are working so we can swap things out and build on it. Very, very powerful concept, our learning model. The gains we've got are second to none. They're being developed by the people who do the serious games. And we know a lot about this because we're piloting it, as I've say, and I've been in schools, watching kids react to it and it's a very different feeling reaction. And then overall, this all integrates on a platform that enables a teacher to work seamlessly from lesson to video, to game, to homework assignment, to driving content to subgroups, to quest. It becomes a full-scale year's work of learning materials that reinforce each other in the classroom and at home, all of which is driven by a teacher who now, for the first time, will have the kind of supports and the kind of tools she needs to make it work. And then the third is Amplify Access, which is our tablet business. And I described a little of that before. Fundamentally, it's an affordable high-end tablet connected for anytime, anywhere learning. We have a partnership with AT&T. So if schools want a 4G pilot -- tablet rather, so the kids can take this home and learn from it. We've already had several experiences, kids who were sick at home, dialing into the classroom. We had one recently in Florida where a teacher was sick and she taught the classroom from home. With the capacity to spend and expand the day, expand the year, et cetera. All of that is built in into what we're doing. Good quality content, which will come both in prepackaged content and premium content, and it's an open platform, other publishers are free to write for it. We're in negotiations, we already have other people's content on this. We've preloaded Stylecon's [ph] videos, Encyclopedia Britannica, so on and so forth, and as I said, Mobile Device Management. On this one, I'm really proud of the fact that we just concluded our first major negotiation down in Guilford School District, Greensboro, North Carolina. They just purchased over 21,000 tablets. We've just announced it today. So every kid in the middle schools in Guilford will be using our tablets. This will give us the chance to show the world what a large scale implementation looks like and how powerful this kind of transformation can really be.

Essentially, our progress today is easy to explain to you. In our Access business, we've got the category-defining product. This is no question that, that tablet is now seen as a defining in-school product. I just told you about the RFP we won in Guilford County. We've already piloted with 2,500 students. I've had the chance to talk to teachers and students. I was personally down Fulton County, Georgia where it's being used and get the feedback to learn where the real value is, and the thing we love, it's a constant iterative learning experience. But I can tell you, teachers and kids are responding. I just, yesterday, over the holidays, got an email from a kid who said, he's sorry, the father told us, can he keep the tablet. I don't know how to fix that for that kid, but nevertheless, that's the kind of feedback we want. We've got, as I said, major agreements with our anchor content players and with AT&T. In Amplify Learning, again, we piloted with 2,500 kids. We're seeing their responses. We're strengthening those parts of the curriculum that are getting real tractions, and we're adding more and more features as we go along. We've got lots and lots of stuff to demo. And with Insight, we've got multiple statewide deals delivered on the enterprise system that I just talked about, and we'll continue to expand that business as we go along.

2014, Access, as I said, we're going to service 2,000 subscribers. Frankly, we're already ahead of that with the 21,000 that we've got in Guilford County. We'll scale the platform and we're going to prove out our business model in 2014. We're very optimistic. We're in negotiation with lots of school districts right now, we're enormously excited about this learning platform and what it means for kids.

Amplify Learning, we've got a scale of technology and we're going to bring -- bringing product to market later in the fiscal year, in time for the 2014 school year when it comes to the Common Core Standards. We've got 3 paradigm shifting courses that'll be ready for the market, 2 of them in English and 1 in science. And again, those are going to be like something you've never seen before because they're comprehensive, integrated, multi-phased curriculum. It sort of brings the textbook in the classroom altogether into a dynamic digital experience. And Amplify Insight has got a lot of contracts, and obviously, continues to expand its business.

Here's an excel of our finances in Amplify Insight so you get a sense. In 2003, when the company started, through 2012, after News Corp. purchased Wireless Generation, you see the growth we've had over the last 5 years, 22 average annual growth rate. We continue to invest in our infrastructure and in our products. We think this is a growth industry not just for us, but in schools across the country. And this is a difficult investment. I know people have asked me about the nature of the investment this year. We've invested in -- capital investment, $180 million to build out our various products you see there, how that money was spent. We will continue to make this kind of investments, this magnitude over the next couple of years. And while that's a significant investment, I want to be clear, it's an investment of that sort that's going to be necessary both to seize the opportunity and to meet the challenging K-12. This is not something that's going to happen in a garage. I'm familiar enough with the space to know that in the absence of really powerful, powerful curriculum, powerful learning platform and powerful data and analytics, this kind of transformation isn't going to happen. Over the years ahead, we'll continue to invest in all of our business, the lion's share in developing the curriculum that I submit will be second to none. Our average course -- cost per course, it varies. Some are more and some are less. But our average cost is about $7 million. So we're going to continue to do that. We benchmark it against performance so that it will move forward in a highly disciplined kind of a way. But I think each of these 3 areas will continue to develop and grow in a very dynamic and exciting way.

Let me just stand on what I think is Amplify's core advantages. In essence, I think we are the best technology company in education and the best education company in technology. And I think that's where we have an integrated sweet spot. We're able to make the kind of investments that I think is necessary for transformation. Critically, we don't have a legacy publishing business to worry about cannibalization. We can lead the charts, get out there on the front foot and help disrupt this market in an aggressive way. We have 10-plus years of experience in K-12. We're the leading, cutting-edge educational technology firm. We have a foundation built on data and analytics so we know how to bring knowledge to bear, and we'll constantly be improving our products. We're going to build our content for a digital age in a digital world. We're not going to go back to a pre-digital world. And we've got a system of delivery that's designed for the classroom. Finally, I think we've got a team that's second to none, lots of people who have been in this space who know the space well, married to great technologists and really talented people. So I thank you for the opportunity to be with you today. And now, it's my privilege to introduce to you, the CFO of News Corp., Bedi Singh.

Bedi Ajay Singh

Thanks, Joe. Yes. Good afternoon, everyone. As you've heard this afternoon from our business leaders, we're very excited about our portfolio of assets, our digital and global initiatives, and the opportunities in front of the New Newscorp as an independent entity. My initial work experience in the '90s was with News Corporation's publishing and entertainment aspects, and having spent a number of years away from the company most recently as CFO at Gemstar TV-Guide and MGM Studios, I'm very excited to be back for the next phase of the story at the new News Corporation.

So hopefully, by now, you have a better understanding of the distinctive nature of our portfolio and various businesses and our investments. We talked about the benefits of owning these assets together and the opportunities I have to lead the digital transformation across the news information services and education sectors.

New Newscorp is distinct from other global and media companies given its footprint, strong Australian presence, it's scale and diversification across geographies and businesses. Our consolidated businesses generated substantial EBITDA of over $1 billion and available free cash flow, as we define it, over $400 million in fiscal '12 on $9 billion plus of revenues. And I'll touch on cash flows shortly. We believe News Corp. is capitalized to succeed with $2.6 billion of cash expected at operation and no bank debt. The key points to take away from the slide here are that we have significant scale and diversification, which we think positions us well to capitalize on digital transformation. We have substantial free cash flow generations, which give us flexibility to invest in high-growth opportunities both organically and through disciplined acquisitions. And of course, we have a debt-free balance sheet and we have multiple catalysts to drive value, which I'll go through shortly.

Let me look at our segments and investments. You got a good sense of both the diversity of the asset mix and the valuation contribution across the portfolio. While almost 70% of our fiscal '12 revenues and the majority of our EBITDA are derived from user information services, a very significant portion of the approximate value and future growth is coming from other assets: REA, which is publicly listed on the ASX in Australia; Fox Sports Australia; and FOXTEL, which we capture through equity earnings.

Our Cable Network business, which comprises Fox Sports Australia, is predominantly a subscription-based business, not unlike U.S. sports networks, and is our second largest business in EBITDA. It has most of the attractive sports rights for the Australian market over the near-term, as Kim already mentioned. REA has a total market cap currently of approximately $3.7 billion, 61.6% of which, or approximately $2.3 billion, is attributable to News Corp. And as you saw last quarter, REA grew its revenues 20%, grew its EBITDA over 30%. It has margins nearing 50% and pays a very healthy dividend, which will grow over time.

Our Book Publishing business has become one of our star performers, becoming increasingly digital and showing great margin improvement as a result. Regarding our 15% stake in FOXTEL, which we account for under the equity method, here, our proportional share of EBITDA would've been approximately $340 million for the 9 months ended 31 March 2013, assuming we had owned 50% of FOXTEL for the entire period. And of course, as I mentioned earlier, we expect to have $2.6 billion of cash at hand, no funded debt at the time of preparation, and this is clearly a major part of this and a key differentiator both with our industry peers.

So this chart illustrates our view of the long term revenue and margin potential in each of our business segments. As you have seen, we have businesses at different stages of their growth cycle. We see 3 major categories: Firstly, growth in digital businesses, which include REA, Fox Sports Australia and FOXTEL; second, businesses undergoing digital transformation, primarily in the news and information segment and Book Publishing. And then HarperCollins, we're already seeing the real benefits through low operating expenses and working capital, and newspapers are, of course, at a relatively early stage as we saw earlier. And thirdly, Amplify, that we just have covered, which is really in its startup phase, which we view as, hopefully, an open-ended growth opportunity. So we're the largest news and information services provider throughout the English-speaking world, generating $7 billion in revenues in FY '12 and EBITDA of approximately $940 million in this segment. And while we expect relatively modest revenue increases in the long term, we expect, as you saw from the earlier presentations, to drive margin expansion by increasing subscriptions and revenues via payroll and by further extracting cost efficiencies and rightsizing the businesses. Our success of The Wall Street Journal being a testament to that strategy already.

We also saw in Kim's presentation that at Fox Sports Australia, we will continue to extend the leading sports programming provider to new digital products and platforms. We see strong revenue and margins slide to hopefully up. At REA, we are focused on finding new and valuable products to improve monetization of mobile, learning and value-added products, and expanding our global footprint. Here, we see revenues and margins continuing to move higher.

At HarperCollins, as Brian mentioned, we will continue to invest in high-quality and compelling content to maintain our leadership position in fiction, children's and Christian categories. And we expect to continue improving margins, having increased these from 5.8% in fiscal '10 to 11.5% in the first 9 months of fiscal '13.

So the other segment includes Amplify and corporate expenses. So in Amplify, we're excited about the potential growth opportunity. As you heard, the education sector is one of the last few industries to benefit from technological innovations. And as Joel mentioned, we see this as a $17 billion plus market opportunity. We recognize that Amplify will continue to meet capital in the near-term at a level similar to fiscal '13 as the Common Core curriculum is developed and rolled out. But we will be very disciplined and we'll focus on specific milestones, and we will communicate our progress to you in the coming quarters.

Regarding corporate expenses, we're going to have 2 types of costs: General corporate overhead needed to run a separate, large, global public company. We estimate that this will be in the range of $140 million to $160 million annually from FY '14 onwards. And secondly, we also have a corporate strategy and creative group to identify new products and services across our businesses where we intend to invest moderately for the expectation of new revenues and a healthy path to profitability and ROI going forward. This is a slide that Robert had shown earlier. It's showing that we're a truly diversified global business with a broad diversity of revenue of types and geographies.

We are far more diverse geographically than most media companies with roughly 30% of revenues in the U.S. and Canada and 60% with -- within Australia, Asia and Europe. Advertising accounts for just over 50% of our revenues, and that compares really favorably with most of our media peers. And that's before taking account of our FOXTEL stake. So on an economic basis, including FOXTEL, advertising would be an even lower proportion of our revenues than reported.

News and information services is the largest revenue business, but our other segments are growing rapidly and providing an attractive diversity of revenue across businesses, and a significant portion, as I mentioned earlier, of our value and future growth is from our other segments.

Our content is increasingly being distributed across the globe,

and likely will be at an accelerated rate going forward. We've already demonstrated the global presence of the Wall Street Journal, HarperCollins and the REA group and expect further global growth to be one of our core strategies of new News Corp.

So this slide illustrates further our financial strength, driven by our strong brands with leading market share positions. As I've said, we generated $1.1 billion of EBITDA for the year ended 30th of June 2012 and $756 million for the 9 months ended 31st March 2013. EBITDA is considered to be an appropriate measure for us to evaluate the performance of our business segments and also allows our investors and equity analysts to compare our operating performance against historical and competitive data.

What you also see here at the bottom of the slide is EBITDA that FOXTEL generates, which, of course, we do not consolidate. Our 50% proportional share of FOXTEL EBITDA would have been $338 million for the 9 months ended March 31, 2013, which was just under half-year amount of total EBITDA generated by our consolidated businesses.

Margins in this business are around 30%. And we have a very strong partner in Telstra, as Kim mentioned, who holds the other 50% of the equity and together with News Corp., is excited about the further growth potential for FOXTEL.

So why is EBITDA is our key measure for operational performance where equally if not more focused on available free cash flow, which we believe is to be the key measure for our success to generate shareholder value? This page illustrates the key inflows and outflows driving our fiscal '12 cash flows and shows a more conservative view of our available free cash flow than simply cash from operations less CapEx.

So the free cash flow from operations line includes news and information services, Fox Sports Australia, REA Group, HarperCollins, Amplify, corporate costs, as well as cash distributions and interest income from FOXTEL. We then deduct CapEx to get the free cash flow. However, given that we own only 61.6% of REA with consolidated business, we further adjust the consolidated cash flow to include only the cash dividends that REA pays to us. Over time, as REA continues to expand, we would expect it to consider the potential for future increases in its dividend payouts.

With this adjustment, we then derive our free cash flow available for further potential investment, M&A and capital returns, including any dividends. We will remain very focused on growing available free cash flow, driven by a combination of margin upside, improving working capital dynamics, stable capital spending and increasing contributions from our affiliates as they continue to grow.

So with respect to our capital needs going forward, as we transform our publishing businesses and some of the heavy lifting has already been done, you see on the left-hand side of this slide, our CapEx has reduced from $549 million in FY '11, which was mostly for printing facilities and equipment, down to $375 million last year, and we expect that this should be fairly stable going forward. We also expect that 80% or so of our capital investment going forward will be focused on technology and information systems to further digitalize our product offerings and create further operating efficiencies.

And as you can see on the second box on this slide, we have also been investing in rightsizing our cost structures. Since the beginning of fiscal '09, we have incurred just over $500 million in restructuring charges related mainly to our newspaper operations. And we will continue to extract efficiencies across all our businesses going forward.

We also have a well-capitalized balance sheet, giving us tremendous strategic and financial flexibility. In addition to the cash balance of $2.6 billion expected at separation, we have another $460 million due from a long-term FOXTEL note receivable. And further, there is an approximately $150 million long-term secured note related to the sale of our U.K. print facilities in May 2012, and this loan is repayable by May 2017.

As of March 31, 2013, we have almost $6 billion of goodwill and intangibles on our balance sheet. This balance is expected to be lower at 30th of June 2013, as News Corporation issued an 8-K last Friday, indicating that we were considering taking a $1.2 billion to $1.4 billion non-cash impairment charge against those balances in the fourth quarter. And these relate principally to the performance of our Australian publishing assets.

As part of the separation agreement, 21st Century Fox group has agreed to indemnify us for payments made after the distribution date arising out of civil claims and investigations relating to the U.K. newspaper matters, as well as legal and professional fees and expenses paid in connection with criminal matters for directors, officers and certain designated employees. News Corp. will not be indemnified by 21st Century Fox for any criminal fines and penalties.

Through the 9 months ended March 31, 2013, new News Corp. incurred $144 million of U.K. newspaper matters expenses, of which $132 million would have been eligible on an after-tax basis for indemnification had we been a separate company, thereby necessitating only a modest accrual for these at 31st of March 2013.

Finally, as of the last fiscal year end, the funded status of the company's pensions and postretirement medical plans was a net liability of $497 million. As you're all aware, persistently low interest rates have increased the present value of all pension obligations, more than offsetting the increase return on equities that have benefited our assets. It's noteworthy, though, that based on present assumptions, actual required cash payments into these plans are expected to be very minimal going forward.

So finally, as you have heard today, we are focused on both investing for future growth, as well as returning capital to shareholders. We recognize that some of our businesses face significant headwinds in the near term and improvements will take time and effort. But we believe the combination of our leading brands, new products, geographic diversification, positive cash flow and strong balance sheet, as well as an experienced and talented management team, positions us well for long-term success.

And additionally, as we've discussed, we believe that we have substantial opportunities to deploy capital into existing business to continue their leadership in the digital age.

Our leadership in the market, coupled with our strong balance sheet, gives us the ability to be opportunistic during periods of disruption in acquiring attractive assets, whilst taking a disciplined approach towards potential strategic opportunities. And in addition, as stated in our Form 10, it is our expectation that we will pay a dividend. However, the amount and timing will be determined going forward by our board.

You also saw in our press release last week, we have in place a $500 million board authorization for buybacks of our nonvoting shares. And we have put in place the appropriate measures to be able to use this authority in a disciplined and opportunistic fashion following our listing on NASDAQ and the ASX in Australia if needed.

So with that, thank you very much for your time. And I think now I'll ask all my colleagues to come up to the stage. And then we'll commence our Q&A session. Thank you.

Question-and-Answer Session

Reed Nolte

Okay, as we wait, I just want to go through some of the ground rules for the Q&A. There will be mics. I think there are about 8 mics out there. Please raise your hand, wait for the microphone to come to you. Also, if you could state your name and company. And also, probably I'll say this in many different earnings calls and I'm sure you hear this from me for a lot but if you can limit it to one question, that will be really helpful. We're sort of -- want to get out as soon as we possibly can. All right, let's begin the Q&A. Jessica Reif Cohen? Can you bring a mic?

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Jessica Reif Cohen from Merrill Lynch. I just have a question on like the investment versus the acquisition strategy. It sounds as if -- you were very clear on Amplify, that level investment would be -- it sounds like steady state. And in terms of acquisitions, it sounds like publishing is an area you might be interested in. But I'm wondering about other potential areas, like in Australia, you have a very strong presence in sports. Why not more cable programming? You have a very strong news position, why not cable news channels? So could you just talk a little bit about the build versus buying and what kind of areas you might be interested in?

Robert J. Thomson

Jessica, thanks very much for the question. Build versus buy, we'll both build and buy. Obviously, we won't go into any details about specific acquisitions. But when we're talking conceptually about acquisitions, what we're looking at potentially properties that we could integrate, revenues that we -- and costs that we can consolidate, and platforms that we can leverage off. And those would be the principles that we bear in mind when we consider any possible investment. Bedi?

Bedi Ajay Singh

Yes. I mean, I think we won't comment, obviously, on specific strategies in Australia. But I think directionally, what Robert said is correct. We're going to be very disciplined when we look at any sort of external acquisitions. And I think we have plenty of things to invest organically, internally.

Reed Nolte

Okay. Let's see. Right over here.

Richard Greenfield - BTIG, LLC, Research Division

Rich Greenfield, BTIG. I think the key question many of the people in this room are grappling with is how news content transitions to digital and mobile, especially given the ability for talent to create their own online destinations. The Wall Street Journal spread is one of the most well-known tech blogs. They're holding a conference tonight, All Things D interviewing Tim Cook in a few hours. And we're just wondering, could you discuss the relationship with All Things D and how you deal with that type of risk over time in other markets.

Robert J. Thomson

Well, I'm sure each of my colleagues will have thoughts on this subject. But I mean, talent is drawn to the companies. It's our quest to acquire the best brands, the best content and the best people. But what we offer to talent is a fantastic platform. And regardless of the set, whether it be sports talent or digital talent or lifestyle talent, when you think about the potential reach that we offer a talented person, whether it be a talented person writing a book for Brian or a talented sports caster for Kim in Australia, they way we're able to leverage that talented person's ability and that talented person's profile is actually unprecedented and unmatched anywhere in the world, given the scale of our company and given the increasing integration and focus of these assets. Brian?

Brian Murray

Yes. I mean, in the book business, we have not lost an author. There are a lot of self-publishing platforms out there. And our experience is, is they really choose to be with HarperCollins. We have not lost authors to that self-publishing -- those self-publishing platforms. I mean, it may happen 1 day. But I think we've gotten better at explaining the value that we bring as a large publishing company, the global reach, all the distribution channels, selling into libraries, as well as companies like Walmart and Barnes & Noble, independents. There's a lot more complexity in the business than self-published authors realize. And when we have those conversations, we find that we're able to ensure them, make them very comfortable that HarperCollins is the best place for them to come in order to be published.

Robert J. Thomson

Kim, you're dealing with talented individuals all the time.

Kim Williams

Well, clearly we bring a lot of scale, we bring a lot of experience and we bring a lot of systems that supports the propagation and commercial exploitation of content in a very effective way. I think there's a very big difference between user-generated content and professionally delivered and curated content, whether that's in broadcasting or in the digital demand.

Reed Nolte

Okay. Next question. Let's see, #5 in the back. I can't see who that is.

Barton E. Crockett - Lazard Capital Markets LLC, Research Division

It's Barton Crockett for Lazard Capital Markets. I wanted to ask a question about REA and the ownership structure there. You highlighted that there are some lack of ability to consolidate all the cash flow there, yet you control the company. I was just wondering if you could talk about your view as to whether that long term is the ideal structure, controlling it but not really owning all the cash flow. And over time, if that's something you might consider addressing.

Keith Rupert Murdoch

I think REA now has a market capital of about $4 billion. I think to buy the remaining 38%, it'd be very, very expensive for us. We're very happy with it. Certainly, the dividends will flow a lot more strongly in the future. We're taking a much closer interest in it and we're going to see its earnings go up a lot, too, I think. I'd tell you, you'll certainly see very different dividends. I might say, it's also sitting on a lot of cash.

Reed Nolte

Ben Swinburne.

Benjamin Swinburne - Morgan Stanley, Research Division

I'll try to squeeze in 2, 1 clarification around newspaper acquisitions. Sorry, Mike. I'm the first person to break the rules. Everyone's focused on whether you'd be interested in buying more papers. And rather than addressing that, can you just talk about the regulatory issues in Australia, the U.K., and the U.S. about buying more newspapers and what would you be allowed to do. And then for -- maybe for Kim on FOXTEL. FOXTEL is an important part of the company, it drives Fox Sports Australia. What makes that business grow over time? Do you need to invest more in content? Do you think it's a consumer issue? What are the things you think that really accelerate the top line in that business over the next couple of years?

Keith Rupert Murdoch

Well, I'll answer the question on newspapers and regulations. I think it's unthinkable that we've been allowed to buy any newspapers in Britain. And there aren't any other newspaper industry there, there won't be very shortly. Well, I mean, they've already announced their position that they're going to go to digital 6 days a week, or at least 5 days and probably drop out on Sunday. So that's those 2 countries. Here, of course, we're -- if the price is right, we'd be interested. We'll probably run into cross-ownership situation between television and newspaper. So I think it's, if anything, is pretty unlikely.

Reed Nolte

Okay, and the next question.

Kim Williams

Growth in FOXTEL will come in 3 ways. First, through IPTV and actually moving into a lower-priced product that actually creates a much cheaper entry-level price. Second, through natural organic continuation of that, which has been happening. And third, through bundling with a triple play moving with broadband and VoIP.

Reed Nolte

Okay. We'll take another -- next question. Anthony DiClemente?

Anthony J. DiClemente - Barclays Capital, Research Division

It's Anthony DiClemente at Barclays. I had a question for Lex. Lex, you made it a point of talking about pricing power in your business, particularly at the Wall Street Journal. And I was wondering if you can just share with us what gives you the confidence that you've got pricing power at the journal, both on the subscription side to the consumer and in terms of the advertising opportunity.

Robert J. Thomson

I think has Lex shown on the subscription side that there's been very much a compound increase in revenue and prices and further plans.

Lex Fenwick

I mean, what we try to talk about in the presentation is the way that we think we can grow the number of subscribers, which is not only in the U.S. by broadening our content, which we've continued to do. We think that helps us and gives us a very good opportunity to grow the number of subscribers here in the U.S. But we think that we have this really quite unique ability to re-purpose our content into different languages and to different cultures much more cheaply than just having to hire a lot more journalists. We can just re-purpose. And we think that, that will help us to increase the number of subscribers. The other thing we -- I also tried to address and talk about is that we think that when we look at some of our competitors, we are underpriced. That's very easy for you to go and do, you can just go and take a look at whoever you think our competitors may be and what they charge for a weekly, monthly, annual subscription and look at ourselves and I'll let you draw your own conclusion.

Keith Rupert Murdoch

All right. I can be a little more specific, I'm sorry to be too -- you're too polite. We charge about $24 a month for the print and delivery of the Wall Street Journal. And similarly, a mature subscriber of the New York Times will be paying over $60. There's a dramatic difference in pricing.

Reed Nolte

We'll take our next question. Mike Morris. Over here.

Michael C. Morris - Davenport & Company, LLC, Research Division

Mike Morris with Davenport. A question about return of capital and the dividend. Clearly, you don't want to say anything about it today. But can you talk about why the board was comfortable with the share repurchase plan, approving that already and not the dividend and maybe some parameters around what the thought process is between now and when you will make the comment on the dividend, something for us to think about there moving forward.

Keith Rupert Murdoch

Yes. I could just say that we think it's quite possible that there'd be a lot of shares to lose in this country, in what is seen as a publishing company. And if we see the price fall dramatically below what we believe its value is, we'll step in and try and steady that. We would like to see the fairly nice -- there will be a fair amount of transition amongst -- in the shareholding, and we're there to help that, if necessary. Ideally, we'll hold on to that money for other forms of expansion.

Robert J. Thomson

Yes. I think as Rupert has made clear that, that allocation will be viewed in terms of the context of other potential investments as well. So we understand there's an opportunity in cost associated with that $500 million. It's an unusual period, given the split, and it's a natural thing for the broad to have approved and something we'll be monitoring later.

Bedi Ajay Singh

I think that's very -- I don't have anything else to add, really.

Reed Nolte

Okay. Next question. Number 6, I can't see who that is.

Todd Juenger - Sanford C. Bernstein & Co., LLC., Research Division

This is Todd Juenger from Sanford Bernstein. Coming off a little bit on Anthony's question from before. I guess, I was just struck at -- a little bit of the lack of conversation about advertising. I think the only place I saw it very specifically called out was in the REA presentation, where REA is a beneficiary of the lack of migration out of print. So I'm just wondering -- and yet, you also talked about margin expansion. And margin is going up. So I'm just wondering if you can share with us, in all of your geographies, on your geographies, what sort of demand environment are you assuming for print advertising? It's half your revenue? And any evidence you have where we -- make us see the more optimistic or more pessimistic or any evidence you have? You're a big operator in all these markets, so what's the demand environment?

Keith Rupert Murdoch

We're being very realistic and not expecting any big expansion. Although I do believe that a lot of the situation in print advertising is due to economic conditions in the 3 countries in which we are at. There's no doubt the Internet has taken a lot of business. But really, it's all gone. There was -- significant revenues has gone. Search, which is very effective, and Google is just getting more and more of it and in sort of niche-specialized variables, such as REA or SEEK or LinkedIn. I think the casual side of advertising that you see in a Yahoo! or Facebook, you're not going to see much growth. We don't see much threat -- we don't see an increasing threat there. I think it's public that for the first 9 months, advertising, overall, was down globally and very -- region by region was down about 12%. But I think the other thing to bear in mind is exactly how each business is responding to that. And in particular, the Wall Street Journal, for example, you'll have noticed a dramatic change in the profile of advertising of the journal. It was very heavily B2B publication, both in print and digitally, say, 5, 6 years ago. The broadening of the content has not only broadened out the audience, it's broadened out the potential advertising cash area. So you look at something like the Wall Street Journal magazine, which has increased frequency every year for the past few years, you look at -- why haven't established those connections with luxury brands that we didn't have before that those luxury brands will have a life not just in the magazine, obviously, in the paper, online, as well as on the foreign language websites. So our company is not being passive in the face of, frankly, what is a volatile advertising market.

And I think we're also saying that we're going out -- we're looking to our readers to pay a heavier load. But take the Times in London, where we have about 130,000 or more digital subscribers. They're paying at least GBP 6 a week for that. And that's very worthwhile revenue and we expect it to grow a lot.

Reed Nolte

Okay. We'll take the next question. Let's see, Alan Gould, #4.

Alan S. Gould - Evercore Partners Inc., Research Division

Alan Gould, Evercore Partners. How much interaction was there between the elements of the new News Corp. and the old News Corp., the Fox Entertainment group? And what kind of relationship do you see between the 2 going forward? For example, does Fox News work with the Wall Street Journal much, will the Fox business channel perhaps become a Wall Street Journal channel?

Keith Rupert Murdoch

No, I don't see the assets changing any further than where they are now. But I do see the companies working very closely. I'll be chairman of both. My family is holding 40% of the votes in both, brings this closer together. So I think we'll be looking forward into as much harmony as possible. But there is nothing -- there are no sort of exclusives between either one of us. No non-competes, that is.

Reed Nolte

Okay. We'll take the next question. Let's say, Tuna, over here.

Tuna N. Amobi - S&P Equity Research

Tuna Amobi, S&P Capital IQ. So as I think about the potential opportunities out there in the marketplace, it appears to me that a publishing industry is primed for consolidation. When I think about the capitalization of the new News Corp., $2.6 billion in cash and you've laid out the share buyback and plans for dividends. So a lot of folks would look to perhaps News Corp., the new News Corp. to be an active player in consolidation. So I'm wondering, in the context of the capitalization, on return of capital that you laid out, if -- what opportunities that you see out there locally and internationally? And then secondly, how do you kind of address that concern that this capitalization may be limited in the context of actively pursuing larger-sized deals, of the size that you, for example, announced in November, you consolidated $2 billion deals. So if you could comment on that, that would be helpful.

Robert J. Thomson

Well, I think the first thing to say is that the cash balance we have puts us in a position at a time of transformation to make the necessary transformation. Clearly, we can't be specific about acquisition targets. But I'm sure -- Bedi, do you have some thoughts more generally about the use of capital?

Bedi Ajay Singh

Well, I think we're very happy we're coming out with a strong balance sheet. And I think there is a lot of operational challenges that's been laid out. And I think executing on the business and moving forward on making progress on those is equally as important as acquisitions or return of capital. So I think we look at all of those 3 things together in the coming quarters. And we won't comment on specific sort of acquisitions.

Robert J. Thomson

But we're in a robust position to take advantage of opportunity. And if you look at the capital structure of some of our competitors or theoretical competitors, these are, frankly, crippled companies.

Reed Nolte

Okay, we'll take the next question. Number 6, I can't see who that is. Number 6.

Jaison T. Blair - Telsey Advisory Group LLC

It's Jaison Blair of Telsey Advisory. Why does it make sense to keep the Australian print assets with the TV assets in Australia but not in the U.S., where FOXTEL, Fox Sports Australia and REA included to provide balance or stability to the holding company?

Robert J. Thomson

Well, the first observation I made before, frankly, across to Kim is that there is an unusual degree of integration in the Australian assets that you've seen through, I think, presentation after presentation today. Kim?

Kim Williams

We have genuine synergies between the different assets in Australia. We actually are working in selling multi-platform advertising to plants. And we have very real benefits in terms of backroom, our corporation between the different business, particularly as we move more aggressively into the subscription demand.

Reed Nolte

Okay. We we'll take the next question. Let's see, #3. Number 3, I think it's Matt Harrigan.

Matthew J. Harrigan - Wunderlich Securities Inc., Research Division

Matt Harrigan of Wunderlich. Just a existential public policy question against [indiscernible], but when you look at Amplify, you clearly got a tough hill to climb. You talked about the structural rigidities in education system on the same number of students per teacher as in 1900. And you also talked about some of that, I guess, East Asian, North European markets, some of the U.S. 23rd math and science or whatever. Do you think there's similar structural rigidities over there? Or are there other differences or are there things that you could learn internationally from the way the systems work over there? Is there something you're doing that can be transferable over there? I know it's a $17-million opportunity and it's got to be something you're looking at from an incredibly long time path. But could you -- I guess, a sort of vague question, but could you elaborate a little bit more on the specifics to that?

Keith Rupert Murdoch

I think any of us could answer existential extensions in a [indiscernible] way but I'll pick Joel for this one.

Joel I. Klein

I do think there are some important global lessons. And part of what we're trying to do is think about how you take a system, where, for example, over the last 20, 25 years, we haven't developed our teaching core the way we should have. And how you provide the requisite supports to that human capital system. And while, in fact, the number of teachers in the system has increased, very little reason to think that the quality is increased. If you compare that to people who are performing well globally, places like Finland or Singapore or Korea and so forth, what you see is both more high-quality people going into the profession, much more professionalized atmosphere than in the U.S and oftentimes, for example, in places in Asia, a lot more education. So what we're trying to do is say how do we take our current human capital. And this is an existential answer to an existential question, but how do we take our current human capital and make it better, make it more accomplished, give it the tools and the content and the other things it needs. Second of all, extend the day, extend the year to the platforms that we're trying to generate. And third of all, come in now when we're having a whole bunch of new people enter the field with the proportional supports necessary so that they can leverage the technology. But I'm pretty convinced if we stick with a human-capital-only solution, we're never going to get the transformative impact we want. But if we mix the best of human capital with the best of technology, then we're going to start to be able to see dramatic growth and improvement over time.

Reed Nolte

Okay. We'll take 2 more questions. Number 5, I can't see that head. Number 5?

Craig Huber

Craig Huber, Huber Research. Very specific question. You spent a lot time earlier today talking about your digital assets within newspapers. I'm curious, what is that percentage of your revenues over -- Australian newspapers that come from digital. What about the U.K. newspapers and also your Wall Street Journal assets? What percent come from digital right now, please?

Keith Rupert Murdoch

I think Britain and Australia, it's relatively small and Australia is really just starting in many ways. But it's very considerable with that [indiscernible]. Lex will answer that.

Lex Fenwick

I don't have -- I mean, the -- look, we think we can grow our consumer business digitally. And we try to show and explain how we can do that by broadening geographically. We have -- 20% of our digital traffic is now coming from our international sites. And that gives us a real opportunity to grow the revenue, the digital consumer revenue. I talked a little bit about the institutional opportunity. It is a very, very large, proven market. And we have under 1% of that market. And it is down to us to build the products and to go out and sell a compelling product to people in finance, legal, education in the corporate market in general, around the world. And we think we have a real opportunity to go out and do that. And if we can just increase just by a small amount, it's a very large market, we think that that's the ways that we're going to do it. So there's 2 ways to do it, consumer and institutional.

Operator

Okay. We'll take our last question. Number 3.

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

It's Marci Ryvicker from Wells Fargo. Robert, you started off talking about this coming publishing system. And I'm just curious as to where you are in the implementation of this. Can you just provide us a timeframe for when you think you'll get ideally to where you want to be?

Robert J. Thomson

Sure. Well, the plan it will be fully implemented across all of the newspapers globally by the end of next year. I think that's a long dive, we're probably coming ahead of that. There are 2 challenges. One is in Australia. Obviously, you have distance, the tyranny of distance. And Dow Jones, we have the challenge of integrating a news-wise into a system that has been designed in part for print and digital. But it is -- and although Kim and Mike talked a little bit about the progress in Australia and the U.K., but it is a phenomenal system. When we created the iPad app, you would imagine that we would have to, under traditional newspaper staffing procedures, we would had to bring in 55 people to re-purpose the content. We had one person overseeing the content flow out of the paper prints, the publishing systems and out of the digital system into the iPad system and whether you read the journal on the iPad, now that we have both, that day's edition in the updated version. And so there is just really one person making sure that the form and content were appropriate for that format. So it really does enable us not only to share content but to deal with new devices and new platforms in an economical way that makes the best of the content we have and delivers it in a way that our customers want to read it. Mike?

Mike Darcey

Yes. We've pretty much completed. Apparently, we're [indiscernible] years and we're about to start to move, to moving content over on to the new system. The Times will start moving in about 6 weeks' time. And that will be followed by the Sunday Times, that's only just kicking up. And then some will come next. If it happens in that order and we don't overlap, then that will take us most of the way through 2014. There's some possibility that we'll be able to overlap the publications, in which case, it might have been a little bit quicker than that.

Robert J. Thomson

We've now completed the majority of our community titles. We move to doing our major metropolitan titles, which are the paid-for products from July of this year. And progressively, we'll complete the whole of the newspaper network in Australia during the course of the next financial year. It's going very smoothly, and we've had a tremendous amount of guidance in our systems from our colleagues at our journals and the Wall Street Journal.

Reed Nolte

Okay. Thank you.

Robert J. Thomson

Thank you all very much for coming on. And thank you for being generous with your time. And thank you for being generous now with your thoughts.

Keith Rupert Murdoch

Thank you.