News Corporation (NASDAQ:NWSA) Q2 2015 Earnings Conference Call - Final Transcript

Feb 05, 2015 • 04:30 pm ET

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News Corporation (NASDAQ:NWSA) Q2 2015 Earnings Conference Call - Final Transcript

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Presentation
Executive
Robert Thomson

to benefit our Book Publishing business hoping to usher in a new era of international and digital expansion at HarperCollins.

Harlequin has access to over 100 markets and publishes in 34 languages, which is a far broader base for us, and we have already begun using that reach to take more advantage of successful titles.

Here are a few top line observations about our Q2 performance. With Harlequin integrated into its stable of brands and solid results in other divisions, HarperCollins continues to show great strengths. Sales of the Divergent series have exceeded our expectations again with 1.5 million units sold in the second quarter, and we are keenly looking forward to the second film in the Divergent series, Insurgent, scheduled for release next month.

We have also benefited significantly from the release of the film American Sniper, which has obviously stimulated sales of the eponymous book, now atop bestseller charts in the US, U.K. and Australia.

The tome had strong momentum in the month of January when it sold 1.2 million units. To date, Chris Kyle's American Sniper has sold 3.9 million copies, and that title is rising rapidly.

HarperCollins announced this week the acquisition of the North American rights to the newly discovered novel by Harper Lee, the author of the monumental To Kill a Mockingbird.

The novel Go Set a Watchman will be published on July 14, this year and gives HarperCollins a head start for next fiscal year. If the overwhelming interest in the announcement is reflected in book sales, we can expect robust performance this summer and beyond.

During the quarter, we also saw increased monetization of the backlist by Brian Murray's team at HarperCollins through dynamic pricing and subscription offerings, demonstrating how digital drives value for titles. Going forward, we are optimistic about the rich scene that is our back catalog.

The net effect of the developments this quarter at our Book Publishing segment, revenues improved by 20% and EBITDA by a healthy 13% versus the prior period.

The Dow Jones continues to make progress at the professional information business, but we were particularly pleased that advertising at The Wall Street Journal was higher than in the prior year.

One reason was an increase in advertising by technology and finance companies in the print edition of The Journal. It is certainly meaningful that tech companies see the value and power of print as a platform and its desirable demographic.

At News Australia, we again saw sequential year-over-year improvement with advertising declining only 3% in local currency and EBITDA again up versus the prior year.

Our digital subscriptions are now approaching 250,000, almost 30% higher versus the prior year, but it is still early days in our digital development. We've been revamping the product offerings, including the launch of new apps at our metro mastheads, and we have reduced costs, including the closing of our Gold Coast printing site, while we have successfully raised newsstand pricing and subscription rates to drive circulation revenues.

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