Yahoo Finance News Corp (NWSA) FY 2018 Earnings Conference Call Transcript
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News Corp (NASDAQ: NWSA)
FY 2018 Earnings Conference Call
Nov. 07, 2018, 5:30 p.m. ET
Contents:
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks:
Operator
Good day, and welcome to the News Corp First Quarter Fiscal 2019 Conference Call. The conference is being recorded. Please note, all media is invited on a listen-only basis today.
At this time, I'd now like to turn today's call over to Mike Florin, Vice President and Head of Investor Relations. Sir, please go ahead.
Mike Florin -- Vice President and Head of Investor Relations
Thank you very much, Carrie. Hello, everyone, and welcome to News Corp's fiscal first quarter 2019 Earnings Call. We issued our earnings press release about an hour ago and it's now posted on our website at newscorp.com. On the call today are, Robert Thomson, Chief Executive; and Susan Panuccio, Chief Financial Officer. We will open with some prepared remarks and then we'll be happy to take questions from the investment community.
This call may include certain forward-looking information with respect to News Corp's business and strategy. Actual results could differ materially from what is said. News Corp's Form 10-K and Form 10-Q filings identify risks and uncertainties that could cause actual results to differ and contain cautionary statements regarding forward-looking information.
Additionally, this call will include certain non-GAAP financial measurements, such as total segment EBITDA, adjusted segment EBITDA and adjusted EPS. The definitions and GAAP to non-GAAP reconciliations of such measures can be found in our earnings release.
With that, I'll pass it over to Robert Thomson for some opening comments.
Robert Thomson -- Chief Executive Officer
Thanks, Mike. Fiscal year 2019 is off to an impressive start with growth in revenue and earnings reaffirming our strategy to become increasingly digital and global, and to put renewed emphasis on subscriptions in a choppy advertising market. We are committed to extracting a premium for our premium content, regardless of the platform on which it is published.
In the first quarter, News Corp saw growth in revenues and total segment EBITDA with digital real estate and book publishing continuing to strive and there was strong expansion in digital subscribers across our News businesses. Meanwhile, at Foxtel, which has added significantly to our consolidated revenue and EBITDA, the transformation of the company continue to pace.
In summary, reported revenues grew 23% to $2.5 billion for the quarter, while reported total segment EBITDA expanded 44% to $358 million. These numbers are noteworthy, as even excluding the Foxtel consolidation, we achieved tangible increases over the same period last year.
In this era of big digital, with its blandishments and banishments, our editors and journalists have consistently reminded readers of their value as trusted sources of real news delivered in real time and with real context. The transition to digital continues and we will strive as a company to change the contours of the content landscape for the sake of our businesses and our societies. We are in active negotiations with Google, Facebook and Amazon, and we are in discussions with law makers and regulators in Europe, the UK, Australia and the US. There is finally a more sophisticated debate about provenance and proprietary in these countries after more than a decade of effort from Rupert Murdoch and the News Corp team.
A victory over the punitive First Click Free was just a start and certainly assisted quality publishes around the world, and Rupert's proposal for a content carriage fee is rightly gathering momentum.
Turning to our business performance, I want to start with the news and information services segment, which is shown progress during challenging times for media companies generally. At Dow Jones, print advertising revenues showed significant improvement and had their best performance in the last three years. Total circulation revenue continue to grow, led by 9% expansion at the Wall Street Journal. Creativity and quality still resonate with readers and advertisers, which is also why subscriptions are growing at Dow Jones.
The professional information business continues to expand with risk and compliance growing this past quarter recording a 27% increase in revenues. A few weeks ago, I visited the Risk and Compliance Asia hub in Shanghai, where the region is experiencing particularly strong growth. Chinese companies are increasingly conscious of risk in international markets and International companies must ensure that they are compliant across jurisdictions when they do business in China.
Meanwhile, WSJ magazine celebrated its 10th anniversary with the biggest issue ever, driving record advertising revenue. On News UK, we again increased our print market share for both The Times and The Sun, and each remains the clear category leader. The Times reported growth in print advertising revenue for the fourth consecutive quarter and we continue to see the evolution of the digital product with subscriptions at The Times and Sunday Times up 24% year-over-year. While, The Sun was confirmed as the number one news brand across both print and digital combined, according to the latest PAMCo survey.
In August, we ended our Sun Bets joint venture with Tabcorp, with whom we are proud to have partnered. Both companies were not from the venture and we in particular saw the power of our mastheads in driving digital audiences to complementary commercial offerings. We see the complementarity at Wireless Group with talkSPORT assisting in the development of The Sun brand and vice versa. We believe our ability to maximize the value of content and talent and to drive audiences from brand to brand is a clear comparative advantage. While it also showed its intent and the ambition by hiring the uniquely talented, Chris Evans, who will undoubtedly lead a renaissance at Virgin Radio.
Meanwhile, in Australia, digital subscriptions rose 18% this quarter and digital advertising grew strongly, thanks in part to the strength of news.com.au, Australia's leading digital news brand. And at the Australian digital subscriptions continued to account for more than half of the total subscriber base. News Corp Australia is also seeing benefits from its joined print and distribution agreement with Fairfax. We are talking with publishers around the world about common sense cost sharing, while enhancing our unique attributes and we believe there is more room for further savings of this collective kind in the UK and the US.
Our team in Australia has been decidedly diligent since we bought together, Foxtel and FOX SPORTS Australia. We have made extensive changes in management, enhance the sports and entertainment portfolio, and upgraded the technology, including a more sophisticated set-top-box, iQ4. This is patently a period of transition, but News Corp has successfully overseeing the transformation of realtor.com, the digitalization of our newspapers and the digital journey of HarperCollins.
It is clear that many more Australians than previously presumed are prepared to pay for OTT services and we believe that we have by far the best content offering with the latest technology and not incidentally a new marketing team. Soon to be launched OTT sport offering will have 30,000 live hours of aggregated sports content, including rights for all major local sports and the most compelling overseas offerings.
As for our fastest revenue growth segment, Digital Real Estate at Move, the home of realtor.com, real estate revenues rose 19% year-on-year, while overall revenues, including B2B, software and advertising, expanded 10%. It's worth noting that we have nearly doubled revenues at Move since we acquired the company four years ago. We made another important acquisition in recent months, Opcity, a market leader in providing professionals with the highest quality leads matching qualified buyers with realtors in real time.
REA Group posted another robust quarter, clearly standing apart from the domestic competition. We remain excited about REA's expansion with Smartline and Hometrack Australia, our new products that strengthen the company's lead.
In book publishing, HarperCollins once again delivered a strong performance this quarter, driven by previously released best sellers and the excitement over new front list titles like Daniel Silva's The Other Woman, Gregg Jarrett's The Russia Hoax, and Heather Morris's The Tattooist of Auschwitz. Yesterday, we celebrated the release of Homebody from Joanna Gaines, half of the Magnolia story duo. Unsurprisingly, it went straight to the top of the US best-seller list and is replaced with Worm's Wits and Wisdom (ph). Meanwhile, in children's books The Hate U Give by Angie Thomas remains as the best selling young adult hardcover benefiting from the synergistic movie release in October.
One particularly significant trend continues to be the rapid growth of digital audio, which expanded 55% this quarter over the prior year. We are in discussions with several Chinese audio publishers, who are also experiencing express growth in their market, which has been complicated in the past by a lack of IP protection and the proliferation of piracy. There has obviously been a fundamental shift in listening habits, not just in the US but globally.
Just over five years since our rebirth, News Corp is leading the evolution of news and media internationally, and will continue the quest for provenance and for profits. Clearly, we believe many of our companies are in the midst of a successful journey to a more lucrative future. At a time of such profound change in these sectors, it behooves us to hold our nerve and to navigate with conviction and with concern for all our shareholders. These are certainly times of great challenge but of even greater opportunity for News Corp, to our audiences and advertisers and for our investors.
And now, Susan will give a more granular look at a strong set of numbers.
Susan Panuccio -- Chief Financial Officer
Thank you, Robert. Before I review the results, I wanted to highlight a few things from this quarter. We continue to take steps to stabilize News and Information Services. We are seeing strong growth in digital paid sales, while balancing that with ongoing cost efficiencies, including industry solutions. There is still plenty of work to do, but I'm pleased with our progress in the start of the fiscal year. Our revenue mix within the segment is also increasing with advertising now making up less than 50% of revenue.
In Digital Real Estate Services, we completed the acquisition of Opcity through Move last month for approximately $210 million, including certain deferred payments and stock grants. As Robert mentioned, this is a leading best in breed real estate tech platform that expands realtor.com's offerings to include a success based concierge model for pre-qualified transaction-ready leads. realtor has made significant progress and remains an area we continue to believe is important to both capital reinvestment and for value creation.
We are making progress at Foxtel. The team is working hard on the launch of its sports-only OTT product, while making significant improvements to our core broadcast offerings. We have restructured the management team, adding key expertise and that team is now heavily focused on further improvements to reinvigorate the new Foxtel.
The performance at HarperCollins this quarter, again, underscores the value of premium content and global scale, posting another quarter of robust EBITDA growth despite more challenging prior-year comparables. With that, I would now like to discuss our financial results in more detail.
We reported fiscal 2019 first quarter total revenues of over $2.5 billion, up 23% versus the prior year, which reflects the impact of the consolidation of Foxtel. On an adjusted basis, which excludes the impact of the Foxtel consolidation, unfavorable currency impact and the other items disclosed in our release, revenues grew 4%. Reported total segment EBITDA was $358 million, up 44% versus the prior year. As a reminder, last year included a benefit of $46 million from the reversal of accrued net liabilities relating to certain employment taxes in the UK, while this year our results include the consolidation of Foxtel and a $48 million benefit from Tabcorp related to the exit of the partnership for Sun Bets in the UK.
Adjusted EBITDA for the quarter, which excludes the Foxtel impact and other items as disclosed in the press release, rose 37%. For the quarter, earnings per share was $0.17 as compared to $0.12 in the prior year. Adjusted earnings per share were also $0.17 in the quarter versus $0.07 in the prior year.
Turning now to the individual operating segments. In news and information services, revenues for the quarter $1.2 billion, up 1% versus the prior year. The quarter included the settlement payments to Sun Bets but also $28 million negative impact related to currency. Within the segment, reported revenues at Dow Jones rose 3%, News UK rose 12%, News Australia declined 7% and News America Marketing fell 6%. More details will be disclosed in the 10-Q tomorrow.
Moving on to the segment highlights. Advertising revenues accounted for 46% of segment revenues and were down 7% versus the prior year with approximately $15 million or one-third of the decline due to currency fluctuations. Across our portfolio, advertising trends were mixed, while print advertising trends remain under pressure, we saw improvements at Dow Jones combined with continued healthy digital advertising growth in Australia and the UK.
At Dow Jones advertising revenues were relatively flat with the prior year, excluding the impact of the closure of the Wall Street International Print editions in the second quarter of fiscal 2018. It is worth highlighting that this was the best advertising performance by Dow Jones in recent quarters. At News Australia, advertising declined 11% or down just 4% in local currency, a slight improvement versus the fourth quarter rate. The decrease was due to ongoing weakness in the print advertising market, which was partially offset by digital advertising growth notably at news.com.au.
News UK was weaker this quarter with advertising down 10% versus the prior year in both reported and local currency, due mostly to softer print trends at The Sun. News America Marketing fell 6% due to weak home delivered revenues, which include freestanding inserts, partially offset by modest domestic in-store revenue growth and improving digital revenues. This quarter, domestic in-store was the biggest contributor to revenues within News America Marketing.
Turning now to circulation and subscription revenues, which accounted for 42% of segment revenues. We saw an increase of 2% with foreign currency negatively impacting these revenues by $10 million or 1%. We are continuing to see healthy digital subscriber growth, which is helping to underpin our improved performance. At Dow Jones, circulation revenues grew 7% and at the Wall Street Journal they grew 9%, benefiting from strong growth in its digital-only subscribers, which were up 20% year-over-year.
We raised subscription prices this quarter ranging from $2 to $6 per month, which will be phased in through existing members throughout the year. In addition, we again saw healthy year-over-year digital subscription growth at The Times and The Sunday Times, up 24% to 263,000 and also at News Australia up 18% to over 442,000.
In the UK and Australia, cover price increases and rising digital sales mostly offset print volume decline. The segment is continuing to transition to digital with total digital revenues up to 33% of revenues from 27% in the prior year, partially due to the payment related to Sun Bets in the UK. For Dow Jones and our mastheads digital revenues were 37%.
Turning to segment EBITDA, news and information services' segment EBITDA was $116 million, up 57%, which included higher contributions from Dow Jones and News Australia, along with the one-time impact at News UK.
At book publishing, we posted another very solid quarter, driven by strong front list and back list performances, as Robert mentioned, notably in the US, which exceeded our expectations. Revenues for the quarter increased approximately 4% to $480 million and segment EBITDA increased 42% to $68 million. Overall, the back list contributed approximately 55% of consumer revenues in the quarter. Total digital revenues for the quarter grew 12%, consistent with the previous quarter and represented 22% of consumer revenues, up from 21% last year. Digital Audio continues to drive robust results, up over 50% and accounting for over 30% of digital revenues.
At the Digital Real Estate Services segment revenues increased 8% to $293 million, partially impacted by unfavorable foreign exchange. REA Group revenues grew 9% or 18% in local currency, due to strong residential depth revenue growth in Australia, including higher penetration for Premiere All and increased yield, the expansion of financial services and modest contribution from the Hometrack acquisition. Revenue growth was partially impacted by 3% decline in listing volume. Please refer to REA's earnings release in their conference call, which just concluded for additional details.
Move revenues rose 10% to $118 million versus the prior year, driven by the continued growth of its connections for Buyers product. As Robert noted, real estate revenues, which include the listing and lead-based products and accounts for approximately 75% of revenues grew 19% this quarter. This was partially offset by reduced display advertising as part of a broader initiative to enhance the user experience and drive engagement and listings.
Early results have been promising with Connections for Buyers lead volume growth rates improving versus the fourth quarter, while continuing to maintain higher yield per customer. Average monthly unique users at realtor.com were approximately $60 million for the quarter, rising 9% versus the prior year. Reported segment EBITDA was up 11% to $105 million and on an adjusted basis EBITDA grew 16%. The team at realtor are focused on the integration and operation of Opcity, which closed on 11th of October, expanding broker and agent adoption, improving lead volume and using data machine learning to improve conversion rates will be a key focus. We will be managing the transition of leads from Connections for Buyers to Opcity pending customer demand. Finally, it is important to note that Opcity is the referral model and we recognize revenues upon transaction closing.
Turning to the subscription video services segment, which as you may recall includes new Foxtel and Sky News. Revenues were $565 million versus the reported $145 million a year ago. Segment EBITDA in the quarter was $113 million versus $27 million in the prior year. On a pro forma basis, reflecting the Foxtel transaction, revenues in the quarter declined 17% compared to revenues of $618 million in the prior year, with foreign currency impacting revenues by $45 million or 7% of the decline.
Operationally, the revenue decline was driven by lower subscription revenues, including a mix shift to lower price packages, lower advertising revenue, and a difficult year-on-year comparison in pay-per-view, which last year included the McGregor/Mayweather fight. In addition, the adoption of the new revenue recognition standard reduced revenues by $4 million.
It is also worth noting that the revenue trends for TV subscriptions, which make up the bulk of the revenues were relatively stable with the fourth quarter. On a pro forma basis, segment EBITDA declined 27% compared to the $154 million in the prior year. The year-over-year decline reflects the lower revenues, partially offset by a 19% decrease in operating expenses, which includes lower non-sports programming costs and a $6 million benefit related to the adoption of the new revenue recognition standard.
On operating metrics, Foxtel's total closing subscribers were over 2.9 million as of September 30th, which is up versus the prior year, driven by Foxtel Now subscription and the inclusion of commercial subscribers from FOX SPORTS Australia, offset by lower broadcast subscribers and the closure and wind down of T-Box and Optus subscription.
In the first quarter, broadcast churn was 12.9% versus the 12.7% in the prior year. ARPU was AUD76, down about 6%. However, excluding the new revenue standard, ARPU would have been about AUD2 higher per month and down about 4% versus the prior year similar to recent trends. The next 12 months, we'll see the new Foxtel business focusing on three key priorities.
Firstly to stabilize and revitalize the core broadcast business, which today accounts for the majority of the revenues and EBITDA. This will be done by improving the content offerings' integration marketing presence. Product improvements introduced include the new iQ4 set-top-box, Foxtel 4K, FOX CRICKET, Foxtel Go, FoxFlicks and FOX SHOWCASE. We believe premium sports is the large competitive advantage in having the recently acquired domestic cricket rights of the dedicated network should help improve churn, significantly enhance our spring and summer schedule and drive subscription.
The team will also focus on expanding our penetration of next generation boxes, which is a much better user experience and comes with over 10% increase in build ARPU per month, double the pay-per-view by rates and higher retention. Currently, about 35% of customers have either the iQ3 or iQ4. So far the reaction in the market to the iQ4 has been very positive and upgrades are trending above the initial expectations delivering over 47,000 upgrades in the first quarter.
Finally, the Foxtel team has been upgrading the customer service function and this team will be focused on improving safe rates and better optimizing offers.
The second key priority within this segment is to launch multiple OTT offerings in order to provide new revenue streams to the company aimed at maximizing reach and leveraging our rights over a larger base. We are building state-of-the-art customer-centric platforms with selling, streaming and billing to provide a seamless customer experience. The first product to launch on the new platform will be the sports-only product. We expect, as Robert mentioned, a soft beta launch for web-only access imminently and plan to expand to iOS, Android and other connected devices soon thereafter.
The third key priority will be focused on cost initiatives to create room for growth, which include the migration of cable on to a pure satellite IP network and a wider focus on overhead costs.
I would now like to mention a few things for the fiscal second quarter. At news and information services, we remain focused on digital subscriber growth and seeking cost efficiencies as the advertising market remains challenged. I also remind you that News UK received a one-time benefit relation to Sun Bets in the first quarter. In subscription video services, we will launch our sports OTT product and begin to amortize the Cricket Australia rights. Rights and production costs related to cricket should be around $25 million to $30 million for the second quarter.
In book publishing, overall trends remain favorable with digital contribution rising modestly. As Robert mentioned, we are very excited by the upcoming release of Joanna Gaines Homebody in November. We also have Mitch Albom's The Next Person You Meet in Heaven and Justin Timberlake Hindsight and all the things I can't see in front of me in addition to strong back list sales.
At Digital Real Estate Services, we will begin reporting the Opcity acquisition, which should drive higher revenue growth, although we will have about $3 million per quarter in costs relating to the deferred payments and equity grants.
With that, let me hand it over to the operator for Q&A.
Questions and Answers:
Operator
Thank you. And at this time, we'd like to open the floor for questions. (Operator Instructions) Our first question will be from Andrew Rakowski with Credit Suisse.
Andrew Rakowski -- Credit Suisse -- Analyst
Hi, Robert. Hi, Susan. My question here is around subscription video services. Firstly, could you let us know how much was spent in Q1 on investment into the OTT products, obviously that's the focus that you've mentioned, so just interested in how much was spent and how that investment is then expected to be phased over the remainder of the year? And as a follow on to that question, following the launch of the packages, how do you think about the addressable market? As in where do you think penetration can get to? Obviously, you've been sitting around that $2.8 million, $2.9 million mark. So just interested about how you thinking about traditional subs?
Robert Thomson -- Chief Executive Officer
Andrew, I think it's fair to say that what we've seen in the Australian market in recent years, the presumption of a ceiling on the number of Australians were willing to pay for television services and services delivered across other platforms, that ceiling no longer exists. And having broken through that ceiling, it creates extra opportunities for the highest quality provider and we are -- certainly in terms of programming, the highest quality provider, but in terms of sports, entertainments, documentaries, children's programming. But we haven't, in the past, delivered the services in the way that potential customers have necessarily wanted. So, as you know, we have new leadership, we have new technology, we have a new marketing team and we are genuinely confident that this confluence of an expanded market and an improved product will make a difference to our percentage share.
Susan Panuccio -- Chief Financial Officer
And, Andrew, just in relation to OTT, we haven't given out the investment numbers in relation to that, but what we have said and we said this on the last call, we spent about $285 million in CapEx last financial year at Foxtel and we expect the investments to be at least $50 million higher than that in the current year. And at this stage, we are currently expecting that that will come in line. We obviously when we launched the product, we will have marketing costs that was to be associated with the OTT program. So that will come in the first quarter -- in the second quarter and obviously will continue somewhat through the balance of the year. And just as a note, we spent about $69 million of CapEx in relation to Q1, which is flat relatively speaking year-on-year.
Andrew Rakowski -- Credit Suisse -- Analyst
Okay.
Mike Florin -- Vice President and Head of Investor Relations
Thank you, Andrew, and welcome back. Carrie, we'll take our next question, please.
Operator
Our next question will be from Alexia Quadrani with JPMorgan.
Alexia Quadrani -- JPMorgan -- Analyst
Thank you. My questions on the news and information services segment and the strong growth you're seeing in digital subscribers. I guess any color can you give us on the opportunity for further growth, really sort of how big is the potential opportunity in your opinion? How that may differ by market obviously. And then just my follow up would be, a quick question on HarperCollins. When you look at the pipeline of books out there going into the next calendar year, even in the fourth quarter, any sense on how those queue physical versus digital?
Robert Thomson -- Chief Executive Officer
Alexia, look, obviously we're doing a lot to change the contours of the content marketplace and the whole subscription scenario has fundamentally changing this in large part because of the work that News Corporation has gone in convincing Google to get rid of First Click Free, which is really punishing premium content. So one thing I'd like to say, if any other publisher around the world, which is now profiting from our efforts would like to send us commission check, we are welcome to that. That really varies paper by paper and country by country, our focus on Dow Jones, because it's obviously the largest of our properties, but what we're seeing the two phenomena which are fruitful; one, continuing to use artificial intelligence to identify through propensity modeling new customers and using that modeling as well to provide them with a more satisfying experience; and, two, from that an ability to upsell those customers to higher value-added products from our professional information services.
Susan Panuccio -- Chief Financial Officer
And I think if we just focus on Dow Jones, obviously, the size of the market within the US is very large as well as internationally. And just to give you sort of a sense, we had about 93 million non-subscriber website businesses in Q1 made up of first time repeat and even former subscription visitors. So there is a big opportunity, obviously, within that pool of people to drive conversion. And the Wall Street Journal customer base is only 11% made up of international subscription and given the brand and the strength of that brand on a global scale we do expect to see growth within International going forward.
Robert Thomson -- Chief Executive Officer
And as for HarperCollins, Alexia, as you can see from the results quarter-after-quarter, the team has done a wonderful job in identifying talent and having the lateral empathy that you need not only to satisfy current demand, but to anticipate future demand. And that's particularly -- so as I said with the release this very week of Homebody, which we have great expectations of them and the other releases that I mentioned. But it's a tribute of, one, to the ability of Brian Murray and his team and Charlie Redmayne in the UK to put together groups of editors you can get the best out of authors and then to make the most of the product by marketing it in a clever way. And also being home for to new opportunities, which is what you see with the exponential increase in digital audio books, and we're very optimistic, as I mentioned, not only about the opportunity in the US, but actually around the world where the same trend is now preeminent. And in that sense, the team deserves particular price, because at HarperCollins we have been the author of our own success.
Alexia Quadrani -- JPMorgan -- Analyst
Thank you very much.
Mike Florin -- Vice President and Head of Investor Relations
Thanks, Alexia, Carrie, we'll take our next question, please.
Operator
Our next question will be from Kane Hannan with Goldman Sachs.
Kane Hannan -- Goldman Sachs -- Analyst
Good morning, Rob and Susan. Can you just provide a little bit more color around the Opcity business, the strategy for you striding (ph) that into Move? And how the economics of an Opcity lead compared to our Connections for Buyers lead? And then just one quick one, just on the Sun Bets payment of $48 million, just confirming that's $48 million in EBITDA for the NIS in the quarter?
Susan Panuccio -- Chief Financial Officer
So just in relation to Sun Bets, yes, it is. We obviously got net offsets that are coming to that, but yes the gross payment were $48 million in adjusted EBITDA.
Robert Thomson -- Chief Executive Officer
And with the Opcity degrading -- degrading Opcity, not just into realtor but actually into the broader News Corp, because it is the complementarity of our platforms that has been behind the successful growth in turnaround story, really there is realtor.com. Essentially, we believe that realtor should have a choice between quantity leads and quality leads and that they should be appropriately priced. And so, we're very much focused on realtors and on buyers and sellers. We're not interested in house flipping, as I said, in other companies. And so, we do see a lot of loyalty. When you look at the other companies' business and there is a fair amount of churn there among their clients, probably more churn than you'll find in the average butter factory. It is our intent with Opcity to be absolutely focused on realtor dates (ph). And the product of that we expect in the second half is a significantly higher rate of growth in overall revenue at realtor.com of the order of the mid- to high-teens, which compared to the 10 or so percent in the quarter just completed is obviously a tangible increase.
Susan Panuccio -- Chief Financial Officer
And I think the other thing that's important to note in relation to that is that realtor will be managing the conversion from leads coming in into Opcity to make sure that the customer experience is optimal. And so, that may fluctuate as we go throughout the year.
Mike Florin -- Vice President and Head of Investor Relations
Thanks, Kane. Carrie, we'll take our next question, please.
Operator
Next question comes from Tim Nollen with Macquarie.
Tim Nollen -- Macquarie Bank -- Analyst
Thanks. I have a question about costs, particularly in Australia. I may have missed the amusing IR side, how you manage to get some nice EBITDA expansion, I think you mentioned in Australia despite some revenue declines there. I know you've been doing some cost out efforts for a while there and maybe that's all that was from a better base. And then similarly on the subscription video side, it looks like some good operating cost cuts despite the fact that a lot of those costs are sports related, I wouldn't think you have to be frustrated (ph) for cost out, one of you could help us maybe quantify a bit more how much the pay-per-view fight contributed to the revenue and the cost differential or how else you've managed to save costs in that business? Thanks.
Susan Panuccio -- Chief Financial Officer
So just taking you to Australia first, I think the team has done a great job at looking at the overall cost bases in that business and obviously it's quite large from a geographical perspective. They have been working on industry solutions, they have been looking at editorial savings, production savings, back-office savings, they obviously get the benefit of lower newsprint coming through, because of the volumes, and they've also been looking at distribution savings. So they've been going really hard on this sort of organizational structure and design, and taking cost out where they think it's not going to impact on the end products. So I think they have been very focused on that. They obviously have got the benefit of the cost out in the previous year. From an annualized perspective, it's flowing through into this year. But they also are still looking at other cost opportunities in the current year. And just in relation to subscription video services, so your question -- can you maybe just repeat your question, again, in relation to that?
Tim Nollen -- Macquarie Bank -- Analyst
Yeah. It's kind of a two-part thing. It's just trying to understand with the fight and the revenue recognition. I think you gave some comments on that. I just wonder if it's possible to quantify what the revenue and cost differential was there on the fight and any other items? What I'm trying to understand is how you managed to save a fair amount of operating costs, given a lot of sports rights we think generally in the mix?
Susan Panuccio -- Chief Financial Officer
So on pay-per-views, it's about $10 million to $12 million in Q1, so that gives you a quantification of that and revenue recognition was about $4 million in the quarter.
Tim Nollen -- Macquarie Bank -- Analyst
Okay. Thanks. Fine. Thank you.
Operator
Thank you.
Mike Florin -- Vice President and Head of Investor Relations
Thanks, Tim. Carrie, we'll take our next question, please.
Operator
Our next question will be from Alan Gould with Loop Capital.
Alan Gould -- Loop Capital -- Analyst
Thank you. I know it's just a first quarter that you've consolidated Foxtel with the Australian sports, but I'm just wondering what sort of timeframe should we be looking for and what sort of metrics should we be looking for to see the success of turning around Foxtel?
Robert Thomson -- Chief Executive Officer
Clearly, we're at an early stage. We're early in the season, we are early in the cricket season in Australia, we're in mid-season of renaissance at Foxtel. I would look really over the next 12 months, particularly the take-up of the OTT in coming months, then ahead of the next winter sports season, Australia's had a selling season there is sort of end of February, March, April as peak selling season. And keep an eye both on the number of new customers and, obviously, the ARPU, but there will be very clear benchmarks over the coming year, it will be obvious to you and we're going to make it obvious to you how we are faring. But we have full confidence in Patrick Delaney and the new team and in his and over-hauled team. And the early indications are that they have both an understanding of the opportunity, empathy with potential customers and a real energy that has brought new life to Foxtel. And so, one, it's a great opportunity for the company; and, two, the metrics will be very clear.
Mike Florin -- Vice President and Head of Investor Relations
Thanks, Alan. Carrie, we'll take our next question, please.
Operator
Our next question will be from Eric Pan with JPMorgan.
Eric Pan -- JPMorgan -- Analyst
Good morning, guys. Thanks for taking my question. So just a little bit more on realtor.com, visitor growth there seems to be slowing. Can you talk a little bit about your strategy there to try to boost the visitorships, where you're focusing your energy? And then (technical difficulty) recently acquired a mortgage business, do you foresee either Move or realtor going into ancillary businesses as well?
Robert Thomson -- Chief Executive Officer
Well, first of all, the audience growth was certainly greater than that of the competitor in the most recent quarter. And the core real estate revenue growth was 19%. The overall was 10%, in part because we consciously reduced the number of advertisements on the site. We're experimenting with user experience and we can frankly turn that dial up and down as and when we choose. But we're obviously constantly trying to improve the experience both for uses on the site and obviously for -- our realtor clients. Our focus over the next year will be the integration of Opcity, because we believe there really is an opportunity in providing quality leads to realtors and being able to price those leads in a way that reflects our contribution to their success.
Mike Florin -- Vice President and Head of Investor Relations
Thanks, Eric. Carrie, we'll take our next question, please.
Operator
Our next question will be from Craig Huber with Huber Research Partners.
Craig Huber -- Huber Research Partners -- Analyst
This $48 million revenue benefit from the Sun Bets, it definitely sounds like it's one-time in nature. I guess I'm just surprised it wasn't taken out of your adjusted EBITDA number, so reason why, I'm just curious. And then secondly, I have a similar question to earlier somebody else, in your subscription video services, it look like costs were down based on page 19, roughly about 14%, maybe down roughly 7% adjusting for currency. What drove the cost to be down that much or what's -- given with the programming costs were up pretty nicely, right, probably at least mid single digits or so? Thank you.
Susan Panuccio -- Chief Financial Officer
So just in relation to the Sun Bets, it was actually partly operationally nature, because the settlement of that was effectively the payout of the contract and bringing forward effectively the minimum revenue guarantees that we had within that contract. So obviously there is a termination payments in there as well, but the bulk of it was operational and as a consequence that's why we report it the way we did.
In relation to subscription video services and the costs, we did see cost reductions coming through from non-programming as well as some of the program. We didn't have some of the year-on-year costs as we talked about on the PayTV, which was $12 million, we didn't have sports, some of the sports costs that came in relative to Q1 of the previous year, but they also are working hard on some of the overhead costs in the background. So they have been looking at driving cost out in the back office as we said in order to provide a runway for investment going forward.
Mike Florin -- Vice President and Head of Investor Relations
Thanks, Craig.
Craig Huber -- Huber Research Partners -- Analyst
Thank you.
Mike Florin -- Vice President and Head of Investor Relations
Carrie, we'll take our next question, please.
Operator
Our next question will be from Brian Han with Morningstar.
Brian Han -- Morningstar -- Analyst
How are you? So in the books division, can you please explain the big margin improvement in the quarter, despite just a 4% revenue increase? I mean, the big growth in digital audio can make or fall (ph)?
Susan Panuccio -- Chief Financial Officer
Part of the reason, obviously, is because of the back list. We get higher margins, obviously, as they come through from a back list perspective relative to the front list, where we are obviously paying large all through advances (technical difficulty) we had. So that's really is what's helping drive that margin improvement.
Brian Han -- Morningstar -- Analyst
So, what was the increase in the back list revenue during the quarter versus pcp?
Susan Panuccio -- Chief Financial Officer
We had a back list that contributed to about 55% of the revenues. I don't have the percentage here in front of me of what that movement was quarter-on-quarter, but it contributed 55% to the overall revenues.
Brian Han -- Morningstar -- Analyst
Thank you.
Mike Florin -- Vice President and Head of Investor Relations
Okay. We'll take our next question, please.
Operator
I'm showing no further questions in the queue at this time. I'd like to turn it back to Mr. Mike Florin.
Mike Florin -- Vice President and Head of Investor Relations
Great. Thank you, Carrie, and thank you for all participating, and we look forward to talking to you next quarter. Have a great day.
Operator
Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.
Duration: 43 minutes
Call participants:
Mike Florin -- Vice President and Head of Investor Relations
Robert Thomson -- Chief Executive Officer
Susan Panuccio -- Chief Financial Officer
Andrew Rakowski -- Credit Suisse -- Analyst
Alexia Quadrani -- JPMorgan -- Analyst
Kane Hannan -- Goldman Sachs -- Analyst
Tim Nollen -- Macquarie Bank -- Analyst
Alan Gould -- Loop Capital -- Analyst
Eric Pan -- JPMorgan -- Analyst
Craig Huber -- Huber Research Partners -- Analyst
Brian Han -- Morningstar -- Analyst
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