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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day. And welcome to the News Corp 1Q Fiscal 2021 Conference Call. Today's conference is being recorded. Media will be on a listen-only basis.
And at this time, I would like to turn the conference over to, Mike Florin, Senior Vice President and Head of Investor Relations. Please go ahead sir.
Thank you very much, Corey. Hello, everyone, and welcome to News Corp's Fiscal First Quarter 2021 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'll 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.
Thank you, Mike. Wherever you happen to be, and whatever time it happens to be virtually and actually, I trust that all are faring well, during these most challenging of times, personally and professionally. We are certainly in the midst of a political uncertainty in the U.S. and continuity is a blessing in these polarized and polarizing moments. Please continue to stay both, safe and sage.
I would in particular like to express my gratitude to all our employees, who've traversed this difficult terrain with courage and commitment. And we've played an important empathetic role in their communities, during these stressful months. Despite the harsh conditions and the inevitable COVID-caused disruptions, I am pleased to report that News Corp had a particularly robust first quarter, with resounding year-on-year growth in our profitability and revenue expansion in several key segments.
Three vital -- three vital pillars of our company, Dow Jones, Book Publishing and Digital Real Estate Services had notable EBITDA growth and higher revenue in Q1. Consolidated revenues were over $2.1 billion. And while that was down 10% year-over-year adjusted revenues which exclude News America Marketing, Unruly and other items noted in the press release were only 3% lower.
Consequentially in Q1, News Corp's total segment EBITDA was $268 million, an increase of 21% year-over-year evidence of the strength of our core businesses and the growth potential of those sectors in which we have made significant acquisitions in particular, Digital Real Estate and Book Publishing.
We are also benefiting from our strategy to simplify the company, allowing us to focus on the segments that have the greatest growth potential, as well as ensuring that we are resolutely reducing shared costs around the company. We are determined to provide greater transparency for investors and the presentation of Dow Jones, as a separate segment was integral to that continuing process.
Turning now to the details, Digital Real Estate Services flourished this quarter. Despite, limits on home inspections and other COVID-related disruption, revenues increased 7% year-over-year, while segment EBITDA surged 45% year-over-year led by particularly strong results at Move, operator of realtor.com, which had record revenues in the quarter of $138 million.
Both REA and realtor.com reported record traffic during the quarter, with the latter having reached a high 92 million monthly unique visitors in August, while traffic was up 26% for the quarter. Based on comScore data, REALTOR has outpaced Zillow in audience growth for 16 of the past 18 months.
This success comes as realtor.com continues to focus on transforming its business towards a data-rich referral model. We are convinced there's a substantial opportunity for REALTOR to expand its market from a still deep pool of real estate marketing dollars to provide value-added services at premium prices in mortgages titles and other adjacent categories.
I would note realtor.com's new partnership with Rocket Mortgage, as one example of the company's growth potential and our efforts to expand the addressable market. realtor.com also recently launched the Seller's Marketplace to provide listings for our buyers without the antediluvian approach of our main competitor, which has been doubling down on its house flipping business. We are a genuinely nimble, agile digital company. And will leave bricks-and-mortar to the specialists.
realtor.com is also constantly focused on improving transparency. And choice for those buying and selling homes, including higher-quality estimates and salient information about everything from flood risk to neighbourhood noise levels. We have been introducing features, while still being cost-conscious. And that flense of creativity and discipline is behind, the burgeoning of the business.
At REA, while listing volumes have patently been affected by government-imposed COVID restrictions, the business still posted a higher profit contribution. What we are seeing at both companies is that the pandemic has been a catalyst for many families to reconsider their current housing and environment prompting an increasing number to seek less dense areas and larger properties.
As the restrictions on movement, ease we believe that trend is likely to gather momentum, particularly at a time of record low interest rates. As we noted earlier, Dow Jones is now reported as a separate segment, which is innate part of our efforts to increase transparency and highlight an inherent value.
As you can see from the company's resounding results, there is much to savour, about the business and its prospects. As we noted in our Investor Day presentation, Dow Jones aims to double its subscribers, given an incremental pool of 12 million prospective Dow Jones premium customers in the U.S. alone.
And as the world's leading provider of business news and analysis, Dow Jones and The Wall Street Journal have maintained premium pricing. And we are increasing our efforts to up-sell our customers' high-value specialist products. Revenue benefited from accelerating digital circulation and digital advertising growth and continued expansion of risk and compliance. These compensated for not unexpected decline in print advertising.
Though, the total ad decline was not as marked as that of other publishers. As a result, Dow Jones segment EBITDA grew 47% year-over-year. A few metrics to note behind that admiral result at a turbulent time. Risk and compliance revenues rose, 16% year-over-year representing the 21st consecutive quarter of double-digit growth.
The Wall Street Journal reported 27% growth in digital-only subscriptions. And total Dow Jones subscriptions increased 18% in the quarter, reaching approximately 3.9 million. MarketWatch also had a buoyant quarter with the highest first quarter revenue results in its history, as traffic surged to 52 million average monthly uniques.
In recent days we have moved to further monetize that fast-expanding audience, by introducing subscriptions and enhancing the news flow for loyal readers. The early results are rather positive for both, MarketWatch and Barron's. To gain the sense of the size of the Dow Jones universe, which like the actual universe is still expanding traffic across the digital network rose 54% year-over-year in Q1, averaging 127 million unique users per month according to Adobe Analytics. And we firmly believe we are still at a relatively early stage of our potential audience and revenue growth.
Meanwhile, in Book Publishing, HarperCollins also reported a strong quarter with revenues increasing 13% and segment EBITDA, up 45%. Again, those results reflected a mix of the creativity of the commissioning along with disciplined, diligent cost control.
Reopened bookstores restocked their shelves with compelling HarperCollins tones and overall digital sales in Q1 were up 20% compared to the prior year continuing a trend that was evident in Q4 of fiscal 2020. Direct-to-consumer revenues rose almost 38% year-over-year. And the I Can Read! Book Club for children nearly quadrupled its membership since February to more than 95,000 monthly active users as of quarter end.
Best-selling authors included Daniel Silva, Jenna Bush Hager, Lucy Foley, Ben Shapiro and LeBron James. And looking ahead, we have high hopes for Frontier Follies by Ree Drummond, The Greatest Secret by Rhonda Byrne, Concrete Rose by Angie Thomas and Code Name Bananas by David Walliams which is being released today.
At Foxtel, there was marked improvement in the growth of the OTT business, which saw total closing paid subscriptions reached a new record high with nearly 3.3 million subscribers. This includes over 1.2 million paying customers of Kayo, Foxtel Now and the recently launched Binge.
In total, there was a 67% year-over-year growth in the OTT base. To be specific, as of September 30, Kayo had 644,000 paid subscribers and 691,000 total subscribers. Foxtel Now had 298,000 paid subscribers and 310,000 total subscribers. And the burgeoning Binge had 290,000 paid subscribers and 321,000 total subscribers. One other note about Binge, the active subscriber is watching for 7.5 hours a week. So we are clearly pleased with how they're binging on Binge.
In the News Media segment, the rate of year-over-year revenue decline moderated compared to Q4. Obviously, the direct year-on-year comparisons are complicated by the sale of both NAM and Unruly. Cost consciousness continue to be raised with one recent announcement of note. In September, we did our plans to shift the printing of The Wall Street Journal the New York Post and Barron's to the New York Times plant in Queens and we are actively exploring options for the Bronx Print Plant site, for which there has been considerable interest.
This decision involved much agonizing as the Bronx plant and its talented committed staff have played an important role in the history of the company and the U.S. newspaper industry. Their sterling efforts will resonate for many decades to come as the mastheads continue their migration to digital in a rapidly changing media environment. A measure of that evolution is that the New York Post digital network traffic grew 35% in September, year-over-year to 144 million unique users. Digital advertising in the quarter climbed over 20% and nearly 90% of advertising revenues at the Post are now digital.
The transformation of News Corp Australia continue to pace with the transition of most of our community in regional mastheads to digital-only. All told, our Australian titles saw strong digital subscription growth, up 26% year-over-year to 685,000. In the U.K. The Times and Sunday Times digital subscribers expanded 8% to 337,000 and also saw strong ARPU growth.
Also in the U.K. Times Radio launched last quarter has already exceeded over 100,000 listeners each week, clearly benefiting from our leveraging of the strong Times brand and talent. Of course, it is also a powerful marketing platform for all of our U.K. titles and businesses.
Finally, it should be clear to all that the digital landscape is changing dramatically and we are at the forefront of that change. It could even be argued that much of that change would not have happened without News Corp's advocacy over the past decade. The drive towards achieving a premium for premium content has gathered momentum and we are pleased that negotiations with the large platforms are ongoing. This is certainly not the end of the issue but without being too Churchillian it is the end of the beginning.
Now more than ever, we believe it is evident that News Corp has value above and beyond the sum of our parts. So that mathematical fact is yet to be fully realized for our investors. That value should be more visible now that we have broken out the Dow Jones results, which also increases the scrutiny of our other news businesses which are themselves in the midst of a successful transition.
We plan to continue simplifying the business and are open to making structural changes to maximize value and will continue to address the cost base. Unlike most media companies we have the option of optionality having carefully mastered our cash reserves which have improved since the pandemic began.
I believe our continuing concerted initiatives are making us a more focused and more digital company, which will generate enhanced returns for our investors, in the months, the quarters and the years to come.
And now for further financial enlightenment, we turn to Susan Panuccio.
Thank you, Robert. As Robert mentioned, we are pleased with the start to the new fiscal year, particularly in an environment which has clearly been marked by unpredictability and uncertainty. Our businesses have responded well to the challenges as evidenced by these results.
Fiscal 2021, first quarter total revenues were over $2.1 billion, down 10% versus the prior year while total segment EBITDA was $268 million, up 21% year-over-year led by very strong growth at the Digital Real Estate Services, Dow Jones and Book Publishing segments.
On an adjusted basis, which excludes the impact from acquisitions and divestitures, most notably the sale of News America Marketing in the fourth quarter of last fiscal year, as well as currency fluctuations and other items disclosed in our release revenues were down by only 3% while total segment EBITDA increased by 23%.
Net income for the quarter was $47 million compared to a net loss of $211 million in the prior year reflecting the absence of impairment charges and higher total segment EBITDA, partially offset by higher tax expense. The prior year figure reflected $273 million of non-cash impairment charges, primarily at News America Marketing. For the quarter, we reported earnings per share of $0.06 as compared to a loss of $0.39 in the prior year. Adjusted EPS were $0.08 in the quarter versus $0.04 in the prior year.
Turning now to the operating segments. At the Digital Real Estate Services segment, revenues increased 7% to $290 million, a big improvement from the fourth quarter, primarily due to the strength of Move. On an adjusted basis revenues increased 4%. Segment EBITDA rose 45% to $119 million or 40% on an adjusted basis, primarily driven by a meaningful increase in profit contribution from Move, due to a combination of higher revenues and cost reduction measures. The results at Move accounted for over 80% of segment revenue growth and over 70% of segment EBITDA growth this quarter.
REA group revenues rose 2%, reflecting a $6 million or 4% benefit from currency fluctuations. National residential listing volumes declined 2% for the quarter impacted by stage four government restrictions in Melbourne, which included a ban on physical inspections. To put that in perspective, Metro Melbourne listings in the quarter declined 44% versus the prior year while the listings in Metro Sydney grew 23%.
REA's results benefited from positive FX movements as well as modest residential revenue and financial services growth driven by higher refinancing activity, but the growth was mostly offset by declines in commercial developer and Asia. Please refer to REA's earnings release and their conference call following this call for more details.
At Move, we are extremely pleased with our progress during the first quarter. Move revenues rose 12% to $138 million, representing an all-time high with real estate revenues rising 13%.
As Robert mentioned, traffic reached record levels with an average of 90 million unique users for the first quarter, an increase of 26% year-over-year. Monthly average lead volume for the quarter grew at an even faster rate at over 40%.
We saw material growth in the performance-based referral model which accounted for approximately 30% of total Move revenues in the quarter, benefiting from the growth in lead volume, higher home prices and real estate transaction closes.
As I've mentioned in the past, there is a delay in recognizing the revenue from the referral model due to the timing of transaction closes, which in addition to natural real estate seasonal patterns can lead to some volatility quarter-to-quarter as we shift more leads to that model.
These results are very encouraging as we further progress towards increasing our addressable market through the integration of key ancillary services like our Rocket Mortgage partnership.
While we continue to transition to the referral model the combination of strong lead volume and price increases for our more traditional lead generation business, resulted in a more stable revenue performance this quarter than the prior quarters.
Move increased its profit contribution by $28 million versus the prior year driven by the scaling of the referral model, cost efficiencies resulting from the restructuring of the organization last quarter, including completing the integration of REALTOR and Opcity and the deferral of marketing spend.
Turning to the Subscription Video Services segment. Revenues for the quarter were $496 million, down 4% versus the prior year and included a $20 million or 3% positive impact from foreign currency fluctuations.
The revenue decline moderated from the prior quarter a strong growth at Kayo driven by the return of live sports as well as the expansion of Binge partially offset the declines in residential and commercial subscriptions.
Foxtel's closing paid subscriber base reached a record high at nearly 3.3 million as of September 30, up 7% year-over-year led by meaningful growth of paying OTT subscriptions, which reached over 1.2 million at quarter end.
Broadcast subscribers declined about 10% to 1.85 million. Commercial subscribers declined 23% to 205,000 but marked a big improvement from the fourth quarter due to the reopening of licensed venues in most parts of the country. Foxtel is continuing to work with impacted customers in the pubs clubs and accommodation sectors particularly in Victoria and New South Wales.
Broadcast churn was relatively stable at 14.6% versus 14.4% in the prior year, partly impacted by the roll-off of some of the churn mitigation initiatives, but were still below the financial year 2019 and financial year 2020 averages. Broadcast ARPU increased 1% from the prior year to AUD 79, which was also modestly higher than the fourth quarter.
Segment EBITDA declined 4% to $78 million and declined 9% on an adjusted basis. Total cost declined approximately 3% or $15 million with a $16 million or 4% adverse impact due to currency fluctuations. Underlying savings were $31 million or AUD 50 million.
These savings came despite an increasing sports rights and production costs, partly due to the $36 million or AUD 51 million impact from the timing of some sporting events deferred from the fourth quarter.
Foxtel also benefited in the quarter from lower entertainment programming costs as well as declines in transmission and overhead expenses as we see the flow-through from the cost actions taken last year.
Moving on to Dow Jones, revenues for the quarter were $386 million, up 1% compared to the prior year with digital revenues accounting for a record 73% of total revenues this quarter, up 8 percentage points from the prior year.
Circulation revenues rose 7% due to robust growth in digital circulation revenues, partially offset by lower-single copy and amenity print volume, and marked the meaningful improvement from the fourth quarter rate of 2%.
As Robert mentioned, Dow Jones again achieved record subscriptions in the quarter with the year-over-year growth rate slightly higher than the fourth quarter. Dow Jones average subscriptions to its consumer product for the quarter were nearly 3.9 million, up 18% from the prior year. And of that digital-only subscriptions were 2.9 million, up 29% year-over-year.
For The Wall Street Journal, there were 3.1 million average subscriptions for the quarter, up nearly 19% from the prior year with digital-only subscriptions growing 27% to more than 2.3 million.
Revenues from Dow Jones Professional Information business rose 2% year-over-year, which included 16% growth in risk and compliance. As mentioned at the Dow Jones Investor Day, long-term contracts are 95% of risk and compliance revenues, providing us with a more predictable and reoccurring revenue base. Advertising revenues, which accounted for only 18% of revenues this quarter, declined 17% to $70 million, an improvement from a 28% decline last quarter.
Digital advertising revenues again exceeded print advertising revenues, accounting for 57% of total advertising and increased 14%, benefiting from growth in direct display, programmatic and sponsored link revenues. Interestingly, we saw digital revenue growth in every industry category. Print and other advertising fell 39% a more modest improvement from the fourth quarter rate.
Dow Jones segment EBITDA for the quarter rose 47% to $72 million with margins expanding to almost 19% and up almost 6 percentage points versus the prior year. Overall costs for the segment declined approximately 6%, which combined with the top line growth led to the material margin expansion this quarter.
At Book Publishing, HarperCollins had a very strong quarter building on the momentum from the fourth quarter, with revenues up 13% year-over-year to $458 million and segment EBITDA up 45% to $71 million.
Revenue growth was driven by general trade and the children's books as well as modest revenue contribution from the Egmont acquisition in the U.K. Adjusted revenues and adjusted segment EBITDA grew 10% and 41% respectively.
We saw strong digital growth with digital sales up 20% year-over-year to represent 23% of consumer revenues, up from 22%. E-book sales increased 18% year-over-year with gains in all genres while downloadable audio books increased 26% year-over-year.
As Robert noted HarperCollins benefited from a strong release slate, which included Daniel Silva's The Order, Lucy Foley's The Guest List, Ben Shapiro's How to Destroy America in Three Easy Steps, Jenna Bush Hager's Everything Beautiful in Its Time as well as LeBron James' I Promise in children's books. The backlist contributed 61% of sales this quarter, down from 64% last year, which was due to the larger mix of front-list titles this quarter.
Turning to News Media. We saw moderation in revenue declines this quarter compared to the fourth quarter. Revenues for the quarter were $487 million down 37% versus the prior year of which the impact from the divestment of News America Marketing accounted for the majority of the decline.
On an adjusted basis which excludes the impact from the divestment of NAM and Unruly and the other items mentioned in our release, revenues declined 16% which is an improvement from the 22% decline in the fourth quarter. The decline also reflects a $35 million or 5% negative impact from the closure or transition to digital of certain regional and community newspapers in Australia.
Circulation and subscription revenues were flat, as a $10 million or 4% benefit from currency fluctuations strong digital paid subscriber growth and cover price increases in the U.K. offset lower news stand sales related to COVID-19. We have seen print volumes beginning to improve particularly at the weekend papers.
Advertising revenue fell $262 million or 59% on a reported basis of which $200 million or 45% was from the sale of News America Marketing, $29 million or a 7% negative impact related to the closure or transition to digital of certain regional and community titles in Australia with the rest of the decline relating to the overall weakness in the print advertising market.
Advertising revenues at News U.K. fell 21% or 24% in local currency, while News Australia declined 35% or 38% in local currency which includes the $29 million negative impact or 20% related to the regional and community titles. Advertising revenues at the New York Post increased 6%, which includes 22% digital advertising growth.
Segment EBITDA for the quarter was a loss of $22 million compared to a positive $7 million in the prior year or a decline of $29 million. The results reflect lower revenues and the absence of a net $12 million contribution from News America Marketing and Unruly partially offset by higher cost savings across the businesses.
I would now like to talk about some of the themes in the upcoming quarter. Needless to say, forecasting continues to remain challenging. At Digital Real Estate Services as REA noted national residential listings in Australia for October were down 1% to the prior year with increases in Melbourne and Sydney.
REA has also agreed to take a controlling interest in India's Elara Technologies. And as a result we expect to fully consolidate their results assuming completion on November 30. Please refer to REA's press release for more details.
At REALTOR, we remain very encouraged by traffic and lead volumes. We are planning higher reinvestment spending in Q1 given our focus on expanding into adjacencies and growing the addressable market. In Subscription Video Services with the conclusion of Australia's two Tier One winter football seasons the AFL and NRL we expect to see seasonality in Kayo's subscriber numbers as we transition to the summer sports most notably Cricket.
For Q2 we expect about $18 million or AUD 26 million of sports rights that were deferred due to COVID-19, but expect offsetting savings due to the ongoing benefit of the cost reduction measures taken in Q4 last year and the continued cost focus within the business.
At Dow Jones overall year-over-year trends thus far are similar including strong digital advertising growth. As we look to the rest of the year, we expect modest reinvestment in the business as we focus on driving revenue growth through subscriptions and in risk and compliance.
In Book Publishing as Robert mentioned, the key titles in the second quarter include Ree Drummond's Frontier Follies and Rhonda Byrne's, The Greatest Secret. We have continued to see higher online sales. At News Media, overall year-over-year revenue and cost trends remained similar to the prior quarter absent currency although visibility remains limited.
As a reminder the prior year included a $22 million onetime benefit to segment EBITDA from the settlement of certain warranty claims at News U.K.'s printing business. We also expect some investment as we ramp our global shared service initiative over the course of the year.
The COVID-19 crisis has presented challenges across all of our businesses and they have responded in a balanced and measured way. They will continue to focus on finding the right balance between permanent cost reduction and investment in growth opportunities, while keeping a close eye on the macroeconomic conditions and government responses to the virus within their own markets. We believe, we are well positioned as we move forward with a greater focus on digital across the company and a more disciplined approach to costs.
With that let me hand it over to the operator for Q&A.
[Operator Instructions] We'll take our first question from Kane Hannan with Goldman Sachs.
Good morning guys. Two for me please. Firstly just on Move, very pleasing to see that revenue growth get back into the double digits. Just talk a bit more about how sustainable you think that growth is? And then the reinvestment you commented on Susan what sort of quantum we should be thinking about there?
And then secondly just more broadly you've obviously seen the Elara investment come through. But just interested in your thoughts around how you should be capitalizing on your balance sheet strength which obviously have thus progressing the simplification agenda and then trying to realize the value in some of the parts in the current environment?
Okay. It's fair to say, REALTOR has truly been renovated. I remember there was skeptics at the time of the acquisition the naysayers who wondered whether we could transform a company that frankly had seen better days. Well the best days are now clearly ahead. We've used our editorial expertise and reached the power of our media platforms and a relentless focus on the need of customers to improve user experience and that's showing up in the returns.
For us the challenge as you indicated to get the blend rides between continuing expansion and contemporary returns. I mean obviously due to the savvy leadership of David Doctorow and Tracey Fellows, we have had a massive increase in margin. And we have elasticity there. But we believe that we're at the early stage of the exponential expansion of that business.
And to be honest, it will also be a beneficiary of our advocacy to change the digital landscape whether it be through digital ad yields or algorithm transparency. And so it will be eminently efficacious for REALTOR for REA for our businesses in Asia and for our operations in India.
Now as for structure the most important way of maximizing our real estate properties value is to ensure that they are the fastest-growing most lucrative most innovative sites in the world truly digital in orientation. And shall I say not weighed down by bricks-and-mortar and unsold inventory or the need to renovate a kitchen or add a bidet in the bathroom. The benefits of that creative committed approach to potential vendors to potential buyers and to real realtors is patently obvious in the results last quarter.
Now we have Tracey Fellows overseeing our global real estate operations and we have just consolidated our India operations through REA.
So there is a shape a structure emerging. And more than that there is a sense of purpose and of profitability. We are by many measures the world's largest real estate company and that business has more than withstood the stress tests of recent months. In fact, the recent months showed the extraordinary potential of that business.
And just in relation to the reinvestment question that you asked, look we don't obviously give guidance -- specific guidance in relation to the cost. But broadly speaking, we could probably think about the cost reductions that happened this quarter in buckets of headcount-related savings and marketing-related savings and probably half of those savings a little bit more related to marketing. So we would expect to see that scale up as we go throughout the year, obviously depending on audience and revenue growth. And we also will have some reinvestment in product innovation as we look to scale out the platforms. So without sort of giving guidance that's sort ofbroadly speaking how we're thinking about it.
Thank you, Kane. Corey, we will take our next question, please.
Thank you. We'll take our next question from Entcho Raykovski with Crédit Suisse.
Hi, Robert. Hi, Susan. Well done on a very good result. I've got a couple as well. So firstly, I appreciate your comments on digital real estate simplification. But if I can ask directly would you consider spinning out those assets? I'm particularly conscious given the implied value ex-REA is now at very much historically low levels by my calcs REA is now more than 90% of market value. So there's clear -- there seems to be a clear disconnect. So is there some scope for a spinout? And secondly, on Dow Jones costs. Interesting the extent to which you can hold on to the cost reductions which have been achieved in the quarter whether they're largely temporary and really achieved as a result of COVID? Thank you.
Entcho look, we're always open-minded. We're constantly institutionally introspective. But the priority at the moment is to do what we're doing, which is to maximize growth in the past quarter, to maximize profitability, to take advantage of opportunities. And I'm just very proud of what Tracey and David and Owen in Australia are doing at the moment in very difficult circumstances. And as I said in particular with realtor.com, and I'm sure you recall the time of the acquisition where people wondered what we were going to do with that business and whether it had indeed seen better days. And it's very clear from those results last quarter that our best days are ahead.
And Entcho just in relation to the cost question on Dow Jones. Look obviously, it's tricky to say exactly how we expect the year to pan out. But what I would say is that the team have been very focused on cost. Some of those you're right will be COVID-related cost reductions and we wouldn't necessarily expect to see those replication throughout the year.
But some of them actually are real cost reductions. There's been a lot of work on headcount and looking at the right balance between permanent reductions and reinvestment. But we would expect to see ongoing investment in that business, particularly, in relation to subscriber growth risk and compliance and new products as well. So very similar to the commentary around -- I gave on REALTOR. But we are really pleased with the ongoing focus given COVID on costs and we do expect to see some of those cost savings certainly continuing as we go throughout the year.
Thank you, Entcho. Corey, we’ll take our next question, please.
Thank you. And our next question comes from Craig Huber with Huber Research Partners.
Yes. Hi. I've got a few questions here. Has your thoughts changed at all on the large cash balance that you guys carry every quarter every year in terms of what to do with that going forward?
Craig, we're constantly reviewing cash and capital allocation whether that be returns directly to shareholders or share buybacks for which we have a provision as you know. Well the potential for company-enhancing investments either internally or externally that are transformative for our results and most importantly for shareholders.
As Susan just mentioned, we've certainly raised consciousness around the company with the imperative of conserving and preserving cash at a difficult time at a time of pandemic and uncertainty. And the success of that program has given us genuine optionality. But I'd certainly suggest the big investments we've made and you'll be aware that REALTOR and Harlequin books approved their worth at a time when every company is being stress tested by the crisis. And we're proud of how those investments have faired, but particularly proud of how our teams around the world have transformed those divisions. And I think it's fair to say that investors and potential investors can see the momentum and the value in those investments.
Okay. Also want to ask…
Craig, do you want to ask another question?
Yes I did. Yes if I could please just real quick. And I guess just in the spirit of transparency here was the EBITDA for realtor.com can you disclose that? Was it roughly $20 million in the quarter?
It would be. I mean Craig we said what the increase in profitability was and the increase in profitability was $28 million. So I think as Susan said that contributed the bulk of the EBITDA improvement at Digital Real Estate. And it was profitable.
Okay. Thank you, guys.
Thanks, Craig. Corey, we’ll take our next question, please.
Thank you. [Operator Instructions] Our next question comes from Brian Han with Morningstar.
Hi. The snapback in earnings and margins for books was that mostly just natural leverage from higher digital sales, or did your general cost-cutting program play a big role there?
Brian actually it wasn't cost-cutting programs within HarperCollins given their revenue growth. So, they have actually been scaling their costs in accordance with their revenue growth. But they do have clearly a different mix. So, there's a different mix between the front list and the back list quarter-on-quarter. And also it depends on the types of front list mastheads titles that we sell. So, it's a combination of those not necessarily cost-driven more revenue-driven this quarter.
Thank you, Brian. We'll take our next question please, Corey.
[Operator Instructions] We do have a follow-up question from Kane Hannan with Goldman Sachs.
Hi guys. Thanks for the follow-up. Just around Foxtel just interested in $15 million increase in cost in the quarter and I take the point around currency. But just whether there's any change in the commentary from the full year around the $100 million reduction.
And then just on the commercial side of things, just interested if you could talk about the revenue impact. Obviously, I think you said you're working with the pubs and clubs and the subs are back up to 200,000. But just wondering what the if you could talk about a revenue impact in the quarter.
No worries, Kane. So, just in relation to the cost it was a net underlying saving of AUD50 million. So, I think that's important. And that does include the deferral of the sports rights in there. So, that gives you a sense as to the scale of the reduction that we're seeing within Foxtel.
We are expecting for underlying costs to be significant for the full year. The team is still very, very focused on that. But as we mentioned last time there will be a net impact of the deferral of sports costs AUD78 million for the year both programming and then production costs included within that number. But the underlying savings will be significantly higher than that.
In relation to the commercial revenue impact of about $14 million this year quarter-on-quarter, you'll see from the subs numbers that we quoted that we have picked up a considerable amount since Q4. We're hoping actually with the opening up of Victoria that we'll actually start to pick that number up again as we move forward. So, they will continue to work on that as we look to build that base back up.
And to supplement what Susan said in the context of the COVID-related restrictions on pubs and clubs the impact on advertising we're very pleased with the rapid growth of the streaming business at Foxtel under Siobhan and Patrick. And we will continue to provide the best possible experience for our subscribers wherever they happen to be.
As Susan earlier noted our OTT subs are up 67% year-on-year. And by any standard that's a significant expansion of the customer base. While the Foxtel broadcast ARPU actually rose at the same period in U.S. dollars obviously affected by currency part from $53 to $56. As we've already made clear we foresee no need to bolster Foxtel with extra investment which shows that the business is on a particularly positive trajectory.
Thank you, Kane. Corey, we'll take our next question please.
Yes. And our final question comes from Craig Huber with Huber Research Partners.
Thank you. Just a couple of quick follow-ups here. On the divestiture front, do you think you're largely done with that? That's my first question. And then secondly is there anything else Susan, you'd want to call out within at Foxtel in terms of timing of costs things that are moving around related to the sports programming costs and anything else that we should be aware of here as we try to model it?
On divestiture, look, we're obviously constantly reviewing the portfolio. But really one wouldn't speculate on speculation of any kind. What I would say is that we -- and you can see from the results, we're very proud of our teams around the world all our employees in the way that they've come together and put together a quarter of results which in the circumstances an indication not only of the strength of the company, but of the potential of the company.
And Craig just in relation to the Foxtel costs so just on phasing we had deferral of sports rights which we quoted at $51 million in this quarter. We've said we'll have another $26 million in Q2. So that sort of picks up the bulk of that deferral. But then of course, when you think forward to Q4, you won't have costs in Q4 in the last year in relation to sports rights which you will have next year. So, you almost have a double-up of those costs as we go through this year.
In relation to the other cost savings the team actually did a really good job in Q4 of looking at that cost base and getting heads out of the business which sort of continued into the first month of this quarter. So, the actual underlying cost savings that they delivered in Q4 in relation to the heads and a lot of the overhead costs we expect that are in play now and they'll continue throughout the year.
Thank you. And Corey are there any other additional questions?
There are no further questions in queue at this time sir.
Great. Thank you, Corey and thank you for all participating. Be well, stay safe, and we will talk to you soon. Have a great day.
Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.