David DeVoe - Chief Financial Officer, Principal Accounting Officer, Senior Executive Vice President, Executive Director, Senior Executive Vice President of News America, Director of BSkyB, Director of NDS, Director of News America and Director of STAR Chase Carey - Deputy Chairman, President and Chief Operating Officer Reed Nolte - Keith Murdoch - Chief Executive officer and Director

Edmund Lee Jolanta Masojada - Crédit Suisse AG Spencer Wang - Crédit Suisse AG Jessica Cohen - BofA Merrill Lynch Georg Szalai Benjamin Swinburne - Morgan Stanley Anthony DiClemente - Barclays Capital Richard Greenfield - BTIG, LLC Michael Nathanson - Nomura Securities Co. Ltd. Jon Lafayette Jason Bazinet - Citigroup Inc David Gelles Yinka Adegoke Alan Gould - Evercore Partners Inc. David Folkenflik Douglas Mitchelson - Deutsche Bank AG David Bank - RBC Capital Markets, LLC

Ladies and gentlemen, thank you for standing by, and welcome to the News Corp.'s Fourth Quarter 2011 Earnings Release. [Operator Instructions] As a reminder, today's conference is being recorded. Okay, at this time, I'd like to turn the conference over to Reed Nolte, Senior Vice President Investor Relations, News Corp. Please go ahead.

Thank you very much, operator. Hello, everyone and welcome to our fourth quarter fiscal 2011 earnings conference call. On the call today are Rupert Murdoch, Chief Executive; Chase Carey, President and Chief Operating Officer; and Dave DeVoe, our Chief Financial Officer. First, we'll give some prepared remarks on the most recent quarter and full year, and then we'll be happy to take your questions, first from the financial community and then from the press. We urge you to please keep to one question so we can accommodate as many folks as possible. 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 for the 12 months ended June 30, 2011, identifies risks and uncertainties that could cause actual results to differ, and these statements are qualified by the cautionary statements contained in such filings. Additionally, this call will include certain non-GAAP financial measurements. The definition of and reconciliation of such measures can be found in our earnings release and our 10-K filing. Finally, please note that certain financial measures used in this call, such as adjusted segment operating income, are expressed as a non-GAAP basis. The GAAP to non-GAAP reconciliation of adjusted segment operating income is included in our earnings release. And with that, I'll turn it over to Rupert.

Thank you, Reed and good afternoon, everyone. As David and Chase will go over shortly, our company's operating and financial performance this quarter was exceptional and our full year results are very solid overall. We are continuing to generate strong cash flow. We have the most robust balance sheet in our history, and just as important, we have effective strategies to further expand our content into even more markets and onto more platforms. I'm very proud of our management team and our people around the world in all our businesses. Their contributions are the reason for our strong performance. Of course, while it has been a good quarter from a financial point of view, our company has had challenges in recent weeks stemming from issues relating to the News of the World. I'll be very clear about where I stand. I've run this company for more than 50 years. The kind of behavior that occurred in that newsroom had no place at News Corporation. It does not reflect the actions and beliefs of our more than 50,000 professional employees. The board and I believe I should continue in my current role as Chairman and CEO. But make no mistake, Chase Carey and I run this company as a team and the strength of that partnership is reflected in our improved results. I'm personally determined to put things right when it comes to the News of the World. Likewise, our Board of Directors and senior management are acting decisively to get to the bottom of what happened. As has been widely reported, Joe Klein is leading our efforts on this issue, reporting directly to Viet Dinh, on behalf of the independent directors. The Board and the company have retained independent outside counsel. In addition, our nominating corporate governance committee has engaged [indiscernible] to advise on our corporate governance practices. We are all committed to doing the right thing. We have taken decisive actions to hold people accountable and we will continue to do whatever is necessary to prevent something like this from ever occurring again. There can be no doubt about our commitment to ethics and integrity. As we work through this matter, it's important to note there's been no material impact on our operations outside of the closure of the News of the World. Our broad, diverse global business is extremely robust today, performing well across the markets where we compete. As Dave and Chase will discuss, we continue to produce content that is loved increasingly by viewers, readers, audiences and fans throughout the world. In short, the drivers of our business are intact and our position is strong and our future is promising. One other outcome of recent events was our decision not to pursue our offer for the remaining BSkyB shares we do not already own. I'm disappointed about that, but it's clear this was no longer feasible under the circumstances. The BSkyB has remained an important element for us and we are very excited of those opportunities for continued growth. We are using this turn of events as an opportunity to carefully reassess our capital allocation priorities. Our first step is the $5 billion share repurchase program we announced last month. I want to give you all my personal assurance that we'll be active in that program aggressively. We are also reexamining our near and long-term priorities. Be assured that in addition to pursuing compelling opportunities that further investment in our businesses, we are always rigorously assessing a broad range of avenues to deploy capital to drive value to our shareholders. Our fundamental goals is at News Corp. are to produce sustained, meaningful value for shareholders, to provide outstanding content and service for customers and consumers, and to do it all with integrity. All these goals are interrelated and all are critically important, and we will deliver on them. Thank you, all. Now let me turn the call over to Dave.

Rupert, thank you and good afternoon, everybody. As Rupert just mentioned and as you have seen in today's earnings release, News Corporation closed out fiscal 2011 with very solid financial results. Let's take a look at the highlights on some of our full year results. Adjusted total segment operating income was $4.98 billion as compared to $4.46 billion reported a year ago. This 12% growth is right in line with the expectations we provided you a year ago and reconfirmed on our last earnings call 3 months ago. This growth was driven by more than 20% operating profit growth at our cable networks and a tripling of contributions from our Television segment. This growth is partially offset by lower results at film, owing to the success of Avatar and Ice Age in fiscal 2010, and increased losses from MySpace. Net income this year was $2.7 billion or $1.04 a share, which included a $0.10 per share loss from the sale of MySpace, resulting in earnings per share from continuing operations of $1.14, this result also includes a $125 million pretax or $0.03 per share charge net of tax at the company's Integrated Marketing Services businesses related to a settlement of litigation. Now let's look at the quarter. For the quarter, segment operating income of $1.35 billion was up 45% over last year's fourth quarter, reflecting either double-digit or triple-digit percentage increases at every business segment. Income from continuing operations was $0.35 per share. Let's just take a look at some of the businesses that drove that growth. Let's start with cable to cable networks. Double-digit growth in our cable networks segments continued with fourth quarter revenues up 15% and operating income contributions up 12%. Overall, affiliate fee increased 11%, driven by strong growth at our international channels and overall advertising revenues were up 22%, reflecting strength across all of our major channels, led by FX and Star. Offsetting a portion of these revenue gains were onetime costs of over $50 million, primarily resulting from shutting down 2 underperforming European channels, and program write down of FX related to canceled shows. Our cable networks, which delivered $2.8 billion of operating income for the year, now represents over 55% of the company's total adjusted segment operating income. We expect this business to continue to lead our overall growth for the foreseeable future. The Filmed Entertainment segment reported fourth quarter segment operating income of $210 million, up 53% from the $137 million reported a year ago. Higher film studio contributions were driven by the very successful worldwide theatrical results in Rio, that generated over $475 million in worldwide box office receipts, as well as worldwide home entertainment contributions from Narnia: Voyage of the Dawn Trader -- Dawn Treader, rather, and Black Swan. Higher 20th Century Fox television contributions reflect higher digital distribution revenues and revenues from Glee, including concerts, tours, music and digital revenues. At our Television segment, operating income in the quarter more than doubled from the fourth quarter a year ago. This growth was driven by 7% revenue increases, including increased retransmission revenues and lower program expenses at the stations and also the broadcast network. Financial ad market continues to be buoyant and we are quite pleased with the low double-digit CPM increases we obtained in this year's upfront for the upcoming broadcast season. The quarter's results reflects reduced spending by foreign auto manufacturers as a result of the Japanese supply chain disruption as a result of the earthquake in Japan and lower political spending. Excluding political and local station, ad market spending in the quarter was essentially in line with a year ago. At SKY Italia, segment operating income increased 50% to $145 million from last year's reported $97 million. On a local currency basis, operating income improved 32%. This improvement is largely the result of lower program expenses from the absence of FIFA World Cup costs that were included in the year ago results. Operationally, this business has demonstrated significant progress over the last 12 months and we're quite proud of the management there. As you may recall, about a year ago, SKY Italia's consumer offer was reorganized, more than doubling the number of program and packages and lowering the price point for the soccer package. Additionally, SKY has continued its efforts to increase penetration of additional subscribers services such as HD and DVR, seeing a nearly 30% increase in the number of residential subscribers taking at least one of those services. As anticipated, these changes impacted our short-term financial results, reducing ARPU slightly to EUR 43 and increasing SAC [ph] by approximately EUR 30 on average for fiscal 2011. Four of these initiatives resulted in a more than 25% increase in gross subscriber additions in the last year and reduced churn to 10% for the year, a significant improvement from last year's 13% level. The net result was an increase of 57,000 subscribers in the fourth quarter and 230,000 net new subscribers for the year. SKY Italia now is just under 5 million subscribers at 4.97 million. We -- clearly we reenergized our business in what I would characterize as a continued difficult economic climate, and we look forward to continued improvement in financial performance for fiscal 2012. In our Publishing segment, fourth quarter segment operating income increased by 38% to $270 million. This improvement reflects higher advertising and circulation revenues at the Wall Street Journal, reduced cost at our Marketing Service division, the contribution from the 53rd week, as well as the strengthening of both the Australian dollars and the pound sterling against the U.S. dollar. In our Other segment, we reported a fourth quarter segment operating loss of $437 million. It's a $37 million improvement from a year ago, reflecting reduced losses at Digital Media Group, particularly at MySpace. And as you all know, we sold MySpace at the end of June, so we will not be reporting those losses going forward. For the year, MySpace operating loss has totaled nearly $230 million. Before I turn to our guidance for fiscal 2012, I'd also like to make a few comments related to our cash flow and for balance sheet strength. For fiscal 2011, a company generated a record from operations less CapEx of $3.3 billion, which exceeds last year's previous record of nearly -- just under $3 billion. At year end, we had $15.5 billion in gross debt and $12.7 billion in cash, which brings our net debt to $2.8 billion. This capital structure largely reflects the fact that we accumulated cash for the potential acquisition of BSkyB. With that deal now off the table, in mid-July, our board approved a stock repurchase program totaling $5 billion which Rupert just mentioned. We intend to execute this plan aggressively over our -- once our blackout period ends next month -- next week, and are targeting to complete this program over the next 12 months. Also consistent with these objectives, today we announced that our annual dividend rate will increase 13% to $0.17 per share from the current $0.15 and Chase will comment further on our capital allocation plan in a moment. Now, let me address our guidance for fiscal 2012. As we measure our guidance, we're starting with the fiscal 2011 total segment operating income of $4.85 billion, which we just reported and exclude from this the $125 million litigation charge, resulting in the face for 2011 of $4.975 billion for comparative purposes. And as we look at fiscal 2012, we expect many of our businesses will generate strong year-over-year earnings growth. These include continued robust growth at our cable networks, led by the further expansion of our international channels, as well as sustained advertising and affiliate increases, led by Fox News, RSN, FX and Star. Higher Television segment earnings, which will benefit from continued growth and retransmission consent revenue. Growth in SKY Italia from among many factors but from the -- principally the 230,000 additional subscribers that we added over last year at Star -- at SKY rather, excuse me, at SKY Italia. Additionally, while we will benefit from the absence of nearly $230 million in operating losses from MySpace in fiscal 2012 this will be substantially offset by reduced contributions from our publishing segment, largely due to the elimination of the operating contributions from the News of the World, and lower results in Australia due to the current soft trading conditions there. We are also assuming current economic conditions continue. We are not forecasting a significant upturn or downturn. Taking these items into account and based on all the assumptions inherent in our projections, we anticipate our total segment operating income growth rate for fiscal 2012 to be in the low to mid-teens range, above the $4.975 billion fiscal 2011 segment operating income base level. And with that, I'd like to now turn the call over to Chase.

Thanks. David has given you our guidance for fiscal 2012, so in the next few minutes, I'd like to focus on 2 things. First, our operating priorities for the next couple of years and second, our plans and strategy regarding managing our balance sheet and capital allocation. Regarding operating priorities, I would identify 5 key objectives. First, to drive our channels business to its full potential. We're not even close. Both Fox and Fox News will take subscription fees to a whole new level in the next 1.5 years. FX is setting ratings records quarter after quarter and we have new leadership to build the untapped potential of National Geographic. The growth story at newer channels, like Fox Soccer and Nat Geo Wild is even more dynamic. And that being said, our most exciting channels growth story is outside the U.S., where we see a potential to use our leadership position to more than double the profits from emerging markets in Latin America, India and Southeast Asia over the coming years. Second, we want to continue to build on our content leadership. The explosion of digital distribution is going to make content, particularly hit content, more valuable than ever. We want to own the broadest rights possible to make sure we can exploit that content across the widest set of geographies and emerging platforms. Our content businesses have great momentum today. On the film side, theatrical release of Rise of the Planet of the Apes and the DVD release of Rio earlier this month are both performing well beyond our expectations. On the TV side, 20th Century Fox TV had 4 of the top 11 scripted series in adults 18 to 49 in the May sweeps. Our third priority is to build our platforms into ever stronger market leaders. We continue to view growth as our short-term priority. That growth will be driven by great content, technology and service, and we're confident we have the expertise to execute. Fourth, we need to intelligently take advantage of expanding digital platforms that continue to reshape our business. We believe authentication is a core strategy in this regard, both to maximize and protect the value of our content. Recently, this has led us to put an 8-day delay on pre-unauthenticated access to our network content and it has been a cornerstone for new digital extensions to our franchises like Big Ten to go. Between now and the end of 2011, you will see us launch many more exciting digital extensions to our brands and franchises, both here and abroad. We also make sure we are vigilant about attacking practices that undervalue our products, like $1 rentals and building new platforms that fairly value our content. We'll do business with new emerging digital platforms like Netflix, where we establish clear rules about what is library product, we're also engaged with other competing digital companies. However, our priority is to make sure we're thoughtful and do not allow a quick buck to jeopardize the longer-term value of our product. Fifth and finally, we need to work to restructure the revenues and cost of our publishing businesses. We've launched digital versions of many franchises and we'll take steps to enhance our traditional revenue streams. We equally need to address our cost structures and strategy in light of our changing world. Our expected results for this year are clearly problematic and we'll address them. With regard to capital structure and allocation, we fully recognize that our $5 billion buyback only begins to address these issues. On capital structure, we believe we should work toward a balance sheet with 2x to 2.5x leverage and about $2 billion to $3 billion of available cash for flexibility. We obviously will not get there in 12 months, but we're targeted to do so in 2 to 3 years. Regarding capital allocation, we expect there will be opportunities for us to make value enhancing investments or key acquisitions in our targeted areas of growth. We are a growth company and believe there are some exciting opportunities for us to add real value to our core businesses. That being said, we will be disciplined, both about the arenas where we invest and the returns expected from these investments. Our priority targets are developing markets, synergistic channels and unique content. These investments should generate mid-teen returns on capital at a minimum. Furthermore, we strongly prefer to build rather than buy businesses, so we'll focus on modest investments, those in the tens or hundreds of millions, not billions. With this disciplined approach to investments, plus the growing cash flow from our annual operations, we recognize that we will have substantial remaining cash flow in our balance sheet. We plan to use this cash to continue to pursue additional buybacks beyond the $5 billion, one recently announced, if our stock continues to be undervalued. And today, it is woefully undervalued. I want to be clear that these are strategies and plans by which we will manage our business. However, these guidelines do not preclude our decision to consider unexpected opportunities or to modify our views based on changes in the broader market or competitive dynamic. We're excited about our future. We have a great management team and businesses with great growth potential. We're determined to run our businesses with a discipline and focus that enables us to drive real value for our shareholders. Thank you and now, Dave, Rupert and I would be happy to take your questions.

[Operator Instructions] Our first question will come from the line of Doug Mitchelson, Deutsche Bank. Douglas Mitchelson - Deutsche Bank AG: A question for Chase. You mentioned a desire to reprice Fox News and the Fox Network licenses, and I noted that 4Q domestic affiliate growth was 7%, so the question is as those repricings kick in, should we expect affiliate fee revenue growth in the U.S. to reaccelerate back to double digits? And I guess as part of that, do you see any hurdles for growth with less Pay TV, sub growth in the U.S. than we've enjoyed historically?

I'm sorry. What was the last piece of that question? Douglas Mitchelson - Deutsche Bank AG: With Pay TV sub growth in the U.S. being more muted this year and perhaps, in the short term, than we've enjoyed historically, with the lack of sub growth in the U.S., are you worried about your ability to grow affiliate fee revenues?

First on the affiliate fee growth, I mean as we look out over the next year, essentially we're looking at in the U.S., an pretty much affiliate fee growth in line with what we experienced this year. So we do think there's continued momentum to that. I think we've said before, we obviously had some -- a number of negotiations ahead of us as we go through the year. But we do expect to continue to maintain the type of growth in the coming year that we had last year. And probably higher growth when we have higher growth internationally and probably again, growth maybe just because the growth rate is so much higher internationally, probably down a touch. But significantly higher growth internationally and continued significantly higher growth internationally. I think in terms of the business, we feel very good about the business. I mean obviously at some level, it's matured in terms of homes and you've got economic issues in terms of household formation and some of the economic issues that are putting pressure on it. But I think the value of this, the value of this bundle and the demand for this bundle out there in United States, I think, continues really to be strong, in many ways, strong as it's ever been. I think, yes, you do have a maturing market that affects to some degree, how many houses, how many homes will be added to the pot. But it's a business we feel great about. And internationally, clearly, different story. So I assume you're talking domestic, because as we see internationally, you do a tremendous growth left ahead of you. I mean in many countries that are still really in the early stages of growth, even including developed markets, not just developing markets. So certainly in the international marketplace, you got enormous growth ahead of you in terms of just household, households coming into the pay TV market. But I think you've got really solid business here. Douglas Mitchelson - Deutsche Bank AG: Just a follow-up, I think you implied this, and Dave as well, in your commentary but the flat margins in cable networks in the fiscal fourth quarter is an anomaly moving back to normal margin expansion in fiscal '12 and forward?

Yes, we had some onetime events in the fourth quarter. Let me be clear, we feel very good about these businesses. I really do feel we've got a bunch of businesses there that have not reached their potential. And you take a channel like FX that is really -- it happens. It set rating records this year and it's just getting stronger. FOX News -- it used to be a -- gearing up we've got a lot of -- probably, I think in the next year plus, half the universe of FOX News coming up again. We're still going through retransmission.

Just to interrupt you for a second, and our ratings are still improving just about wherever you look.

So the [indiscernible] strength of that business, we feel very good about, we think we can do a lot of things. So it was the onetime event in the quarter.

Our margins were about 35 -- mid-30s rather. We would expect to see them to continue to grow a bit.

And that will come from the line of Jessica Reif Cohen, Bank of America, Merrill Lynch. Jessica Cohen - BofA Merrill Lynch: Your advertising in the quarter was unusually strong. I mean like almost double everybody else's. I'm just wondering was there anything unusual? Can you give us color on your assumptions or how you're thinking about the year ahead, given kind of the disruption we've had in the last few weeks in the economy?

I mean I think our advertising certainly, I think reflects the strength of, in many ways, the strength of our channels. The cable ratings, as I talked about FX, if you look at the ratings of that strength for FOX News and American Idol, obviously for us got stronger as the year went along. So you had a good healthy -- healthy national market and good healthy channels to sell into it. And as we look out into 2012, certainly right now, that the national business is great, whether it continues to be with the rate scatter pricing, in the broadcast business, [indiscernible] scatter pricing in cable business, and I think as we for the year, when we're looking at ad dollars for the broadcast network, I think we're assuming they are probably about flat. And on the cable business, I think it's sort of up. Domestically up mid double digits and higher than that.

Higher than that.

Higher than that, fairly significantly notch above that internationally. Probably the area that is, right now, certainly the local business is not as robust as the national business. Looks like it will be a bit better for us in September as we get some things kicking in but...

We'd be looking at basically, low single digits, when you exclude political consumable from a year ago.

If you do the year-on-year comps, I think it's a couple of points up. Obviously, politicals are going to create year-on-year negative comps and we did have the Super Bowl and so if you give it [ph] those things, it probably puts it down a bit on the actual numbers. Jessica Cohen - BofA Merrill Lynch: Can I just ask David a follow up? The 2x to 2.5x leverage, which is great that you guys actually have a target, is that gross or net leverage?

It's gross. It's pretty much what we've always been saying. Jessica Cohen - BofA Merrill Lynch: So it's not a change.

Yes.

And that will come from the line of Richard Greenfield, BTIG. Richard Greenfield - BTIG, LLC: I had a quick question for Rupert that I'd love his answer to. When you go back a few years ago, I think it was basically August of 2008. You were asked a question about buying back your stock. The stock was substantially below current where it is today. And you really responded in a tone where you weren't really all that interested in buying back the stock. And I'm curious now, as you look at where you are now 3 years later, you've delevered dramatically over that time period. Now, it seems like you have a lot of conviction in buying back the stock and I just -- we'd just love to hear from you why you're so interested in buying the stock now and why it's going to be a fundamental part of your strategy going forward?

Well, I think it's a question of relative values. The reason in 2008, that I was coy about it was, and I couldn't say it, was of course that we were saving up to bid for BSkyB. That's -- all that's changed.

And that will come from the line of Alan Gould, Evercore Partners. Alan Gould - Evercore Partners Inc.: Following up on the buyback. Dave, how much of the $13 billion of cash that you have today is held offshore? And at 2.75x or 2.5x to 3x next year as the EBITDA, you get to something like $13 billion of excess cash from here. Do we assume that BSkyB is permanently off the table and that you're not going to start saving up for the possibility of getting that again in the next 2 to 3 years when this hopefully blows by?

The answer to the first part of your question is, about 1/3 of our cash is held offshore, principally in euros and in sterling and in all appropriate banks that are highly rated. With respect to BSkyB, BSkyB is just for. . .

We're not stockpiling for it yet. We're focused on running our businesses and going forward. Alan Gould - Evercore Partners Inc.: So that means the -- as you said, the $5 billion could increase depending where the stock is?

Yes.

Yes.

Comes from the line of David Bank, RBC Capital Markets. David Bank - RBC Capital Markets, LLC: Just sort of one big picture question, one small picture question on the TV business. Could you talk about the sort of pacing right now, both local ONO business from what you can see on the small picture side? And the big picture side, you essentially created a new authentication window online, by, I think it's an 8-day delay. How do you -- do you have authentication deals in place with the majority of your distributors today? And how long do you think it will -- if not, how long do you think it will take to get all of those in place, and how does that impact viewership between now and the time that you have them all in place? Like you're essentially foregoing some viewership, right, if you don't have them all in one place?

I guess on the first question, pacing local, I think as we look at this quarter, and I think we're probably pacing down, I think it's sort of mid up high single digits down in the quarter. Again, a little bit better as you get to September, as we get some other things that are -- some of the events coming in there, the NFL is doing -- the NFL is selling well. The auto business seems to be coming back in September. I think we feel great about the network lineup that we got to sell into that but -- and clearly, part of that pacing is political, if you take out the -- I think if you exclude political, it's probably sort of low single-digit down. So excluding political, you probably have a reasonably flat market. With the politicals in it, it sort of gets to be a more mid to high single digit type of pacing. In terms of the 8-day window, I guess it really sort of ties into retransmission. And I guess our overall view, in many ways, that our broadcast network as a channel, just like, in many ways, like our cable channel. So dual revenue stream business with advertising and subscription fees. And if we're going to go out and get paid subscription fees for that product, we think it's appropriate that we manage how -- what are the terms on which consumers access it elsewhere. And if you look at most of the cable original programming, it's available on various delays because that's partial of the demands you're putting into the channel itself. And I think what we'd look to is authentication being the tool through which consumers can get to that midnight, next day experience, but it's an addition to the experience, it's not a replacement. And we think that's an important principle. I'm not going to get too deep into all our negotiations in the terms of our agreements with various parties. They have different terms and conditions to them. But obviously, this becomes part of -- sort of if it's tied into running the broadcast business like the cable channel, then it's tied into retransmission, which is really the tool for making a dual revenue business. I think I said in the past, we're largely in the next 18 months through the vast majority of our -- I think both affiliates in broadcast and MVPDs, we'll be through the vast majority of our retransmission agreements. Doesn't mean, again, we won't -- if the windows aren't necessarily tied to agreements. I think we recognize we're foregoing some and if authentication -- our hopes would be if authentication gets some better traction, I guess it's been disappointing in some ways authentication hasn't gotten further in terms of concepts, in terms of execution in the last couple of years, there's been a lot of talk, not as much action. And I think in some ways, it's getting overly beaten up by some of the distributors out there. We'd like to see an open, robust authenticated environment where a lot of people can compete with it, a lot of -- there's a lot of choice for customers. It's not another version of a wall garden experience. And hopefully that's where we can get to, where it's rich, easy to use, exciting experience. Customers get that experience. Look, almost everybody -- authentication really isn't going encumber anybody. Most homes take cable subscriptions today. So it -- really if you make it easy to use, and you created an exciting open environment where consumers got a lot of choice in that authenticated world, we think it's a great experience that really can make the whole process of, sort of, from the initial subscription and the ongoing viewing, additive. And I think that we believe is important investment in our long-term health and to a degree, there's some viewership we sacrifice in the short term. I place that upfront. I think we -- we're going to be focused on having built the right the business models and long term asset value and not having to squeeze a quick buck out of this for a quarter or two.

And that comes from the line of Jason Bazinet with Citi. Jason Bazinet - Citigroup Inc: I just had one question on one of your cable channels, Fox Business. It seems like there's quite a bit of excitement about the asset a number of years ago. I think you got carriage in New York, which was a key gating factor. You seem to have hired quite a bit of talent from CNBC, but it doesn't seem to show up on the ratings and you don't even mention it as sort of one of the under-monetized assets, at least in your prepared remarks. So can you just give us sort of an update on where you are in Fox Business?

The ratings are in fact, improving. And certain times of the day, we're head-to-head with CNBC. We're beating them. We do need more distribution, that's true. As to regards to the performance, it is now at a cash break even.

And it may not get that great growth. I think it's much better channel than it was 12 months ago. I think they've done a good job. I mean these channels, they don't -- Fox News didn't grow overnight, Fox Business doesn't grow overnight. I think the channel's made real headway, and it really -- actually I could've put it on the list, I just didn't select it. It was more example wise, not all-inclusive. I mean, to say the ones I didn't mention wasn't -- by excluding them wasn't saying we're not excited by them and we really are. I mean Fox Business has made great strides, as Rupert said, we got a couple of holes in distribution that we've got to fill, one which we got a handle on. And we think this channel really is an exciting growth area for us as well, and I think really adds an exciting dimension to our FOX News business.

And that comes from the line of Jolanta Masojada, Crédit Suisse. Jolanta Masojada - Crédit Suisse AG: Chase, I wondered if you could talk through the cost opportunities you see in the publishing business in the U.K. and Australia, given the tough outlook? And if you could maybe be specific on whether there's the opportunity to rationalize printing operations in Australia?

Well, they're continuing -- it's really an ongoing process, and it's really multidimensional. It is -- and it's not just for us. It is revenue, digital extensions of the product. We're certainly investing in that. We're looking at ways we can deal with the printing side of it. We have real scale there and I think it's important for us to figure out how do we take advantage of that scale to create real efficiencies. And really, like I said, over time we're continuing -- the growth side of this is going to be increasingly digital. And that's a long-term transitional process but an area we need to focus on. In the U.K., we obviously going through in much more -- with closure of the News of the World, a much more jarring change than we need to. We got new management that's been in place for all of -- we've got a new CEO in place for a couple of weeks. And he's obviously taking up something that looks very different than it did a month ago. And I think in fairness to him, we'll give him time to get his head around how do you deal with the business at that stage [ph] that it has absolutely created a significant and a negative year-over-year variance for us this year. And we need to prioritize how do we address a business that looks very different without News of the World there.

I'd just add to that, that the -- there is room and certainly, for economies, in various parts of our situation in Britain, but not in printing. We had the biggest and the most efficient printing plants in Britain. We print for our opposition and we'll be printing for more of our opposition if they want to come to us. They're extremely economical. In fact, when you go into these enormous plants, it's alarming because you don't see anybody. But it's probably the most efficient, the London plant and the Liverpool plant are the most efficient plants in Europe. And in Australia, we have relatively [indiscernible] the 5 year-old plants in each of the big cities. You cannot -- and they haven't got spare capacity, you cannot print in one city papers for cities 600 miles apart. There's not big room for savings there. And that's part of the business. In fact, there have been savings being made throughout the year or the last 18 months in Australia. And I think our headcount is down considerably in all corners of the business. The trouble though, frankly, is that advertising business isn't hitting magazines more than us. But business is just bad. People in Australia -- [indiscernible] is going to be 12%, and the retail has been very badly. We just have to come through this.

That comes from the line of Michael Nathanson, Nomura Securities. Michael Nathanson - Nomura Securities Co. Ltd.: I have 1 for Chase and then I'll have 1 for Rupert. Chase, you talked in your prepared remarks about [indiscernible] or trying to get mid-teen returns on your capital allocations decisions going forward and I wonder when you look back on the previous decision, do you think the company has done mid-teens returns on capital? And then if so, if not, what's going to be different going forward in terms of a new process?

I mean I'm not going to go back and critique things that are in the years past. Generally, you make honest judgments. Rarely -- it doesn't mean they're not honest judgments, rarely does something look the same as you thought it would 5 years after the fact. But -- so all I can really do is speak to it prospectively. And that's how I'm going to deal with it. And prospectively, I think it is important. We have discipline, we have goals, that we invest in places that we really think fit our core areas of focus and growth that -- and that can really bring something -- bring a dimension to our business that we can really capitalize on. And again, that being said, when you talk about acquisitions, and I guess I want to continue to be clear. I mean that the way you build -- you create real value is to build it. And I think within that, what you really probably are looking for mostly is places where you're acquiring something, it's sort of a foundation to build off of. I think if you're buying mature businesses it's probably pretty tough.

I'll just interrupt, sorry. In the businesses, we have really huge returns in -- 100%, 200% return on investment, and we have businesses which are soft. But I would think we are averaging well over 15% on what we've done and we hope to do that in the future. Michael Nathanson - Nomura Securities Co. Ltd.: And then Rupert, following up on a question I have for you is, on these past calls, when a question about newspaper assets has come up, and maybe spinning them off, is the answer is no, no it's a part of the company. I wonder in light of what's happened, and the damage caused financially and to the brand, if your tolerance for papers or your support of the assets has changed at all, or maybe even a mix of certain types of newspapers. Can you talk a bit about how you're feeling about those assets within the portfolio?

No, I'm feeling very confident. I'm shocked and appalled at what happened in one small corner, which is the News of the World. And then I see that never, never happens again. But everything else is fine. The Wall Street Journal, I'm not saying it's making 15%, but it is the only newspaper that increased advertising revenue -- major newspaper that increased advertising revenue in the last year in the United States. So we are making progress wherever we can.

That comes from the line of Anthony DiClemente of Barclays Capital. Anthony DiClemente - Barclays Capital: A question for Dave on the quarter, first. I wondered if you'd help us quantify the write-down and closing of channels that led to higher programming expenses at the cable network segment?

It's roughly half the amount I mentioned, which is $50 million. To be specific, $25 million. Anthony DiClemente - Barclays Capital: Is there any part of that, that you would characterize as potentially coming up again next quarter or anything in terms of. . .

This is one off. There were some programming contracts as well, that we've had for a while, which we wrote down as well. Anthony DiClemente - Barclays Capital: And then when we try and model moving forward in terms of what's contemplated in your guidance, one of the swing factors that is tough for us to project is film. Just wondering if you could help us with what your plan is for film for next year. Is that adjusted OI growth going to be -- can you say directionally what it could be in relation to what your guidance says for the consolidated results?

It's a very, very dangerous thing to predict the outcome. All I can say is, you can see the comparison of the years, which was the lack of Avatar, which was a total, extraordinary event the year before. But this year, we have already started very well. Last weekend, we had a huge opening, well ahead of budget on Planet of the Apes. And we also launched, I think maybe Monday, the DVD of Rio and beat our full target in about 2 days.

But inside our expectations, we expect it's a reasonably flat business. We want to be conservative. It's a business that obviously, as what Rupert said, it's tough to predict. And so we believe we have got a great team there that's done a great job, but I think as you try to project out, you be conservative, so we projected the year as pretty flat with this year.

We are very conservative on our projections there. And I think it's very appropriate. We see other companies and we've had the experience. It's not that difficult to lose $100 million on film, which is, we haven't had that experience for a long, long time and we are very careful. And we also, I should say, lay off a lot of the risk in every film we make.

Anthony -- I think actually Rich asked, but I just want to go back to the question that Rich asked Rupert and just to give a slightly more perspective on it. Rupert may have forgot this. But if you go back, if you compare where we were 2008 to where we are today, I mean today as a company is much, much stronger financially, the nature of the company has changed. The predictability of our earnings have changed if you look at where we're going with our cable business. And in 2008, at one point, we thought that the financial world was coming to an end so we're extremely, extremely conservative. So I just think we're in a totally different place today from where we were in 2008 with respect to our ability and capacity to buy back stock.

Comes from the line of Ben Swinburne, Morgan Stanley. Benjamin Swinburne - Morgan Stanley: I have one on the guidance, Dave. If you could just comment, possibly on the publishing assumption around severance or onetime cost, either News of the World litigation stuff or in Australia, anything that you're factoring in that might help us understand if it's onetime and quantify it, if you could.

Well, there's nothing in Australia to quantify it. And, in the U.K., no we're not prepared to give that figure yet. Nor do we know. We are trying very hard. Everyone's getting included as well as we can. But first, we have to get to the bottom, exactly of what happened. Were there a dozen guilty people or 2 dozen? We are not only investigating, but we are cooperating totally, 100%, with the police in their investigations. And we expect that to go on for some time.

With respect to the guidance, we have not provided in the guidance anything out of the ordinary with respect to the cost that. -We, obviously -- we have to provide it for the known litigations that we know about and the expected settlements of those cases. Benjamin Swinburne - Morgan Stanley: Just on capital allocation and I think you can tell from the questions, everyone's very happy to hear the details there. I mean it looks if I run the math, you guys threw off about $4 billion of free cash flow this year, no reason to think that's going down. So in 3 years, you're talking about $12 billion of free cash, you've got $12 billion of cash on the balance sheet, if you take that down to $3 billion. You're basically talking about $20 billion of capacity, it's over 1/2 your market cap. The only other variable, I think Chase, you threw out, was acquisitions and you talked about tens or hundreds of millions. I just wanted to make sure I'm not missing anything and all that?

We're not saying something won't come along that might be $1 billion, but we don't see anything, and we certainly don't see any really big things like we were, sort of like with BSkyB. We don't have any prospects or anything like that.

Operator, we have time for one more question for the financial community before we go to the press. Also at this time, I'd like to remind members of the press that they should start queuing up the call.

[Operator Instructions] That last question comes from the line of Spencer Wang, Crédit Suisse. Spencer Wang - Crédit Suisse AG: Chase, you mentioned earlier you thought the stock was, I think, woefully undervalued. So I was wondering if, for you Rupert, would you guys consider some more structural changes at the company? And I don't mean just getting rid of the newspapers, but maybe just help us understand why you think having the company configured the way it is makes sense in terms of asset mix? And then just a quick housekeeping question for Dave, what's the FX impact in your guidance, please?

I don't see, I think we've got a very good mix. There are one or 2, it's one thing I'm not prepared to specify to you, I think at the moment and hasn't been announced that we would sell. But no, no major restructure.

And I think we try to do -- we've certainly done some streamlining of our businesses and I think we would continue to try to like this, focus on the core businesses that we think are the heart of our gross revenue. So I think just the last month or 2, sold the outdoor business and have taken some other steps. But I think from a larger and sort of the core area that we're focused on, the areas we grow and build, I'm sure you're a great fan of financial engineering. But want to be smart but I think we have tried to cleaned up some of the things where we got complexities to focus some businesses that we think makes sense. We obviously cleaned up MySpace and digital area this year. So I do think we're trying to bring a level of focus and discipline that both help deal with the undervalue of our stock.

I think we've learned a tremendous amount in the digital area. And we have some terrific people now, all which are accounted for the cost of them in digitizing, not just the independent products, but all our information products. If you look at our apps, The London Times, The Sunday Times, News of the World, [indiscernible], they are as good or better than anybody else's. We intend to keep improving them. That will expand and the money coming from that will expand as more people have tablets, and what is interesting is we're getting tremendous take off, not just on the iPad but on the Kindle. Spencer Wang - Crédit Suisse AG: The other question on the FX?

It's not significant of guidance. We're using pretty much the exchange rate that exists. There are some -- to be honest, I don't have the exact number at my fingertips, but it's not significant. If it's very important to you, I will get Reed to get back to you on that.

Operator, now, we'd like to go to the press. Also given the time, we will limit each reporter to one question.

And our first question will come from the line of Yinka Adegoke with Reuters.

Yinka Adegoke with Reuters. Hi, Mr. Murdoch, you said at the U.K., here the other day that you still hope for one of your children to run the company at some stage. It was good to hear you say you're still running the company with Chase for now. Given what's happened and some of the questions about James's testimony, do you think the board will support you if -- will support James being appointed as CEO at some stage in the near future?

Well I hope that the job won't be open in the near future. And I have -- Chase is my partner, if anything happens to me, I'm sure he'll get it immediately if I went under a bus. But Chase and I have full confidence in James. But I think that's all I need to say about it. But in the end, the succession is a matter for the board.

And that will come from the line of David Gelles, Financial Times.

Do you acknowledge critics' claims that many of your board members are not independent by traditional corporate governance definition? And if it is so, do you plan any changes to the board?

No, I don't acknowledge that and no, I don't plan to change it. It's a very strong board, very often very critical and we have a lot of free ranging discussions.

It comes from the line of Georg Szalai, Hollywood Reporter.

I was wondering if you can talk a little bit about the state of the Hulu auction, when do you expect to close and will it go forward?

I'm not going to speak too much of the way Hulu's running the process. We're obviously partners, so I think probably they are the right ones to speak to. It is obviously ongoing, and I think, progressing largely according to plan, but for us, I think we'll see where it ultimately ends up. And I think for us, it's still a decision to see where -- what it looks like at the end. Does it make sense to pursue that path or does it make sense for us to stay in an ownership position and continue to have it driven by content owners. But I think it's on course and on schedule, but I'll let Hulu speak to it in more detail.

And that comes from the line of Edmund Lee with Advertising Age.

Mr. Murdoch, so given that you're concerned about what happened at News of the World, what are you doing to -- what is the company doing and what are you doing to look at other areas of News Corp. and potential activities of a similar sort, namely News America Marketing and other news operations within News Corp.?

We are cooperating with all investigations and indeed, have invited in legal firms to help us check through. But we're not going into any more specifics of what they are. I can tell you that we are totally committed to absolute transparency for the whole company.

And that comes from the line of Jon Lafayette, B&C.

What steps are you taking to make sure that any future misdeeds come to your attention much quicker than these ones did in the U.K.?

I think we have obviously had a big alarm call. What happened there was we found out, the police found that, few people were charged, people went to jail. And after further investigations by them, [indiscernible] they said there was no further evidence and they were closing their file. In retrospect, we should have continued investigating.

Operator, we have time for one last question from the press, please.

And that will come from the line of David Folkenflik, National Public Radio.

This question is for Mr. Murdoch. I hope you guys can hear. You mentioned that you and the board affirmed it would be right that you continue on as Chairman and CEO of the Corporation. That said, there are a lot of ties, familial, corporate and financial between yourself, members of your immediate family, the board and those responsible for the internal inquiry. What do you say to those analysts who contend that your company...

That's not true. The people who are responsible for the -- the independent directors. . .

Who is Mr. Dinh and. . .

Mr. Dinh is a completely independent director, a distinguished lawyer. And I'll just assure you that we continually evaluate our corporate governance practices and have engaged outside counsel to confirm that we are in compliance with standards of good corporate governance.

Thank you, Rupert. Well, I want to thank everybody for joining the call today. If you have any further questions, please give us a call. Thanks.

Ladies and gentlemen, that does conclude today's conference. As I mentioned before, today's call was recorded and is available for replay starting today at 6:30 Eastern for 2 weeks until August 24, 2011, at midnight. You may access the replay system by dialing 1 (800) 475-6701 and entering the access code 208827. International participants may dial into the United States at (320) 365-3844 with the same access code of 208827. That does conclude today's conference and I thank you for your participation. You may now disconnect.