Aug 9, 2017
Executives
Reed Nolte - EVP, IR Lachlan Murdoch - Executive Chairman John Nallen - CFO James Murdoch - CEO
Analysts
Jessica Reif Cohen - Bank of America Merrill Lynch Rich Greenfield - BTIG Steve Cahall - RBC Capital Markets Michael Nathanson - MoffettNathanson Doug Mitchelson - UBS Brian Wieser - Pivotal Research
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the 21st Century Fox Fourth Quarter 2017 Earnings Conference Call.
At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time.
[Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mr.
Reed Nolte, Executive Vice President, Investor Relations.
Reed Nolte
Thank you very much, operator. Hello, everyone, and welcome to our fourth quarter fiscal 2017 earnings conference call.
On the call today are Lachlan Murdoch, Executive Chairman; James Murdoch, Chief Executive Officer; John Nallen, our Chief Financial Officer. First, we will give some prepared remarks on the most recent quarter, and we'll be happy to take questions from the investment community.
This call may include certain forward-looking information with respect to 21st Century Fox's business strategy. Actual results could differ materially from what is said.
The company's Form 10-K for the 12 months ended June 30th, 2017 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 measures. Definition of and reconciliation of such measures can be found in our earnings release and our 10-K filing.
Please note that certain financial measures used in this call, such as segment operating income before depreciation and amortization, often referred to as EBITDA, and adjusted earnings per share, which excludes the net income effect of other net, impairment and restructuring, and equity earnings adjustments, are expressed on a non-GAAP basis. The GAAP to non-GAAP reconciliation of these non-GAAP measures is included in our earnings release.
Lastly, please note that our offer for Sky plc that was announced last December is governed by the U.K. takeover code.
As such, there are strict limitations as to what we can say with regard to that transaction. And we are restricted to providing information that has been publicly announced.
And with that, I'm pleased to turn it over to Lachlan.
Lachlan Murdoch
Thanks Reed. And thanks, everyone, for joining us on today's call.
Pleasing to us as we sit here in August that our new fiscal year begins with real momentum. The achievements of 2017 set us up well for the next year and beyond.
In the last 12 months, we delivered 9% full year EBITDA growth, driven by 8% global affiliate fee growth and solid year-over-year growth of 5% in global advertising revenues. The last few years, we've focused on investments on our core video brands.
This has proven to be the right strategy and as a result, these brands are experiencing robust domestic affiliate fee gains, reaching 10% for the most recent quarter. And while it's true the broader industry loss approximately 2% of subscribers over the last year, we have maintained our aggregate subscriber level.
This includes subscriber additions from all of the emerging DMVPD products, including from the newest launches, YouTube TV and Hulu Live, as well as growth in our younger channels. We are excited by the progress of this new marketplace and believe advances in the viewing experience and increased value to customers will provoke further innovation across all platforms and distributors and underscores the core pay TV bundle as the best video proposition for customers.
Creatively as well, 2017 has been a year of achievement for our teams. Our Television studio produced number one shows on five networks, including the biggest new hit of the season, This is Us.
And was also a key contributor to Fox broadcast having its highest number of returning shows in a decade, a positive for both businesses. Feud and Legion reinforced FX Networks position as a creative leader, highlighted this year -- this past year by the most Emmy wins ever for basic cable channel.
James will talk later about how we plan to leverage FX's creative success. At our film studio, Logan and Hidden Figures exceeded expectations while serving as great examples of the benefit of original storytelling.
In news, the Fox News Channel was the most-watched cable network for the last 12 months, during which it achieved its highest rated quarter ever in 24-hour viewership. We believe that as time shifted on-demand and ad-free viewing continue to grow in popularity, our strengths and live news and sports globally is a great advantage.
News and sports, the least likely programming to be watched delayed, comprised more than half of our advertising revenues. In fact, network entertainment programming, while important, accounts for less than 3% of our total revenue.
Underpinning our momentum is a keen focus on our organization with an eye to the future, we have evolved the leadership at our Film business, Fox News and at our national ad sales organization. And have brought in a small handful of Senior Executives at the corporate level to ensure we empower our businesses globally with the best talent and technology to drive us forward, especially in this time of transformation and opportunity.
We ended fiscal 2017 in a strong position by any measure. But importantly, the work we achieved last year, including completing key long-term programming and affiliate deals, provides us with a superb platform for the new fiscal year and for the longer term.
And with that, I hand it over to John.
John Nallen
Great. Thanks Lachlan and good afternoon.
As Lachlan said, we are very pleased with the overall financial results for the full fiscal year and then I'll start my comments there, followed by more specific comments on the fourth quarter. Total full year revenues were $28.5 billion, up 4% over last year, led by an 8% increase in worldwide affiliate revenues and a 5% increase in advertising revenue.
Total full year segment EBITDA was $7.17 billion, up 9% over last year, led by strong growth at both our cable network and Television segments. Overall, unfavorable foreign currency rates reduced our EBITDA results by approximately $105 million and our growth rate by two percentage points.
Reported income from continuing operations attributable to shareholders was $3 billion this year or $1.61 per share, while adjusted EPS was $1.93 this year, up 12%. Now turning to the fourth quarter.
Revenues increased 2% over last year led by double-digit growth at our cable networks segment, partially offset by reduced revenues at both the Television and Film segments. Total segment EBITDA of $1.45 billion was equal to last year's results, as strong gains at our cable networks were offset by lower Television and Film contributions.
From a bottom-line perspective, we reported EPS of $0.27 while adjusted EPS was $0.36, down from a comparable $0.45 last year, which as you will probably remember, included a tax benefit of $0.07 per share from a favorable ruling we received. Now, let me provide some added context on the fourth quarter performance at our operating segments, starting with the cable network segment, where we had very strong results with total segment EBITDA of $1.44 billion, 19% higher than last year on revenue growth of 10%.
Domestic cable revenue increased 10%, driven by accelerated affiliate fee growth of 10% and strong advertising growth of 6%. The affiliate fee growth was supported by the renewal of two major affiliate agreements and the advertising growth primarily reflects higher ratings and pricing at Fox News.
EBITDA at our domestic channels increased 22%, reflecting the strong revenue growth partially offset by modestly higher programming costs at both the FX Networks and National Geographic. Fourth quarter reported international cable revenues increased 11%, driven by 9% growth in affiliate revenue and 9% increase in advertising revenues, which was led by STAR's current year broadcast of the ICC Cricket Champions Trophy.
Reported international EBITDA increased 6% over last year as higher contributions from FNG International were partially offset by reduced contributions from Star due to the expected higher Champions Trophy costs. Now, turning to our Television segment, fourth quarter EBITDA of $137 million was 5% below last year, has a 4% decline in revenues was partially offset by a similar percent decline in expenses.
Lower advertising revenues from lower primetime ratings, including comping against the final season of American Idol and a softer local advertising market, were partially offset by continued double-digit growth in retransmission consent revenue. At the Film segment, we faced difficult comparisons to a year ago.
This quarter, we reported an EBITDA loss of $22 million versus $164 million in profits a year ago. This quarter included significant releasing costs for our summer movie slate, including War for the Planet of the Apes and the Alien: Covenant, whereas last year, we had very substantial contributions from Deadpool and The Martian and significantly higher pay-TV avails from the timing of prior releases.
Additionally, this year, we had lower TV library contributions from international markets. So, all in all, a strong earnings quarter and year and equally strong cash flow generation for the year, where we delivered $3.4 billion in cash from operations less CapEx, a 22% increase over a year ago.
And from a capital standpoint, we ended the fiscal year with $6.2 billion in cash and approximately $20 billion in debt. Our capital allocation priority continues to be focused on funding the Sky acquisition.
So, as we look to fiscal 2018, there are several items worth drawing attention to on which we have visibility. Hopefully you notice that we achieved virtually all of the metrics provided for fiscal 2017, and we'd like to again provide a framework for this fiscal year.
At our cable networks, the momentum seen in this past quarter will carry into fiscal 2018. We expect every quarter in fiscal 2018 will show at least high single-digit domestic affiliate fee growth and our confidence in this, our largest revenue stream, is underpinned by locked-in contracts.
Internationally, we're expecting strong total revenue growth, driven by Star advertising increases, where we'll continue to generate market leading organic ad growth, will lap the impact of the demonetization policy, and we'll hit the $500 million EBITDA milestone. On the cable network cost side, we're expecting roughly mid-single-digit expense growth from our core operations.
In addition, we'll welcome two new sports agreements to our roster, specifically the Big Ten and the Argentine Football Association, as well as broadcasting the next cycle of the World Cup, which will bridge fiscal 2018 and 2019. These new sports events are expected to increase total expense growth to the high single-digit range and for completeness, we'll have a matching gross up in expenses and content revenues owing to the accounting treatment of the new Big Ten contract, where will sublicense certain events to third-parties.
While this has no impact on net earnings, it will inflate segment reported expense growth by about two percentage points. At the Television segment, we'll have unusual advertising revenue comparisons from several events that either don't recur in fiscal 2018 or that we're just not expecting at the same level, notably, we're not broadcasting the Super Bowl in fiscal 2018.
We'll have one less additional NFL divisional playoff game and it's an off-cycle political year. Additionally, we're not expecting an epic seven-game World Series nor any local station revenue from spectrum use, both of which we had in fiscal 2017.
We will continue to have double-digit retransmission consent growth and the ad revenue impact of the new sporting events. Segment expenses are expected to be flat over the prior year, as low single-digit core growth plus the increases from the new World Cup and Big Ten broadcasts offset the absence of the Super Bowl.
At our Film segment, we have a promising line up of television series and film releases, where we end the fiscal year with the release of Deadpool 2 in early June. Additionally, this segment will see the inaugural investments into mobile game development following our acquisition of Aftershock.
And finally, below the line, we expect our reported tax rate to remain in the low 30% range. And with that, over to James.
James Murdoch
Thanks very much, John and Lachlan, and good afternoon everyone. So, fiscal 2017, as you've heard, finished well, and we've made progress in multiple fronts.
So, as John just mentioned, while we benefited from a number of notable events in the year, we, nonetheless, expect the underlying velocity to continue. But I'd like to talk with you for a few minutes on the direction of the company and the potential to create what we think is really incredible value here, as we enter a new year and look ahead considerably farther than that.
As we simplified our business, focused on these core brands and creative output and directed all of our enterprise to those things, we've started to see good results. As we described earlier, this has been about aligning the company around the future of video.
The underlying changes of universal connectivity, the proliferation of connected displays and the potential for untethered access to these creative assets for customers globally and what made possible the acceleration and expansion of engagement with our customers. From Hotstar in India to Hulu Live and SkyGo and SkyQ, we've never been able to reach customers and as diverse, flexible and rewarding a fashion as we can now.
This is, of course, just the beginning. We've got great confidence in the future of this video business for us.
Our commitment to making our programming more available and not less, combined with the increased and sustained investment and extraordinary storytelling, manifest everywhere in the business. Domestically, the new digital MVPD market has already delivered an aggregate 2 plus million subscribers, set new benchmarks in user experience and packaging innovation, and I'm convinced will prove to be a great catalyst increased and accelerated innovation in the sector.
And whenever that happens that means growth is coming. This week, we announced FX Plus.
Comcast Xfinity will offer an on-demand ad free viewing experience with unfettered access to more than 30 current and back library FX and FX's Originals for just $5.99 a months. And earlier this year, we overhauled our authenticated FoxNow app available in more than 90 million households domestically.
In Europe, Asia and Latin America, we've introduced Fox Plus and Fox Premium, then your access to programming and a digital live experience that is second to none. And Hotstar set the pace for the streaming market in the world's fastest-growing economy, crossing 1 billion minutes of watch time in a single day during the fourth quarter.
So, as you can see, the transformation of the company is not only well underway but is gaining taste. In 2017, across the whole business, the team delivered against almost every metric we established for ourselves.
And importantly, this sets us up for greater velocity across the business, especially in the key areas of affiliate revenues, how we license our brands and how we shape new experiences for customers and shape this company to create extraordinary value. Before turning it over to questions, I'd like to quickly touch upon the Sky transaction.
The transaction has been cleared in all of its markets except for the U.K., where the process is still underway and where the U.K. regulator, Ofcom, concluded that the concessions we offered mitigated its morality concerns and further was unequivocal about our commitment to broadcasting standards.
We remain confident our transaction will be approved but more likely in the first half of 2018 than before the end of this calendar year. And with that, I'll turn it over to Reed and we're happy to take whatever questions you have.
So thanks.
Reed Nolte
Thank you, James. Operator, we'll be happy to take questions from the investment community now.
Operator
Certainly. [Operator Instructions] Our first question is from Jessica Reif Cohen with Bank of America.
Please go ahead.
Jessica Reif Cohen
Thank you. [Indiscernible] sorry, but Lachlan, when you said that the core bundle is the best video platform for consumers, which we wouldn't -- not argue with James discussed, FX Plus being available through Comcast and supporting the bundle with that and the enhanced app, et cetera.
Could you comment on some of the announcements over the last few days by a competitors with these direct-to-consumer offerings, how you expect that to affect the overall bundle? And then the second question just completely different, but you've made some announcements on advertising loads in advertising the amount of time the ads will be, can you just talk about your overall advertising strategy?
Lachlan Murdoch
Sure. James and I will both tackle these questions.
Hi, Jessica. So, when we talk about the core bundle, we're fundamentally talking about an offering that allows the consumer to have the highest amount of viewing for the brands and the programming that they want to engage with for the lower possible price.
And so as you can see across all the emerging DMVPDs, we've included our -- our brands has been included in these core bundles. Having said that, I think it's not mutually exclusive that you can launch a more highly sort of refined bundle within that.
So for instance, for us, with FX Plus, it's also a service which offer much of the same programming on FX it's on a core bundle, but in a way that's direct-to-consumer in a beneficial way.
James Murdoch
And I think Jessica, look, it's very clear that bundling kind of we all know this, it drives consumption up and pricing down. So, it's a real positive for customers and it's very much in line with trying to make our products more available and not less.
I think Lachlan's right. It's not mutually exclusive to say that other kinds of bundles and other kinds of packaging are going to live alongside that for certain customers who want in a different way.
So, I think it's all part and parcel of what we've been talking about for a while with you, which is the downstream regional market for our Television is becoming much, much more competitive and that's driving innovation and in terms of customer experience as well as packaging innovation with some narrow bundles and some wider ones. We have really been focusing on the customer experience on how we build and -- how we build these products and how we license our content and brands in the third-party products, but also we remain very open-minded about an independently priced direct-to-consumer offering as well, and we're certainly mindful of what we're seeing in the marketplace.
And we're mindful of how these things are progressing for some other firms out there as they on the packaging as well. One thing we found around the world with bundling digital products, be it at Sky Go and NOW TV or at Hotstar, is that constant iterations and constant innovation and experimentation with packaging is really beneficial.
And to be able to do that at the high pace, is the best way to build our business and find the best combination. And you -- also your question about ad strategy?
Jessica Reif Cohen
Yes.
James Murdoch
So, because of this there's no fundamentals change in the way our people, our consumer, our products, we announced the less actually for a couple of years, and we've talked about before, less than 50% of the viewing on our entertainment programming, less than 50% is viewed live. And a growing amount is viewed, obviously, on our own apps and the slightly shrinking amount is viewed on sort of delayed sort of non-streaming DVR's and whatnot.
So, within this environment, we've achieved a lot of success in terms of streaming advertising and non-linear advertising. I think this past year alone, our non-linear advertising has grown by 30% and within that, our advanced advertising products revenue has grown by 40%, which is something that's really pleasing to us.
John Nallen
That's right. Fundamentally, these streaming platforms and streaming consumption becomes the primary people consume content, which we think will happen over time at a fundamentally better ad product and the fundamentally better platform for us to monetize these brands and investments that were making, either by pricing them innovative with the customers or by creating new on products that are priced at a premium with respect to targeting capability, but also created better ad experience for customers with fewer interruptions, shorter formats and the like.
James Murdoch
Absolutely.
Jessica Reif Cohen
Thank you.
Reed Nolte
Thank you, Jessica. Operator, next question please.
Operator
Certainly. Our next question is from Rich Greenfield with BTIG.
Please go ahead.
Rich Greenfield
Hi. Just wanted to ask you a question about reversing retrans.
I think, John, as you go into the numbers, it's pretty clear that's retrans is an increasingly important part of the broadcast TV revenue growth story. So, reverse retrans gets even more important as you move forward.
And you all appeared quite interested in the transaction with Blackstone Group that was talked about in the press that you have essentially acquired trivia and it didn't pan out. But I just wonder, as you think strategically about Fox's positioning and Fox's future, anything less of more in the TV station business attractive to Fox, especially if you could dramatically increase your share of reverse retrans dollars and have more control over how your affiliates negotiate digital rights and retrans, et cetera.
I'm just -- overall, I'm just fascinated by the potential of an ion transaction and just wondering how aggressively are you pursuing that.
James Murdoch
Thanks Rich. It's James here.
Look, obviously, we can't comment on any kind of speculation about hypothetical kind of corporate activity that's going on, but I would just say that we think that the retrans environment is very attractive going forward. We think that fundamentally, the broadcast networks and broadcast stations with the strength in sports and reach and all of the things that are there are delivering a lot of value to distributors.
And a lot to play for in terms of retrans both for reverse retrans from our non-O&O affiliates as well O&O Group. And I think fundamentally, we're just very pleases with the position we have right now, we look at it we have a lot of options.
We have a number of affiliation agreements coming up shortly and over the next couple of years. And we're very, very focused on the best way to really maximize any advantage that we can get for the business going forward.
That's really all it say about it, so yes, are very focused on it and we think it's a big opportunity for us.
Reed Nolte
Thank you, Rich. Operator, next question please.
Operator
Certainly. Our next question is from Steven Cahall with Royal Bank of Canada.
Please go ahead.
Steve Cahall
Yes, thanks. Two for me, both on the cable network side.
First, I think you suggested in the past that there may be a possibility the swap some of your international cricket rights throughout the course of fiscal 2018, so I was wondering if you could give us an update on what the status would look like? And if you do decide to move the rights do that change, the $500 million EBITDA target or the cost growth guidance that you gave earlier.
And then separately, I was wondering if you could just update out sub picture has looked like recently for the RSNs. Is sub growth there in line with a number that you gave earlier?
Or any diversions there versus your more general cable networks? Thanks.
James Murdoch
Thanks Steven. On the cricket rights, we had a strong portfolio of cricket rights.
I assume you're asking just about India, and we it's been -- performing very well for us. From time-to-time, new rights are available in the market, and I would just say to you that, Star Sports, Cricket portfolio is very strong right now.
If we could really strengthen it, we'd love to do so but being very disciplined about that and certainly don't want to be -- we don't want to do things that are going to make a problem in terms of our near-term and longer term goals for the business. So, as John mentioned earlier in his comments, we're well on track for our targets in India of $500 million profit -- of EBITDA next year and thereafter.
So, no, we don't have any plans to do anything complicated with cricket rights that would jeopardize that. Although when we see any new rights come up, we approach them in a disciplined way and in a way that we think is going to be end of the best thing for customers and for the business.
And then in terms of the regional sports networks, subscriber numbers, it's important to remember that we've been able to achieve our regional sports networks inclusion in all of the emerging DMVPDs as their critical viewing for most viewers. And so as such, I think there would be subscriber numbers are down very slightly, so less than 0.5%.
Steve Cahall
Thank you.
Reed Nolte
Thank you very much Steven. Operator, next question please.
Operator
That will come from Mike Nathanson with Moffitt. Please go ahead.
Michael Nathanson
Thanks. I have two.
One on SVOD and one on Hulu. Could you give update on your latest thinking on SVOD strategy.
A couple of weeks ago, you moved some content from Netflix to Hulu and then you said, rolled out a new service with Comcast with deep library. Is that content exclusive to FX Plus?
And should be worry that there will an air pocket on SVOD in the coming year? And then on Hulu, it's early days, but anything you can share about what surprised you so far as the products rolled out?
James Murdoch
Look, I think SVOD marketplace is a really interesting one. We continue to see a competitive marketplace for product there, but we also want to make sure that we're licensing things that -- in a way that's consistent with our strategy of making things, saying again, more available and not less.
So, monolithic, global, exclusive deals with Netflix are troublesome with that strategy and we think there's a broader marketplace for us to license into. Hulu is a very attractive customer and partner of ours.
And as our -- some of the other emerging players that as well as figuring out and really building businesses to monetize some of those rights ourselves, for example, with the FX Plus Premium service. So, I think it's going to be a mix.
I don't anticipate the sort of so-called air pocket, as you talked about. We are very, very intent and very far along on really optimizing the monetization and the maximization of the reach as well as profit potential for our shows and all of our partners and make them with us.
Lachlan Murdoch
I think it's important to remember as well that the Hulu deal that we deal is on a non-exclusive basis. Some of that program has about 3,000 hours of programming, some of the programming was exclusive on Netflix, but is now a non-exclusive on Hulu, and we want that product in as many places and distributed by as many people as possible.
James Murdoch
And then with respect to the Hulu service, I really a question more for them, but I guess they don't report like this, so you're out of luck. But I would just incur -- I think the most -- it's very, very early days, but I just think, as a customer looking at the marketplace right now, I just think it's an incredibly exciting time, right?
You have a great pricing, great new products. I think YouTube TV is tremendous.
I think the Hulu Live product is setting a benchmark in terms of user experience, and I think it's typically really -- it's a really interesting time for innovation in the marketplace. I really think it's just last few months where we've seen these new products hit the market and they're really setting the bar very high.
And that's a great thing for customers and it's a great thing for creators and content makers that can gain access to those platforms.
Reed Nolte
Thank you, Michael. Operator, next question please.
Operator
We'll go now to Doug Mitchelson with UBS. Please go ahead.
Doug Mitchelson
Hi, thanks. I guess two questions.
One, do you consider the value of a virtual MVPD sub to be equivalent to a traditional MVPDs sub for Fox? I think a lot of investors are worried that either there'll be fewer network side of virtual MVPDs or the churn will be higher with the business model unsustainable and that we should sort of in our minds discount virtual subs versus traditional sub.
And separately, just tradition number curious about how news and sports is such an important part of the programming strategy for Fox. Any thoughts about competitive positioning as either you have the potential for companies to think about launching a news competitor in the United States with a similar conservative focus as Fox News?
Or digital companies coming after sports rights at some point in the future, maybe the next the cycle any thoughts about that would be helpful. Thank you.
Lachlan Murdoch
So, first, on the digital MVPDs and the value for subscriber in a what you call virtual or digital MVPD versus traditional MVPD. Certainly, on paper, our subscriber deals are more valuable significantly more valuable in the digital MVPD than in a traditional MVPD.
We're extracting more per subscriber in every way. Also additionally, we share more data or we get more data shared with us, which allows us to monetize the advertising significantly better as well.
You mentioned, churn, I think it's early days to know what churns are going to be like in these services and presumably some distributors will manage their churn better than others.
James Murdoch
I think it's worth pointing out that not all of our affiliate are necessarily the same. So, amongst traditional MVPDs, there are some but we would much prefer to steal customers from others.
So, it's not -- as these things develop, you are always kind of playing that game and as you go along alone with these renewals and these renewal cycles that are not all coming up at the same time, different churns and different opportunities emerge. I think Lachlan's right.
I mean, in every way, the good digital MVPD customer and partnership is one that is -- can be more valuable and should be over time. I think that the flexibility it requires -- it gives us for packaging and pricing and advertising innovation is tremendous.
And so we find it -- we think is a very, very attractive new entrant category in the marketplace. Much us FiOS and U-verse world when they first enter the market as well as when folks started licensing the Ku-band and DBS satellites back of the day.
So, new choice and new competition has always been great for the content business, but you have to invest in the content in a concentrated way to really make it work and make sure that you are desired and a key part of those so called bundles, which is a segue into your second question. Look, the content marketplace is incredibly competitive and always has been.
The news marketplace is super competitive right now. And I anticipate it's going to continue to be.
I think you already see so much news consumption in the digital world as well. And all-news channels have to deal with that and try to put something together that's really going to matter for their viewers and that they're going to care about.
And sports competition is always been very, very intense. We've seen multiple rights holders around the world selling to new entrants had new categories of rights out there.
And that's something that we deal with everywhere from the Netherlands to Argentina and in the U.S. and I think digital entrants are a certainty in that marketplace, but that doesn't mean that new entrants are necessarily any less or more rational than existing competitors.
Reed Nolte
Thank you, Doug. Operator, next question please.
Operator
Next up is Michael Morris with Guggenheim. Please go ahead.
Mr. Morris your line is open.
Apologies. Next, we'll go to Brian Mercer with Pivotal Research.
Please go ahead.
BrianWieser
Thanks for taking the question. I have two.
First, just wondering what your current thoughts around the strategy of maintaining minority stakes and a number of other entities [Indiscernible] China, et cetera. And separately, I also thought -- get your take on the current state of the overall exciting economy.
I feels that on average its slightly negative, you've got a good balance of properties, so be curious to hear take on that.
James Murdoch
Look, with respect to minority and investments that we may from time-to-time, it's clearly not something that frankly that we do very often. We generally look at minority stakes and investments there as both either opportunistic where we think there's a new category or brand that something that's going to be successful that there's opportunities to work together with them as well.
And there might be a small investment or an investment that goes along with that. But also, I think we look at it over time and say, what's the -- how do we exit those?
Can we create the return around those? So, it's a mix.
We have an investment, as you mentioned, in Vice, which are excited about you think that's a great company and is doing really well. We also have investments in some virtual-reality innovators, where minority was available in the partnership could be struck, and we think we could really learn and build capabilities amongst ourselves a great value on both sides.
Roku I think is another good example of that, so there's been a variety of places where that's been effective, but it's not a -- we don't have a sort of approach to it as a venture capital operation like some of the firms in our space do. It's more opportunistic, and we try to do it less often because we really like to keep our business simple and we like to keep it straightforward as we've discussed that we really made a probably it's over the last number of years.
But sometimes it's -- it is the way things work. Tata Sky is another good example where from a regulatory perspective, we couldn't own a certain amount but we think it's really important to drive that business forward and great for the Indian television marketplace and for our business there.
So, it's a mix out of rational, but something that we would generally prefer to focus on our core operations then investment portfolio.
Lachlan Murdoch
No, I totally agree, James. You guys are the best investors and for us, we got to be strategic if we're going to have a minority interest where.
Reed Nolte
Brian, thank you for your questions. Operator, at this point we're out of time and would like to conclude our call.
Thanks, everybody for joining today. If you have further questions, please give me or Mike Petrie a call.
Thank you.
James Murdoch
Thanks everyone.
Operator
Ladies and gentlemen, this conference will be available for replay after 6:30 P.M. today through midnight on Wednesday, August 23rd.
You may access the AT&T Executive replay system at any time by dialing 1800-475-6701 and entering the access code 426719. International participants dial 320-365-3844.
Those numbers again are 1800-475-6701 and 320-365-3844, access code 46719. That does conclude today's conference.
Thank you for your participation. You may now disconnect.