News Corporation (NWSA) Earnings Call Transcript & Summary

Good morning, everyone. I'm Kane, the firm's Australian TMT analyst, and pleased to be joined by Robert Thomson, the CEO of News Corp. I really appreciate your time, Robert. Lovely to be back in person.

So maybe just to kick things off, obviously, we're in a very different environment to the one we spoke in last year. Maybe just at a high level, could you talk about sort of how the increase in inflation, cost of living pressures that are going through globally having an impact on your business but how we think about the revenue levers that you have to offset some of these costs?

Thanks, Kane. Well, inflation is not going to be transitory as rumored. It's neither ephemeral but nor is it eternal. It's somewhere between ephemeral and eternal. But its impact in the short and medium term is on the business as you imply in the question. We're in a reasonably strong position without being too cocky about it. If you look at the results over the past couple of years, pandemic years, that was a stress test of the business. Inflation is another stress test. And the fact that the teams around the world coped very well ably with the challenges of the pandemic indicate that -- I suspect that they're capable also of coping with an inflationary environment, a different kind of challenge but a challenge nonetheless. And when you look at just corporately speaking, where the company is relative to a few years ago, so our EPS virtually doubled last year. Our net income was up 92%. You saw our EBITDA in Q4 was up 50%. So the very robustness of the business is important in a time like -- because we've been very careful in both managing our cash and generating more cash. So that certainly puts us in a position to be poised, one, to cope with the exigencies of higher inflation, but two, to be in a position to take advantage of opportunities, which we think will arise in some of the sectors in the next 12 to 18 months because companies are going to be under pressure. We perceive that we'll be under less pressure. That moment of opportunity will come because of the hard work the teams have done over many years, really since the split back in 2013 when we had a lot of work to do to get the company in fine fettle, which it now is in. And whether it be in the continued rollout of streaming products in Australia or the expansion of professional information business at Dow Jones, that was up 47% revenue there in Q4, it shows that we've got a strong platform to build on. Now some specific instances of inflationary effect. Obviously, the more physical product, the more distribution, the more transport, the more exposure to increased labor costs and transportation costs. Also, we're seeing at HarperCollins, the effects of Amazon recalibrating its warehouses. So there will be a onetime reset effect at HarperCollins, we perceive. Because of that -- that's common to the book industry, more sourced from Amazon than from anything HarperCollins is doing. But even despite that, you need best sellers. And so it's clear if you look at the best seller list that Jared Kushner's autobiography was #1 nonfiction in this country. The Tolkien works are doing very well because of the Amazon series, and I would strongly recommend that everybody in the room read Bill Barr's One D*** Thing After Another, which is not a description of the life of a fund manager but his time as Attorney General. And it's -- he's been criticized by left and right, so he must have done something right. And the book is beautifully written, so if I could put in a plug for that. And if you do buy it, that will obviously help the bottom line at HarperCollins.

I mean do you see any sort of major differences from the advertising business versus the subscription business environment? There was speculation around cost of living and people canceling subscription or what have you.

Yes, it's a SAGE question. There's more pressure on the advertising side than the subscription side, which is why we've become more of a subscription business over recent years, and you see that both at Dow Jones and at Foxtel, but the increase in BINGE and Kayo -- BINGE is the entertainment provider in Australia and Kayo is a sports provider. They've been robust, and you've seen the growth over the past year in digital subs generally there. And we increased prices for the first time at Kayo from $25 to $27.50 very little resistance to that. And why? We've got the best sports rights in Australia, which is Australian rules football and NRL and cricket and Formula 1, among other things. And you have to project those rights in a way that relates -- has empathy with the fans. And that's why you see audience is growing so rapidly at Kayo relative to the terrestrial broadcasters in Australia. So it's one thing to have the rights. It's another to make the most of the rights. And if you make the most of the rights, you become more resistant to churn.

Come back to Foxtel in a second. So just lastly, at the group level, maybe just worth thinking about in your mind, I mean, what do you see as single biggest risk for News Corp earnings the next 12 months? I mean potentially it sounds like it could be the book publishing margins in that reset. And so it's conversely the biggest single opportunity. Given those comments you made as well previously, it sounds like it might be inorganic or really leaning into some investment in one of the segments.

Yes. Well, the biggest threat really is of the unknown. And is it a climate in the Middle East? Is it Italy becoming economically unhinged from the rest of Europe? Those are threats. What we can perceive now to be threats are manageable and in the normal order of business in an inflationary environment. And one thing we are doing is looking at budgeting in a completely different way, which is normally we set, obviously, CapEx and OpEx targets before the financial year starts. We give a fair amount of autonomy to the businesses, but we are doing repeated reviews through the year -- through this year because we want to see precisely -- some of the issues you're raising, precisely the impact of inflation on whether it be digital advertising or advertising generally or in case there are some unintended impacts and certainly unforeseen impacts. And I think the combination of that monitoring combined with the talent we have at ground level will mean that we're better prepared for the truly unexpected, which is always possible in a dynamic global environment. But I do think in terms of opportunity that -- look, you can see our cash position. It's public. It does enable us to take advantage of opportunity. I don't seem as though we're preying on fragile [ problem-ridden ] companies. But it -- we're obviously better positioned than most. And you can see from the impact already of the OPIS and the CMA acquisitions at Dow Jones, the base chemicals, that there's no doubt that, that has already made a difference to the profile of the Dow Jones profit. As I said, Dow Jones Professional Information business was up 47% Q4. And that was at a time when other bits of consumer media were already starting to be under pressure. But that's not a pressure we saw -- I mean advertising was up at Dow Jones. Q4 subscriptions were up. So we're -- it's a different kind of business, say, for example, to a New York Times or Washington Post or a more, what you would call, mainstream media business.

And then I suppose coming to Foxtel, specifically, just basically finished year 1 of the 3-year strategy we set out this time last year. You have returned the business to revenue growth. So these things are going to need to accelerate a little bit in the next couple of years to that $3 billion target you outlined. Talk about what you see as the drivers of that growth. Is that price led in some of the BINGE, Kayo price rises you spoke about previously? Or is that accelerating subscription subscribers for example?

It's both. It's growth and price, and we'll be very reasonable about the price increase. We're not going to gouge people. But there's clearly elasticity in the Australian market and because of the premium service that both Kayo and BINGE are providing. And it's clear that the Australian entertainment and streaming ecosystem is very different to the U.S. And first of all, you're seeing U.S. companies coming to the conclusion that they're vulnerable to imperial overstretch. So they're not going to set up in 40 different countries, which is what people presumed, say, 2 years ago. And it seemed to me highly unlikely because if you want to compete in Australia, it's a tough market, and you have to commit a lot of resource. And are you better to partner with us or -- and not just us the other providers in Australia, you better to partner or compete? And what are your priorities for competition and growth? But there's a lot of institutional inspection going on at the moment now and among American companies and some of it, you can hear it echoing in this room about plans that 2 years ago seemed to make sense that are being revised now. That's an opportunity for us because we've always wanted to be the village square for streaming in Australia. We have a comparative advantage in our expertise, our teams in a certain amount of size. There is a lot of competition in Australia, but we compete well. And there's no doubt that the success we're seeing with Kayo and the continuing success, people say, "Well, when is it going to peak? When is it going to peak?" And that's about acquiring the rights. And as you know, we made comfortable. We just locked up the Aussie rules rights until 2031. We have the Rugby League rights until 2027 that what you do with those rights -- so it's not just having the rights to event. It's owning the event and being empathetic about fan culture. And if you are that, you'll have a genuine opportunity in terms of price to take advantage of that. So it's both growth and price.

Yes. And on the pricing, and we touched on Kayo and BINGE being a premium service, I mean how do I think about the delta between the streaming ARPU and maybe the cable ARPU? Does that start to close over time? Or do we think pricing on both of them continue to drive higher?

Yes, it's interesting because you look closely, you saw that broadcast churn has actually come down by 4 percentage points year-on-year. So one of the concerns naturally enough was how much cannibalization. Clearly, not as much as people fear. And I guess the best indicator of whether or not the strategy is working was that in Q4, for much of last year, in Australian dollars, revenue and profitability were higher for the first time in a little while. And that -- if you're looking for a measure of whether a strategy is successful or not, that's not a bad one.

And you touched on the AFL rights. You touched on the entertainment side of things and maybe a bit of a lessening of competition there. You did see a reasonable step-up in the AFL rights, so extending out to 2031. So on that backdrop, how do I think about the profitability of the sports side of Foxtel versus maybe the profitability of the entertainment side, which price rises are going through? Potentially we're seeing some content cost deflation, does look to be a better backdrop than maybe Kayo.

Although you'd certainly be worried about profitability in Australia if you didn't have Aussie rules rights because it is a very powerful sport -- I mean Aussie League -- Rugby League in certain states. But I think the thing to bear in mind is there's always been a step-up in sports rights costs year-after-year. And we're clearly coping with that well already. I mean people cite various numbers, but an inflationary environment has a way of making those numbers more manageable, shall we say. I'll let you draw your own conclusion about that. And so longer term, you don't want sports rights for 2 years. You put in a lot of effort. There's a lot of investment in brand building. There's a lot of investment in building talent for us to have long term, both the Aussie rules and Rugby League rights. It's absolutely crucial because, actually, the talent cost evens out as well in a way that I don't think people factor into the pure cost of rights. And so net-net, we're in a great position to take advantage of those rights to partner with those sports, which we're proud to do but also to get a great return for our shareholders.

Yes. And then if we go digital real estate, did notice some changes coming out in the last couple of weeks. Maybe just want to touch on those before we dig into the segments a little bit more deeply.

Yes. I think most people here know that Tracey is retiring -- Tracey Fellows and for personal reasons, and they are indeed personal reasons. And I, first of all, publicly would like to laud what she's done for the company because she was always going to be the key person connecting the Australian culture with the U.S. culture. That was very imperative, and she's done that brilliantly. And I spent most of yesterday down at Move talking to the team. And every second sentence about new products was a reference to discussions that the U.S. team was having with the Australian team. And so that's a testament to the great work that Tracey has done. And the fact that those conversations are now taking place without prompting, without provocation, it's -- that's a true mark of the cultural integration that we always needed to get the best for REA and the best for REALTOR. And particularly the product sets are starting to look a little more similar. The Australian market is very different to here. Here, obviously, the money is on the buy side, not the sell side. In Australia, it's on the sell side, not the buy side. There's more of a buy-side business emerging in Australia and more of a sell-side business emerging here. And Tracey, having run REA, having run REALTOR where it has been key in us understanding the trajectory of the 2.

Yes. And is her position going to be replaced or has Move got the scale that it can just stand on its own?

So we've got -- she's not going to be replaced. I'm going to be responsible for more oversight, but it's oversight of businesses that are much more integrated than they were 2 years ago, really, when Tracey started, what she was doing. And her being able to bring them together in a way where they -- where they're finishing each other's sentences now, which is what you want in a commercial partnership or any relationship. And so the need for someone to drive that conversation in the same way isn't quite fair. And that's a mark of her success and her contribution commercially and culturally.

Yes. So then focusing on Move specifically, obviously, uncertain housing market out here, lots of commentary from some of the competitors around the outlook. Just how do you think about that business' scope to keep growing its yields, expanding the adjacent revenue streams is about -- be able to offset some of the weaker housing environment that's coming through?

Obviously, we're subject to the prevailing winds of vicissitudes of the macroeconomy, and the sort of 30-year mortgage rate today is a smidgen above 6%, so -- 6.01% is the average. So that's double what it was at the start of the year. That has an impact, although you can still get adjustable rate. You can just start for a few years at a much lower rate. The -- what -- some of what's going on is very positive for the market. Some of it's questionable and some of it's unquestionably negative. And so the positive is that you are seeing an abating of these rapid price increases already, and evidence of that is in the significant number of properties on market now that are accepting discounts. I would recommend tracking that number. So there's more affordability there. At the same time, on the more negative side, mortgage rates are slightly higher. The average time on market in August was 5 days longer than a year ago. That's a plus for us because people have to market a property more to get it sold. You wouldn't want it to be 50 days on the market extra. We don't want a property sold after 4 hours. We don't want a property sold after 4 years. Somewhere in between 4 hours and 4 years, there's a happy medium where REALTOR and REA make a maximum return from inventory being turned over. So it really depends on the continuing macro environment. As I said, inflation is not ephemeral, but it's not eternal. And whether or not you still have the ongoing job stability because with the low unemployment rate is a plus for housing because people have certainty. There's more not only job certainty but job mobility. I mean now there's been some announcements from Wall Street in the last 48 hours that may provide at least in some sectors for more uncertainty. But generally, there's a lot of employment demand in the U.S. So these -- it's a mix of factors, which is why I think to take an unusually pessimistic attitude to it is wrong. You can't be Panglossian about it. But at the same time, the smart companies, there are really opportunities. And one of the things I noticed yesterday being with the team at REALTOR was the new products we have coming out will work well in this kind of environment. The user interface is getting better. Our expansion into rentals, it looks clever to me the way they're approaching, if we're not revealing too much detail. So there's sort of things I see them doing and saw them doing yesterday, are precisely the sorts of things you need to be doing at a time like this in the market.

Yes, yes. And you touched on before that the majority of the business has been on the buyer lead side of things, UpNest. I suppose, Move will be more into the sell lead side. Just talk a little bit about UpNest, so how it opens that sell lead opportunity for Move, I suppose how meaningful that can be over time in your view.

Extremely meaningful and extremely lucrative. I mean the pathway of profits is long and lucrative, the digital real estate in this country. Part of it is us proving to realtors the value that we bring. And if you don't do that, why would they pay you? And again, the sort of products I see and saw yesterday coming out of the UpNest acquisition on that sell side are really quite interesting, interesting for people buying a house but particularly interesting for agent. I mean there's real value for the agents in the way that we can bring some sell leads. We can see if somebody might be about to sell a property, and we're spending a lot of time divining digitally through AI the sort of characteristics that are represented in someone contemplating selling a house. And so if you can bring that person to an agent that they want, then you start a partnership that we will benefit from and hopefully, both the agent and the customer benefit as well because you can help offer services that, at the moment, really aren't commercialized in the U.S. market. So early days, but as I say, the sorts of things that the team are doing seem to me to be logical because they provide value for the client and they provide value for the realtor.

Yes. And you said, so it's pathway to profit is long and lucrative in real estate. You guys had a bumper '21, I think reinvested quite a bit in '22. So how do I think about that balance between near-term profitability and long-term growth? I think obviously some headlines out there around potential restructuring at Move or some layoffs. Just how do I think about the backdrop for Move?

Well, yes -- but it is exactly that. It's a balance and with a lot of acquisitions, which we've clearly made. There comes a moment for some consolidation, and there have been layoffs at REALTOR as part of that consolidation. But at the same time, there's a significant amount of investment going on in the core product areas that we've targeted for development. I mean the discipline of a more uncertain market means that other projects that were being looked at, they're not pursuing, which is smart. What are your core objectives? And that was one of the things we went through yesterday in some detail about the areas that are being focused on. And you have to invest because of the scale of opportunity in that sector is enormous. This is the world's largest real estate market. It's still in the early phase of its evolution. It's -- for us not to take advantage of that opportunity is not to bring full value to our investments.

So given that opportunity and scale, I'm not sure if that'll pin you down, but how do I think about the margin profile of Move from where it is today versus something like an REA, how much of that gap we can close at scale?

Yes, I wouldn't necessarily compare REALTOR at this moment to REA. Obviously, if you track REALTOR because they're at different stage of evolution in a different country, in a different macro environment. But the margin has risen rapidly at REALTOR compared to, say, 2 or 3 years ago. And we know that brings with it expectations on margin, which is part of the responsibility of the team to be cognizant of. At the same time, at certain moments, it may make sense to do more in marketing. It may make sense to focus a bit of extra investment in this or that sector. I don't want to give it away to help competitors. And that's what they're doing. But that's very variable in a sense. If we wanted to run it just for profit at the moment, it would be significantly more profitable than it is. But that would be denying us the opportunity for long-term sustainable profit growth that will bring real benefits to investors.

Yes. So just on to Dow Jones, a record year in 2022. As we touched on, the earnings base is increasingly diversified. Let's talk about where you see that business evolving 3, 5 years' time. I know we had the Investor Day back a few years and set out some targets. But so how do you think about Dow Jones post OPIS, and what it can become over time?

Yes. Well, I think we probably -- the team and -- Almar and the team and his predecessors have probably exceeded those expectations, actually, when you look at the continued profit growth and you compare what's happened at Dow Jones to other media companies. So what we're seeing is, I think the digital subs at WSJ were up 13%. Last year, it's -- Barron's up 18%. And you're seeing what we call the final approach, which is that people are coming into an audience, joining an audience -- a digital audience at Dow Jones, which is just above 100 million -- sorry, depending on the month but around about 100 million or so. And then you've got MarketWatch. You've got Wall Street Journal. You've got IBD. You've got Barron's, and then you've got the specialist products, whether it's risk and compliance, which was up 18% last year. You've got base chemicals, OPIS. And you can spin products out. Some of it's very specialist, and some of it's less specialist. Some of it's of value to someone who may not be particularly in the chemicals industry but is looking for intel or analysis. And so we think a very -- bundling is very different to, say, for example, the manner in which the New York Times use it, which is recipes and sport, hard to bundle. Puzzles and left wing political opinions were hard to bundle. I mean maybe that's a puzzle in and of itself. But they -- so horizontal bundling is much harder than vertical bundling. So we're vertical bundling, not horizontal. It's a completely different model. And I think we're seeing the benefits of that, and we'll see the benefits of that over time.

Do you think that the mix of specialists versus less specialist products is right where the business stands today? And is that something that needs to be addressed, I suppose, inorganically? Or can you grow the specialist products organically over time?

Well, we've made a couple of big acquisitions. The onus now on Almar and the team is to make the most of them. And we've seen already -- I mean you can see in the Q4 numbers that integration is far from over, but the early signs are positive. And it -- look, it's -- those were great assets acquired at reasonable prices, which wasn't characteristic of the market at that time. And so there are other great assets that can be acquired at reasonable prices without being specific. We would be interested, one. And two, we have the resource. And three, we have a team that is very conscious of the responsibilities of consolidation.

Yes. Yes. And in terms of, I suppose, the digital subs at WSJ, Barron's, I mean how do I think about where the incremental opportunity is to grow that base? And how I think about, say, promotional pricing or other strategies to grow the digital subs?

Yes. You have to be very careful with -- some promotional pricing schemes are essentially subscription churn schemes. So the right price for the right demographic, which is why that market watch audience is so important and other free content that we have, where people are reading news that has a focus or a flare of business, economics, tech, the sort of areas where premium pricing is more viable. And even on -- for example, on the REALTOR side, where we have -- and we're talking to the content team yesterday. We have some great content around macro pressures on interest rates, housing prices, the 100 best places to live, all that sort of stuff that's relevant for somebody focused on property. And there are indicators we're finding in that audience of people potentially able to pay and willing to pay for business news. And the other area where we're looking across -- we're creating what we call the super segments, both for advertising and subscription fishing is the New York Post business section, which is free. But anyone who reads that on a regular basis is a potential Wall Street Journal subscriber. And that's where the cooperation and the communication within the company, which was -- as you know, because we spoke about this in the past, has been an absolute priority for me that the people learn how to talk to each other. Sometimes one of the ironies of the communications industry, and we're sort of in the communications industry, is that people don't communicate with each other very much and so making that an obligation. And then once people start those conversations, they see the benefit of them. And the folks at REALTOR are talking regularly to the people at the New York Post now and MarketWatch and REALTOR. And so that gives us an opportunity to harvest readers internally without spending a lot of money on churn creation schemes.

Yes. Yes. And then I suppose the Post was back in profit for the first time.

Back in profit.

Back in profit.

For the first time since Alexander Hamilton.

But if I think about the earnings profile for Dow Jones from here, do you think there's scope to keep driving performance of each of the businesses? Or is the margin more a function of OPIS outperforming some of the other segments and sort of a blended margin grinding higher?

Each of the businesses, absolutely. And in a way, the New York Post is an interesting example, where it's a fascinating mix of news content. But it did make a profit. We put prices up on print. We doubled the print price, which makes the relative subscription discount a little higher, but still, the subscription price is up. And when you look at what Sean and Keith -- Sean, who's the business manager; and Keith, the editor, have done at the Post, it's 185 million monthly uniques. It's a phenomenon. The Sun globally now is around 165 million monthly uniques. And so these are big audiences. And Rebekah and her team in the U.K. and Michael Miller and the team in Australia, one, they're experimenting themselves. And two, they are having these conversations about what works and doesn't work in contemporary media. And that's why, in some ways, the Post is also an example for the Wall Street Journal. When do you get -- when do you change print pricing? Because there are some people who pay anything for print. Henry Kravis can afford to pay $10 for the New York Post if he wants to. I mean there are -- so you're starting to get that self-selecting point where those who are true print readers will pay a premium. Meanwhile, you'll be able to leverage a digital audience in a slightly different way.

Yes. Yes. News media and a big earnings contributor in '22. But as you touched on -- so some of the initiatives in the U.K., some of the investment that's coming back in the U.K. and radio, TV, it would be interesting from a longer-term opportunity. I mean how do I think about that business in terms of, clearly, you're not just running it for cash given these investments that are being made? But is the core -- like should we be thinking about that business continuing to scale from here? I mean I suppose there's just been a bit of a mixed track record on some of the investments in the past. We're now going into TV and radio. The confidence to make those investments, just willing -- interested if you could talk about that.

Well, the increase in TV investment will be incremental, not fundamental firstly. We should be clear about that. The radio is growing in profitability. So it's of a different order at this moment. But when you're investing in something like TV, in an age when we know video is more important, us increasing the quality of the video that we do produce and distribute is really important. And so your -- the skills -- first of all, there's a fair amount of distributed cost from the U.K. TV project around the world, in Australia, obviously, here [ to set ] at Fox, with the New York Post. But there's also a fair amount of distributed understanding and a fair amount of distributed learnings because we are obviously slicing and dicing the video in a way that makes it repurposable and an extra source of revenue. So calculating the precise cost of the U.K. TV project is that can be rather crude. But what we can see are the precise benefits culturally and commercially for the company being more astute in the way that we do video because we -- if you asked a group of print journalists to learn very quickly how to do video, it doesn't quite work, right? They just don't have the innate [ now ]. But going from TV back into video and populating that expertise around the company is something that we're already seeing in the virtue of.

Yes, yes. And Book Publishing, you said at the full year results, consumer spending is still above pre-COVID levels in that segment. Does that mean that, I suppose, the business is still over-earning from a revenue perspective? Or do you think -- I mean this is just a new normal for books and we should be thinking about it. Depending on what the front list, backlist does going forward, you'll be hopefully growing from here.

Yes. I would think the latter in that book reading you have is habitual. There were certainly habits formed during the pandemic. People did read more. And that said, we are seeing -- as I said, the warehouse changes will make a bit of a difference in the first quarter. But that doesn't take away from the inclination of an individual woman or man to buy a book. Then the onus is on us to make sure that we have books that people want to read and pay for but also to continue to understand how the audio book market is evolving because it's been, the last couple of years, by far, the fastest-growing part of digital. E-books have never -- we were all expecting 6 or 7 years ago that e-books would be, say, 40% of the reading market by now. It's down to, I think, around 16%, 17%. I think digital net-net is around 24%, including audio. So it's -- habits are changing. Habits are forming. We have to understand those habits in a way that's empathetic, and the other element of empathy is in finding books that either people want to listen to or they want to watch or they want to read.

So given the initial comments around that onetime reset from Amazon, I mean, how do I think about the margins in books should have the HMH synergies coming through, scale, digital driving margin offset by some of these supply chain issues, Amazon, as you called out? I mean just interested if you could talk about that, how big an impact that Amazon reset could be for the business.

Well, I think there'll be more information and it won't -- obviously it won't just be HarperCollins. This is an industry-wide phenomenon over a short period as they recalibrate. So longer-term impact on margin compared -- that won't make a difference. And the book business will be back to its old [ billion ] self within a couple of months, I presume.

Yes, yes. Just a couple of minutes before time. Might finish on everyone's favorite topic in terms of capital allocation. You guys obviously have the buyback underway. But we do see, I suppose, constant press around assets you may be interested in wagering in Australia, assets you may be looking to exit that come up from time to time. Just remind us of your capital allocation framework, how you're thinking about the priorities for the business, particularly when the current buyback is completed. And I know we touched on a few topics sort of through the Q&A.

Yes, wagering in Australia is [ minuscule ] and we're not the main driver of that. That's more a partnership than an investment. Look, it is -- you can see with the dividend, with the buyback, which you can check because of Australian disclosure regulations precisely how much we're buying back. You can see how consistent we have been. And that's because we realize that there should be a return of capital to investors. Look, obviously, share markets are volatile now. So are you getting full value from that buyback that you can argue that endlessly? But we created a provision, and we're living up to the spirit of that provision. And then when you examine more generally where we were with cash generation, say, 4 years ago to now, it's doubled really in real terms. And I think it has surprised people on the upside. But what does that tell you? First of all, the people are very cost conscious; secondly, that these businesses are doing significantly better than is generally appreciated. And then the combination does give us the optionality to be opportunistic. And so again, I wouldn't be specific. If I'm specific, I'll just put the price of something up. But without being specific, and I think you're seeing either about object or timing, I think instinct will tell most people in this room that there are going to be opportunity -- interesting opportunities as companies, which haven't been well run, come under increasing pressure. And then what does that mean for us in terms -- if it fits the profile of something that's core to our objectives, it's not some -- not trying to justify something as an adjacency when it's a far-flung suburb. It's real adjacencies, a real core competence and is a wise use of shareholders' money. But we have that optionality now in a way that, a few years ago, we didn't.

Perfect. Well, Robert, I really appreciate your time this morning. Look forward to speaking again in November.

Cheers. Take care. Thank you.