Key questions and answers from the third quarter fiscal 2008 earnings call conducted by The Knot Inc. on November 6, 2008.

Jeetil Patel (Deutsche Bank Securities): On the registry side, what are your retail customers or partners doing in terms of spending activity to potentially drive the registry business?

David Liu: We have seen some pullback and some of the advertisers and retail partners are really re-examining their fourth quarter spend. Some of them have really pushed their commitments. Interestingly enough, we are actually seeing a decent amount of demand for 2009 media inventory. We continue to receive a large volume in response to our large volume of RFPs. Thus on the one hand, while I think they are pulling back a log of their marketing for their general merchandise sales, for bridal we seem to be still weathering the storm well in context.

Jeetil Patel (Deutsche Bank Securities): As it relates to visibility on the national ad front, things are changed but what percentage of the quarter is booked at this point in the quarter especially in light of October which seems to have been generally weak?

John P. Mueller: We basically have a pipeline in advertising revenues probably $1 million or $2 million which represents maybe 15% that we don’t have booked at this point. Thus 85% of it is locked in.

Jeetil Patel (Deutsche Bank Securities): As it relates to the local side of the business, you’re looking at variable pricing models. How many different pricing buckets or pricing schemes have you come up with at this point as you go to market?

David Liu: The test on both the high and the low end has been very encouraging. However, keep in mind the challenge that we’re still working with in the old system is that when you implement this one price strategy, it is universal for all categories in all markets. The reality is there is a significant difference between the geographies and between categories.
Thus we really have looked at the local transition to being from right now a matrix of six prices given their (a), (b), (c) territories and core and non-core categories to an enormous number. When you think about how Yellow Pages slices and dices pricing by category and by market, we are looking to emulate a pricing model and a rate card that has that level of complexity.

Richard Ingrassia (Roth Capital Partners LLC): You were able to get more than a week’s commitment out of your premium unit trials let alone three months. Can you speak about the trend in average spend and length of commitment in your legacy ad units?

David Liu: On the local side we’re rigid so the commitments are minimally six months. The way most of our programs work is they’re much long term. We won’t really give people the opportunity to get in and out very quickly. If you cancel within the first six months, you still pay us for the six month exposure so you’re dis-incentivized to do that.
The lesson learned here is that we’ve always suspected that we were driving tremendous value to many of our advertisers and particularly the high value categories. Certainly the high price that we’ve been able to charge for the premium product is something that we’re looking to explore ways of creating more premium inventory on our site.

Richard Ingrassia (Roth Capital Partners LLC): Do you feel that you’re leaving any local commitments on the table by enforcing that six month commitment?

David Liu: I don’t think so. The question really becomes how precise can we get with our pricing strategy. When you think about the secondary category that we identified in the September test was really looking at the categories that were underpenetrated with the assumption that our pricing was a little too high for them. Thus introducing the $50 price point has clearly dramatically introduced and shown the demand and pent-up demand for the media.
When we started allowing for variable pricing across every single category in every market so that a caterer in New York is paying a very different rate from a caterer in Kansas City and the ice sculptors to tent rental people all have a very customized price point, we’ll be able to recapture a lot of the revenue that we’re currently not able to harvest because of the rudimentary price structures we have.

Richard Ingrassia (Roth Capital Partners LLC): The impact of the retail environment on the registry business is obviously easy to see but how do you assess your position competitively? How did your strategy in the segment change as retailers get smarter online and increasingly develop in-house registry capabilities?

David Liu: We think we’re actually working in concert with the retailers and so our goal is to drive business to them, whether it’s through registry creation, by marketing their registries on our site or through the search and purchase tool that we have. We do have a patent on this tool so nobody else can actually offer a multiple registry search tool and that is something that we’re looking to leverage and distribute more aggressively.
The challenge of the registry industry is that it is a constant state of flux and as consumers are availing themselves to more choices of both products and retailers, we have to respond by expanding our networks. One of the bigger focuses for us going into the next couple of years is to really dramatically increase the number of retailers who are able to search and incorporate into the wedding channel systems.

Meggan Friedman (William Blair & Company, LLC): Can you talk about some of the national advertisers who cancelled or delayed their plans with you in terms of the industries they represented? Were they endemic non-endemic?

David Liu: It really ran the full gamut, everything from consumer packaged goods, beauty, retail, financial services; it was broad in its scope of categories. A percentage of them have pushed in to the 2009 schedule and it’s indicative of marketers recalibrating their plans to try to maximize every dollar that they’re spending. We still believe that we’re well positioned because being online and being measurable and also addressing an audience that has such a high propensity to spend in categories.
We actually think that in industries and categories where we were originally considered too small we’ve actually become more relevant because of the high purchase intention.

Meggan Friedman (William Blair & Company, LLC): Have you had conversations with some of your national advertisers and local vendors about their budgets for 2009?

David Liu: It is ongoing discussions. What is surprising is the sheer volume of RPs that we continue to respond to and that’s a positive. However, we are very cautious with what we think is going to happen in the next six months.

Meggan Friedman (William Blair & Company, LLC): Can you talk about the phasing over the course of the quarter for national ad revenue/cancellations and delays, local vendor additions and attritions and the publishing side?

John P. Mueller: We’ll still see strong growth in the fourth quarter compared to fourth quarter in 2007 on both the national and the local side. Probably national actually growing a little bit more strongly than local. With respect to the other areas, registry will probably be flat to down a little bit primarily as it relates to the general economic conditions offset by the weddings supplies business which will probably be up 4% or 5%.
Our publishing and other, most of our local books come out in the fourth quarter and you’re going to see the impact in decline in print advertising there and that will probably be down 10% or 11%. However, all in all over fourth quarter of 2007 we’re going to be up but it’s not going to be a huge up.

George Askew (Stifel Nicolaus & Company, Inc.): How did you achieve your sequential $1 million cost cut in the third quarter? You suggested that some of the cost cuts are permanent, can you provide detail?