Conde Nast Woes, An Opportunity For The Knot? (KNOT)

The Knot, Inc. (NASDAQ: KNOT) may just have become an indirect beneficiary of the old print media world dying one publication at a time.  The Wall Street Journal and CNBC have reported that Conde Nast is closing four magazines, two of which are Elegant Bride and Modern Bride.  While this highlights problems in the wedding sector, it actually opens up more possibilities for The Knot’s key bridal and wedding website called TheKnot.com and for the twice-per-year THE KNOT Magazine which sells for $9.95.  This highlights that weddings are not recession-proof.

Conde Naste does run Brides.com, and the sites for Elegant Bride and Modern Bride which both go that Brides.com destination.  Some of the Knot’s websites TheNest.com and theBump.com and other operations include Weddingbook, Mommyhood, BreastFeeding.com. LilaGuide.com, PartySpot.com, WeddingTracker.com, WeddingChannel.com, myDIYweddingday.com, CelebrityWeddingBuzz.com, Weddings.com, ChineseWeddingsByTheKnot.com, BeachWeddingsByTheKnot.com, and DestinationWeddingsByTheKnot.com.

Quantcast has estimates, that could be off, that Brides.com has fallen from over 640,000 users to under 400,000 users in the last six months.  But Quantcast also estimated — again that could be off — that TheKnot.com has risen from under 1.2 million monthly users to almost 1.5 million in the same period.  Alexa ranks Brides.com as being 3,773 by traffic ranking in the United States, while it ranks TheKnot.com as #941.

Shares of The Knot are up 2.3% at $10.89, and its 52-week trading range is $5.35 to $11.42.  With a $367 million market cap, as of the end of June The Knot had only $30 million in total liabilities and almost $115 million in cash and investments. Thomson Reuters expects that it will generate $107 million in 2009 revenues and $114 million in 2010 revenues.  The problem is that profits are still running very thin on expectations, so it appears to be extremely expensive on a forward earnings multiple analysis.  We will be checking into whether or not there are cross revenues here, but TheKnot.com likely just picked up an opportunity to gain more advertisers or a higher premium as the recovery takes shape.

The estimates vary wildly from source to source over the translation of online advertising revenues versus old world media revenues in print, radio, and TV.  Some have said that an old world ad spending $1.00 is worth $0.10 and some have noted far less than that.

JON C. OGG