# UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

# FORM 10-Q

|[X] | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

# For the quarterly
period ended: March 28, 2004

or

|[_] | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

| | For
the transition period from ________________ to _______________ Commission File Number: 1-31805
| | --------------------------------------------------------------------------------------------------

|JOURNAL COMMUNICATIONS, INC.                          
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)

|WISCONSIN                                     | 20-0020198                          
|--------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation | (I.R.S. Employer Identification No.)
|or organization)                             
|333 W. State Street, Milwaukee, Wisconsin     | 53203                               
|(Address of principal executive offices)      | (Zip Code)                          

|414-224-2616                                      
|--------------------------------------------------
|Registrant's telephone number, including area code

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

# Yes  X   No  ___

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)

# Yes  ___    No X

Number of shares outstanding of each
of the issuers classes of common stock as of April 21, 2004 (excluding 4,338,352 and
4,338,353 shares of class B-1 and B-2 common stock, respectively, held by our subsidiary,
The Journal Company):

|Class                  | Outstanding at April 21, 2004
|---------------------- | -----------------------------
|Class A Common Stock   | 20,198,142                   
|Class B-1 Common Stock | 14,968,817                   
|Class B-2 Common Stock | 38,297,924                   
|Class C Common Stock   | 3,264,000                    

---

# JOURNAL
COMMUNICATIONS, INC.

# INDEX

|         |                                                                       
|-------- | ----------------------------------------------------------------------
|Part I   | Financial Information                                                 
|         | Item 1.  Financial Statements                                         
|         | Consolidated Condensed Balance Sheets as of                           
|         | March 28, 2004 (Unaudited) and December 31, 2003                      
|         | Unaudited Consolidated Condensed Statements of Earnings               
|         | for the First Quarter Ended March 28, 2004 and March 30, 2003         
|         | Unaudited Consolidated Condensed Statement of                         
|         | Shareholders' Equity for the Quarter Ended                            
|         | March 28, 2004                                                        
|         | Unaudited Consolidated Condensed Statements of                        
|         | Cash Flows for the First Quarter Ended March 28, 2004                 
|         | and March 30, 2003                                                    
|         | Notes to Unaudited Consolidated Condensed                             
|         | Financial Statements as of March 28, 2004                             
|         | Item 2. Management's Discussion and Analysis of Financial Condition   
|         | and Results of Operations                                             
|         | Item 3. Quantitative and Qualitative Disclosure of Market Risk        
|         | Item 4. Controls and Procedures                                       
|Part II. | Other Information                                                     
|         | Item 1. Legal Proceedings                                             
|         | Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of
|         | Equity Securities                                                     
|         | Item 3. Defaults Upon Senior Securities                               
|         | Item 4. Submission of Matters to a Vote of Security Holders           
|         | Item 5. Other Information                                             
|         | Item 6. Exhibits and Reports on Form 8-K                              

1

---

# PART I.  FINANCIAL
INFORMATION

# ITEM 1.  FINANCIAL
STATEMENTS

JOURNAL COMMUNICATIONS,
INC. Consolidated Condensed Balance Sheets(in thousands, except share and per share
amounts)

|                                                                    
|--------------------------------------------------------------------
|(unaudited)                                                         
|ASSETS                                                              
|Current assets:                                                     
|Cash and cash equivalents                                           
|Receivables, less allowance for doubtful accounts                   
|of $7,608 and $6,836                                                
|Inventories                                                         
|Prepaid expenses                                                    
|Deferred income taxes                                               
|                                                                    
|TOTAL CURRENT ASSETS                                                
|Property and equipment, at cost, less accumulated depreciation      
|of $341,808 and $331,658                                            
|Goodwill                                                            
|Broadcast licenses                                                  
|Other intangible assets, net                                        
|Prepaid pension costs                                               
|Other assets                                                        
|                                                                    
|TOTAL ASSETS                                                        
|                                                                    
|LIABILITIES AND SHAREHOLDERS' EQUITY                                
|Current liabilities:                                                
|Accounts payable                                                    
|Accrued compensation                                                
|Deferred revenue                                                    
|Accrued employee benefits                                           
|Other current liabilities                                           
|Current portion of long-term liabilities                            
|                                                                    
|TOTAL CURRENT LIABILITIES                                           
|Accrued employee benefits                                           
|Long-term notes payable to banks                                    
|Deferred income taxes                                               
|Other long-term liabilities                                         
|Shareholders' equity:                                               
|Preferred stock, $0.01 par - authorized 10,000,000 shares; no shares
|outstanding at March 28, 2004 and at December 31, 2003              
|Common stock, $0.01 par:                                            
|Class C - authorized 10,000,000 shares; issued and outstanding:     
|3,264,000 shares at March 28, 2004 and December 31, 2003            
|Class B-2 - authorized 60,000,000 shares; issued and outstanding:   
|38,297,924 shares at March 28, 2004 and 38,301,224                  
|shares at December 31, 2003                                         
|Class B-1 - authorized 60,000,000 shares; issued and outstanding:   
|14,968,817 shares at March 28, 2004 and 14,972,117                  
|shares at December 31, 2003                                         
|Class A - authorized 170,000,000 shares; issued and outstanding:    
|20,198,142 shares at March 28, 2004 and 20,191,542                  
|shares at December 31, 2003                                         
|Additional paid-in capital                                          
|Unearned compensation                                               
|Retained earnings                                                   
|Treasury stock, at cost                                             
|                                                                    
|TOTAL SHAREHOLDERS' EQUITY                                          
|                                                                    
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                          
|                                                                    

Note: The balance sheet at December
31, 2003 has been derived from the audited financial statements at that date, but does not
include all the information and footnotes required by generally accepted accounting
principles in the United States for complete financial statements.

See accompanying notes
to unaudited consolidated condensed financial statements.

2

---

JOURNAL COMMUNICATIONS,
INC. Unaudited Consolidated Condensed Statements of Earnings(in thousands, except per
share amounts)

|                                                           
|-----------------------------------------------------------
|March 28, 2004                                             
|Operating revenue:                                         
|Publishing                                                 
|Broadcasting                                               
|Telecommunications                                         
|Printing services                                          
|Other                                                      
|                                                           
|Total operating revenue                                    
|Operating costs and expenses:                              
|Publishing                                                 
|Broadcasting                                               
|Telecommunications                                         
|Printing services                                          
|Other                                                      
|                                                           
|Total operating costs and expenses                         
|Selling and administrative expenses                        
|                                                           
|Total operating costs and expenses and selling             
|and administrative expenses                                
|Operating earnings                                         
|Other income and expense:                                  
|Interest income and dividends                              
|Interest expense, net                                      
|                                                           
|Total other income and expense                             
|                                                           
|Earnings before income taxes                               
|Provision for income taxes                                 
|                                                           
|Net earnings                                               
|                                                           
|Net earnings available to class A and B common shareholders
|                                                           
|Earnings per share:                                        
|Basic                                                      
|                                                           
|Diluted                                                    
|                                                           

See accompanying notes
to unaudited consolidated condensed financial statements.

3

---

Journal Communications,
Inc.           Unaudited Consolidated Condensed Statement of Shareholders' Equity    For the Quarter ended
March 28, 2004    (dollars in thousands, except per share amounts)

|                                            | Common Stock | 
|------------------------------------------- | ------------ | 
|
|Balance at December 31, 2003                |              | 
|Net earnings and other comprehensive income |              | 
|                                            |              | 
|Dividends declared:                         |              | 
|Class C ($0.142 per share)                  |              | 
|Class B ($0.065 per share)                  |              | 
|Class A ($0.065 per share)                  |              | 
|Issuance of shares:                         |              | 
|Conversion of class B to                    |              | 
|class A                                     |              | 
|Amortization of unearned compensation       |              | 
|                                            |              | 
|Balance at March 28, 2004                   |              | 
|                                            |              | 

See accompanying notes
to unaudited consolidated financial statements.

4

---

JOURNAL COMMUNICATIONS,
INC. Unaudited Consolidated Condensed Statements of Cash Flows(in thousands)

|                                                
|------------------------------------------------
|March 28, 2004                                  
|Cash flow from operating activities:            
|Net earnings                                    
|Adjustments for non-cash items:                 
|Depreciation                                    
|Amortization                                    
|Provision for doubtful accounts                 
|Deferred income taxes                           
|Net loss from disposal of assets                
|Net changes in operating assets and liabilities:
|Receivables                                     
|Inventories                                     
|Accounts payable                                
|Other assets and liabilities                    
|                                                
|NET CASH PROVIDED BY OPERATING ACTIVITIES       
|Cash flow from investing activities:            
|Capital expenditures for property and equipment 
|Proceeds from sales of assets                   
|Other, net                                      
|                                                
|NET CASH USED FOR INVESTING ACTIVITIES          
|Cash flow from financing activities:            
|Net decrease in notes payable to banks          
|Proceeds from long-term notes payable to banks  
|Payments of long-term notes payable to banks    
|Cash dividends                                  
|                                                
|NET CASH USED FOR FINANCING                     
|ACTIVITIES                                      
|                                                
|NET DECREASE IN CASH AND CASH EQUIVALENTS       
|Cash and cash equivalents:                      
|Beginning of year                               
|                                                
|At March 28, 2004 and March 30, 2003            
|                                                

See accompanying notes
to unaudited consolidated condensed financial statements.

5

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JOURNAL COMMUNICATIONS,
INC.  Notes to Unaudited Consolidated Condensed Financial Statements(in thousands, except
per share amounts)

|1 | BASIS
OF PRESENTATION
|- | ---------------------

| | The
accompanying unaudited consolidated condensed financial statements have been prepared by
Journal Communications, Inc. and its wholly owned subsidiaries in accordance with
accounting principles generally accepted in the United States for interim financial
information and pursuant to the rules and regulations of the Securities and Exchange
Commission and reflect normal and recurring adjustments, which we believe to be necessary
for a fair presentation. As permitted by these regulations, these statements do not
include all of the information and footnotes required by accounting principles generally
accepted in the United States for annual financial statements. However, we believe that
the disclosures are adequate to make the information presented not misleading. The
operating results for the first quarter ended March 28, 2004 are not necessarily
indicative of the results that may be expected for the fiscal year ending December 26, 2004. You
should read these unaudited consolidated condensed financial statements in conjunction
with the consolidated financial statements and the notes thereto included in our Annual
Report on Form 10-K for the year ended December 31, 2003.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | ACCOUNTING
PERIODS
|- | ------------------

| | As
of January 1, 2004, we adopted a 52-53 week fiscal year ending on the last Sunday of
December in each year. In addition, we have four quarterly reporting periods, each
consisting of 13 weeks and ending on a Sunday, provided that once every six years,
starting in 2006, the fourth quarterly reporting period will be 14 weeks.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Prior
to fiscal 2004, we divided our calendar year into 13 four-week accounting periods, except
that the first and thirteenth periods were longer or shorter to the extent necessary to
make each accounting year end on December 31 and we followed a practice of reporting our
quarterly financial statements at the end of the third accounting period (the first
quarter), at the end of the sixth accounting period (the second quarter), and at the end
of the tenth accounting period (the third quarter). The results of the first quarter of
2003 have been presented on a basis which conforms to the quarterly reporting of
operating results adopted effective January 1, 2004.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 | EARNINGS
PER SHARE
|- | ------------------

| | Basic
earnings per share are computed by dividing net earnings available to class A and B
common shareholders by the weighted average number of class A and B shares outstanding
during the period. Diluted earnings per share are computed based upon the assumption that
the class C shares outstanding were converted into class A and B shares. Certain of our
non-statutory stock options granted to outside directors and employees are currently
anti-dilutive and were not included. Certain of our non-statutory stock options granted
to outside directors and employees are currently dilutive, however, the impact on
earnings per share is immaterial and is not presented below. In the first quarter of
2003, basic and diluted earnings were the same because there were no dilutive securities.
The term share includes both shares and units of beneficial interest
outstanding.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Basic
and diluted earnings per share are computed as follows:
| | -------------------------------------------------------------

|                                                                
|----------------------------------------------------------------
|Basic earnings:                                                 
|Net earnings                                                    
|Less dividends on class C common stock                          
|                                                                
|Net earnings available to class A and B common shareholders     
|                                                                
|Weighted average class A and B shares outstanding               
|Basic earnings per share                                        
|                                                                
|Diluted earnings:                                               
|Net earnings available to class A and B common shareholders     
|Plus dividends on class C common stock                          
|                                                                
|Net earnings                                                    
|                                                                
|Weighted average shares outstanding                             
|Incremental class A and B shares for assumed conversion of class
|C shares                                                        
|                                                                
|Adjusted weighted average shares outstanding                    
|                                                                
|Diluted earnings per share                                      
|                                                                

6

---

JOURNAL COMMUNICATIONS,
INC. Notes to Unaudited Consolidated Condensed Financial Statements(in thousands, except
per share amounts)

|3 | EARNINGS
PER SHARE, continued
|- | -----------------------------

| | Each
of the 3,264 class C shares outstanding, which are held by the Grant family shareholders,
is convertible at any time at the option of the holder into either (i) 1.363970 class A
shares (or a total of 4,452 class A shares) or (ii) 0.248243 class A shares (or a total
of 810 class A shares) and 1.115727 class B shares (or a total of 3,642 class B shares).
Pursuant to our articles of incorporation, each class of common stock has equal rights
with respect to cash dividends, except that dividends on class C shares are cumulative
and will not be less than $0.57 per year or $0.142 per quarter.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | STOCK-BASED
COMPENSATION
|- | ------------------------

| | We
account for stock-based compensation by using the intrinsic value-based method in
accordance with Accounting Principles Board Opinion (APB) No. 25, Accounting for
Stock Issued to Employees. Under APB No. 25, we do not recognize compensation
expense for our stock options because the exercise price equals the market price of the
underlying stock on the grant date. We recognize compensation expense related to
restricted stock grants over the vesting period. As permitted, we have elected to adopt
the disclosure only provisions of Statement No. 123, Accounting for Stock-Based
Compensation and Statement No. 148, Accounting for Stock-Based Compensation
 Transition and Disclosure  an Amendment of FASB Statement No. 123.Statement
No. 123, as amended by Statement No. 148, establishes a fair value-based method of
accounting for employee stock-based compensation plans and encourages companies to adopt
that method. However, it also allows companies to continue to apply the intrinsic
value-based method currently prescribed under APB No. 25. We have chosen to continue to
report stock-based compensation in accordance with APB No. 25, and provide the following
pro forma disclosure of the effects of applying the fair value method to all applicable
awards granted. The following table illustrates the effect on net earnings and net
earnings per share if we had applied the fair value recognition provisions of Statement
No. 123:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                    
|--------------------------------------------------------------------
|Net earnings as reported                                            
|Add compensation cost of restricted stock grants, net of related tax
|effects, included in the determination of net earnings as reported  
|Deduct stock based compensation determined under fair value-        
|based method, net of related tax effects:                           
|Stock options                                                       
|Restricted stock grants                                             
|                                                                    
|Pro forma net earnings                                              
|                                                                    
|Net earnings per share of common stock:                             
|Basic earnings per share:                                           
|As reported                                                         
|                                                                    
|Pro forma                                                           
|                                                                    
|Diluted earnings per share:                                         
|As reported                                                         
|                                                                    
|Pro forma                                                           
|                                                                    

|5 | INVENTORIES
|- | -----------

| | Inventories
are stated at the lower of cost (first in, first out method) or market. Inventories at
March 28, 2004 and December 31, 2003 consisted of the following:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         
|-------------------------
|Paper and supplies       
|Work in process          
|Finished goods           
|Less obsolescence reserve
|                         
|Inventories              
|                         

7

---

JOURNAL COMMUNICATIONS,
INC. Notes to Unaudited Consolidated Condensed Financial Statements(in thousands, except
per share amounts)

|6 | NOTES
PAYABLE TO BANKS
|- | ----------------------

| | We
have a $350 million unsecured revolving credit facility expiring on September 4, 2008.
The interest rate on borrowings are either LIBOR plus a margin that ranges from 87.5
basis points to 150 basis points, depending on our leverage, or the Base Rate, which
equals the higher of the prime rate set by U.S. Bank, N.A. or the Federal Funds Rate plus
one percent per annum. As of March 28, 2004 we had borrowings of $56,300 under the
facility at the weighted average interest rate of 2.01%. Fees of $1,959 in connection
with the facility are being amortized over the term of the facility using the
straight-line method which approximates the effective-interest method.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7 | EMPLOYEE
BENEFIT PLANS
|- | ----------------------

| | In
accordance with the provisions of FASB Staff Position 106-1, we elected to defer
accounting for the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act) pending guidance to be issued by the FASB during 2004. The Act is expected to
reduce our postretirement benefit obligation by approximately $5,100.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
components of our net periodic benefit costs for our defined benefit and non-qualified
pension plans and our postretirement health benefit plan are as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                               
|---------------------------------------------------------------
|March 28, 2004                                                 
|Service cost                                                   
|Interest cost                                                  
|Expected return on plan assets                                 
|Amortization of:                                               
|Unrecognized prior service cost                                
|Unrecognized net transition obligation                         
|Unrecognized net loss                                          
|                                                               
|Net periodic benefit cost included in total operating costs and
|expenses and selling and administrative expenses               
|                                                               
|Other Postretirement Benefits                                  
|March 28, 2004                                                 
|Service cost                                                   
|Interest cost                                                  
|Amortization of:                                               
|Unrecognized net transition obligation                         
|Unrecognized net loss                                          
|                                                               
|Net periodic benefit cost included in total operating costs and
|expenses and selling and administrative expenses               
|                                                               

|8 | GOODWILL
AND OTHER INTANGIBLE ASSETS
|- | ------------------------------------

| | Definite-lived
Intangibles
| | --------------------------

| | Our
definite-lived intangible assets consist primarily of network affiliation agreements,
customer lists and non-compete agreements. We amortize the network affiliation agreements
over a period of 25 years, the customer lists over a period of 5 to 40 years and the
non-compete agreements over the terms of the contracts.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Amortization
expense was $491 for the first quarter ended March 28, 2004. Estimated amortization
expense for our next five fiscal years is $1,336 for 2004, $763 for 2005, $748 for 2006,
$710 for 2007 and $662 for 2008.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

---

JOURNAL COMMUNICATIONS,
INC. Notes to Unaudited Consolidated Condensed Financial Statements(in thousands, except
per share amounts)

|8 | GOODWILL
AND OTHER INTANGIBLE ASSETS, continued
|- | -----------------------------------------------

| | The
gross carrying amount, accumulated amortization and net carrying amount of the major
classes of definite-lived intangible assets as of March 28, 2004 and December 31, 2003 is
as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              
|------------------------------
|As of March 28, 2004          
|Network affiliation agreements
|Customer lists                
|Non-compete agreements        
|Other                         
|                              
|Total                         
|                              
|December 31, 2003             
|Network affiliation agreements
|Customer lists                
|Non-compete agreements        
|Other                         
|                              
|Total                         
|                              

| | Indefinite-lived
Intangibles
| | ----------------------------

| | Broadcast
licenses are deemed to have indefinite useful lives because we have renewed these
agreements without issue in the past and we intend to renew them indefinitely in the
future. Accordingly, we expect the cash flows from our broadcast licenses to continue
indefinitely. There were no changes to the carrying amount of broadcast licenses in the
first quarter ended March 28, 2004.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Goodwill
| | --------

| | There
were no changes in the carrying amount of goodwill in the first quarter ended March 28,
2004.
| | ---------------------------------------------------------------------------------------------------

|9 | WORKFORCE
REDUCTION AND BUSINESS IMPROVEMENT INITIATIVES
|- | --------------------------------------------------------

| | Activity
associated with our daily newspapers and printing services workforce
reduction and business improvement initiatives during the first quarter ended March 28,
2004 is as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               
|-------------------------------
|Employee severance and benefits
|Facility costs                 
|                               
|                               
|                               

| | The
obligations for our workforce reduction and business improvement initiatives are included
in other current liabilities in the consolidated balance sheets. The remaining costs
associated with these actions are expected to be paid in 2004, except for portions of the
$108 liability representing the remaining operating lease obligation for the closed
CD-ROM mastering and replication facility, expiring in June 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10 | SEGMENT
INFORMATION
|-- | -------------------

| | We
conduct our operations through four reportable segments: publishing, broadcasting,
telecommunications and printing services. In addition, our label printing business, our
direct marketing services business and certain administrative activities are aggregated
and reported as other. All operations primarily conduct their business in the
United States. We publish the Milwaukee Journal Sentinel and more than 90 weekly
shopper and community newspapers in eight states. We also own and operate 38 radio
stations and six television stations in 11 states. Our telecommunications business serves
the wholesale carrier market and also provides integrated data communications solutions
for small and mid size businesses. Our printing services business serves the publishing,
software, entertainment and government markets by providing printing, assembly and
complete fulfillment services.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

---

JOURNAL COMMUNICATIONS,
INC. Notes to Unaudited Consolidated Condensed Financial Statements(in thousands, except
per share amounts)

|10 | SEGMENT
INFORMATION, continued
|-- | ------------------------------

| | The
following tables summarize operating revenue, operating earnings, depreciation and
amortization and capital expenditures for the first quarter ended March 28, 2004 and
March 30, 2003 and identifiable total assets at March 28, 2004 and December 31, 2003:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             
|-----------------------------
|March 28, 2004               
|Operating revenue            
|Publishing                   
|Broadcasting                 
|Telecommunications           
|Printing services            
|Other                        
|                             
|                             
|                             
|Operating earnings           
|Publishing                   
|Broadcasting                 
|Telecommunications           
|Printing services            
|Other                        
|                             
|                             
|                             
|Depreciation and amortization
|Publishing                   
|Broadcasting                 
|Telecommunications           
|Printing services            
|Other                        
|                             
|                             
|                             
|Capital expenditures         
|Publishing                   
|Broadcasting                 
|Telecommunications           
|Printing services            
|Other                        
|                             
|                             
|                             
|                             
|March 28, 2004               
|Audited                      
|Identifiable total assets    
|Publishing                   
|Broadcasting                 
|Telecommunications           
|Printing services            
|Other                        
|                             
|                             
|                             

|11 | SUBSEQUENT
EVENT
|-- | ----------------

| | On
April 28, 2004, we signed an agreement to purchase the business and certain assets of an
NBC affiliate WGBA-TV, in Green Bay, Wisconsin, subject to Federal Communications
Commission approval.  The cash purchase price for the television station is expected to
be approximately $43,250.  We will also assume an existing local marketing agreement
between WGBA-TV and UPN affiliate WACY-TV, Channel 32, which is licensed to serve
Appleton, Wisconsin.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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# JOURNAL
COMMUNICATIONS, INC.

# ITEM 2. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our
financial condition and results of operations should be read together with our unaudited
consolidated condensed financial statements for the first quarter ended March 28, 2004,
including the notes thereto. The results of the first quarter of 2003 have been presented
on a basis which conforms to the quarterly reporting of operating results adopted
effective January 1, 2004.

More information regarding us is
available at our website at www.jc.com. We are not including the information
contained in our website as a part of, or incorporating it by reference into, this
Quarterly Report on Form 10-Q. Our Annual Report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and any amendments to those reports are made available
to the public at no charge, other than a readers own internet access charges,
through a link appearing on our website. We provide access to such material through our
website as soon as reasonably practicable after we electronically file such material with,
or furnish it to, the Securities and Exchange Commission.

# Forward-Looking
Statements

We make certain statements in this
Quarterly Report on Form 10-Q that are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. We intend these
forward-looking statements to be covered by the safe harbor provisions for forward-looking
statements contained in that Act, and we are including this statement for purposes of
those safe harbor provisions. These forward-looking statements generally include all
statements other than statements of historical fact, including statements regarding our
future financial position, business strategy, budgets, projected revenues and expenses,
expected regulatory actions and plans and objectives of management for future operations.
We use words such as may, will, intend,
anticipate, believe, or should and similar expressions
in this Quarterly Report on Form 10-Q to identify forward-looking statements.

These forward-looking statements are
not guarantees of future performance and are subject to risks, uncertainties and other
factors, some of which are beyond our control. These risks, uncertainties and other
factors could cause actual results to differ materially from those expressed or implied by
those forward-looking statements. Among such risks, uncertainties and other factors that
may impact us are the following:

| | changes
in advertising demand;
|- | ------------------------------

| | changes
in newsprint prices and other costs of materials;
|- | ---------------------------------------------------------

| | changes
in federal or state laws and regulations or their interpretations (including changes in
regulations governing the number and types of broadcast and cable system properties,
newspapers and licenses that a person may control in a given market or in total);
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | changes
in legislation or customs relating to the collection, management and aggregation and use
of consumer information through telemarketing and electronic communication efforts;
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | the
availability of quality broadcast programming at competitive prices;
|- | ------------------------------------------------------------------------

| | changes
in network affiliation agreements;
|- | ------------------------------------------

| | quality
and rating of network over-the-air broadcast programs available to our customers;
|- | -----------------------------------------------------------------------------------------

| | effects
of the loss of commercial  inventory resulting from uninterrupted  television news
coverage and potential  advertising      cancellations due to war or terrorist acts;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | effects
of the rapidly changing nature of the publishing, broadcasting, telecommunications, and
printing industries, including general business issues, competitive issues and the
introduction of new technologies;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | effects
of bankruptcies and government investigations on customers for our telecommunications
wholesale services;
|- | -----------------------------------------------------------------------------------------------------------------

| | the
ability of regional telecommunications companies to expand service offerings to include
intra-exchange services;
|- | --------------------------------------------------------------------------------------------------------------------

| | changes
in interest rates;
|- | --------------------------

| | the
outcome of pending or future litigation;
|- | --------------------------------------------

| | energy
costs;
|- | -------------

| | the
availability and effect of acquisitions, investments, and dispositions on our results of
operations or financial condition; and
|- | -----------------------------------------------------------------------------------------------------------------------------------

| | changes
in general economic conditions.
|- | ---------------------------------------

We caution you not to place undue
reliance on these forward-looking statements, which we have made as of the date of this
Quarterly Report on Form 10-Q.

# Overview

Our business segments are based on
the organizational structure used by management for making operating and investment
decisions and for assessing performance. Our reportable business segments are: (i)
publishing; (ii) broadcasting; (iii) telecommunications; (iv) printing services; and (v)
other. Our publishing segment consists of a daily newspaper, the Milwaukee Journal
Sentinel, and more than 90 community newspapers and shoppers. Our broadcasting segment
consists of 38 radio stations and six television stations in 11 states. Our
telecommunications segment consists of wholesale and business-to-business
telecommunications services provided through a high speed fiber optic telecommunications
network that covers more than 4,400 route miles in seven states, of which we operate about
3,800 route miles. Our printing services segment reflects the operations of our printing
and assembly and fulfillment business. Our other segment consists of a label printing
business and a direct marketing services business. Also included in other are corporate
expenses and eliminations.

11

---

Noteworthy this quarter were the
performances of the publishing and broadcasting groups, where operating earnings were up
121% and 70%, respectively. The efficiencies from the daily newspapers new
production facility have materialized as expected, and we are encouraged by first quarter
revenue gains in classified, general and other advertising at our daily newspaper and
classified advertising at our community newspapers and shoppers business. Our television
stations recorded revenue improvement this quarter, due in large part to political and
issue and local advertising. Our overall success at our radio stations was driven by both
gains in local advertising, advertising revenue from our sports broadcasts and cost
controls. Despite continuing pricing pressure and other industry challenges in the first
quarter of 2004, our telecommunications business experienced a smaller decline in revenue
than we had expected. In wholesale telecommunications, service disconnections attributed
to a decrease in revenue, but we are encouraged by continuing revenue growth in commercial
telecommunications services which totaled more than 11% for the first quarter of 2004.
Looking ahead to the second quarter of 2004, we anticipate continued strength in our
publishing and broadcasting businesses and remain focused on pursuing acquisition
opportunities.

# Results of Operations

| | First
Quarter Ended March 28, 2004 compared to First Quarter Ended March 30, 2003
| | ---------------------------------------------------------------------------------

| | Consolidated
| | ------------

Our consolidated operating revenue in
the first quarter of 2004 was $192.7 million, an increase of $2.8 million, or 1.5%,
compared to $189.9 million in the first quarter of 2003. Our consolidated operating costs
and expenses in the first quarter of 2004 were $111.7 million, a decrease of $0.2 million,
or 0.2%, compared to $111.9 million in the first quarter of 2003. Our consolidated selling
and administrative expenses in the first quarter of 2004 were $54.3 million, a decrease of
$2.5 million, or 4.4%, compared to $56.8 million in the first quarter 2003.

The following table presents our
total operating revenue by segment, total operating costs and expenses, selling and
administrative expenses and total operating earnings as a percent of total operating
revenue for the first quarter of 2004 and 2003:

|                                              
|----------------------------------------------
|(dollars in millions)                         
|Operating revenue:                            
|Publishing                                    
|Broadcasting                                  
|Telecommunications                            
|Printing services                             
|Other                                         
|                                              
|Total operating revenue                       
|Total operating costs and expenses            
|Selling and administrative expenses           
|                                              
|Total operating costs and expenses and selling
|and administrative expenses                   
|                                              
|Total operating earnings                      
|                                              

The increase in total operating
revenue was due to an increase in political and issue advertising at our television
stations, increases in local advertising at our radio and television stations, increases
in classified, general and other advertising revenue at our daily newspaper, and an
increase in commercial printing revenue at our publishing businesses. These increases were
partially offset by a decrease in telecommunications revenue due to wholesale customer
disconnections and a decrease in revenue from several computer-related customers in our
printing services business.

The decrease in total operating costs
and expenses was primarily due to the decrease in revenue at our label printing business,
lower operating costs and expenses at our daily newspaper from its transition to the new
production facility in the first quarter of 2003 and cost control initiatives across all
of our businesses. These decreases were partially offset by higher operating costs and
expenses associated with the revenue increases at our direct marketing business and our
commercial telecommunications business.

12

---

The decrease in selling and
administrative expenses was primarily due to payroll savings and an employee benefit
change at our daily newspaper plus cost control initiatives across all of our businesses
offset by a corporate excise tax adjustment in the first quarter of 2003.

Our consolidated operating earnings
in the first quarter of 2004 were $26.7 million, an increase of $5.5 million, or 25.9%,
compared to $21.2 million in the first quarter of 2003. The following table presents our
operating earnings by segment for the first quarter of 2004 and 2003:

|                        
|------------------------
|(dollars in millions)   
|Publishing              
|Broadcasting            
|Telecommunications      
|Printing services       
|Other                   
|                        
|Total operating earnings
|                        

The increase in total operating
earnings was primarily due to increased operating efficiencies from the daily
newspapers new production facility, an increase in operating revenue in our
publishing businesses, an increase in political and issue advertising at our television
stations and cost reduction initiatives across all of our businesses offset by wholesale
telecommunications service disconnections and lower profit margins on the increased
commercial telecommunications revenue, a decrease in revenue from several computer-related
customers and lower profit margins at our printing services business and a corporate
excise tax adjustment in the first quarter of 2003.

Our consolidated EBITDA in the first
quarter of 2004 was $38.3 million, an increase of $5.3 million, or 16.1%, compared to
$33.0 million in the first quarter of 2003. We define EBITDA as net earnings plus
provision for income taxes, total other income and expense, depreciation and amortization.
We believe the presentation of EBITDA is relevant and useful because it helps improve our
investors ability to understand our operating performance and makes it easier to
compare our results with other companies that have different financing and capital
structures or tax rates. Our management uses EBITDA, among other things, to evaluate our
operating performance, to value prospective acquisitions and as a component of incentive
compensation targets for certain management personnel. In addition, our lenders use EBITDA
as one of the measures of our ability to service our debt. EBITDA is not a measure of
performance calculated in accordance with accounting principles generally accepted in the
United States. EBITDA should not be considered in isolation of, or as a substitute for,
net earnings as an indicator of operating performance or cash flows from operating
activities as a measure of liquidity. EBITDA, as we calculate it, may not be comparable to
EBITDA measures reported by other companies. In addition, EBITDA does not represent funds
available for discretionary use.

The following table presents a
reconciliation of our consolidated net earnings to consolidated EBITDA for the first
quarter of 2004 and 2003:

|                              
|------------------------------
|(dollars in millions)         
|Net earnings                  
|Provision for income taxes    
|Total other income and expense
|Depreciation                  
|Amortization                  
|                              
|EBITDA                        
|                              

The increase in total EBITDA is
consistent with increases in operating earnings in our publishing and broadcasting
segments offset by a decrease in operating earnings at our telecommunications, printing
services and other segments.

| | Publishing
| | ----------

Operating revenue from publishing in
the first quarter of 2004 was $76.7 million, an increase of $2.1million, or 2.8%, compared
to $74.6 million in the first quarter of 2003. Operating earnings from publishing were
$9.0 million, an increase of $4.9 million, or 121.2%, compared to $4.1 million in the
first quarter of 2003.

13

---

The following table presents our
publishing operating revenue and operating earnings for the first quarter of 2004 and
2003:

|                      |                                
|--------------------- | -------------------------------
|Daily
Newspaper       | Community
Newspapers
& Shoppers
|(dollars in millions)
|Operating revenue     |                                
|                      |                                
|Operating earnings    |                                
|                      |                                

The following table presents our
publishing operating revenue by category for the first quarter of 2004 and 2003:

|                            |                                
|--------------------------- | -------------------------------
|Daily
Newspaper             | Community
Newspapers
& Shoppers
|(dollars in millions)      
|Advertising revenue:        |                                
|Retail                      |                                
|Classified                  |                                
|General                     |                                
|Other                       |                                
|                            |                                
|Total advertising revenue . |                                
|Circulation revenue         |                                
|Other revenue               |                                
|                            |                                
|Total operating revenue     |                                
|                            |                                

Advertising revenue in the first quarter
of 2004 accounted for 73.3% of total publishing revenue compared to 73.5% in the first
quarter of 2003.

Retail advertising revenue in the
first quarter of 2004 and 2003 was $31.0 million. A $0.2 million increase in daily
newspaper retail advertising was offset by a $0.2 million decrease in community newspaper
and shopper retail advertising. The $0.2 million increase at the daily newspaper was
primarily due to advertising from a new furniture retailer in the marketplace and the
shift of an advertisers sales promotion program to the first quarter of the year
which was previously held in the second quarter of the year. The $0.2 million decrease at
our community newspapers and shoppers was primarily due to a reduction in automotive
advertising. Preprint advertising for the first quarter of 2004 for both our daily
newspaper and our community newspapers and shoppers was essentially even compared to the
first quarter of 2003.

Classified advertising revenue in the
first quarter of 2004 was $17.1 million, an increase of $0.5 million, or 2.9%, compared to
$16.6 million in the first quarter of 2003. Increases in general advertising of $0.4
million and real estate advertising of $0.3 million at our daily newspaper and $0.2
million increase at our community newspapers and shoppers were partially offset by
decreases in employment advertising of $0.2 million and automotive advertising of $0.2
million at our daily newspaper. The decrease in employment advertising, which accounted
for 37.8% of total classified advertising in the first quarter of 2004, represented a 3.4%
decrease from the first quarter of 2003 primarily due to continued economic uncertainty.
The decrease in automotive advertising is due to a reduction in manufacturers
incentives to dealers, inclement weather and certain advertisers switching their ad
placement from the classified section to retail sections of the paper.

General advertising revenue in the
first quarter of 2004 was $3.3 million, an increase of $0.5 million, or 15.2%, compared to
$2.8 million in the first quarter of 2003. The increase was due to an increase in
entertainment and airlines ROP (run-of-press) advertising and an increase in preprints
from computer hardware manufacturers and national advertisers.

14

---

The following table presents our
daily newspapers core newspaper advertising linage by category for the first quarter
of 2004 and 2003:

|                              
|------------------------------
|Advertising linage (inches):  
|Full run                      
|Retail                        
|Classified                    
|General                       
|                              
|Total full run                
|Part run                      
|                              
|Total advertising linage      
|                              
|Preprint pieces (in thousands)
|                              

Total advertising linage in the first
quarter of 2004 increased 1.5% compared to the first quarter of 2003. The increase was
largely due to a 31.2% increase in part run advertising linage. Part run advertising
linage increased in the first quarter of 2004 due to an increase in zoned retail
advertising. Full run advertising linage in the first quarter of 2004 was essentially even
compared to the first quarter of 2003 due to a 33.4% increase in general ROP advertising
linage offset by 1.2% decrease in classified advertising linage and a 1.0% decrease in
retail ROP advertising linage. The increase in general ROP advertising linage is
consistent with the increase in general advertising revenue and the decrease in classified
advertising linage is consistent with the decrease in classified advertising revenue. The
decrease in retail ROP advertising linage is due to a decrease in daily ROP advertising.
Preprint advertising pieces decreased 7.0% due to the closing of several area Kmart
stores.

The following table presents the full
pages of advertising and revenue per page of our community newspapers and shoppers for the
first quarter of 2004 and 2003:

|                               
|-------------------------------
|Full pages of advertising:     
|Community newspapers           
|Shoppers                       
|                               
|Total full pages of advertising
|                               
|Revenue per page               
|                               

Total full pages of advertising for
our community newspapers and shoppers in the first quarter of 2004 decreased 9.8% compared
to the first quarter of 2003. The decrease was due to reformatting certain papers to more
efficiently use the amount of available space on each page. Revenue per page increased
11.0% primarily due to the decrease in total pages of full advertising while increasing or
maintaining the same advertising rates.

Other advertising revenue in the
first quarter of 2004, consisting of revenue from direct marketing and event marketing
efforts, JSOnline for our daily newspaper and company sponsored event advertising for our
community newspapers and shoppers, was $4.8 million, an increase of $0.4 million, or
10.1%, compared to $4.4 million in the first quarter of 2003. The increase was due to a
$0.3 million increase in company sponsored event advertising revenue at our community
newspapers and shoppers and a $0.1 million increase in direct mail advertising revenue at
our daily newspaper.

Circulation revenue in the first
quarter of 2004 accounted for 14.6% of total publishing revenue compared to 15.0% in the
first quarter of 2003. Circulation revenue in the first quarter of 2004 and 2003 was $11.2
million. Preliminary figures for the Audit Bureau of Circulations Newspaper
Publishers Statement for the six month period ended March 31, 2004 indicate average
net paid circulation for the daily newspaper decreased approximately 5.0% for the daily
edition and approximately 1.0% for the Sunday edition compared to the six month period
ended March 31, 2003. We believe these decreases are due to reduced discounting on renewal
offers, which were targeted at already highly discounted subscriptions, a price increase
on daily single copy sales in part of the PMA (primary market area), a cover price
increase for both the daily and Sunday editions outside of the PMA, telemarketing Do
Not Call legislation and persistent economic weakness. Average paid circulation for
our community newspapers decreased 2.8% in the first quarter of 2004 compared to the first
quarter of 2003.

Other revenue, which consists of
revenue from commercial printing opportunities at the print plants for our community
newspapers and shoppers and promotional, distribution and commercial printing revenue at
our daily newspaper, in the first quarter of 2004 accounted for 12.1% of total publishing
revenue compared to 11.5% in the first quarter of 2003. Other revenue in the first quarter
of 2004 was $9.3 million, an increase of $0.7 million, or 8.3%, compared to $8.6 million
in the first quarter of 2003. The increase was attributed to $0.4 million of commercial
printing revenue at the daily newspaper as a result of the increased printing capabilities
and capacity of our new presses and an increase of $0.3 million in printing revenue at our
community newspapers and shoppers.

15

---

Publishing operating earnings in the
first quarter of 2004 were $9.0 million, an increase of $4.9 million, or 121.2%, compared
to $4.1 million in the first quarter of 2003. The increase was primarily due to a $1.5
million decrease in payroll expenses related to the daily newspapers new production
facility, a $0.6 million reduction of the vacation liability at the daily newspaper
resulting from a policy change, $0.7 million in savings from the structural reorganization
and other cost reduction initiatives of our community newspapers and shoppers business,
and the increase in revenue at our daily newspaper. These operating earnings increases
were partially offset by an increase in operating costs due to the increase of commercial
printing revenue and the increase in direct mail advertising revenue at our daily
newspaper, an increase in the cost of newsprint, and the recording of $0.3 million for
additional bad debt expense. Newsprint costs were $9.7 million in the first quarter of
2004, an increase of $0.4 million, or 4.3%, compared to $9.3 million in the first quarter
of 2003. The increase in the cost of newsprint was primarily attributed to price increases
totaling $0.9 million, or an 11.0% price increase per average ton, partially offset by
$0.8 million in savings at the daily newspaper from utilizing a smaller page size. The
additional bad debt expense in the first quarter of 2004 was accrued for the prospect that
our publishing businesses will be required to refund critical vendor payments received
from Kmart Corporation during their bankruptcy proceedings. A recent ruling by the United
States Court of Appeals for the 7th Circuit affirmed an earlier United States
District Court decision that certain critical vendor payments made by Kmart Corporation
during its bankruptcy proceedings in 2002 were without legal authority and are subject to
recovery from recipients.

As of March 31, 2003, all production
and distribution of the daily newspaper was transitioned to the new production facility.
Production and distribution of the newspaper was performed at both the old and new
production facilities from October 2002 until March 2003.

| | Broadcasting
| | ------------

Operating revenue from broadcasting
in the first quarter of 2004 was $34.6 million, an increase of $2.4 million, or 7.4%,
compared to $32.2 million in the first quarter of 2003. Operating earnings from
broadcasting in the first quarter of 2004 were $6.5 million, an increase of $2.7 million,
or 70.1%, compared to $3.8 million in the first quarter of 2003.

The following table presents our
broadcasting operating revenue and operating earnings for the first quarter of 2004 and
2003:

|                      |           
|--------------------- | ----------
|Radio                 | Television
|(dollars in millions)
|Operating revenue     |           
|                      |           
|Operating earnings    |           
|                      |           

Operating revenue from our radio
stations in the first quarter of 2004 was $16.7 million, an increase of $0.9 million, or
5.7%, compared to $15.8 million in the first quarter of 2003. The increase was primarily
attributed to a $1.1 million increase in local advertising revenue and a $0.1 million
increase in political and issue advertising revenue offset by a $0.3 million decrease in
national advertising.

Operating earnings from our radio
stations in the first quarter of 2004 were $3.1 million, an increase of $1.2 million, or
63.2%, compared to $1.9 million in the first quarter of 2003. The increase was primarily
attributed to the increase in revenue and decreases in programming, promotional, and sales
expenses due to cost reduction initiatives offset by an increase in depreciation and
technology expenses.

Operating revenue from our television
stations in the first quarter of 2004 was $17.9 million, an increase of $1.5 million, or
9.1%, compared to $16.4 million in the first quarter of 2003. The increase was primarily
attributed to a $1.2 million increase in political and issue advertising revenue and a
$0.5 million increase in local advertising revenue offset by a $0.2 million decrease in
national advertising.

Operating earnings from our
television stations in the first quarter of 2004 were $3.4 million, an increase of $1.5
million, or 78.9%, compared to $1.9 million in the first quarter of 2003. The increase was
primarily attributed to higher margins associated with the increased demand created by
political and issue advertising offset by increases in programming and news expenses
related to the Wisconsin presidential debate held in February 2004 and increased
depreciation expense.

| | Telecommunications
| | ------------------

Operating revenue from
telecommunications in the first quarter of 2004 was $35.6 million, a decrease of $1.1
million, or 3.0%, compared to $36.7 million in the first quarter of 2003. Operating
earnings from telecommunications in the first quarter of 2004 were $8.7 million, a
decrease of $1.3 million, or 12.8%, compared to $10.0 million in the first quarter of
2003.

16

---

Wholesale telecommunication services
provide network transmission solutions for other service providers by offering bulk
transmission capacity. Operating revenue from wholesale services in the first quarter of
2004 was $20.6 million, a decrease of $2.6 million, or 11.2%, compared to $23.2 million in
the first quarter of 2003. The decrease was primarily due to service disconnections which
occurred during 2003. Due to the current state of the telecommunications industry, we have
experienced a significant increase in customers disconnecting or terminating service.
While we are not always able to determine the specific reason a customer may disconnect
service, we believe the trend of customers focusing on reducing their network costs will
continue, primarily due to consolidating traffic on least cost routes and economic and
other changes occurring within our customers end-user customer base.
Monthly recurring revenue from wholesale services at the end of the first quarter of 2004
was $6.8 million compared to $6.9 million at the beginning of 2004 and $7.4 million at the
end of the first quarter of 2003. During the first quarter of 2004, new circuit
connections of $0.1 million in monthly recurring revenue were more than offset by service
disconnections.

Commercial telecommunication services
provide advanced data communications and long distance service to small and medium sized
businesses in the Upper Midwest, principally in Wisconsin, Michigan, Indiana, Minnesota
and Illinois. Operating revenue from commercial services in the first quarter of 2004 was
$15.0 million, an increase of $1.5 million, or 11.1%, compared to $13.5 million in the
first quarter of 2003. The increase was primarily attributed to an increase in the number
of customers served from new long distance and advanced data services business acquired in
2003. Monthly recurring revenue from commercial advanced data services at the end of the
first quarter of 2004 was $3.4 million compared to $3.3 million at the beginning of 2004
and $3.1 million at the end of the first quarter of 2003. In the third quarter of 2003,
regulators approved SBC Communications Inc.s application to offer long distance
service in Wisconsin, Indiana, Illinois and Michigan. We believe this increased
competition for commercial telecommunication services could adversely impact us through
the loss of existing customers or by reducing the success rate of securing new customers.
We have been proactively working with our customers by leveraging our customer service
abilities and adding new bundled services as we extend contracts at reduced prices.

The decrease in operating earnings
from telecommunications was primarily attributed to wholesale service disconnections that
occurred during 2003 and a decrease in profit margin due to higher operating costs and
expenses associated with the higher mix of commercial revenue.

MCI and Global Crossing together
accounted for 16.6% and 18.9% of our telecommunications revenue in the first quarter of
2004 and 2003, respectively. Global Crossing filed for Chapter 11 bankruptcy protection in
January 2002 and emerged in December 2003. We continue to provide services to Global
Crossing and receive advance or timely payment for those services; however, under our
current arrangement, Global Crossing may terminate circuits not under contract upon 30
days notice. Currently, a majority of the circuits are not under contract. We are
currently negotiating a renewal service contract with Global Crossing and expect to
complete negotiations in 2004. The new contract with Global Crossing will likely result in
price reductions and the elimination of certain existing services. MCI filed for Chapter
11 bankruptcy protection in July 2002 and emerged in April 2004. We continue to provide
services to MCI and receive advance or timely payment for those services. We are in the
process of negotiating contract extensions with MCI for our current contracts and we
believe they will remain a significant customer. These new contracts will likely result in
a re-pricing of services and could result in providing them additional capacity. We expect
these contract changes to result in a significant decrease in our telecommunications
operating earnings. The loss of the ongoing business from either of these two customers
would have a significant adverse effect on our results of operations.

We do not believe we have a material
bad debt exposure because we bill all data services for both wholesale and commercial
customers in advance of providing services. Most customers are required to pay their bill
before services are provided.

| | Printing
Services
| | -----------------

Operating revenue from printing
services in the first quarter of 2004 was $21.8 million, a decrease of $0.9 million, or
4.2%, compared to $22.7 million in the first quarter of 2003. Operating earnings from
printing services in the first quarter of 2004 were $0.9 million, a decrease of $0.3
million, or 23.3%, compared to $1.2 million in the first quarter of 2003.

The decrease in printing services
operating revenue was primarily attributed to the decreases in revenue from several
computer-related customers, including our largest customer, Dell Computer Corporation.
These decreases were partially offset by an increase in publication printing revenue
primarily from new business acquired in 2003.

The decrease in printing services
operating earnings was primarily attributed to the decrease in revenue and lower operating
margins as a result of operating beyond our optimum capacity due to our changing mix of
business. These decreases were offset by cost reduction initiatives.

Dell Computer Corporation accounted
for 27.1% and 28.4% of our printing services revenue in 2004 and 2003, respectively. We
expect further revenue decreases from Dell, as we learned in the first quarter that we
lost a $3 million, low-margin product of our Dell business and are facing very competitive pricing for
other Dell products we produce. The loss of all of this business could have a
material adverse effect on our results of operations.

17

---

| | Other
| | -----

Other operating revenue in the first
quarter of 2004 was $24.0 million, an increase of $0.3 million, or 1.5%, compared to $23.7
million in the first quarter of 2003. Other operating earnings in the first quarter of
2004 were $1.6 million, a decrease of $0.5 million, or 26.8%, compared to $2.1 million in
the first quarter of 2003.

The following table presents our
other operating revenue and operating earnings for the first quarter of 2004 and 2003:

|                      |                          
|--------------------- | -------------------------
|Label
Printing        | Direct
Marketing
Services
|(dollars in millions)
|Operating revenue     |                          
|                      |                          
|Operating earnings    |                          
|                      |                          

The increase in other operating
revenue was primarily attributed to an increase in list and database marketing services
and postage amounts billed to customers at our direct marketing services business. These
increases were offset by a decrease in gravure label sales at our label printing
operation. Included in operating revenue and operating costs and expenses from our direct
marketing services business is $6.2 million and $5.1 million of postage amounts billed to
customers in the first quarter of 2004 and 2003, respectively.

The decrease in other operating
earnings was primarily attributed to a corporate excise tax adjustment in the first
quarter of 2003 offset by the increase in revenue at our direct marketing services
business and the related increased profit margins on list and database marketing services
revenue.

SAB/Miller Brewing Company accounted
for 44.2% and 43.6% of our label printing business revenue in the first quarter of
2004 and 2003, respectively. In 2004, our label printing business was in the fourth
year of a five year contract with SAB/Miller Brewing Company.  The loss of SAB/Miller
Brewing Company could have a material adverse effect on our results of operations.

| | Non
Operating Income and Taxes from Continuing Operations
| | ---------------------------------------------------------

Interest income and dividends was
$0.1 million in the first quarter of 2004 and 2003. Interest expense in the first quarter
of 2004 was $0.6 million, an increase of $0.1 million, or 14.4%, compared to $0.5 million
in the first quarter of 2003. Gross interest expense from borrowings under our credit
agreement was $0.4 million in the first quarter of 2004 and $0.5 million in the first
quarter of 2003.

The effective tax rate on continuing
operations was 40.0% in the first quarter of 2004 and 2003.

| | Earnings
per Share
| | ------------------

Our basic and diluted earnings per
share in the first quarter of 2004 were $0.21 and $0.20, respectively, an increase of
$0.05 and $0.04, respectively, compared to basic and diluted earnings per share of $0.16
in the first quarter of 2003. Earnings per share amounts are presented on a generally
accepted accounting principles basis (discussed in Note 3 in our Notes to Unaudited
Condensed Consolidated Financial Statements) and reflect our new capital structure
effected by our initial public offering in September 2003 and the tender offer that was
completed in November 2003.

# Liquidity and Capital
Resources

We have a $350 million unsecured
revolving credit facility expiring on September 4, 2008. The interest rate on borrowings
are either LIBOR plus a margin that ranges from 87.5 basis points to 150 basis points,
depending on our leverage, or the Base Rate, which equals the higher of the
prime rate set by U.S. Bank, N.A. or the Federal Funds Rate plus one percent per annum. As
of March 28, 2004 we had borrowings of $56,300 under the facility at the weighted average
interest rate of 2.01%. Fees of $1,959 in connection with the facility are being amortized
over the term of the facility using the straight-line method which approximates the
effective-interest method. The material covenants of this agreement include the following:

| | A
consolidated funded debt ratio as determined for the four fiscal quarter period preceding
the date of determination of not greater than 3.0:1.0. As of March 28, 2004, the
consolidated funded debt ratio was 0.34.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
fixed charge coverage ratio as determined for the four fiscal quarter period preceding
the date of determination of not less than 1.75:1.0. As of March 28, 2004, the fixed
charge coverage ratio was 2.73.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
consolidated tangible net worth as of the end of any quarter of not less than $200
million. As of March 28, 2004, consolidated tangible net worth was $350.5 million.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

---

| | Consolidated
capital expenditures during any fiscal year of not more than $75 million. As of March 28,
2004, consolidated capital expenditures were $5.5 million.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
consolidated rent expense during any fiscal year of not more than $40 million. As of
March 28, 2004, consolidated rent expense was $6.2 million.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------

Cash balances were $6.3 million at
March 28, 2004. We believe our expected cash flows from operations and borrowings
available under our credit facility will adequately meet our needs for the foreseeable
future.

# Cash Flow

Cash provided by operating activities
was $36.3 million in the first quarter of 2004 compared to $37.6 million in the first
quarter of 2003. The decrease is primarily attributed to the lower accounts payable
balance in the first quarter of 2004 compared to the first quarter of 2003.

Cash used for investing activities
was $5.6 million in the first quarter of 2004 compared to $16.8 million in the first
quarter of 2003. Capital expenditures for property and equipment were $5.5 million in the
first quarter of 2004 and $16.8 million in the first quarter of 2003. In the first quarter
of 2003, we were continuing to invest in the equipment and the building for our daily
newspaper production facility.

Cash used for financing activities
was $32.9 million in the first quarter of 2004 compared to $24.6 million in the first
quarter of 2003. Borrowings under our new credit facility during the first quarter of 2004
were $36.9 million and we made payments of $64.6 million. We decreased our borrowing under
our old credit agreement by $16.8 million in the first quarter of 2003. We paid cash
dividends of $5.2 million and $7.8 million in the first quarter of 2004 and 2003,
respectively.

# Critical Accounting
Policies

There are no material changes to the disclosures
regarding critical accounting policies made in our Annual Report on Form 10-K for the year
ended December 31, 2003.

# ITEM 3.    QUANTITATIVE AND
QUALITATIVE DISCLOSURE OF MARKET RISK

There are no material changes to the
disclosures regarding interest rate risk and foreign currency exchange risk made in our
Annual Report on Form 10-K for the year ended December 31, 2003.

# ITEM 4.    CONTROLS AND
PROCEDURES

We carried out an evaluation, under
the supervision and with the participation of our Disclosure Committee, including our
Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures, as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c) as of the end of the period covered by this Quarterly Report
on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are effective to ensure that
information required to be disclosed in our Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms, and that such information is accumulated and
communicated to them to allow timely decisions regarding required disclosure.

There has been no change in our
internal control over financial reporting that occurred during our last fiscal quarter
that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

# PART II. OTHER
INFORMATION

# ITEM 1.    LEGAL PROCEEDINGS

National Advertising Representative Litigation.In September 2003, we
hired a new national television advertising representative due to our assessment of the
performance of the prior representative. On September 11, 2003, the prior representative,
TeleRep, Inc. and Harrington, Righter & Parsons, Inc. (which are affiliated entities),
filed suits against our subsidiary, Journal Broadcast Group, Inc., in the Supreme Court of
the State of New York, County of New York, demanding a lump sum payment under certain
contractual provisions in the aggregate amount of approximately $9.0 million. The new
representative has assumed liability in connection with that claim and agreed to indemnify
us for all losses, damages and certain expenses associated with the prior
representatives claim. At March 28, 2004 the estimated remaining amount of $8.0
million claimed by our prior national representative is included in the consolidated
condensed balance sheet in other current liabilities and the estimated receivable of $8.0
million from the new national representative is included in the consolidated condensed
balance sheet in receivables.

19

---

# ITEM 2.    CHANGES IN
SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITES

None.

# ITEM 3.    DEFAULTS UPON
SENIOR SECURITIES

None.

# ITEM 4.    SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS

None.

# ITEM 5.    OTHER INFORMATION

None.

# ITEM 6.    EXHIBITS AND
REPORTS ON FORM 8-K

|(a) | Exhibits
|--- | --------

| | Exhibit No.          Description
| | --------------------------------

| | 31.1 | Certification
 by Steven J. Smith,  Chairman and Chief Executive  Officer of Journal  Communications,
 Inc.,                            pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
 by Paul M.  Bonaiuto,  Executive  Vice  President  and Chief  Financial  Officer  of
 Journal                            Communications, Inc., pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32 | Certificationof
Steven J. Smith, Chairman and Chief Executive Officer and Paul M. Bonaiuto, Executive
Vice President and Chief Financial Officer of Journal Communications, Inc., pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Reports
on Form 8-K
|--- | -------------------

|Filing | Date              | Items Reported                              | Financial Statements Filed
|------ | ----------------- | ------------------------------------------- | --------------------------
|8-K    | February 5, 2004  | Item 5 Other Events and Regulation         
|       |                   | FD Disclosure                               | None                      
|       |                   | Item 7 Financial Statements and Exhibits    | None                      
|       |                   | Item 12 Results of Operations and Financial
|       |                   | Condition                                   | None                      
|8-K    | February 11, 2004 | Item 10 Amendments to the Registrant's     
|       |                   | Code of Ethics, or Waiver of a Provision   
|       |                   | of the Code of Ethics                       | None                      

20

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SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

|                      | JOURNAL COMMUNICATIONS, INC.                                          
|--------------------- | ----------------------------------------------------------------------
|                      | Registrant                                                            
|Date:  April 28, 2004 | /s/ Steven J. Smith                                                   
|                      | Steven J. Smith, Chairman and Chief Executive Officer                 
|Date:  April 28, 2004 | /s/ Paul M. Bonaiuto                                                  
|                      | Paul M. Bonaiuto, Executive Vice President and Chief Financial Officer

21