# 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: June 29, 2008

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)                          

|414-224-2000                                      
|--------------------------------------------------
|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 a large accelerated filer, an accelerated filer, non-accelerated filer or a
smaller reporting company. See definitions of large accelerated filer,
accelerated filer, and smaller reporting company in Rule 12b-2 of
the Exchange Act.

# Large Accelerated Filer 
   Accelerated Filer X       Non-accelerated Filer              Smaller reporting company

Indicate by check mark whether the
registrant is a shell company (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 July 25, 2008 (excluding 8,676,705
shares of class B common stock held by our subsidiary, The Journal Company):

|Class                | Outstanding at July 25, 2008
|-------------------- | ----------------------------
|Class A Common Stock | 40,058,896                  
|Class B Common Stock | 10,513,930                  
|Class C Common Stock | 3,264,000                   

---

# JOURNAL
COMMUNICATIONS, INC.

# INDEX

|         |                       |                                                              
|-------- | --------------------- | -------------------------------------------------------------
|         |                       |                                                              
|Part I.  | Financial Information |                                                              
|         | Item 1.               | Financial Statements                                         
|         |                       | Unaudited Consolidated Condensed Balance Sheets as of        
|         |                       | June 29, 2008 and December 30, 2007                          
|         |                       | Unaudited Consolidated Condensed Statements of Earnings      
|         |                       | for the Second Quarter and Two Quarters Ended                
|         |                       | June 29, 2008 and July 1, 2007                               
|         |                       | Unaudited Consolidated Condensed Statement of                
|         |                       | Shareholders Equity for the Two Quarters Ended June 29, 2008
|         |                       | Unaudited Consolidated Condensed Statements of               
|         |                       | Cash Flows for the Two Quarters Ended June 29, 2008          
|         |                       | and July 1, 2007                                             
|         |                       | Notes to Unaudited Consolidated Condensed                    
|         |                       | Financial Statements as of June 29, 2008                     
|         | 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 1A.              | Risk Factors                                                 
|         | Item 2.               | Unregistered Sales of Equity Securities and Use of Proceeds  
|         | Item 3.               | Defaults Upon Senior Securities                              
|         | Item 4.               | Submission of Matters to a Vote of Security Holders          
|         | Item 5.               | Other Information                                            
|         | Item 6.               | Exhibits                                                     

1

---

# PART I. FINANCIAL
INFORMATION

# ITEM 1. FINANCIAL
STATEMENTS

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

|                                                                                            | June 29, 2008 | December 30, 2007
|------------------------------------------------------------------------------------------- | ------------- | -----------------
|ASSETS                                                                                      |               |                  
|Current assets:                                                                             |               |                  
|Cash and cash equivalents                                                                   |               |                  
|Receivables, less allowance for doubtful accounts                                           |               |                  
|of $4,225 and $4,031                                                                        |               |                  
|Inventories, net                                                                            |               |                  
|Prepaid expenses                                                                            |               |                  
|Deferred income taxes                                                                       |               |                  
|                                                                                            |               |                  
|TOTAL CURRENT ASSETS                                                                        |               |                  
|                                                                                            |               |                  
|Property and equipment, at cost, less accumulated depreciation                              |               |                  
|of $226,511 and $221,273                                                                    |               |                  
|Goodwill                                                                                    |               |                  
|Broadcast licenses                                                                          |               |                  
|Other intangible assets, net                                                                |               |                  
|Prepaid pension costs                                                                       |               |                  
|Other assets                                                                                |               |                  
|                                                                                            |               |                  
|TOTAL ASSETS                                                                                |               |                  
|                                                                                            |               |                  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                        |               |                  
|Current liabilities:                                                                        |               |                  
|Accounts payable                                                                            |               |                  
|Accrued compensation                                                                        |               |                  
|Accrued employee benefits                                                                   |               |                  
|Deferred revenue                                                                            |               |                  
|Accrued income taxes                                                                        |               |                  
|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 June 29, 2008 and December 30, 2007                                          |               |                  
|Common stock, $0.01 par:                                                                    |               |                  
|Class C - authorized 10,000,000 shares; issued and outstanding:                             |               |                  
|3,264,000 shares at June 29, 2008 and December 30, 2007                                     |               |                  
|Class B - authorized 120,000,000 shares; issued and outstanding (excluding treasury stock): |               |                  
|10,582,582 shares at June 29, 2008 and 11,528,044                                           |               |                  
|shares at December 30, 2007                                                                 |               |                  
|Class A - authorized 170,000,000 shares; issued and outstanding:                            |               |                  
|40,505,944 shares at June 29, 2008 and 45,351,893                                           |               |                  
|shares at December 30, 2007                                                                 |               |                  
|Additional paid-in capital                                                                  |               |                  
|Accumulated other comprehensive loss, net of tax                                            |               |                  
|Retained earnings                                                                           |               |                  
|Treasury stock, at cost (8,676,705 class B shares)                                          |               |                  
|                                                                                            |               |                  
|TOTAL SHAREHOLDERS EQUITY                                                                  |               |                  
|                                                                                            |               |                  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                  |               |                  
|                                                                                            |               |                  

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)

|                                               | Second Quarter Ended | Two Quarters Ended
|---------------------------------------------- | -------------------- | ------------------
|
|Revenue:                                       |                      |                   
|Publishing                                     |                      |                   
|Broadcasting                                   |                      |                   
|Printing services                              |                      |                   
|Other                                          |                      |                   
|                                               |                      |                   
|Total revenue                                  |                      |                   
|Operating costs and expenses:                  |                      |                   
|Publishing                                     |                      |                   
|Broadcasting                                   |                      |                   
|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                                |                      |                   
|Interest expense                               |                      |                   
|                                               |                      |                   
|Total other income and (expense)               |                      |                   
|                                               |                      |                   
|Earnings from continuing operations            |                      |                   
|before income taxes                            |                      |                   
|Provision for income taxes                     |                      |                   
|                                               |                      |                   
|Earnings from continuing operations            |                      |                   
|Gain from discontinued operations, net of      |                      |                   
|applicable income tax expense of $0, $683,     |                      |                   
|$0, and $42,473, respectively                  |                      |                   
|                                               |                      |                   
|Net earnings                                   |                      |                   
|                                               |                      |                   
|Earnings per share:                            |                      |                   
|Basic - Class A and B common stock:            |                      |                   
|Continuing operations                          |                      |                   
|Discontinued operations                        |                      |                   
|                                               |                      |                   
|Net earnings                                   |                      |                   
|                                               |                      |                   
|Diluted - Class A and B common stock:          |                      |                   
|Continuing operations                          |                      |                   
|Discontinued operations                        |                      |                   
|                                               |                      |                   
|Net earnings                                   |                      |                   
|                                               |                      |                   
|Basic and diluted - Class C common stock:      |                      |                   
|Continuing operations                          |                      |                   
|Discontinued operations                        |                      |                   
|                                               |                      |                   
|Net earnings                                   |                      |                   
|                                               |                      |                   

See accompanying notes
to unaudited consolidated condensed financial statements.

3

---

Journal Communications,
Inc.                                  Unaudited Consolidated Condensed Statement of
Shareholders' Equity        For the Two Quarters Ended June 29, 2008          (dollars in
thousands, except per-share amounts)

|                                                      | Preferred | Common Stock | Additional | Accumulated
Other
Comprehensive | Retained | Treasury
Stock, |   
|----------------------------------------------------- | --------- | ------------ | ---------- | ------------------------------- | -------- | --------------- | --
|
|Balance at December 30, 2007                          |           |              | $          | --                              |          | $               | 33
|Net earnings                                          |           |              |            |                                 |          |                 |   
|Change in pension and post-retirement                 |           |             
|(net of tax of $12)                                   |           |              |            |                                 |          |                 |   
|Dividends declared:                                   |           |             
|Class C ($0.142 per share)                            |           |              |            |                                 |          |                 |   
|Class B ($0.08 per share)                             |           |              |            |                                 |          |                 |   
|Class A ($0.08 per share)                             |           |              |            |                                 |          |                 |   
|Issuance of shares:                                   |           |             
|Conversion of class B to class A                      |           |              |            |                                 |          |                 |   
|Stock grants                                          |           |              |            |                                 |          |                 |   
|Employee stock purchase plan                          |           |              |            |                                 |          |                 |   
|Shares purchased and retired                          |           |              |            |                                 |          |                 |   
|Shares transferred from employees for tax withholding |           |              |            |                                 |          |                 |   
|Stock-based compensation                              |           |              |            |                                 |          |                 |   
|                                                      |           |              |            |                                 |          |                 |   
|Balance at March 30, 2008                             |           |              |            | --                              |          |                 | 33
|                                                      |           |              |            |                                 |          |                 |   
|Net earnings                                          |           |              |            |                                 |          |                 |   
|Change in pension and post-retirement                 |           |             
|(net of tax of $11)                                   |           |              |            |                                 |          |                 |   
|Dividends declared:                                   |           |             
|Class C ($0.142 per share)                            |           |              |            |                                 |          |                 |   
|Class B ($0.08 per share)                             |           |              |            |                                 |          |                 |   
|Class A ($0.08 per share)                             |           |              |            |                                 |          |                 |   
|Issuance of shares:                                   |           |             
|Conversion of class B to class A                      |           |              |            |                                 |          |                 |   
|Stock grants                                          |           |              |            |                                 |          |                 |   
|Shares purchased and retired                          |           |              |            |                                 |          |                 |   
|Stock-based compensation                              |           |              |            |                                 |          |                 |   
|                                                      |           |              |            |                                 |          |                 |   
|Balance at June 29, 2008                              |           |              | $          | --                              |          | $               | 33
|                                                      |           |              |            |                                 |          |                 |   

See accompanying notes
to unaudited consolidated condensed financial statements.

4

---

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

|                                                                  | Two Quarters Ended
|----------------------------------------------------------------- | ------------------
|
|Cash flow from operating activities:                              |                   
|Net earnings                                                      |                   
|Less gain from discontinued operations                            |                   
|                                                                  |                   
|Earnings from continuing operations                               |                   
|Adjustments for non-cash items:                                   |                   
|Depreciation                                                      |                   
|Amortization                                                      |                   
|Provision for doubtful accounts                                   |                   
|Deferred income taxes                                             |                   
|Non-cash stock-based compensation                                 |                   
|Net (gain) loss from disposal of assets                           |                   
|Net changes in operating assets and liabilities, excluding effect |                   
|of sales and acquisitions of businesses:                          |                   
|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                                     |                   
|Proceeds from sales of businesses                                 |                   
|Acquisition of businesses                                         |                   
|                                                                  |                   
|NET CASH PROVIDED BY (USED FOR)                                   |                   
|INVESTING ACTIVITIES                                              |                   
|Cash flow from financing activities:                              |                   
|Proceeds from long-term notes payable to banks                    |                   
|Payments on long-term notes payable to banks                      |                   
|Proceeds from issuance of common stock                            |                   
|Redemption of common stock                                        |                   
|Cash dividends                                                    |                   
|                                                                  |                   
|NET CASH USED FOR FINANCING ACTIVTIES                             |                   
|Cash flow from discontinued operations:                           |                   
|Net operating activities                                          |                   
|Net investing activities                                          |                   
|                                                                  |                   
|NET CASH PROVIDED BY (USED FOR)                                   |                   
|DISCONTINUED OPERATIONS                                           |                   
|                                                                  |                   
|NET DECREASE IN CASH AND CASH EQUIVALENTS                         |                   
|Cash and cash equivalents:                                        |                   
|Beginning of year                                                 |                   
|                                                                  |                   
|At June 29, 2008 and July 1, 2007                                 |                   
|                                                                  |                   

See accompanying notes
to unaudited consolidated condensed financial statements.

5

---

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 U.S.
generally accepted accounting principles for interim financial information and pursuant
to the rules and regulations of the Securities and Exchange Commission (SEC) 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 U.S. generally accepted accounting principles
for annual financial statements. However, we believe that the disclosures are adequate to
make the information presented not misleading. The balance sheet at December 30, 2007 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. The operations of Norlight
Telecommunications, Inc., our former telecommunications segment, and the regional
publishing and printing operations of our community newspapers and shoppers business in
Ohio, Louisiana and New England have been reflected as discontinued operations in our
consolidated condensed financial statements for all periods presented. Adjustments
related to NorthStar Print Group, Inc. have been reflected as discontinued operations in
our consolidated condensed financial statements for the two quarters of 2008. The
operating results for the second quarter and two quarters ended June 29, 2008 are not
necessarily indicative of the results that may be expected for the fiscal year ending
December 28, 2008. 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 30, 2007.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Our
fiscal year is a 52-53 week 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, the fourth quarterly reporting
period will be 14 weeks.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 | NEW
ACCOUNTING STANDARDS
|- | ------------------------

| | In
December 2007, the FASB issued FASB Statement No. 141 (Revised 2007), Business
Combinations. Statement No. 141R requires that an acquiring entity recognize all
the assets acquired and liabilities assumed in a transaction at the acquisition date fair
value with limited exceptions. Statement No. 141R will change the accounting treatment
for acquisition costs, non-controlling interests, contingent liabilities, in-process
research and development, restructuring costs, and income taxes. In addition, it also
requires a substantial number of new disclosure requirements. Statement No. 141R applies
prospectively to business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December 15, 2008.
Earlier adoption is prohibited. We will adopt Statement No. 141R in the first quarter of
2009. We do not believe the effect of adopting Statement No. 141R will have a material
impact on our consolidated financial statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of
FASB Statement No. 157, which delays the effective date of Statement No. 157 for
all nonfinancial assets and liabilities, except those that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually) to fiscal
years beginning after November 15, 2008.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2008, the FASB issued Staff Position FAS 142-3, Determination of the Useful
Life of Intangible Assets. Staff Position FAS 142-3 requires that in
developing assumptions about renewal or extension used to determine the useful life of a
recognized intangible asset, an entity shall consider its own historical experience in
renewing or extending similar arrangements; however, these assumptions should be adjusted
for entity-specific factors. In the absence of that experience, an entity shall consider
the assumptions that market participants would use about renewal or extension (consistent
with the highest and best use of the asset by market participants), adjusted for the
entity-specific factors. For a recognized intangible asset, an entity shall disclose
information that enables users of financial statements to assess the extent to which the
expected future cash flows associated with the asset are affected by the entitys
intent and/or ability to renew or extend the arrangement. This guidance is effective for
financial statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Early adoption is prohibited. The guidance for
determining the useful life of a recognized intangible asset shall be applied
prospectively to intangible assets acquired after the effective date. The disclosure
requirements shall be applied prospectively to all intangible assets recognized as of,
and subsequent to, the effective date. We will adopt Staff Position FAS 142-3 in the
first quarter of 2009. We do not believe the effect of adopting Staff Position FAS 142-3
will have a material impact on our consolidated financial statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

---

# JOURNAL
COMMUNICATIONS, INC.

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

|3 | NEW
ACCOUNTING STANDARDS continued
|- | ----------------------------------

| | In
May 2008, the FASB issued FASB Statement No. 162, The Hierarchy of Generally
Accepted Accounting Principles. Statement No. 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in conformity
with U.S. generally accepted accounting principles for nongovernmental entities.
Statement No. 162 is effective 60 days following the SECs approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting Principles. We do
not believe the effect of adopting Statement No. 162 will have a material impact on our
consolidated financial statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
June 2008, the FASB issued EITF 03-6-1, Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities. EITF 03-6-1 requires
that unvested share-based payment awards that contain nonforfeitable rights to dividends
or dividend equivalents (whether paid or unpaid) are participating securities and shall
be included in the computation of earnings per share pursuant to the two-class method.
EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those years. All prior-period earnings per
share data presented shall be adjusted retrospectively to conform to the provisions of
this EITF. Early application is not permitted. We will adopt EITF 03-6-1 in the first
quarter of 2009. We do not believe the effect of adopting EITF 03-6-1 will have a
material impact on our consolidated financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | EARNINGS
PER SHARE
|- | ------------------

| | Basic
| | -----

| | We
apply the two-class method for calculating and presenting our basic earnings per share.
As noted in Statement of Financial Accounting Standards No. 128, Earnings per Share
(as amended), the two-class method is an earnings allocation formula that
determines earnings per share for each class of common stock according to dividends
declared (or accumulated) and participation rights in undistributed earnings. Under that
method:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | Income
from continuing operations (net earnings) is reduced by the
               amount of dividends declared in the current period for each class of stock
and                by the contractual amount of dividends that must be paid during the
current                period.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | The
remaining earnings, which may include earnings from discontinued operations
               (undistributed earnings), are allocated to each class of
common                stock to the extent that each class of stock may share in earnings
if all of the                earnings for the period were distributed.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | The
total earnings allocated to each class of common stock are then divided by
               the number of weighted average shares outstanding of the class of common
stock                to which the earnings are allocated to determine the earnings per
share for that                class of common stock.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Basic
earnings per share data are presented for class A and B common stock in
               the aggregate and for class C common stock. The basic earnings per share
for                class A and B common stock are the same; hence, these classes are
reported                together.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
applying the two-class method, we have determined that undistributed earnings should be
allocated equally on a per share basis among each class of common stock due to the lack
of any contractual participation rights of any class to those undistributed earnings. The
weighted average number of shares outstanding for each class of common stock excludes
non-vested restricted stock for basic earnings per share.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

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

|4 | EARNINGS
PER SHARE continued
|- | ----------------------------

| | The
following table sets forth the computation of basic earnings per share under the
two-class method.
| | ------------------------------------------------------------------------------------------------------

|                                                        | Second Quarter Ended | Two Quarters Ended
|------------------------------------------------------- | -------------------- | ------------------
|
|Numerator for basic earnings from continuing            |                      |                   
|operations for each class of common stock:              |                      |                   
|Earnings from continuing operations                     |                      |                   
|Less dividends:                                         |                      |                   
|Class A and B                                           |                      |                   
|Class C                                                 |                      |                   
|                                                        |                      |                   
|Total undistributed earnings from                       |                      |                   
|continuing operations                                   |                      |                   
|                                                        |                      |                   
|Class A and B undistributed earnings                    |                      |                   
|from continuing operations                              |                      |                   
|Class C undistributed earnings                          |                      |                   
|from continuing operations                              |                      |                   
|                                                        |                      |                   
|Total undistributed earnings                            |                      |                   
|from continuing operations                              |                      |                   
|                                                        |                      |                   
|Numerator for basic earnings from continuing operations |                      |                   
|per class A and B common stock:                         |                      |                   
|Dividends on class A and B                              |                      |                   
|Class A and B undistributed earnings                    |                      |                   
|                                                        |                      |                   
|Numerator for basic earnings from continuing            |                      |                   
|operations per class A and B common stock               |                      |                   
|                                                        |                      |                   
|Numerator for basic earnings from continuing operations |                      |                   
|per class C common stock:                               |                      |                   
|Dividends on class C                                    |                      |                   
|Class C undistributed earnings                          |                      |                   
|                                                        |                      |                   
|Numerator for basic earnings from continuing            |                      |                   
|operations per class C common stock                     |                      |                   
|                                                        |                      |                   
|Denominator for basic earnings from continuing          |                      |                   
|operations for each class of common stock:              |                      |                   
|Weighted average shares outstanding -                   |                      |                   
|Class A and B                                           |                      |                   
|Class C                                                 |                      |                   
|Basic earnings per share from continuing                |                      |                   
|operations                                              |                      |                   
|Class A and B                                           |                      |                   
|                                                        |                      |                   
|Class C                                                 |                      |                   
|                                                        |                      |                   

8

---

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

|4 | EARNINGS
PER SHARE continued
|- | ----------------------------

|                                                   | Second Quarter Ended | Two Quarters Ended
|-------------------------------------------------- | -------------------- | ------------------
|
|Numerator for basic earnings from discontinued     |                      |                   
|operations for each class of common stock:         |                      |                   
|Total undistributed earnings from                  |                      |                   
|from discontinued opertions                        |                      |                   
|                                                   |                      |                   
|Class A and B undistributed earnings               |                      |                   
|from discontinued opertions                        |                      |                   
|Class C undistributed earnings                     |                      |                   
|from discontinued operations                       |                      |                   
|                                                   |                      |                   
|Total undistributed earnings                       |                      |                   
|from discontinued operations                       |                      |                   
|                                                   |                      |                   
|Denominator for basic earnings from discontinued   |                      |                   
|operations for each class of common stock:         |                      |                   
|Weighted average shares outstanding -              |                      |                   
|Class A and B                                      |                      |                   
|Class C                                            |                      |                   
|Basic earnings per share from discontinued         |                      |                   
|operations                                         |                      |                   
|Class A and B                                      |                      |                   
|                                                   |                      |                   
|Class C                                            |                      |                   
|                                                   |                      |                   
|Numerator for basic net earnings for each          |                      |                   
|class of common stock:                             |                      |                   
|Net earnings                                       |                      |                   
|Less dividends:                                    |                      |                   
|Class A and B                                      |                      |                   
|Class C                                            |                      |                   
|                                                   |                      |                   
|Total undistributed net earnings                   |                      |                   
|                                                   |                      |                   
|Class A and B undistributed net earnings           |                      |                   
|Class C undistributed net earnings                 |                      |                   
|                                                   |                      |                   
|Total undistributed net earnings                   |                      |                   
|                                                   |                      |                   
|Numerator for basic net earnings per class A and B |                      |                   
|common stock:                                      |                      |                   
|Dividends on class A and B                         |                      |                   
|Class A and B undistributed net                    |                      |                   
|earnings                                           |                      |                   
|                                                   |                      |                   
|Numerator for basic net earnings per               |                      |                   
|class A and B common stock                         |                      |                   
|                                                   |                      |                   
|Numerator for basic net earnings per class C       |                      |                   
|common stock:                                      |                      |                   
|Dividends on class C                               |                      |                   
|Class C undistributed net earnings                 |                      |                   
|                                                   |                      |                   
|Numerator for basic net earnings per               |                      |                   
|class C common stock                               |                      |                   
|                                                   |                      |                   

9

---

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

|4 | EARNINGS
PER SHARE continued
|- | ----------------------------

|                                            | Second Quarter Ended | Two Quarters Ended
|------------------------------------------- | -------------------- | ------------------
|
|Denominator for basic net earnings for each |                      |                   
|class of common stock:                      |                      |                   
|Weighted average shares outstanding -       |                      |                   
|Class A and B                               |                      |                   
|Class C                                     |                      |                   
|Basic net earnings per share                |                      |                   
|Class A and B                               |                      |                   
|                                            |                      |                   
|Class C                                     |                      |                   
|                                            |                      |                   

| | Diluted
| | -------

| | Diluted
earnings per share is computed based upon the assumption that the class C shares
outstanding were converted into class A and B shares, except for the second and two
quarters of 2008 because they are anti-dilutive, common shares are issued upon exercise
of our non-statutory stock options when the exercise price is less than the current
market price of our common shares, and common shares will be outstanding upon expiration
of the vesting periods for our non-vested restricted stock.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table sets forth the computation of diluted net earnings per share for class A
and B common stock:
| | ----------------------------------------------------------------------------------------------------------------

|                                                | Second Quarter Ended | Two Quarters Ended
|----------------------------------------------- | -------------------- | ------------------
|
|Numerator for diluted net earnings per share:   |                      |                   
|Dividends on class A and B                      |                      |                   
|common stock                                    |                      |                   
|Dividends on class C                            |                      |                   
|common stock                                    |                      |                   
|Total undistributed earnings                    |                      |                   
|from continuing operations                      |                      |                   
|Total undistributed earnings                    |                      |                   
|from discontinued operations                    |                      |                   
|                                                |                      |                   
|Net earnings                                    |                      |                   
|                                                |                      |                   
|Denominator for diluted net earnings per share: |                      |                   
|Weighted average shares                         |                      |                   
|outstanding - class A and B                     |                      |                   
|Impact of non-vested restricted stock           |                      |                   
|Conversion of class C shares                    |                      |                   
|                                                |                      |                   
|Adjusted weighted average                       |                      |                   
|shares outstanding                              |                      |                   
|                                                |                      |                   
|Diluted earnings per share:                     |                      |                   
|Continuing operations                           |                      |                   
|Discontinued operations                         |                      |                   
|                                                |                      |                   
|Net earnings                                    |                      |                   
|                                                |                      |                   

| | Diluted
earnings per share for the class C common stock is the same as basic earnings per share
for class C common stock because there are no class C common stock equivalents.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Each
of the 3,264,000 class C shares outstanding is convertible at any time at the option of
the holder into either (i) 1.363970 class A shares (or a total of 4,451,998 class A
shares) or (ii) 0.248243 class A shares (or a total of 810,265 class A shares) and
1.115727 class B shares (or a total of 3,641,733 class B shares).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---

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

|5 | COMPREHENSIVE
INCOME
|- | --------------------

| | The
following table sets forth our comprehensive income:
| | --------------------------------------------------------

|                            | Second Quarter Ended | Two Quarters Ended
|--------------------------- | -------------------- | ------------------
|
|Net earnings                |                      |                   
|Change in pension and post- |                      |                   
|retirement (net of tax)     |                      |                   
|                            |                      |                   
|Comprehensive income        |                      |                   
|                            |                      |                   

|6 | STOCK-BASED
COMPENSATION
|- | ------------------------

| | 2007
Journal Communications, Inc. Omnibus Incentive Plan
| | --------------------------------------------------------

| | The
purpose of the 2007 Journal Communications, Inc. Omnibus Incentive Plan (2007 Plan) is to
promote our success by linking personal interests of our employees, officers and
directors to those of our shareholders, and by providing participants with an incentive
for outstanding performance. The 2007 Plan is also intended to enhance our ability to
attract, motivate and retain the services of employees, officers, and directors upon
whose judgment, interest, and special effort the successful conduct of our operation is
largely dependent.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Subject
to adjustment as provided in the 2007 Plan, the aggregate number of shares of class A
common stock or class B common stock reserved and available for issuance pursuant to
awards granted under the 2007 Plan is 4,800,000 shares which may be awarded in the form
of nonstatutory or incentive stock options, stock appreciation rights (SARs), restricted
stock, restricted or deferred stock units, performance awards, dividend equivalents,
other stock-based awards and cash-based awards. The 2007 Plan replaces the 2003 Equity
Incentive Plan (2003 Plan) and, as of May 3, 2007, all equity grants are made from the
2007 Plan. We will not grant any additional awards under the 2003 Plan. As of June 29,
2008, there are 4,695,987 shares available for issuance under the 2007 Plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2003
Equity Incentive Plan
| | --------------------------

| | Our
2003 Plan, which was replaced in May 2007 by our 2007 Plan, rewarded key employees for
achieving designated corporate and individual performance goals and allowed for issuances
to outside directors as part of their board compensation package. In February 2007, our
board of directors approved and adopted an amendment to our 2003 Plan to provide for the
inclusion of stock-settled stock appreciation rights as a permitted form of award under
the Plan. Awards to outside directors could have been granted in any one or a combination
of stock appreciation rights, stock grants, non-statutory stock options, performance unit
grants and stock unit grants. Incentive stock options could have been granted to
employees.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the second quarter and two quarters ended June 29, 2008, we recognized $578 and $934,
respectively, in stock-based compensation expense. Total income tax benefit recognized
related to stock-based compensation for the second quarter and two quarters ended June
29, 2008 was $225 and $364, respectively. We recognize stock-based compensation expense
on a straight-line basis over the service period based upon the fair value of the award
on the grant date. As of June 29, 2008, total unrecognized compensation cost related to
stock-based compensation awards was $2,277, net of estimated forfeitures, which we expect
to recognize over a weighted average period of 1.2 years. Stock-based compensation
expense is reported in selling and administrative expenses in our consolidated statements
of earnings.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Non-statutory
stock options
| | ---------------------------

| | The
compensation committee of our board of directors has granted non-statutory stock options
to employees and directors at a purchase price equal to at least the fair market value of
our class B common stock on the grant date for an exercise term determined by the
committee, not to exceed 10 years from the grant date. It is our policy to issue new
class B common stock upon the exercise of non-statutory stock options.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
2003 and 2004, our directors and certain of our employees were granted options to
purchase class B common stock. These options are exercisable and will remain exercisable
for a period of up to seven years from the grant date. There have been no options granted
since 2004.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

---

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

|6 | STOCK-BASED
COMPENSATION continued
|- | ----------------------------------

| | There
has been no stock option activity during the two quarters of 2008.
| | ------------------------------------------------------------------------

|                                            
|--------------------------------------------
|Outstanding at December 30, 2007            
|Outstanding and exercisable at June 29, 2008

| | The
aggregate intrinsic value of stock options outstanding and exercisable at the end of the
second quarter of 2008 is zero because the fair market value of our class B common stock
on June 29, 2008 was lower than the weighted average exercise price of the options.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stock
appreciation rights
| | -------------------------

| | A
stock appreciation right, or SAR, represents the right to receive an amount equal to the
excess of the fair value of a share of our class B common stock on the exercise date over
the base value of the SAR, which shall not be less than the fair value of a share of our
class B common stock on the grant date. Each SAR is settled only in shares of our class B
common stock. The term during which any SAR may be exercised is 10 years from the grant
date, or such shorter period as determined by the compensation committee of our board of
directors.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
SARs vest over a three year graded vesting schedule and it is our policy to recognize
compensation cost for awards with graded vesting on a straight-line basis over the
vesting period for the entire award. We ensure the compensation cost recognized at any
date is at least equal to the portion of the grant-date value of the award that is vested
at that date. The fixed price SARs have a fixed base value equal to the closing price of
our class A common stock on the date of grant. The escalating price SARs have an
escalating base value that starts with the closing price of our class A common stock on
the date of grant and increases by six percent per year for each year that the SARs
remain outstanding, starting on the first anniversary of the grant date.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fair
value for SARs granted in the two quarters of 2008 was calculated using the Black-Scholes
option pricing model, with the following weighted-average assumptions:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Dividend yield                                               | 2.70% 
|------------------------------------------------------------ | ------
|Expected volatility                                          | 26.00%
|Risk-free rate of return of fixed price SARs                 | 3.41% 
|Risk-free rate of return of escalating price SARs            | 3.54% 
|Expected life of fixed price SARs (in years)                 | 7.0   
|Expected life of escalating price SARs (in years)            | 7.5   
|Weighted average fair value of fixed price SARs granted      | $1.81 
|Weighted average fair value of escalating price SARs granted | $1.03 

| | Because
we have no historical options or SARs exercise experience, the expected life of the fixed
price SARs was based on the midpoint between the vesting date and the end of the
contractual term and adjusted for the retirement provisions of our 2007 Plan. The
expected life of the escalating price SARs was determined by adding a half of a year to
the fixed price SARs to compensate for their higher exercise price.  The risk free
rate of return was based on the United States Treasury yield curve in effect on the date
of grant for the respective life of the SAR.  The dividend yield was based on the
most recent annualized quarterly dividend payment divided by the average trailing
twelve-month daily stock price and annualizing the rate.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
expected volatility was based on the historical volatility of our common stock and was
benchmarked to our peers historical volatility over the same time period.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

---

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

|6 | STOCK-BASED
COMPENSATION continued
|- | ----------------------------------

| | A
summary of SAR activity during the two quarters of 2008 is:
| | -------------------------------------------------------------

|                                
|--------------------------------
|Outstanding at December 30, 2007
|Granted                         
|                                
|Outstanding at June 29, 2008    
|                                
|Exercisable at June 29, 2008    
|                                

| | The
aggregate intrinsic value of the SARs outstanding and exercisable at the end of the
second quarter of 2008 is zero because the fair market value of our class B common stock
on June 29, 2008 was lower than the weighted average exercise price of the SARs.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stock
grants
| | ------------

| | The
compensation committee of our board of directors has granted class B common stock to
employees and directors under our 2003 Plan and our 2007 Plan. Each stock grant may have
been accompanied by restrictions, or may have been made without any restrictions, as the
compensation committee of our board of directors determined. Such restrictions could have
included requirements that the participant remain in our continuous employment for a
specified period of time, or that we or the participant meet designated performance
goals. We value non-vested restricted stock grants at the closing market prices of our
class A common stock on the grant date. A summary of stock grant activity during the two
quarters of 2008 is:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | 
|------------------------------- | 
|Non-vested at December 30, 2007 | 
|Granted                         | 
|Vested                          | 
|Forfeited                       | 
|                                | 
|Non-vested at June 29, 2008     | 
|                                | 

| | Our
non-vested restricted stock grants vest either three or five years from the grant date.
We expect our non-vested restricted stock grants to fully vest over the weighted average
remaining service period of 1.6 years. The total fair value of shares vesting during the
two quarters of 2008 was $952. There were 98,265 vested unrestricted and non-vested
restricted stock grants issued to our directors and employees in the first two quarters
of 2007 at a weighted average fair value of $13.47, of which none of the non-vested
restricted shares have since vested.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Employee
stock purchase plan
| | ----------------------------

| | The
2003 Employee Stock Purchase Plan permits eligible employees to purchase our class B
common stock at 90% of the fair market value measured as of the closing market price of
our class A common stock on the day of purchase. We recognize compensation expense equal
to the 10% discount of the fair market value. Subject to certain adjustments, 3,000,000
shares of our class B common stock are authorized for sale under this plan. There were
35,789 class B common shares sold to employees under this plan in the two quarters of
2008 at a weighted average fair value of $8.05. As of June 29, 2008, there are 2,698,338shares
available for sale under the plan.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

---

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

|7 | INCOME
TAXES
|- | ------------

| | We
file tax returns in the United States federal jurisdiction, as well as approximately 15
state and local jurisdictions. The statute of limitations for assessing additional taxes
is three years for federal purposes and typically between three and four years for state
and local purposes. Accordingly, our 2004 through 2007 tax returns are open for federal
purposes, and our 2003 through 2007 tax returns remain open for state tax purposes,
unless the statute of limitations has been previously extended. Currently, we are under
audit in Wisconsin and Kansas.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of June 29, 2008, our net liability for unrecognized tax benefits was $4,616, which, if
recognized, $4,503 would have an impact on our effective tax rate. Our net liability
includes $3,670 accrued for tax positions, $1,424 accrued for interest expense and
penalties and $478 accrued for interest income related to audit prepayments. During the
two quarters of 2008, we recognized $254 in interest expense. We recognize interest
income/expense and penalties related to unrecognized tax benefits in our provision for
income taxes.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | It
is possible for $850 of unrecognized tax benefits and related interest to be recognized
within the next 12 months due to settlements with taxing authorities.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|8 | INVENTORIES
|- | -----------

| | Inventories
are stated at the lower of cost (first in, first out method) or market. Inventories at
June 29, 2008 and December 30, 2007 consisted of the following:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | June 29, 2008 | December 30, 2007
|------------------------- | ------------- | -----------------
|Paper and supplies        |               |                  
|Work in process           |               |                  
|Finished goods            |               |                  
|Less obsolescence reserve |               |                  
|                          |               |                  
|Inventories, net          |               |                  
|                          |               |                  

|9 | NOTES
PAYABLE TO BANKS
|- | ----------------------

| | We
have a $475.0 million unsecured revolving facility that expires on June 2, 2011. The
interest rate on borrowings is either LIBOR plus a margin that ranges from 37.5 basis
points to 87.5 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 100
basis points. As of June 29, 2008 and December 30, 2007, we had borrowings of $211.5
million and $178.9 million, respectively, under the facility at a weighted average rate
of 3.17% and 5.55%, respectively. The increase in our borrowings was primarily used for
repurchases of our class A common stock. Fees in connection with the facility of $1,717
are being amortized over the term of the facility using the straight-line method.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10 | GUARANTEES
|-- | ----------

| | We
provided a guarantee to the landlord of our former New England community newspapers and
shopper business, which was sold in 2007, with respect to tenant liabilities and
obligations associated with a lease which expires in December 2016. Our maximum potential
obligation pursuant to the guarantee is $1,456 as of June 29, 2008.  As part of the
sales transaction, we received a guarantee from the buyer of our New England business
that they will satisfy all the liabilities and obligations of the assigned lease.  In
the event that they fail to satisfy their liabilities and obligations and the landlord
invokes our guarantee, we have the right of indemnification from the buyer.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

---

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

|11 | EMPLOYEE
BENEFIT PLANS
|-- | ----------------------

| | 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:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            | Pension Benefits
|------------------------------------------- | ----------------
|
|
|Service cost                                |                 
|Interest cost                               |                 
|Expected return on plan assets              |                 
|Amortization of:                            |                 
|Unrecognized prior service cost             |                 
|Unrecognized net loss                       |                 
|                                            |                 
|Net periodic benefit cost included in total |                 
|operating costs and expenses,               |                 
|selling and administrative expenses         |                 
|and discontinued operations                 |                 
|                                            |                 

| | In
the first quarter of 2007, a pension plan curtailment gain of $390 was recorded as the
result of the sale of Norlight Telecommunications, Inc. (Norlight) to Q-Comm Corporation
(Q-Comm) on February 26, 2007 and reflects a reduction in future pension benefit accruals
for all non-union employees of Norlight. The curtailment gain was recorded in
discontinued operations and is not reflected in the above table. Due to this pension plan
change, the measurement of the net periodic benefit cost in the first quarter of 2007
from February 26, 2007 until the sale of all three regional publishing and printing
operations of our community newspapers and shoppers business is based upon a 5.75%
discount rate.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the second quarter of 2007, a pension curtailment gain of $58 was recorded as a result of
the sale of the Journal Community Publishing Groups Central Ohio Advertiser Network
(Ohio publishing and printing) to Gannett Co, Inc. on June 26, 2007. The curtailment gain
reflects a reduction in future pension benefit accruals for the pension participants of
the Ohio publishing and printing operations. The curtailment gain was recorded in
discontinued operations and is not reflected in the above table.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
net periodic pension benefit cost related to the three regional publishing and printing
operations reported in discontinued operations was $78 and $154 for the second quarter
and two quarters of 2007, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            | Other Postretirement Benefits
|------------------------------------------- | -----------------------------
|
|
|Service cost                                |                              
|Interest cost                               |                              
|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         |                              
|                                            |                              

|12 | GOODWILL
AND OTHER INTANGIBLE ASSETS
|-- | ------------------------------------

| | Our
definite-lived intangible assets consist primarily of network affiliation agreements,
customer lists, non-compete agreements and trade names. We amortize the network
affiliation agreements over a period of 25 years based on our good relationships with the
networks, our long history of renewing these agreements and because 25 years is deemed to
be the length of time before a material modification of the underlying contract would
occur. We amortize the customer lists over a period of five to 15 years, the non-compete
agreements over the terms of the contracts and the tradenames over a period of 25 years.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Amortization
expense was $504 and $996 for the second quarter and two quarters ended June 29, 2008,
respectively, and $475 and $951 for the second quarter and two quarters ended July 1,
2007, respectively. Estimated amortization expense for our next five fiscal years is
$1,931 for 2008, $1,691 for 2009, $1,642 for 2010, $1,284 for 2011 and $1,202 for 2012.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15

---

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

|12 | 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 June 29, 2008 and December 30, 2007 are
as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | Gross
Carrying
Amount | Accumulated
Amortization | Net
Carrying
Amount
|------------------------------ | --------------------- | ------------------------ | -------------------
|June 29, 2008                  |                       |                          |                    
|Network affiliation agreements |                       |                          | $                  
|Customer lists                 |                       |                          |                    
|Non-compete agreements         |                       |                          |                    
|Other                          |                       |                          |                    
|                               |                       |                          |                    
|Total                          |                       |                          | $                  
|                               |                       |                          |                    
|December 30, 2007              |                       |                         
|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. The net carrying amount of our broadcast licenses was $225,507 and $223,529
as of June 29, 2008 and December 30, 2007, respectively. The increase in the net carrying
amount of our broadcast licenses for the two quarters ended June 29, 2008 represents the
acquisition of the broadcast license for KPSE-LP, Channel 50, in Palm Springs,
California.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | The
adjustments in the carrying amount of goodwill for the two quarters ended June 29, 2008
are as follows:
| | -----------------------------------------------------------------------------------------------------------

|                                  | Goodwill at
December 30, 2007 | Adjustments | Goodwill at
June 29, 2008
|--------------------------------- | ----------------------------- | ----------- | -------------------------
|Reporting unit                    |                               |             |                          
|Daily newspaper                   |                               |             | $                        
|Community newspapers and shoppers |                               |             |                          
|Broadcasting                      |                               |             |                          
|                                  |                               |             |                          
|Total                             |                               |             | $                        
|                                  |                               |             |                          

| | The
adjustments in the carrying amount of goodwill for the two quarters ended June 29, 2008
represents the acquisition of KPSE-LP, Channel 50, in Palm Springs, California and the
acquisitions of four community newspapers.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Adverse
changes in expected operating results and/or unfavorable changes in other economic
factors used to estimate fair values could result in non-cash impairment charges on our
goodwill, broadcast licenses and other intangible assets in the future under FASB Statement No. 142, Goodwill
and Other Intangible Assets.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16

---

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

|13 | DISCONTINUED
OPERATIONS
|-- | -----------------------

| | NorthStar
Print Group, Inc.
| | ---------------------------

| | In
the first quarter of 2008, we recorded a gain on discontinued operations of $400 for a
reduction in the reserve related to a preliminary settlement with the Environmental
Protection Agency for a 2007 initial assessment.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Community
newspapers and shoppers
| | ---------------------------------

| | In
2007, Journal Community Publishing Group, Inc., our community newspapers and shopper
business of our publishing segment, completed the sale of its New England- Ohio- and
Louisiana-based publishing and printing businesses. Proceeds, net of transaction
expenses, were $28,613 and resulted in a gain on discontinued operations before income
taxes of $3,369.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table summarizes the three regional publishing and printing businessesresults
of operations, which are included in discontinued operations in our consolidated
condensed statement of earnings for the second quarter and two quarters of 2007:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             | Second Quarter Ended | Two Quarters Ended
|---------------------------- | -------------------- | ------------------
|
|Revenue                      |                      |                   
|Earnings before income taxes |                      |                   

| | Norlight
Telecommunications, Inc.
| | ---------------------------------

| | On
February 26, 2007, Q-Comm acquired 100% of the stock of Norlight, our former
telecommunications subsidiary and segment. Proceeds, net of transaction expenses, were
$175.9 million and resulted in a gain on discontinued operations before income taxes of
$101.8 million.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table summarizes Norlights results of operations, which are included in
the gain from discontinued operations in our consolidated condensed statement of earnings
for the second quarter and two quarters of 2007:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             | Second Quarter Ended | Two Quarters Ended
|---------------------------- | -------------------- | ------------------
|
|Revenue                      |                      |                   
|Earnings before income taxes |                      |                   

17

---

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

|14 | SEGMENT
INFORMATION
|-- | -------------------

| | 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) printing services; and (iv) other.
Our publishing segment consists of the Milwaukee Journal Sentinel, which serves as
the only major daily newspaper for the Milwaukee metropolitan area, and 52 community
newspapers and shoppers in Wisconsin and Florida. As of June 29, 2008, our broadcasting
segment consisted of 35 radio stations and 11 television stations in 12 states and the
operation of a television station under a local marketing agreement. We also provide a
wide range of commercial printing services, including printing of publications,
professional journals and documentation material, through our printing services segment.
Our other segment consists of a direct marketing services business and corporate expenses
and eliminations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following tables summarize revenue, operating earnings, depreciation and amortization and
capital expenditures from continuing operations for the second quarter and two quarters
ended June 29, 2008 and July 1, 2007 and identifiable total assets at June 29, 2008 and
December 30, 2007.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | Second Quarter Ended | Two Quarters Ended
|----------------------------- | -------------------- | ------------------
|
|Revenue                       |                      |                   
|Publishing                    |                      |                   
|Broadcasting                  |                      |                   
|Printing services             |                      |                   
|Other                         |                      |                   
|                              |                      |                   
|                              |                      |                   
|                              |                      |                   
|Operating earnings            |                      |                   
|Publishing                    |                      |                   
|Broadcasting                  |                      |                   
|Printing services             |                      |                   
|Other                         |                      |                   
|                              |                      |                   
|                              |                      |                   
|                              |                      |                   
|Depreciation and amortization |                      |                   
|Publishing                    |                      |                   
|Broadcasting                  |                      |                   
|Printing services             |                      |                   
|Other                         |                      |                   
|                              |                      |                   
|                              |                      |                   
|                              |                      |                   
|Capital expenditures          |                      |                   
|Publishing                    |                      |                   
|Broadcasting                  |                      |                   
|Printing services             |                      |                   
|Other                         |                      |                   
|                              |                      |                   
|                              |                      |                   
|                              |                      |                   

|                          | June 29, 2008 | December 30, 2007
Audited
|------------------------- | ------------- | -------------------------
|Identifiable total assets |               |                          
|Publishing                |               |                          
|Broadcasting              |               |                          
|Printing service          |               |                          
|Other                     |               |                          
|                          |               |                          
|                          |               |                          
|                          |               |                          

18

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

|15 | SUBSEQUENT
EVENTS
|-- | -----------------

| | On
July 2, 2008, our daily newspaper announced a plan to reduce its workforce by about 10%,
continuing its efforts to align its costs with declining revenues. We estimate the
pre-tax charge for this to be between $3,800 and $4,000, most of which will be recorded
in the third quarter of 2008.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 22, 2008, Journal Broadcast Corporation and Journal Broadcast Group, Inc., our
broadcasting businesses, completed the asset purchase of CW Network affiliate, KWBA-TV,
Analog Channel 58, Digital Channel 44, in Sierra Vista, Arizona, from Cascade
Broadcasting Group, LLC and Tucson Communications, L.L.C for $11,885. KWBA-TV serves the
Tucson, Arizona market. We also own KGUN-TV, the ABC affiliate, and four radio stations
in Tucson. We believe owning cross-platform businesses in this growth market will help us
increase our local news focus and better serve our viewers and listeners.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19

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|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 second quarter and two quarters ended
June 29, 2008, including the notes thereto.

More information regarding us is
available at our website at www.journalcommunications.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 (including the information that we incorporate by reference
herein) 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 often 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 or the buying  strategies  of  advertisers  or the  migration
 of certain      advertising to the Internet;
|- | --------------------------------------------------------------------------------------------------------------------------------------------

| | 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, including programs changing
networks and changing competitive dynamics regarding how and when programs are made
available to our viewers;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 and printing industries,
including general business issues, competitive issues and the introduction of new
technologies;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | effects
of any non-cash  impairment  charges due to the  impairment  of goodwill,  broadcast
 licenses and      other intangible assets;
|- | ----------------------------------------------------------------------------------------------------------------------------------------

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

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

| | energy
costs;
|- | -------------

| | the
availability and effect of acquisitions, investments, dispositions and other capital
expenditures including share repurchases on our results of operations, financial
condition or stock price; and
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

20

---

A detailed discussion of the risks
and uncertainties that could cause actual results and events to differ materially from any
forward-looking statements is included in the section entitled Risk Factors of
our Annual Report on Form 10-K for the year ended December 30, 2007. 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) printing services; and (iv) other. Our publishing
segment consists of the Milwaukee Journal Sentinel, which serves as the only major
daily newspaper for the Milwaukee metropolitan area, and 52 community newspapers and
shoppers in Wisconsin and Florida. Our broadcasting segment consists of 35 radio stations
and 12 television stations in 12 states and the operation of a television station under a
local marketing agreement. Our interactive media assets include more than 121 online
enterprises that are associated with our publishing and broadcasting segments. We also
provide a wide range of commercial printing services, including printing of publications,
professional journals and documentation material, through our printing services segment.
Our other segment consists of a direct marketing services business and corporate expenses
and eliminations.

Over the past two years,
fundamentals in the newspaper industry have deteriorated significantly. Continuing
weakness in automotive advertising (driven primarily by the domestic automobile
industry), reductions in retail and classified run-of-press (ROP) advertising (due in
part to department store consolidation, weakened employment and real estate economics and
a migration of advertising to the Internet), circulation declines and online competition
have negatively impacted newspaper industry revenues. Additionally, the recent housing
market downturn has adversely impacted the newspaper industry, including real estate
classified advertising as well as the home improvement, furniture and financial services
advertising categories. These conditions, along with a weakening economy, persisted in
the second quarter of 2008 and we expect them to continue in future periods. Due to the
economic slowdown and the unfavorable perception of media industry equity valuations,
certain media companies are recording non-cash impairment charges for the impairment of
goodwill, broadcast licenses and other intangible assets. We do not believe that
impairment indicators are currently present for our businesses that would require us to
test for impairment of our goodwill, broadcast licenses and other intangible assets at
this time. Our normal practice is to perform impairment tests on goodwill and indefinite
lived intangible assets as of the beginning of the fourth quarter
each year. While we believe that the fair value of our goodwill, broadcast licenses and other intangible
assets exceeds their recorded values at June 29, 2008, we cannot be certain that future
impairment tests will not result in a non-cash impairment charge to earnings or that we
will not perform impairment tests at other times during the year.

Our publishing business was
challenged in the second quarter of 2008. Classified advertising revenue decreased $3.5
million in the second quarter of 2008 compared to the second quarter of 2007 primarily in
the employment and real estate categories. Retail advertising also decreased in the second
quarter of 2008 compared to the second quarter of 2007 with weakness in a number of
categories, including automotive, communications, department stores, finance/insurance,
small to mid-sized retailers, real estate and airline and travel. Our pursuit of new media
initiatives resulted in interactive revenue increasing 11.9% to $3.8 million at our
publishing businesses in the second quarter of 2008 compared to the second quarter of
2007. In an effort to offset the negative effect of advertising revenue decreases, our
publishing businesses focused on expense controls which caused expenses to decrease by
2.2% in the second quarter of 2008 compared to the second quarter of 2007.

In the second quarter of 2008, our
daily newspaper announced that it will stop publishing MKE, the free weekly
publication aimed at young adults, on July 10, 2008. The publication was launched in 2004.
Advertising revenue peaked in 2006 and it has decreased consistently since then. The weak
advertising climate, competition with other websites and publications and increasing costs
prompted the decision.

On July 2, 2008, our daily newspaper
announced a plan to reduce its workforce by about 10%, continuing its efforts to align its
costs with declining revenues. We estimate the pre-tax charge for this to be between $3.8
and $4.0 million, most of which will be recorded in the third quarter of 2008. We expect
the associated pre-tax cost savings for the remainder of 2008 to be between $1.4 and $1.6
million. Full year net pre-tax savings are expected to be between $5.6 and $6.0 million.

Our broadcasting business was also
challenged in the second quarter of 2008 due to a decrease in local and national
advertising revenue. These revenue decreases were partially offset by an increase in
developmental revenue, interactive advertising revenue and political and issue advertising
revenue. Expense controls caused expenses to decrease by 2.2% in the second quarter of
2008 compared to the second quarter of 2007.

On July 1, 2008, we signed an asset
purchase agreement with Banks-Boise, Inc. to purchase CW Network affiliate KNIN-TV, Analog
Channel 9 and Digital Channel 10, in Boise, Idaho for $8.0 million. The purchase is
subject to regulatory approval and customary closing conditions. We currently own KIVI-TV,
the ABC affiliate, and six radio stations in Boise. The acquisition of KNIN-TV gives us an
opportunity to build out cross-platform businesses in Boise and with two television
stations and six radio stations in this market, we believe we can better serve advertisers
and viewers to build an even stronger presence in the community.

21

---

Revenue at our printing services
business increased 1.5% in the second quarter of 2008 compared to the second quarter of
2007 primarily due to an increase in printing documentation materials. Operating earnings
at our printing services business decreased due to an increase in employee benefit costs
and lower margins for printing documentation materials, partially offset by production
efficiencies. Revenue at our direct marketing services business increased 5.2% in the
second quarter of 2008 compared to the second quarter of 2007 primarily due to an increase
in revenue at our Clearwater, Florida facility.

# Results of Operations

| | Second
Quarter Ended June 29, 2008 compared to the Second Quarter Ended July 1, 2007
| | ------------------------------------------------------------------------------------

| | Continuing
Operations
| | ---------------------

Our consolidated revenue in the
second quarter of 2008 was $140.1 million, a decrease of $7.4 million, or 5.0%, compared
to $147.5 million in the second quarter of 2007. Our consolidated operating costs and
expenses in the second quarter of 2008 were $79.2 million, an increase of $0.4 million, or
0.6%, compared to $78.8 million in the second quarter of 2007. Our consolidated selling
and administrative expenses in the second quarter of 2008 were $44.3 million, a decrease
of $1.7 million, or 3.7%, compared to $46.0 million in the second quarter of 2007.

The following table presents our
total revenue by segment, total operating costs and expenses, selling and administrative
expenses and total operating earnings as a percent of total revenue for the second quarter
of 2008 and the second quarter of 2007:

|                                               | 2008 | Percent of
Total
Revenue | 2007 | Percent of
Total
Revenue
|---------------------------------------------- | ---- | ------------------------ | ---- | ------------------------
|
|Revenue:                                       |      |                          |      |                         
|Publishing                                     |      |                          | $    | 61.8                    
|Broadcasting                                   |      |                          |      | 53.5                    
|Printing services                              |      |                          |      | 16.8                    
|Other                                          |      |                          |      | 8.0                     
|                                               |      |                          |      |                         
|Total revenue                                  |      |                          |      | 140.1                   
|Total operating costs and expenses             |      |                          |      | 79.2                    
|Selling and administrative expenses            |      |                          |      | 44.3                    
|                                               |      |                          |      |                         
|Total operating costs and expenses and selling |      |                         
|and administrative expenses                    |      |                          |      | 123.5                   
|                                               |      |                          |      |                         
|Total operating earnings                       |      |                          | $    | 16.6                    
|                                               |      |                          |      |                         

The decrease in total revenue was due
to a decrease in classified ROP advertising, primarily for employment and real estate, at
our publishing businesses, a decrease in local advertising revenue at our television and
radio stations, a decrease in retail ROP advertising at our publishing businesses, a
decrease in national advertising revenue at our television and radio stations and our
daily newspaper, and a decrease in circulation revenue and direct marketing advertising
revenue at our daily newspaper. These revenue decreases were partially offset by an
increase in commercial printing revenue at our daily newspaper, an increase in interactive
advertising revenue at our publishing and broadcasting businesses, an increase in
political and issue advertising revenue at our television stations, an increase in
developmental revenue at our broadcasting business, an increase in offset printing
services and postage and freight revenue at our direct marketing services business and an
increase in printing documentation materials at our printing services business.

The increase in total operating costs
and expenses was due to an increase in paper costs at our printing services business, an
increase in interactive costs at our publishing and broadcasting businesses associated
with the increase in interactive revenue and certain cost increases and an increase in
postage and freight expense at our direct marketing services business. These expense
increases were partially offset by a decrease in payroll and benefit costs across most of
our businesses and a decrease in paper costs at our publishing businesses.

The decrease in selling and
administrative expenses is primarily due to a decrease in payroll and retirement benefit
costs at our all of our businesses, a decrease in advertising expenses at our broadcasting
and publishing businesses and a decrease in depreciation expense primarily at our
publishing businesses. These decreases were partially offset by the gain on the sale of
the Hartland, Wisconsin printing facility in the second quarter of 2007 at our community
newspapers and shoppers business, an increase in health care costs at all of our
businesses and a contract termination charge at our community newspapers and shoppers
business.

22

---

Our consolidated operating earnings
in the second quarter of 2008 were $16.6 million, a decrease of $6.1 million, or 26.9%,
compared to $22.7 million in the second quarter of 2007. The following table presents our
operating earnings by segment for the second quarter of 2008 and the second quarter of
2007:

|                         | 2008 | Percent of
Total
Operating
Earnings | 2007 | Percent of
Total
Operating
Earnings
|------------------------ | ---- | ----------------------------------- | ---- | -----------------------------------
|
|Publishing               |      |                                     | $    | 5.7                                
|Broadcasting             |      |                                     |      | 9.7                                
|Printing services        |      |                                     |      | 0.8                                
|Other                    |      |                                     |      | 0.4                                
|                         |      |                                     |      |                                    
|Total operating earnings |      |                                     | $    | 16.6                               
|                         |      |                                     |      |                                    

The decrease in total operating
earnings was primarily due to the decrease in revenue across most of our businesses.

Our consolidated EBITDA in the second
quarter of 2008 was $23.9 million, a decrease of $6.1 million, or 20.2%, compared to $30.0
million in the second quarter of 2007. We define EBITDA as net earnings excluding gain
from discontinued operations, net, provision for income taxes, total other expense, net
(which is entirely comprised of interest income and expense), depreciation and
amortization. Our management uses EBITDA, among other things, to evaluate our operating
performance and to value prospective acquisitions. 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.

The following table presents a
reconciliation of our consolidated net earnings to consolidated EBITDA for the second
quarter of 2008 and the second quarter of 2007:

|                                       | 2008 | 2007
|-------------------------------------- | ---- | ----
|
|Net earnings                           |      |     
|Gain from discontinued operations, net |      |     
|Provision for income taxes             |      |     
|Total other expense, net               |      |     
|Depreciation                           |      |     
|Amortization                           |      |     
|                                       |      |     
|EBITDA                                 |      |     
|                                       |      |     

The decrease in EBITDA is consistent
with decreases in operating earnings in our publishing, broadcasting and printing services
segments for the reasons described above.

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

Revenue from publishing in the second
quarter of 2008 was $61.8 million, a decrease of $5.8 million, or 8.5%, compared to $67.6
million in the second quarter of 2007. Operating earnings from publishing were $5.7
million, a decrease of $4.5 million, or 44.0%, compared to $10.2 million in the second
quarter of 2007.

23

---

The following table presents our
publishing revenue by category and operating earnings for the second quarter of 2008 and
the second quarter of 2007:

|                            | 2008 | 2007
|--------------------------- | ---- | ----
|
|
|Advertising revenue:        |      |     
|Retail                      |      |     
|Classified                  |      |     
|National                    |      |     
|Direct Marketing            |      |     
|Other                       |      |     
|                            |      |     
|Total advertising revenue.. |      |     
|Circulation revenue         |      |     
|Other revenue               |      |     
|                            |      |     
|Total revenue               |      |     
|                            |      |     
|Operating earnings          |      |     
|                            |      |     

Advertising revenue in the second
quarter of 2008 accounted for 72.4% of total publishing revenue compared to 75.2% in the
second quarter of 2007.

Retail advertising revenue in the
second quarter of 2008 was $28.6 million, a decrease of $1.9 million, or 6.3%, compared to
$30.5 million in the second quarter of 2007. The $1.5 million decrease at our daily
newspaper was primarily due to a decrease in ROP advertising, primarily in the automotive,
communications, department stores, finance/insurance, small to mid-sized retailers, real
estate and airline and travel categories. Retail preprint advertising decreased in the
home improvement and department stores categories. These decreases were partially offset
by increases in Market Place, our TMC (total market coverage) product, and interactive
advertising in the second quarter of 2008. The $0.4 million decrease at our community
newspapers and shoppers was primarily due to decreases in automotive, real estate and
health care advertising, partially offset by revenue from newly acquired publications in
Northern Wisconsin and Florida and an increase in revenue at our community newspapers
surrounding Milwaukee, Wisconsin.

Classified advertising revenue in the
second quarter of 2008 was $13.7 million, a decrease of $3.5 million, or 20.6%, compared
to $17.2 million in the second quarter of 2007. Decreases in ROP, Market Place, and MKEclassified advertising at our daily newspaper were partially offset by an increase in
interactive classified advertising. The $3.8 million decrease in ROP, Market Place and
MKE classified advertising revenue at our daily newspaper was primarily due to
decreases in the following categories: employment advertising of $1.8 million, real estate
advertising of $1.2 million and automotive advertising of $0.8 million. Employment
advertising accounted for 39.3% of classified advertising revenue at the daily newspaper
in the second quarter of 2008. Classified advertising revenue at our community newspapers
and shoppers in the second quarter of 2008 was essentially even compared to the second
quarter of 2007.

Interactive advertising revenue is
reported in the various advertising revenue categories. Total retail and classified
interactive advertising revenue at our publishing businesses was $3.8 million in the
second quarter of 2008, an increase of $0.4 million, or 11.9%, compared to $3.4 million in
the second quarter of 2007 primarily due to an increase in online classified advertising,
including ancillary services from our Jobnoggin.com co-branded employment site with
Monster®, and sponsorship advertising.

National advertising revenue in the
second quarter of 2008 was $1.5 million, a decrease of $0.4 million, or 20.0%, compared to
$1.9 million in the second quarter of 2007. The decrease was due to a decrease in national
ROP advertising in the dining and entertainment, business services and communications
categories and a decrease in national preprint advertising in the business services
category.

Direct marketing revenue, consisting
of revenue from direct mail products of our daily newspaper, was $0.9 million in the
second quarter of 2008, a decrease of $0.2 million, or 20.5%, compared to $1.1 million in
the second quarter of 2007 primarily due to a decrease in direct mail products sold.

Other advertising revenue, consisting
of revenue from company-sponsored event advertising at our community newspapers and
shoppers, was $0.1 million in the second quarter of 2008 and the second quarter of 2007.

24

---

Circulation revenue in the second
quarter of 2008 accounted for 20.7% of total publishing revenue compared to 19.3% in the
second quarter of 2007. Circulation revenue of $12.8 million in the second quarter of 2008
decreased $0.3 million, or 2.0%, compared to $13.1 million in the second quarter of 2007
primarily due to decreases in average net paid circulation for the Sunday and daily
editions and a decrease in the Sunday average rate per copy, partially offset by an
increase in the daily average rate per copy at our daily newspaper.

Other revenue, which consists of
revenue from commercial printing at the printing plants for our community newspapers and
shoppers and promotional, distribution and commercial printing revenue at our daily
newspaper, accounted for 6.9% of total publishing revenue in the second quarter of 2008
compared to 5.5% in the second quarter of 2007. Other revenue in the second quarter of
2008 was $4.2 million, an increase of $0.5 million, or 15.8%, compared to $3.7 million in
the second quarter of 2007. The $0.8 million increase at our daily newspaper was primarily
due to an increase in commercial printing revenue from printing the Chicago Readerand La Raza. Commercial printing revenue decreased $0.3 million at our
community newspapers and shoppers.

In May 2008, our daily newspaper
signed a three-year agreement and began printing La Raza, a Spanish language
newspaper, for distribution in the greater Chicago, Illinois area. La Raza is among
the largest Sunday Hispanic newspapers in the United States.

Publishing operating earnings in the
second quarter of 2008 were $5.7 million, a decrease of $4.5 million, or 44.0%, compared
to $10.2 million in the second quarter of 2007. Operating earnings decreased $3.0 million
in the second quarter of 2008 at the daily newspaper primarily due to the impact of the
decrease in classified and retail ROP advertising, partially offset by a $1.2 million
decrease in payroll and benefit costs and decreases in various other costs due to cost
control initiatives. Operating earnings decreased $2.1 million in the second quarter of
2008 at our community newspapers and shoppers primarily due a $0.9 million gain on the
sale of the Hartland, Wisconsin printing facility in 2007, a $0.4 million contract
termination charge and the impact of the decrease in retail and classified advertising.
Total newsprint and paper costs for our publishing businesses in the second quarter of
2008 were $6.8 million, a decrease of $0.1 million, or 1.7%, compared to $6.9 million in
the second quarter of 2007 primarily due to an 8.6% decrease in newsprint consumption,
partially offset by a 9.2% increase in average newsprint pricing per metric ton.
Consumption of metric tonnes of newsprint in the second quarter of 2008 decreased
primarily due to decreases in ROP advertising, average net paid circulation and a
reduction in waste at our daily newspaper and a decrease in ROP advertising at our
community newspapers and shoppers. We believe our consumption of newsprint will continue
to be lower in 2008 compared to 2007. However, we expect our average newsprint pricing per
metric ton will increase during the remainder of 2008 compared to 2007.

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

Revenue from broadcasting in the
second quarter of 2008 was $53.5 million, a decrease of $2.5 million, or 4.6%, compared to
$56.0 million in the second quarter of 2007. Operating earnings from broadcasting in the
second quarter of 2008 were $9.7 million, a decrease of $1.6 million, or 14.1%, compared
to $11.3 million in the second quarter of 2007.

The following table presents our
broadcasting revenue and operating earnings for the second quarter of 2008 and the second
quarter of 2007:

|                   | 2008 | 2007
|------------------ | ---- | ----
|
|
|Revenue            |      |     
|                   |      |     
|Operating earnings |      |     
|                   |      |     

Revenue from our television stations
in the second quarter of 2008 was $32.6 million, a decrease of $1.4 million, or 4.3%,
compared to $34.0 million in the second quarter of 2007. The revenue decrease was
primarily from our larger television markets of Las Vegas, Fort Myers/Naples, Tucson and
Milwaukee and was partially offset by an increase in revenue in our Palm Springs, Omaha,
Boise and Lansing markets. The decrease was due to a $1.3 million decrease in local
advertising revenue and a $0.6 million decrease in national advertising revenue, partially
offset by a $0.4 million increase in political and issue advertising revenue and a $0.1
million increase in other revenue. Developmental and interactive revenue, which are
reported in local advertising revenue, increased $0.3 million and $0.1 million,
respectively, in the second quarter of 2008 compared to the second quarter of 2007.
Developmental revenue refers to non-transactional revenue that targets non-traditional
advertisers.

Operating earnings from our
television stations in the second quarter of 2008 were $4.6 million, a decrease of $1.4
million, or 24.4%, compared to $6.0 million in the second quarter of 2007. The decrease in
operating earnings was primarily due to the impact of the decrease in revenue. Total
expenses at our television stations in the second quarter of 2008 were essentially even
compared to the second quarter of 2007.

25

---

Revenue from our radio stations in
the second quarter of 2008 was $20.9 million, a decrease of $1.1 million, or 5.0%,
compared to $22.0 million in the second quarter of 2007. Revenue decreased in all of our
radio markets, except Omaha. The decrease was due to a $0.6 million decrease in local
advertising revenue, a $0.2 million decrease in national advertising revenue, a $0.2
million decrease in political and issue advertising and a $0.1 million decrease in other
revenue. Developmental and interactive revenue, which are reported in local advertising
revenue, increased $0.1 million and $0.1 million, respectively, in the second quarter of
2008 compared to the second quarter of 2007.

Operating earnings from our radio
stations in the second quarter of 2008 were $5.1 million, a decrease of $0.2 million, or
2.2%, compared to $5.3 million in the second quarter of 2007. The decrease in operating
earnings is due to the impact of the decrease in revenue, partially offset by a decrease
in payroll and benefits costs, a decrease in broadcasting rights fees for Milwaukee
Bucks basketball games due to a change in the Milwaukee Bucks affiliation
agreement and a decrease in promotion expenses.

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

Revenue from printing services in the
second quarter of 2008 was $16.8 million, an increase of $0.3 million, or 1.5%, compared
to $16.5 million in the second quarter of 2007. Operating earnings from printing services
in the second quarter of 2008 were $0.8 million, a decrease of $0.2 million, or 23.8%,
compared to $1.0 million in the second quarter of 2007.

The increase in printing services
revenue was primarily due to an increase in printing documentation materials for Dell
Computer Corporation (Dell), partially offset by a decrease in printing publications.
Notwithstanding the increase in the quarter, we believe our revenue from Dell in 2008 will
be essentially even compared to revenue from Dell in 2007.

The decrease in printing services
operating earnings was primarily due to an increase in employee benefit costs and lower
margins for printing of documentation materials, partially offset by production
efficiencies.

| | Other
| | -----

Other revenue in the second quarter
of 2008 was $8.0 million, an increase of $0.6 million, or 9.2%, compared to $7.4 million
in the second quarter of 2007. Other operating earnings in the second quarter of 2008 were
$0.4 million, an increase of $0.2 million, or 96.1%, compared to $0.2 million in the
second quarter of 2007.

The following table presents our
other revenue and operating earnings for the second quarter of 2008 and the second quarter
of 2007:

|                          | 2008 | 2007
|------------------------- | ---- | ----
|
|
|Revenue                   |      |     
|                          |      |     
|Operating earnings (loss) |      |     
|                          |      |     

The increase in other revenue in the
second quarter of 2008 compared to the second quarter of 2007 was primarily due to an
increase in offset printing services and postage and freight amounts billed to customers
at our Clearwater, Florida facility of our direct marketing services business. Included in
revenue and operating costs and expenses from our direct marketing services business is
$4.7 million and $4.3 million of postage amounts billed to customers in the second quarter
of 2008 and the second quarter of 2007, respectively.

The increase in operating earnings
was primarily due to the increase in revenue at our direct marketing services business.

| | Other
Income and Expense and Taxes
| | ----------------------------------

Interest income was insignificant in
the second quarter of 2008 and the second quarter of 2007. Interest expense was $1.9
million in the second quarter of 2008 compared to $2.0 million in the second quarter of
2007. The decrease is primarily due to a decrease in our weighted average interest rate,
partially offset by an increase in the average debt outstanding due to repurchases of our
class A common stock. Amortization of deferred financing costs was $0.1 million in the
second quarter of 2008 and the second quarter of 2007.

The effective tax rate for continuing
operations was 38.9% in the second quarter of 2008 and 38.8% in the second quarter of
2007.

26

---

| | Discontinued
Operations
| | -----------------------

On June 25, 2007, July 6, 2007 and
August 2, 2007, we sold our Ohio publishing and printing operations, our Louisiana
publishing operation and our New England publishing and printing operations, respectively.
The operations of the three regional publishing and printing operations of our community
newspapers and shoppers business have been reflected as discontinued operations in our
consolidated financial statements for all periods presented.

There were no results from
discontinued operations in the second quarter of 2008. Gain from discontinued operations,
net of income taxes, was $1.5 million in the second quarter of 2007. Income tax expense
related to discontinued operations was $0.7 million in the second quarter of 2007.

| | Net
Earnings
| | ------------

Our net earnings in the second
quarter of 2008 were $9.0 million, a decrease of $5.2 million, or 36.4%, compared to $14.2
million in the second quarter of 2007. The decrease was due to the decrease in operating
earnings from continuing operations for the reasons described above and the decrease in
gain from discontinued operations in the second quarter of 2007.

| | Diluted
Earnings per Share for Class A and B Common Stock
| | ---------------------------------------------------------

Diluted earnings per share for class
A and B common stock from continuing operations were $0.16 in the second quarter of 2008
compared to $0.19 in the second quarter of 2007. Diluted earnings per share for class A
and B common stock from discontinued operations were $0.00 in the second quarter of 2008
compared to $0.02 in the second quarter of 2007. Diluted earnings per share for class A
and B common stock from net earnings were $0.16 in the second quarter of 2008 compared to
$0.21 in the second quarter of 2007. Our diluted earnings per share were favorably
impacted in the second quarter of 2008 and the second quarter of 2007 by our share
repurchases.

# Two Quarters Ended June
29, 2008 compared to the Two Quarters Ended July 1, 2007

| | Continuing
Operations
| | ---------------------

Our consolidated revenue in the two
quarters of 2008 was $274.4 million, a decrease of $16.3 million, or 5.6%, compared to
$290.7 million in the two quarters of 2007. Our consolidated operating costs and expenses
in the two quarters of 2008 were $156.5 million, a decrease of $2.6 million, or 1.7%,
compared to $159.1 million in the two quarters of 2007. Our consolidated selling and
administrative expenses in the two quarters of 2008 were $88.7 million, a decrease of $3.5
million, or 3.8%, compared to $92.2 million in the two quarters of 2007.

The following table presents our
total revenue by segment, total operating costs and expenses, selling and administrative
expenses and total operating earnings as a percent of total revenue for the two quarters
of 2008 and the two quarters of 2007:

|                                               | 2008 | Percent of
Total
Revenue | 2007 | Percent of
Total
Revenue
|---------------------------------------------- | ---- | ------------------------ | ---- | ------------------------
|
|Revenue:                                       |      |                          |      |                         
|Publishing                                     |      |                          | $    | 122.6                   
|Broadcasting                                   |      |                          |      | 102.8                   
|Printing services                              |      |                          |      | 33.3                    
|Other                                          |      |                          |      | 15.7                    
|                                               |      |                          |      |                         
|Total revenue                                  |      |                          |      | 274.4                   
|Total operating costs and expenses             |      |                          |      | 156.5                   
|Selling and administrative expenses            |      |                          |      | 88.7                    
|                                               |      |                          |      |                         
|Total operating costs and expenses and selling |      |                         
|and administrative expenses                    |      |                          |      | 245.2                   
|                                               |      |                          |      |                         
|Total operating earnings                       |      |                          | $    | 29.2                    
|                                               |      |                          |      |                         

The decrease in total revenue was due
to a decrease in classified ROP advertising, primarily for employment and real estate at
our publishing businesses, a decrease in retail ROP and preprint advertising at our
publishing businesses, a decrease in local advertising revenue at our television and radio
stations, a decrease in national advertising revenue at our television stations and at our
daily newspaper, a decrease in circulation revenue at our publishing businesses, a
decrease in direct marketing revenue at our daily newspaper, a decrease in national
advertising revenue at our radio stations and decrease in revenue from printing catalogs
at our printing services business. These revenue decreases were partially offset by an
increase in political and issue advertising revenue at our television stations, an
increase in interactive advertising revenue at our publishing and broadcasting businesses,
an increase in commercial printing revenue at our daily newspaper and an increase in
developmental revenue at our broadcasting business.

27

---

The decrease in total operating costs
and expenses was due to a decrease in newsprint and paper costs at our publishing
businesses, decrease in payroll and retirement benefit costs at our daily newspaper and
direct marketing services business, a decrease in outside printing costs at our publishing
businesses, a decrease in postage and freight costs primarily at our printing services
business, a decrease in broadcasting rights fees for Milwaukee Bucks basketball
games and various other cost reductions. These cost decreases were partially offset by an
increase in interactive costs at our publishing and broadcasting businesses associated
with the increase in interactive revenue, an increase in payroll and programming costs at
our television stations and an increase in health care costs at all of our businesses.

The decrease in selling and
administrative expenses is primarily due to a decrease in payroll and retirement benefit
costs at all of our businesses, a decrease in advertising expenses at our broadcasting and
publishing businesses, a decrease in depreciation expense at our publishing businesses and
various other cost reductions. These decreases were partially offset by an increase in
health care costs at all of our businesses, a gain on the sale of the Hartland, Wisconsin
printing facility in the two quarters of 2007 and a contract termination charge at our
community newspapers and shoppers business.

Our consolidated operating earnings
in the two quarters of 2008 were $29.2 million, a decrease of $10.2 million, or 25.8%,
compared to $39.4 million in the two quarters of 2007. The following table presents our
operating earnings by segment for the two quarters of 2008 and the two quarters of 2007:

|                         | 2008 | Percent of
Total
Operating
Earnings | 2007 | Percent of
Total
Operating
Earnings
|------------------------ | ---- | ----------------------------------- | ---- | -----------------------------------
|
|Publishing               |      |                                     | $    | 10.0                               
|Broadcasting             |      |                                     |      | 16.8                               
|Printing services        |      |                                     |      | 1.6                                
|Other                    |      |                                     |      | 0.8                                
|                         |      |                                     |      |                                    
|Total operating earnings |      |                                     | $    | 29.2                               
|                         |      |                                     |      |                                    

The decrease in total operating
earnings was primarily due to the decrease in revenue in our publishing and broadcasting
businesses.

Our consolidated EBITDA in the two
quarters of 2008 was $43.9 million, a decrease of $10.2 million, or 19.0%, compared to
$54.1 million in the two quarters of 2007. The following table presents a reconciliation
of our consolidated net earnings to consolidated EBITDA for the two quarters of 2008 and
the two quarters of 2007:

|                                       | 2008 | 2007
|-------------------------------------- | ---- | ----
|
|Net earnings                           |      |     
|Gain from discontinued operations, net |      |     
|Provision for income taxes             |      |     
|Total other expense, net               |      |     
|Depreciation                           |      |     
|Amortization                           |      |     
|                                       |      |     
|EBITDA                                 |      |     
|                                       |      |     

The decrease in EBITDA is consistent
with decreases in operating earnings in our publishing, broadcasting and printing services
segments for the reasons described above.

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

Revenue from publishing in the two
quarters of 2008 was $122.6 million, a decrease of $11.4 million, or 8.6%, compared to
$134.0 million in the two quarters of 2007. Operating earnings from publishing were $10.0
million, a decrease of $5.2 million, or 34.6%, compared to $15.2 million in the two
quarters of 2007.

28

---

The following table presents our
publishing revenue by category and operating earnings for the two quarters of 2008 and the
two quarters of 2007:

|                            | 2008 | 2007
|--------------------------- | ---- | ----
|
|
|Advertising revenue:        |      |     
|Retail                      |      |     
|Classified                  |      |     
|National                    |      |     
|Direct Marketing            |      |     
|Other                       |      |     
|                            |      |     
|Total advertising revenue.. |      |     
|Circulation revenue         |      |     
|Other revenue               |      |     
|                            |      |     
|Total revenue               |      |     
|                            |      |     
|Operating earnings          |      |     
|                            |      |     

Advertising revenue in the two
quarters of 2008 accounted for 71.6% of total publishing revenue compared to 74.2% in the
two quarters of 2007.

Retail advertising revenue in the two
quarters of 2008 was $55.3 million, a decrease of $3.1 million, or 5.4%, compared to $58.4
million in the two quarters of 2007. The $2.3 million decrease at our daily newspaper was
primarily due to a decrease in ROP advertising, primarily in the automotive,
communications, home improvement, department stores, airline and travel and real estate
categories, partially offset by an increase in ROP advertising in the dining and
entertainment category. Retail preprint advertising decreased in the home improvement,
department stores and communications categories. These decreases were partially offset by
an increase in interactive, Market Place and specialty magazine advertising in the two
quarters of 2008. The $0.8 million decrease at our community newspapers and shoppers was
primarily due to decreases in automotive, real estate and health care advertising,
partially offset by revenue from the newly acquired publications in Northern Wisconsin and
Florida and an increase in revenue at our community newspapers surrounding Milwaukee,
Wisconsin.

Classified advertising revenue in the
two quarters of 2008 was $27.2 million, a decrease of $7.0 million, or 20.6%, compared to
$34.2 million in the two quarters of 2007. Decreases in ROP, Market Place and MKE
classified advertising at our daily newspaper were partially offset by an increase in
interactive classified advertising. The $7.1 million decrease in ROP, Market Place and
MKE classified advertising revenue at our daily newspaper was primarily due to
decreases in the following categories: employment advertising of $3.7 million, real estate
advertising of $2.4 million and automotive advertising of $1.1 million. The other
classified advertising category for ROP, Market Place and MKE increased $0.1
million in the two quarters of 2008 compared to the two quarters of 2007. Employment
advertising accounted for 41.3% of classified advertising revenue at the daily newspaper
in the two quarters of 2008. The revenue decreases were partially offset by an increase in
interactive advertising in the two quarters of 2008. The $0.3 million decrease in
classified advertising revenue at our community newspapers and shoppers is primarily due
to a decrease in automotive advertising.

Interactive advertising revenue is
reported in the various advertising revenue categories. Total retail and classified
interactive advertising revenue at our publishing businesses was $7.4 million in the two
quarters of 2008, an increase of $0.9 million, or 14.5%, compared to $6.5 million in the
two quarters of 2007 primarily due to an increase in online classified advertising,
including ancillary services from our Jobnoggin.com co-branded employment site with
Monster®, and sponsorship advertising.

National advertising revenue in the
two quarters of 2008 was $3.5 million, a decrease of $0.8 million, or 18.5%, compared to
$4.3 million in the two quarters of 2007. The decrease was due to a decrease in national
ROP advertising in the communications, dining and entertainment, business services and
airline and travel categories and a decrease in national preprint advertising in the
business services and communications categories.

Direct marketing revenue, consisting
of revenue from direct mail products of our daily newspaper, was $1.6 million in the two
quarters of 2008, a decrease of $0.6 million, or 24.6%, compared to $2.2 million in the
two quarters of 2007 primarily due to a decrease in direct mail products sold and a
decrease in postage amounts billed to customers.

Other advertising revenue, consisting
of revenue from company-sponsored event advertising at our community newspapers and
shoppers, was $0.2 million in the two quarters of 2008 and the two quarters of 2007.

Circulation revenue in the two
quarters of 2008 accounted for 20.7% of total publishing revenue compared to 19.5% in the
two quarters of 2007. Circulation revenue of $25.4 million in the two quarters of 2008
decreased $0.7 million, or 2.8%, compared to $26.1 million in the two quarters of 2007
primarily due to decreases in average net paid circulation for the daily and Sunday
editions and a decrease in the Sunday average rate per copy, partially offset by an
increase in the daily average rate per copy at our daily newspaper.

29

---

Other revenue, which consists of
revenue from commercial printing at the printing plants for our community newspapers and
shoppers and promotional, distribution and commercial printing revenue at our daily
newspaper, accounted for 7.7% of total publishing revenue in the two quarters of 2008
compared to 6.3% in the two quarters of 2007. Other revenue in the two quarters of 2008
was $9.4 million, an increase of $0.8 million, or 10.2%, compared to $8.6 million in the
two quarters of 2007. The $1.2 million increase at our daily newspaper was primarily due
to an increase in commercial printing revenue from printing the Chicago Readerand
La Raza. Commercial printing revenue decreased $0.4 million at our community
newspapers and shoppers primarily due to a decrease in commercial printing volume.

In May 2008, our daily newspaper
signed a three-year agreement and began printing La Raza, a Spanish language
newspaper, for distribution in the greater Chicago, Illinois area.

Publishing operating earnings in the
two quarters of 2008 were $10.0 million, a decrease of $5.2 million, or 34.6%, compared to
$15.2 million in the two quarters of 2007. Operating earnings decreased $4.3 million in
the two quarters of 2008 at the daily newspaper primarily due to the impact of the
decrease in classified and retail ROP advertising, partially offset by a $2.8 million
decrease in payroll and retirement benefit costs, a decrease in total newsprint and paper
costs, web-width reduction costs of $0.5 million in the two quarters of 2007, a decrease
in outside printing costs and various other cost reductions. Operating earnings decreased
$0.9 million in the two quarters of 2008 at our community newspapers and shoppers
primarily due a $0.9 million gain on the sale of the Hartland, Wisconsin printing facility
in the two quarters of 2007, the impact of the decrease in revenue and a $0.4 million
contract termination charge in the two quarters of 2008. Total newsprint and paper costs
for our publishing businesses in the two quarters of 2008 were $12.7 million, a decrease
of $1.2 million, or 8.6%, compared to $13.9 million in the two quarters of 2007 primarily
due to a 9.5% decrease in newsprint consumption, partially offset by a 2.4% increase in
average newsprint pricing per metric ton. Consumption of metric tonnes of newsprint in the
two quarters of 2008 decreased primarily due to decreases in ROP advertising, average net
paid circulation and a reduction in waste at our daily newspaper and a decrease in ROP
advertising at our community newspapers and shoppers. We believe our consumption of
newsprint will continue to be lower in 2008 compared to 2007. However, we expect our
average newsprint pricing per metric ton will increase during the remainder of 2008
compared to 2007.

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

Revenue from broadcasting in the two
quarters of 2008 was $102.8 million, a decrease of $5.0 million, or 4.6%, compared to
$107.8 million in the two quarters of 2007. Operating earnings from broadcasting in the
two quarters of 2008 were $16.8 million, a decrease of $4.5 million, or 20.9%, compared to
$21.3 million in the two quarters of 2007.

The following table presents our
broadcasting revenue and operating earnings for the two quarters of 2008 and the two
quarters of 2007:

|                   | 2008 | 2007
|------------------ | ---- | ----
|
|
|Revenue            |      |     
|                   |      |     
|Operating earnings |      |     
|                   |      |     

Revenue from our television stations
in the two quarters of 2008 was $64.9 million, a decrease of $2.7 million, or 3.9%,
compared to $67.6 million in the two quarters of 2007. The revenue decrease was primarily
from our larger television markets of Las Vegas, Fort Myers/Naples, Tucson and Milwaukee
and was partially offset by an increase in revenue in our Palm Springs, Lansing, Boise and
Omaha markets. The decrease was due to a $2.8 million decrease in local advertising
revenue and a $1.5 million decrease in national advertising revenue, partially offset by a
$1.5 million increase in political and issue advertising revenue and a $0.1 million
increase in other revenue. Developmental and interactive revenue, which are reported in
local advertising revenue, increased $0.7 million and $0.3 million, respectively, in the
two quarters of 2008 compared to the two quarters of 2007. Developmental revenue refers to
non-transactional revenue that targets non-traditional advertisers.

Operating earnings from our
television stations in the two quarters of 2008 were $8.2 million, a decrease of $4.0
million, or 32.7%, compared to $12.2 million in the two quarters of 2007. The decrease in
operating earnings was primarily due to the impact of the decrease in revenue and
increases in: payroll and benefit costs; depreciation expense due to our investment in
digital and high-definition equipment and the new building constructed in Las Vegas,
Nevada; interactive fees due to the increase in interactive revenue; programming costs;
legal expenses; and bad debt expense. These expense increases were partially offset by a
decrease in promotion expenses.

30

---

Revenue from our radio stations in
the two quarters of 2008 was $37.9 million, a decrease of $2.3 million, or 5.8%, compared
to $40.2 million in the two quarters of 2007. Revenue decreased in all of our radio
markets, except for Omaha. The decrease was due to a $1.6 million decrease in local
advertising revenue, a $0.5 million decrease in national advertising revenue and a $0.2
million decrease in political and issue advertising revenue. Developmental and interactive
revenue, which are reported in local advertising revenue, increased $0.2 million and $0.2
million, respectively, in the two quarters of 2008 compared to the two quarters of 2007.

Operating earnings from our radio
stations in the two quarters of 2008 were $8.6 million, a decrease of $0.5 million, or
5.1%, compared to $9.1 million in the two quarters of 2007. The decrease in operating
earnings is due to the impact of the decrease in revenue partially offset by decreases in
payroll and retirement benefits costs, promotion expenses, broadcasting rights fees for
Milwaukee Bucks basketball games due to a change in the Milwaukee Bucks
affiliation agreement, and a $0.1 million loss on the sale of KOMJ-AM in Omaha, Nebraska
in the two quarters of 2007.

In the first quarter of 2008, our
Milwaukee, Wisconsin radio station, WTMJ-AM, agreed to an extension of a radio
broadcasting rights agreement with the Milwaukee Brewers baseball team.

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

Revenue from printing services in the
two quarters of 2008 was $33.3 million, a decrease of $0.1 million, or 0.3%, compared to
$33.4 million in the two quarters of 2007. Operating earnings from printing services in
the two quarters of 2008 were $1.6 million, a decrease of $0.5 million, or 22.9%, compared
to $2.1 million in the two quarters of 2007.

The decrease in printing services
revenue was primarily due to a decrease in printing catalogs, partially offset by an
increase in printing documentation materials for Dell and printing publications.

The decrease in printing services
operating earnings was primarily due to an increase in employee benefit costs and a
favorable adjustment from the termination of a sublease agreement in the two quarters of
2007, partially offset by production efficiencies.

| | Other
| | -----

Other revenue in the two quarters of
2008 was $15.7 million, an increase of $0.2 million, or 1.3%, compared to $15.5 million in
the two quarters of 2007. Other operating earnings were $0.8 million in the two quarters
of 2008 and the two quarters of 2007.

The following table presents our
other revenue and operating earnings for the two quarters of 2008 and the two quarters of
2007:

|                          | 2008 | 2007
|------------------------- | ---- | ----
|
|
|Revenue                   |      |     
|                          |      |     
|Operating earnings (loss) |      |     
|                          |      |     

The increase in other revenue in the
two quarters of 2008 compared to the two quarters of 2007 was primarily due to a decrease
in intercompany revenue. Included in revenue and operating costs and expenses from our
direct marketing services business is $9.1 million and $8.8 million of postage amounts
billed to customers in the two quarters of 2008 and the two quarters of 2007,
respectively.

An increase in operating earnings at
our direct marketing services business was primarily due to a decrease in payroll and
benefits costs. This increase was offset by an increase in corporate expenses related to
the development of new interactive products for our publishing and broadcasting
businesses.

| | Other
Income and Expense and Taxes
| | ----------------------------------

Interest income was insignificant in
the two quarters of 2008 and the two quarters of 2007. Interest expense was $4.2 million
in the two quarters of 2008 compared to $5.0 million in the two quarters of 2007. The
decrease is primarily due to a decrease in our weighted average interest rate partially
offset by an increase in the average debt outstanding due to repurchases of our class A
common stock. Amortization of deferred financing costs was $0.2 million in the two
quarters of 2008 and the two quarters of 2007.

The effective tax rate for continuing
operations was 38.9% in the two quarters of 2008 and 39.1% in the two quarters of 2007.

31

---

| | Discontinued
Operations
| | -----------------------

On February 26, 2007, Q-Comm
Corporation acquired 100% of the stock of Norlight Telecommunications, Inc. (Norlight). On
June 25, 2007, July 6, 2007 and August 2, 2007, we sold our Ohio publishing and printing
operations, our Louisiana publishing operation and our New England publishing and printing
operations, respectively. The operations of Norlight and the three regional publishing and
printing operations of our community newspapers and shoppers business have been reflected
as discontinued operations in our consolidated financial statements for all periods
presented.

Gain from discontinued operations,
net of income taxes, was $0.4 million in the two quarters of 2008 compared to $66.5
million in two quarters of 2007. Income tax expense related to discontinued operations was
$42.5 million in the two quarters of 2007.

In the two quarters of 2008, we
recorded a gain on discontinued operations of $0.4 million for a reduction in the reserve
related to a preliminary settlement with the Environmental Protection Agency for a 2007
initial assessment against NorthStar Print Group, Inc.

We recorded a $62.0 million net gain
on the sale of Norlight and $1.3 million net gain on the sale of the Ohio publishing and
printing operations in the two quarters of 2007. The net gain from the operating results
from discontinued operations was $3.2 million in the two quarters of 2007.

| | Net
Earnings
| | ------------

Our net earnings in the two quarters
of 2008 were $15.7 million, a decrease of $71.8 million, compared to $87.5 million in the
two quarters of 2007. The decrease was due to the decrease in gain from discontinued
operations in the two quarters of 2007 and the decrease in operating earnings from
continuing operations for the reasons described above.

| | Diluted
Earnings per Share for Class A and B Common Stock
| | ---------------------------------------------------------

Diluted earnings per share for class
A and B common stock from continuing operations were $0.26 in the two quarters of 2008
compared to $0.30 in the two quarters of 2007. Diluted earnings per share from
discontinued operations for class A and B common stock were $0.01 in the two quarters of
2008 compared to $0.97 in the two quarters of 2007. Diluted earnings per share for class A
and B common stock from net earnings were $0.27 in the two quarters of 2008 compared to
$1.27 in the two quarters of 2007. Our diluted earnings per share were favorably impacted
in the two quarters of 2008 and the two quarters of 2007 by our share repurchases.

# Liquidity and Capital
Resources

We have a $475.0 million unsecured
revolving credit facility that expires on June 2, 2011. The interest rate on borrowings is
either LIBOR plus a margin that ranges from 37.5 basis points to 87.5 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 100 basis points. As of June 29, 2008,
we had borrowings of $211.5 million under the facility at a weighted average rate of
3.17%. Fees in connection with the facility of $1.7 million are being amortized over the
term of the facility using the straight-line method which approximates the
effective-interest method. The financial 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.
| | - | ----------------------------------------------------------------------------------------------------------------------

| |  | An
interest coverage ratio as determined for the four fiscal quarter period preceding the
date of determination.
| | - | ----------------------------------------------------------------------------------------------------------------

As of June 29, 2008, we were in
compliance with these financial covenants.

We have $1.7 million of standby
letters of credit for business insurance purposes.

| | Dividends
| | ---------

On February 12, 2008, our board of
directors increased the quarterly dividend on our class A and class B shares from $0.075
to $0.08 per share.

| | Acquisitions
| | ------------

On January 9, 2008, Journal Community
Publishing Group, Inc., our community newspapers and shoppers business, acquired the
Iola Herald and Manawa Advocate in Waupaca County in Wisconsin. These are
weekly publications with a paid circulation of approximately 1,800. On March 19, 2008,
Journal Community Publishing Group, Inc. acquired two shoppers, the Clintonville
Shoppers Guide and the Wittenberg Northerner Shopping News, in Waupaca
County, Wisconsin. The total cash purchase price for these publications was $1.4 million.
The acquisitions deepen our media offerings and extend our reach in north central
Wisconsin.

32

---

On January 28, 2008, Journal
Broadcast Corporation and Journal Broadcast Group, Inc., our broadcasting businesses,
completed the asset purchase of My Network affiliate KPSE-LP, Channel 50, in Palm Springs,
California from Mirage Media LLC for $4.7 million. We also own KMIR-TV, the NBC affiliate,
also in Palm Springs. The acquisition of KPSE allows us to better serve advertisers and
viewers in the Coachella Valley and builds a stronger presence in Palm Springs and the
surrounding area.

On July 1, 2008, Journal Broadcast
Corporation and Journal Broadcast Group, Inc., our broadcasting businesses, entered into
an asset purchase agreement with Banks-Boise, Inc. to purchase CW Network affiliate
KNIN-TV, Analog Channel 9 and Digital Channel 10, in Boise, Idaho for $8.0 million. The
purchase is subject to regulatory approval and customary closing conditions. We currently
own KIVI-TV, the ABC affiliate, and six radio stations in Boise. The acquisition of
KNIN-TV gives us an opportunity to build out cross-platform businesses in Boise and with
two television stations and six radio stations in this market, we believe we can better
serve advertisers and viewers build an even stronger presence in the community.

On July 22, 2008, Journal Broadcast
Corporation and Journal Broadcast Group, Inc., our broadcasting businesses, completed the
asset purchase of CW Network affiliate, KWBA-TV, Analog Channel 58, Digital Channel 44, in
Sierra Vista, Arizona, from Cascade Broadcasting Group, LLC and Tucson Communications,
L.L.C. for $11.9 million. KWBA-TV serves the Tucson, Arizona market. We also own KGUN-TV,
the ABC affiliate, and four radio stations in Tucson. We believe owning cross-platform
businesses in this growth market will help us increase our local news focus and better
serve our viewers and listeners.

| | Share
Repurchase Authorizations
| | -------------------------------

In the two quarters of 2008, we
purchased 5.9 million shares of our class A common stock pursuant to our October 2007 and
May 2008 board of directors authorizations for $40.6 million or an average of $6.87
per share, excluding commissions. We completed our repurchases under the October 2007
authorization in March 2008.

The May 2008 authorization is for the
repurchase of up to five million additional shares of our class A common stock over the
following 18 months. As of the end of the second quarter of 2008, we have 3.2 million
shares of our class A common stock remaining to be purchased under our May 2008
authorization.

# Cash Flow

| | Continuing
Operations
| | ---------------------

Cash balances were $4.2 million at
June 29, 2008. We believe our expected cash flows from operations and borrowings available
under our credit facility will adequately meet our needs for the next twelve months.

Cash provided by operating activities
was $29.5 million in the two quarters of 2008 compared to $23.7 million in the two
quarters of 2007. The increase was primarily due to an increase in cash provided by
working capital in the two quarters of 2008 compared to the two quarters of 2007.

Cash used for investing activities
was $14.7 million in the two quarters of 2008 compared to cash provided by investing
activities of $159.0 million in the two quarters of 2007. Capital expenditures were $8.5
million in the two quarters of 2008 compared to $16.9 million in the two quarters of 2007.
In an effort to reduce costs, we are reviewing all of our planned capital expenditures for
2008 and may delay spending on non-critical projects. Our capital expenditures at our
daily newspaper are primarily targeted towards equipment and building improvements. Our
capital expenditures in our broadcasting business are targeted towards technology
upgrades, including investments in digital radio and high-definition equipment for certain
of our television stations. We believe these expenditures will help us to better serve our
advertisers, viewers and listeners and to facilitate our cost control initiatives.
Proceeds from the sale of Norlight, our Ohio publishing and printing operations and
KOMJ-AM in Omaha, Nebraska were $185.3 million in the two quarters of 2007. During the two
quarters of 2008, we acquired KPSE-LP in Palm Springs, California for $4.7 million and two
community newspapers and two community shoppers for $1.6 million. We remitted the final
purchase payment of $10.0 million to Emmis Communications Corporation to acquire the FCC
license of KMTV-TV and our daily newspaper acquired two magazines for $1.4 million in the
two quarters of 2007.

Cash used for financing activities
was $17.4 million in the two quarters of 2008 compared to $162.0 million in the two
quarters of 2007. Borrowings under our credit facility in the two quarters of 2008 were
$106.4 million and we made payments of $73.8 million compared to borrowings of $175.9
million and payments of $292.5 million in the two quarters of 2007 reflecting the
immediate use of proceeds received from the sale of Norlight. In the two quarters of 2008
and the two quarters of 2007, we paid $40.8 million and $35.1 million, respectively, to
purchase our class A common stock. We paid cash dividends of $9.5 million and $10.6
million in the two quarters of 2008 and the two quarters of 2007, respectively.

| | Discontinued
Operations
| | -----------------------

Cash provided by discontinued
operations was $0.6 million in the two quarters of 2008 compared to cash used by
discontinued operations of $22.2 million in the two quarters of 2007 primarily due to
income tax payments related to the sale of Norlight in February 2007. Capital
expenditures, which related primarily to Norlight, were $0.7 million in the two quarters
of 2007.

33

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# New Accounting Standards

In December 2007, the FASB issued
FASB Statement No. 141 (Revised 2007), Business Combinations. Statement No.
141R requires that an acquiring entity recognize all the assets acquired and liabilities
assumed in a transaction at the acquisition date fair value with limited exceptions.
Statement No. 141R will change the accounting treatment for acquisition costs,
non-controlling interests, contingent liabilities, in-process research and development,
restructuring costs, and income taxes. In addition, it also requires a substantial number
of new disclosure requirements. Statement No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008. Earlier adoption is
prohibited. We will adopt Statement No. 141R in the first quarter of 2009. We do not
believe the effect of adopting Statement No. 141R will have a material impact on our
consolidated financial statements.

In February 2008, the FASB issued
FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which
delays the effective date of Statement No. 157 for all nonfinancial assets and
liabilities, except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually) to fiscal years beginning after
November 15, 2008.

In April 2008, the FASB issued Staff
Position FAS 142-3, Determination of the Useful Life of Intangible Assets.
Staff Position FAS 142-3 requires that in developing assumptions about renewal or
extension used to determine the useful life of a recognized intangible asset, an entity
shall consider its own historical experience in renewing or extending similar
arrangements; however, these assumptions should be adjusted for entity-specific factors.
In the absence of that experience, an entity shall consider the assumptions that market
participants would use about renewal or extension (consistent with the highest and best
use of the asset by market participants), adjusted for the entity-specific factors. For a
recognized intangible asset, an entity shall disclose information that enables users of
financial statements to assess the extent to which the expected future cash flows
associated with the asset are affected by the entitys intent and/or ability to renew
or extend the arrangement. This guidance is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those fiscal
years. Early adoption is prohibited. The guidance for determining the useful life of a
recognized intangible asset shall be applied prospectively to intangible assets acquired
after the effective date. The disclosure requirements shall be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date. We will
adopt Staff Position FAS 142-3 in the first quarter of 2009. We do not believe the effect
of adopting Staff Position FAS 142-3 will have a material impact on our consolidated
financial statements.

In May 2008, the FASB issued FASB
Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles.
Statement No. 162 is intended to improve financial reporting by identifying a consistent
framework, or hierarchy, for selecting accounting principles to be used in preparing
financial statements that are presented in conformity with U.S. generally accepted
accounting principles for nongovernmental entities. Statement No. 162 is effective 60 days
following the SECs approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles. We do not believe the effect of adopting
Statement No. 162 will have a material impact on our consolidated financial statements.

In June 2008, the FASB issued EITF
03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions
Are Participating Securities. EITF 03-6-1 requires that unvested share-based payment
awards that contain nonforfeitable rights to dividends or dividend equivalents (whether
paid or unpaid) are participating securities and shall be included in the computation of
earnings per share pursuant to the two-class method. EITF 03-6-1 is effective for
financial statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those years. All prior-period earnings per share data presented
shall be adjusted retrospectively to conform to the provisions of this EITF. Early
application is not permitted. We will adopt EITF 03-6-1 in the first quarter of 2009. We
do not believe the effect of adopting EITF 03-6-1 will have a material impact on our
consolidated financial statements.

# 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 30, 2007.

|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 30, 2007.

|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
Rule 13a-15(e)) 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 SECs rules and
forms, and that such information is accumulated and communicated to them to allow timely
decisions regarding required disclosure.

34

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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
|------- | -----------------

None.

|ITEM 1A. | RISK
FACTORS
|-------- | ------------

There are no material changes to the
disclosures regarding risk factors made in Item 1A. of our Annual Report on Form 10-K for
the year ended December 30, 2007.

|ITEM 2. | UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

The following table provides
information about our repurchases of our class A common stock in the second quarter ended
June 29, 2008:

# Issuer Purchases of
Equity Securities

|                                
|--------------------------------
|Period                          
|March 31, 2008 to April 27, 2008
|April 28, 2008 to May 25, 2008  
|May 26, 2008 to June 29, 2008   

| | (1) | These
shares were purchased pursuant to a repurchase program publicly announced
               on May 1, 2008, and commenced on May 12, 2008, pursuant to which our board
of                directors authorized the repurchase of up to 5,000,000 class A shares
over the                following 18 months. These shares will remain authorized but
unissued.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Also
includes 29 shares of class B common stock from May 26, 2008 to June 29,
               2008 transferred from an employee to us to satisfy tax withholding
requirements                in connection with the vesting of restricted stock under the
2003 Equity                Incentive Plan.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 3. | DEFAULTS
UPON SENIOR SECURITIES
|------- | -------------------------------

None.

35

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|ITEM 4. | SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

On May 1, 2008, we held our annual
meeting of shareholders for the purpose of voting on the following items:

| |  | The
election of four Class II directors:  Steven J. Smith,  Mary Ellen Stanek,  Owen Sullivan
and Jeanette          Tully, and
| | - | ------------------------------------------------------------------------------------------------------------------------------

| |  | A
proposal put forth by one of our shareholders that the board of Journal Communications
considers using free cash flow for quarterly dividends and dividend increases before
beginning new share repurchase programs or outside acquisitions.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Steven J. Smith and Douglas G. Kiel,
as the designated proxies, voted the shares of Journal Communications, Inc. common stock
as they were instructed by the shareholders of Journal Communications, Inc. Approximately
74% of all votes were represented at the meeting in person or by proxy. The votes were:

|               
|---------------
|Steven J. Smith
|Votes For      
|Votes Withheld 
|               
|Total Votes    
|               

|                     
|---------------------
|Term Expiring in 2009
|                     
|                     
|                     

The proposal that the board consider
using free cash flow for quarterly dividends and dividend increases before beginning new
share repurchase programs or outside acquisitions was defeated with 72,041,554 votes
AGAINST the shareholder proposal, 42,925,889 votes FOR the shareholder proposal and
11,369,597 votes ABSTAINING.

|ITEM 5. | OTHER
INFORMATION
|------- | -----------------

None.

|ITEM 6. | EXHIBITS
|------- | --------

(a) Exhibits

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

|(3.1) | Bylaws
of Journal Communications, Inc., as amended (incorporated by reference           to
Exhibit 3.2 to Journal Communications Current Report on Form 8-K dated
          May 1, 2008 [Commission File No. 1-31805]).
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10.1) | Journal
Communications, Inc. (f/k/a The Journal Company) 2003 Employee Stock           Purchase
Plan, as amended and restated.
|------ | ------------------------------------------------------------------------------------------------------------------------------

|(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) | Certification
of 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.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

36

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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: July 31, 2008 | /s/ Steven J. Smith                                                   
|                    | Steven J. Smith, Chairman and Chief Executive Officer                 
|Date: July 31, 2008 | /s/ Paul M. Bonaiuto                                                  
|                    | Paul M. Bonaiuto, Executive Vice President and Chief Financial Officer

37