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

# FORM 10-Q

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

# For the quarterly
period ended: March 26, 2006

or

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

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

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

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

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

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

# Yes [X] No [   ]

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act.

# Large Accelerated Filer
[   ] Accelerated Filer [X] Non-accelerated Filer [   ]

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 April 21, 2006 (excluding 8,676,705
shares of class B common stock held by our subsidiary, The Journal Company):

|Class                | Outstanding at April 21, 2006
|-------------------- | -----------------------------
|Class A Common Stock | 45,123,429                   
|Class B Common Stock | 23,109,542                   
|Class C Common Stock | 3,264,000                    

---

# JOURNAL
COMMUNICATIONS, INC.

# INDEX

|         |                       |                                                                
|-------- | --------------------- | ---------------------------------------------------------------
|         |                       |                                                                
|Part I.  | Financial Information |                                                                
|         | Item 1.               | Financial Statements                                           
|         |                       | Consolidated Condensed Balance Sheets as of                    
|         |                       | March 26, 2006 (Unaudited) and December 25, 2005               
|         |                       | Unaudited Consolidated Condensed Statements of Earnings        
|         |                       | for the First Quarter Ended March 26, 2006 and March 27, 2005  
|         |                       | Unaudited Consolidated Condensed Statement of                  
|         |                       | Shareholders Equity for the First Quarter Ended March 26, 2006
|         |                       | Unaudited Consolidated Condensed Statements of                 
|         |                       | Cash Flows for the First Quarter Ended March 26, 2006          
|         |                       | and March 27, 2005                                             
|         |                       | Notes to Unaudited Consolidated Condensed                      
|         |                       | Financial Statements as of March 26, 2006                      
|         | 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. Consolidated Condensed Balance Sheets(in thousands, except share and per share
amounts)

|                                                                     | March 26, 2006 | December 25, 2005
|-------------------------------------------------------------------- | -------------- | -----------------
|(unaudited)                                                          |               
|Current assets:                                                      |                |                  
|Cash and cash equivalents                                            |                |                  
|Receivables, less allowance for doubtful accounts                    |                |                  
|of $4,500 and $4,581                                                 |                |                  
|Inventories, net                                                     |                |                  
|Prepaid expenses                                                     |                |                  
|Deferred income taxes                                                |                |                  
|                                                                     |                |                  
|TOTAL CURRENT ASSETS                                                 |                |                  
|Property and equipment, at cost, less accumulated depreciation       |                |                  
|of $357,201 and $345,838                                             |                |                  
|Goodwill                                                             |                |                  
|Broadcast licenses                                                   |                |                  
|Other intangible assets, net                                         |                |                  
|Prepaid pension costs                                                |                |                  
|Other assets                                                         |                |                  
|Non-current assets of discontinued operations                        |                |                  
|                                                                     |                |                  
|TOTAL ASSETS                                                         |                |                  
|                                                                     |                |                  
|LIABILITIES AND SHAREHOLDERS EQUITY                                 |                |                  
|Current liabilities:                                                 |                |                  
|Accounts payable                                                     |                |                  
|Accrued compensation                                                 |                |                  
|Accrued employee benefits                                            |                |                  
|Deferred revenue                                                     |                |                  
|Other current liabilities                                            |                |                  
|Current liabilities of discontinued operations                       |                |                  
|Current portion of long-term liabilities                             |                |                  
|                                                                     |                |                  
|TOTAL CURRENT LIABILITIES                                            |                |                  
|Accrued employee benefits                                            |                |                  
|Long-term notes payable to banks                                     |                |                  
|Deferred income taxes                                                |                |                  
|Other long-term liabilities                                          |                |                  
|Shareholders equity:                                                |                |                  
|Preferred stock, $0.01 par - authorized 10,000,000 shares; no shares |                |                  
|outstanding at March 26, 2006 and at December 25, 2005               |                |                  
|Common stock, $0.01 par:                                             |                |                  
|Class C - authorized 10,000,000 shares; issued and outstanding:      |                |                  
|3,264,000 shares at March 26, 2006 and December 25, 2005             |                |                  
|Class B - authorized 120,000,000 shares; issued and outstanding:     |                |                  
|23,571,923 shares at March 26, 2006 and 26,762,782                   |                |                  
|shares at December 25, 2005                                          |                |                  
|Class A - authorized 170,000,000 shares; issued and outstanding:     |                |                  
|44,585,918 shares at March 26, 2006 and 42,188,974                   |                |                  
|shares at December 25, 2005                                          |                |                  
|Additional paid-in capital                                           |                |                  
|Unearned compensation                                                |                |                  
|Retained earnings                                                    |                |                  
|Treasury stock, at cost                                              |                |                  
|                                                                     |                |                  
|TOTAL SHAREHOLDERS EQUITY                                           |                |                  
|                                                                     |                |                  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                           |                |                  
|                                                                     |                |                  

Note: The balance sheet at December
25, 2005 has been derived from the audited financial statements at that date, but does not
include all the information and footnotes required by generally accepted accounting
principles in the United States for complete financial statements.

See accompanying notes
to unaudited consolidated condensed financial statements.

2

---

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

|                                                                | First Quarter Ended
|--------------------------------------------------------------- | -------------------
|
|Continuing Operations:                                          |                    
|Revenue:                                                        |                    
|Publishing                                                      |                    
|Broadcasting                                                    |                    
|Telecommunications                                              |                    
|Printing services                                               |                    
|Other                                                           |                    
|                                                                |                    
|Total revenue                                                   |                    
|Operating costs and expenses:                                   |                    
|Publishing                                                      |                    
|Broadcasting                                                    |                    
|Telecommunications                                              |                    
|Printing services                                               |                    
|Other                                                           |                    
|                                                                |                    
|Total operating costs and expenses                              |                    
|Selling and administrative expenses                             |                    
|                                                                |                    
|Total operating costs and expenses and selling                  |                    
|and administrative expenses                                     |                    
|                                                                |                    
|Operating earnings                                              |                    
|Other income and expense:                                       |                    
|Interest income and dividends                                   |                    
|Interest expense                                                |                    
|                                                                |                    
|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 and $3,073, respectively                          |                    
|                                                                |                    
|Net earnings                                                    |                    
|                                                                |                    
|Earnings available to class A and B common shareholders         |                    
|                                                                |                    
|Earnings per share:                                             |                    
|Basic:                                                          |                    
|Continuing operations                                           |                    
|Discontinued operations                                         |                    
|                                                                |                    
|Net earnings                                                    |                    
|                                                                |                    
|Diluted:                                                        |                    
|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
Quarter Ended March 26, 2006       (dollars in thousands, except per-share amounts)

|                                            | Preferred | Common Stock | Additional | Unearned | Retained | Treasury
Stock, |    | Comprehensive
|------------------------------------------- | --------- | ------------ | ---------- | -------- | -------- | --------------- | -- | -------------
|
|Balance at December 25, 2005                |           |              | $          | --       |          | $               | 33 |              
|Net earnings and other comprehensive income |           |              |            |          |          |                 |    |              
|                                            |           |              |            |          |          |                 |    |              
|Dividends declared:                         |           |             
|Class C ($0.142 per share)                  |           |              |            |          |          |                 |    |              
|Class B ($0.065 per share)                  |           |              |            |          |          |                 |    |              
|Class A ($0.065 per share)                  |           |              |            |          |          |                 |    |              
|Issuance of shares:                         |           |             
|Conversion of class B to class A            |           |              |            |          |          |                 |    |              
|Stock grants                                |           |              |            |          |          |                 |    |              
|Employee stock purchase plan                |           |              |            |          |          |                 |    |              
|Shares purchased and retired                |           |              |            |          |          |                 |    |              
|Implementation of SFAS 123 (R)              |           |              |            |          |          |                 |    |              
|Amortization of unearned compensation       |           |              |            |          |          |                 |    |              
|                                            |          
|Balance at March 26, 2006                   |           |              | $          | --       |          | $               | 33 |              
|                                            |          

See accompanying notes
to unaudited consolidated condensed financial statements.

4

---

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

|                                                     | First Quarter 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                                |                    
|Net gain from disposal of assets                     |                    
|Net operating activities of discontinued operations  |                    
|Net changes in operating assets and liabilities:     |                    
|Receivables                                          |                    
|Inventories                                          |                    
|Accounts payable                                     |                    
|Other assets and liabilities                         |                    
|                                                     |                    
|NET CASH PROVIDED BY OPERATING ACTIVITIES            |                    
|Cash flow from investing activities:                 |                    
|Capital expenditures for property and equipment      |                    
|Proceeds from sales of assets                        |                    
|Net investing activities of discontinued operations  |                    
|                                                     |                    
|NET CASH (USED FOR) PROVIDED BY                      |                    
|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               |                    
|Purchase and retirement of common stock              |                    
|Cash dividends                                       |                    
|                                                     |                    
|NET CASH USED FOR FINANCING ACTIVTIES                |                    
|                                                     |                    
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |                    
|Cash and cash equivalents:                           |                    
|Beginning of year                                    |                    
|                                                     |                    
|At March 26, 2006 and March 27, 2005                 |                    
|                                                     |                    

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 accounting principles for annual
financial statements. However, we believe that the disclosures are adequate to make the
information presented not misleading. The operating results for the first quarter ended
March 26, 2006 are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 2006. 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 25, 2005.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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. The 2006 fiscal year ends on December 31st and is a 53 week year
with a 14 week fourth quarter.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Basic
earnings per share is computed by dividing net earnings available to class A and B common
shareholders by the weighted average number of class A and B shares outstanding during
the period and excludes non-vested restricted stock. Diluted earnings per share is
computed based upon the assumption that the class C shares outstanding were converted
into class A and B shares, common shares are issued upon exercise of certain of our
non-statutory stock options, and common shares will be outstanding upon expiration of the
vesting periods for our non-vested restricted stock.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|                                                        | First Quarter Ended
|------------------------------------------------------- | -------------------
|
|Basic earnings:                                         |                    
|Earnings from continuing operations                     |                    
|Discontinued operations                                 |                    
|                                                        |                    
|Net earnings                                            |                    
|Less dividends on class C common stock                  |                    
|                                                        |                    
|Earnings available to class A and B common shareholders |                    
|                                                        |                    
|Weighted average class A and B shares outstanding       |                    
|Basic earnings per share:                               |                    
|Continuing operations                                   |                    
|Discontinued operations                                 |                    
|                                                        |                    
|Net earnings                                            |                    
|                                                        |                    
|Diluted earnings:                                       |                    
|Earnings available to class A and B common shareholders |                    
|Plus dividends on class C common stock                  |                    
|                                                        |                    
|Net earnings                                            |                    
|                                                        |                    
|Weighted average shares outstanding                     |                    
|Impact of restricted stock                              |                    
|Conversion of class C shares                            |                    
|                                                        |                    
|Adjusted weighted average shares outstanding            |                    
|                                                        |                    
|Diluted earnings per share:                             |                    
|Continuing operations                                   |                    
|Discontinued operations                                 |                    
|                                                        |                    
|Net earnings                                            |                    
|                                                        |                    

6

---

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

|3 | EARNINGS
PER SHARE (continued)
|- | ------------------------------

| | Each
of the 3,264,000 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).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Effective
December 26, 2005, we adopted Statement of Financial Accounting Standards Statement No.
123(R), Share-Based Payment (SFAS No. 123(R)), using the modified prospective
application transition method. Under the modified prospective application transition
method, the fair value and recognition provisions of SFAS No. 123(R) are applied to
stock-based awards granted or modified subsequent to the date of adoption and prior
periods are not restated. Before we adopted SFAS No. 123(R), we accounted for stock-based
compensation by using the intrinsic value-based method in accordance with Accounting
Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees. Other
than for restricted stock, no stock-based employee compensation cost has been reflected
in net earnings prior to December 26, 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the first quarter of 2006, we recognized $237 in stock-based compensation expense. Total
income tax benefit recognized related to stock-based compensation for the first quarter
of 2006 was approximately $94. We recognize compensation expense on a straight-line basis
over the service period. As of March 26, 2006, total unrecognized compensation cost
related to stock-based compensation awards was approximately $1,464, net of estimated
forfeitures, which we expect to recognize over a weighted average period of approximately
2.3 years. Stock-based compensation expense is included in selling and administrative
expenses in our consolidated condensed statement of earnings. There was no impact on basic or
diluted earnings per share from adopting SFAS No. 123(R).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
2003 Equity Incentive Plan rewards outside directors and key employees for achieving
designated corporate and individual performance goals. Awards may be granted in any one
or a combination of stock grants, non-statutory stock options, incentive stock options,
performance unit grants and stock unit grants. Subject to certain adjustments, 6,000,000
shares of our class B common stock are authorized to be issued under the plan. Not more
than 3,000,000 shares of our class B common stock may be issued under the plan in the
form of stock grants, performance unit grants or stock unit grants.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | The
compensation committee of our board of directors may grant 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, but not more than ten years from the grant date. As of March 26, 2006, there
are 5,753,075 shares available for issuance under the Plan.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fair
value was calculated using the Black-Scholes option pricing model, with the following
weighted-average assumptions for options granted in 2004 and 2003. There were no options
granted in 2005 or in the first quarter of 2006.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               | 2004 | 2003
|---------------------------------------------- | ---- | ----
|Dividend yield                                 |      |     
|Expected volatility                            |      |     
|Risk-free rate of return                       |      |     
|Expected life of options (in years)            |      |     
|Weighted average fair value of options granted |      |     

| | A
summary of stock option activity during the first quarter of 2006 is:
| | -----------------------------------------------------------------------

|                                                   
|---------------------------------------------------
|Outstanding at December 25, 2005 and March 26, 2006
|                                                   
|Exercisable at March 26, 2006                      
|                                                   

| | The
aggregate intrinsic value of stock options outstanding and exercisable at the end of the
first quarter is zero because the fair market value of our class B common stock on March
26, 2006 was lower than the weighted average exercise price of the options.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

---

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

|4 | STOCK-BASED
COMPENSATION (continued)
|- | ------------------------------------

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

| | Each
stock grant may be accompanied by restrictions, or may be made without any restrictions,
as the compensation committee of the board of directors determines. Such restrictions may
include 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. As of March 26, 2006, there are 2,818,825 shares available for issuance in the
form of stock grants under the plan.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
summary of stock grant activity during the first quarter of 2006 is:
| | ----------------------------------------------------------------------

|                                
|--------------------------------
|Outstanding at December 26, 2005
|Granted                         
|Exercised                       
|Forfeited                       
|                                
|Outstanding at March 26, 2006   
|                                

| | Prior
year pro forma expense
| | ----------------------------

| | The
following table illustrates the effect on net income and earnings per share as if the
fair value-based method provided by SFAS No. 123, Accounting for Stock-Based
Compensation, had been applied for all outstanding and unvested awards for periods
prior to the adoption of SFAS 123(R):
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                          | First Quarter Ended
March 27, 2005
|------------------------------------------------------------------------- | ----------------------------------
|Net earnings as reported                                                  |                                   
|Add compensation cost of restricted stock, net of related tax             |                                   
|effects, included in the determination of net earnings                    |                                   
|as reported                                                               |                                   
|Deduct stock based compensation determined under fair value-              |                                   
|based method, net of related tax effects:                                 |                                   
|Stock options                                                             |                                   
|Employee stock purchase plan                                              |                                   
|Restricted stock                                                          |                                   
|                                                                          |                                   
|Pro forma net earnings including the effect of stock compensation expense |                                   
|                                                                          |                                   
|Net earnings per share of common stock:                                   |                                   
|Basic earnings per share:                                                 |                                   
|As reported                                                               |                                   
|                                                                          |                                   
|Pro forma including the effect of stock compensation expense              |                                   
|                                                                          |                                   
|Diluted earnings per share:                                               |                                   
|As reported                                                               |                                   
|                                                                          |                                   
|Pro forma including the effect of stock compensation expense              |                                   
|                                                                          |                                   

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

| | Inventories
are stated at the lower of cost (first in, first out method) or market. Inventories at
March 26, 2006 and December 25, 2005 consisted of the following:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | March 26, 2006 | December 25, 2005
|------------------------- | -------------- | -----------------
|Paper and supplies        |                |                  
|Work in process           |                |                  
|Finished goods            |                |                  
|Less obsolescence reserve |                |                  
|                          |                |                  
|Inventories, net          |                |                  
|                          |                |                  

8

---

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

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

| | We
have a $475 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 March 26, 2006, we had borrowings of $269,760 under the facility at a
weighted average rate of 5.34%. Fees in connection with the facility of $1,717 are being
amortized over the term of the facility using the straight-line method which approximates
the effective-interest method.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7 | 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 and selling and administrative expenses                             |                 
|                                                                             |                 
|
|
|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                                          |                 
|                                                                             |                 

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

| | Definite-lived
Intangible Assets
| | --------------------------------

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

| | Amortization
expense was $578 for the first quarter ended March 26, 2006 and $334 for the first
quarter ended March 27, 2005. Estimated amortization expense for our next five fiscal
years is $2,347 for 2006, $2,317 for 2007, $2,257 for 2008, $1,978 for 2009 and $1,607
for 2010.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

---

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

| | 8 | GOODWILL
AND OTHER INTANGIBLE ASSETS (continued)
| | - | ------------------------------------------------

| | The
gross carrying amount, accumulated amortization and net carrying amount of the major
classes of definite-lived intangible assets as of March 26, 2006 and December 25, 2005
are as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | Gross
Carrying
Amount | Accumulated
Amortization | Net
Carrying
Amount
|------------------------------ | --------------------- | ------------------------ | -------------------
|As of March 26, 2006           |                       |                          |                    
|Network affiliation agreements |                       |                          | $                  
|Customer lists                 |                       |                          |                    
|Non-compete agreements         |                       |                          |                    
|Other                          |                       |                          |                    
|                               |                       |                          |                    
|Total                          |                       |                          | $                  
|                               |                       |                          |                    
|As of December 25, 2005        |                       |                         
|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.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | The
change in the carrying amount of goodwill for the first quarter ended March 26, 2006 is
as follows:
| | -------------------------------------------------------------------------------------------------------

|Reporting unit                  | Goodwill at
December 25, 2005 | Adjustment | Goodwill at
March 26, 2006
|------------------------------- | ----------------------------- | ---------- | --------------------------
|Daily newspaper                 |                               |            | $                         
|Community newspapers & shoppers |                               |            |                           
|Broadcasting                    |                               |            |                           
|Telecommunications              |                               |            |                           
|Direct marketing services       |                               |            |                           
|                                |                               |            |                           
|Total                           |                               |            | $                         
|                                |                               |            |                           

| | The
change to the carrying amount of network affiliation agreements, customer lists, other
intangibles, broadcast licenses and goodwill in the first quarter ended March 26, 2006
represents the revised purchase price allocation for our purchase of FOX-affiliate WFTX-TV,
in Fort Myers/Naples, Florida, ABC-affiliate, KGUN-TV, in Tucson, Arizona and certain
assets of CBS-affiliate KMTV-TV, in Omaha, Nebraska, from subsidiaries of Emmis
Communications Corporation on December 5, 2005.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9 | ACQUISITIONS
|- | ------------

| | All
acquisitions are accounted for using the purchase method. Accordingly, the results of
operations and cashflows since the respective date of acquisition are included in the
consolidated condensed financial statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
December 5, 2005, we acquired the business and assets of FOX-affiliate WFTX-TV, in Fort
Myers/Naples, Florida and ABC-affiliate, KGUN-TV, in Tucson, Arizona from subsidiaries of
Emmis Communications Corporation. We also acquired certain assets of CBS-affiliate
KMTV-TV, in Omaha, Nebraska, and have begun programming KMTV under a local marketing
agreement. The total purchase price for the three stations is $235,000, subject to
certain adjustments. We paid $228,779, including $3,848 for expenses associated with the
transaction, in 2005. The remaining $10,000 will be paid upon the earlier of the transfer
to us of the broadcast license associated with KMTV-TV, or a $5,000 payment no later than
October 15, 2007 and another $5,000 payment no later than October 15, 2008. The
acquisition allows us to operate television stations in two growth markets where we
already own radio stations and to leverage our market resources to be more effective in
serving the communities and advertisers of Tucson and Omaha. The acquisition also adds a
new mid-size growth market (Fort Myers/Naples) to our broadcast operations. These are
among the factors that contributed to the recognized goodwill.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---

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

|9 | ACQUISITIONS
(continued)
|- | ------------------------

| | The
unaudited pro forma consolidated condensed statement of earnings information for the
first quarter of 2005, set forth below, presents the results of operations as if the
acquisition of the three television stations had occurred at the beginning of 2005 and is
not necessarily indicative of future results or actual results that would have been
achieved had the acquisition occurred as of the beginning of such year.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                     | 2005
|---------------------------------------------------- | ----
|Revenue                                              |     
|Earnings from continuing operations                  |     
|Earnings per common share from continuing operations |     
|Basic                                                |     
|Diluted                                              |     

| | The
revised purchase price allocation for this acquisition is as follows:
| | -------------------------------------------------------------------------

|                               | Preliminary
Purchase Price | Adjustments | Revised
Purchase Price
|------------------------------ | -------------------------- | ----------- | ----------------------
|Accounts receivable            |                            |             | $                     
|Prepaid expenses               |                            |             |                       
|Property and equipment         |                            |             |                       
|Other intangibles              |                            |             |                       
|Customer list                  |                            |             |                       
|Other assets                   |                            |             |                       
|Goodwill                       |                            |             |                       
|Broadcast licenses             |                            |             |                       
|Network affiliation agreements |                            |             |                       
|Accounts payable               |                            |             |                       
|Other current liabilities      |                            |             |                       
|Other long-term liabilities    |                            |             |                       
|                               |                            |             |                       
|Total purchase price           |                            |             | $                     
|                               |                            |             |                       

| | The
revised purchase price allocation does not reflect the purchase of the broadcast license
for KMTV-TV in Omaha; the sale of which is subject to certain FCC regulations.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10 | DISCONTINUED
OPERATIONS
|-- | -----------------------

| | On
January 25, 2005, we entered into a definitive asset sale agreement with Multi-Color
Corporation pursuant to which Multi-Color Corporation acquired substantially all of the
assets and certain liabilities of NorthStar Print Group, Inc. (NorthStar), our label
printing business. The purchase price, excluding certain real estate holdings that we
retained, was $26,144 in cash and resulted in a gain on discontinued operations before
income taxes of $8,382, of which $7,919 was recognized in the first quarter of 2005. The
revenue of NorthStar for the period December 27, 2004 through the date of sale totaled
$4,112.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

---

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

|10 | DISCONTINUED
OPERATIONS
|-- | -----------------------

| | The
current and non-current assets and liabilities of discontinued operations in the
consolidated condensed balance sheets at March 26, 2006 and December 25, 2005 consisted
of the following:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | March 26, 2006 | December 25, 2005
|------------------------- | -------------- | -----------------
|Property and equipment    |                |                  
|                          |                |                  
|Total non-current assets  |                |                  
|                          |                |                  
|Accounts payable          |                |                  
|Accrued employee benefits |                |                  
|Other current liabilities |                |                  
|                          |                |                  
|Total current liabilities |                |                  
|                          |                |                  

|11 | SEGMENT
INFORMATION
|-- | -------------------

| | We
conduct our operations through four reportable segments: publishing, broadcasting,
telecommunications and printing services. In addition, our direct marketing services
business and certain administrative activities are aggregated and reported as other. All
operations conduct their business in the United States. We publish a daily newspaper, the
Milwaukee JournalSentinel, and about 90 community newspapers and shoppers
in eight states. Our broadcasting segment consists of 37 radio stations and nine
television stations in 12 states, as well as the operation of two additional television
stations under local marketing agreements. Our telecommunications segment consists of
wholesale and business-to-business telecommunications services provided through a high
speed fiber optic telecommunications network that covers more than 4,400 route miles in
seven states, of which we operate about 4,150 route miles. Our printing services segment
includes the operations of our printing and assembly and fulfillment business.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following tables summarize revenue, operating earnings, depreciation and amortization and
capital expenditures from continuing operations for the first quarter ended March 26,
2006 and March 27, 2005 and identifiable total assets at March 26, 2006 and December 25,
2005:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | First Quarter Ended
|----------------------------- | -------------------
|
|Revenue                       |                    
|Publishing                    |                    
|Broadcasting                  |                    
|Telecommunications            |                    
|Printing services             |                    
|Other                         |                    
|                              |                    
|                              |                    
|                              |                    
|Operating earnings            |                    
|Publishing                    |                    
|Broadcasting                  |                    
|Telecommunications            |                    
|Printing services             |                    
|Other                         |                    
|                              |                    
|                              |                    
|                              |                    
|Depreciation and amortization |                    
|Publishing                    |                    
|Broadcasting                  |                    
|Telecommunications            |                    
|Printing services             |                    
|Other                         |                    
|                              |                    
|                              |                    
|                              |                    

12

---

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

|11 | SEGMENT
INFORMATION (continued)
|-- | -------------------------------

|                     | First Quarter Ended
|-------------------- | -------------------
|
|Capital expenditures |                    
|Publishing           |                    
|Broadcasting         |                    
|Telecommunications   |                    
|Printing services    |                    
|Other                |                    
|                     |                    
|                     |                    
|                     |                    

|                                                      | March 26, 2006 | December 25, 2005
|----------------------------------------------------- | -------------- | -----------------
|
|Identifiable total assets                             |                |                  
|Publishing                                            |                |                  
|Broadcasting                                          |                |                  
|Telecommunications                                    |                |                  
|Printing services                                     |                |                  
|Other including corporate and discontinued operations |                |                  
|                                                      |                |                  
|                                                      |                |                  
|                                                      |                |                  

|12 | SUBSEQUENT
EVENT
|-- | ----------------

| | On
April 25, 2006, we announced our plan to spin-off to our shareholders our
telecommunications business, Norlight Telecommunications, Inc. (Norlight).
The spin-off will be accomplished through a pro-rata distribution of all of Norlights
shares to our shareholders. We will announce the record date, the distribution date and
the distribution ratio at a later time. Norlight is expected to apply for listing on the
NASDAQ Global Market (formerly known as the NASDAQ National Market).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Norlight
filed a registration statement with the SEC on April 25, 2006. Completion of the spin-off
is subject to the effectiveness of the registration statement and receipt of an opinion
from counsel to the effect that the spin-off will qualify as a tax-free transaction for
us and our shareholders. Additionally, we intend to submit a request to the Internal
Revenue Service seeking a private letter ruling as to the tax-free nature of the
spin-off. No other significant approvals are required, and completion of the spin-off is
expected to take up to six months.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
telecommunications segment will be reported as a discontinued operation at the time of the spin-off.
| | --------------------------------------------------------------------------------------------------------

13

---

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

The following discussion of our
financial condition and results of operations should be read together with our unaudited
consolidated condensed financial statements for the first quarter ended March 26, 2006,
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
Annual Report on Form 10-K (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 Annual Report
on Form 10-K 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;
|- | ----------------------------------------------------------------------

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

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

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

| | effects
of potential acquisitions of or mergers of telecommunications companies or advertisers;
|- | -----------------------------------------------------------------------------------------------

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

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

| | energy
costs;
|- | -------------

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

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

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

# Overview

Our business segments are based on
the organizational structure used by management for making operating and investment
decisions and for assessing performance. Our reportable business segments are: (i)
publishing; (ii) broadcasting; (iii) telecommunications; (iv) printing services; and (v)
other. Our publishing segment consists of a daily newspaper, the Milwaukee Journal
Sentinel, and about 90 community newspapers and shoppers in eight states. Our
broadcasting segment consists of 37 radio stations and nine television stations in 12
states, as well as the operation of two additional television stations under local
marketing agreements. Our telecommunications segment consists of wholesale and
business-to-business, or enterprise, telecommunications services provided through a high
speed fiber optic telecommunications network that covers more than 4,150 route miles in
seven states. Our printing services segment reflects the operations of our printing and
kit assembly and fulfillment business. Our other segment consists of a direct marketing
services business and corporate expenses and eliminations.

14

---

In the first quarter of 2006,
operating earnings increased at our television stations driven by a strong performance at
our three new stations acquired in December 2005, an increase in Olympics revenue and a
solid start to the year by our Las Vegas station. At our radio stations, we were coming
off of a tough comparison in the first quarter of 2005, where revenues had increased 9%
over the first quarter of 2004. Our radio stations in Omaha, Knoxville, Boise and
Springfield saw increased operating earnings in the first quarter of 2006, and we continue
to focus on expense control, with overall radio expenses decreasing 4.5%. Our daily
newspaper, which continues to concentrate on controlling expenses, posted a disappointing
February and March as overall classified and automobile advertising decreased despite a
small increase in retail advertising. Journal Interactive revenues of $2.1 million
increased 28.2%. Operating earnings increased at our community newspapers and shoppers due
to a decrease in expenses and an increase in revenue from specialty publications, which
carry higher profit margins than our existing core products. Overall revenue at our
community newspapers and shoppers decreased due to the closure of our Dixie Web printing
facility in New Orleans and the reduction in publication revenue in New Orleans due to the
impact of Hurricane Katrina. At our telecommunications business, revenue decreased due to
the anticipated lower contract pricing in the wholesale business. Our printing services
business experienced operating earnings improvement despite the expected lower revenue.

# Subsequent Event

On April 25, 2006, we announced our
plan to spin-off to our shareholders our telecommunications business, Norlight
Telecommunications, Inc. The spin-off will be accomplished through a pro-rata distribution
of all of Norlights shares to our shareholders. We will announce the record date,
the distribution date and the distribution ratio at a later time. Norlight is expected to
apply for listing on the NASDAQ Global Market (formerly known as the NASDAQ National
Market).

Norlight filed a registration
statement with the SEC on April 25, 2006. Completion of the spin-off is subject to the
effectiveness of the registration statement and receipt of an opinion from counsel to the
effect that the spin-off will qualify as a tax-free transaction for us and our
shareholders. Additionally, we intend to submit a request to the Internal Revenue Service
seeking a private letter ruling as to the tax-free nature of the spin-off. No other
significant approvals are required, and completion of the spin-off is expected to take up
to six months.

Our telecommunications segment will
be reported as a discontinued operation at the time of the spin-off.

# Results of Operations

| | First
Quarter Ended March 26, 2006 compared to First Quarter March 25, 2005
| | ---------------------------------------------------------------------------

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

Our consolidated operating revenue
from continuing operations in the first quarter of 2006 was $189.1 million, an increase of
$4.9 million, or 2.6%, compared to $184.2 million in the first quarter of 2005. Our
consolidated operating costs and expenses from continuing operations in the first quarter
of 2006 were $108.2 million, a decrease of $0.1 million, or 0.1%, compared to $108.3
million in the first quarter of 2005. Our consolidated selling and administrative expenses
from continuing operations in the first quarter of 2006 were $56.9 million, an increase of
$2.3 million, or 4.1%, compared to $54.6 million in the first quarter of 2005.

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 first quarter
of 2006 and 2005:

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

The increase in total revenue from
continuing operations was due to the contribution from the television operations we
acquired in December 2005 and an increase in Olympics advertising revenue at our
television stations. These increases were partially offset by a decrease in wholesale
revenue at our telecommunications business due to repricings and service disconnections
and a decrease in enterprise services revenue due to a reduction in long-distance services
and aggressive competition, a decrease in revenue from several computer-related customers
in our printing services business, a decrease in postage amounts at our direct marketing
services business, a decrease in local advertising at our radio stations, a decrease in
other revenue at our community newspapers and shoppers due to the closure of our Louisiana
printing facility in New Orleans due to the impact of Hurricane Katrina and a decrease in
national advertising at our daily newspaper.

15

---

The decrease in total operating costs
and expenses from continuing operations is due to cost reduction initiatives and lower
sales volume at our printing services business, a decrease in postage and freight expenses
at our direct marketing services business, a decrease in total operating costs and expenses in  enterprise
services at our telecommunications business due to the decrease in revenue, a decrease in production costs at
our community newspapers and shoppers due to the closure of our Louisiana printing
facility in New Orleans, a decrease in syndicated programming expense at our television
stations and a decrease in technology and programming expenses at our radio stations.
These decreases were partially offset by an increase in total operating costs and expenses
at the television operations acquired in December 2005 and an increase in total newsprint
and paper cost at our publishing businesses.

The increase in selling and
administrative expenses from continuing operations is primarily due to the television
operations acquired in December 2005 and an increase in relocation, recruitment and legal
expenses at our daily newspaper. These increases were partially offset by decreases in
legal and bad debt expenses at our community newspapers and shoppers, sales commissions
and promotion expenses at our radio stations and marketing, advertising and payroll
expenses at our telecommunications business. Included in our total operating costs and
expenses was a decrease in employee welfare benefit costs of $0.4 million.

Our consolidated operating earnings
from continuing operations in the first quarter of 2006 were $24.0 million, an increase of
$2.7 million, or 12.8%, compared to $21.3 million in the first quarter of 2005. The
following table presents our operating earnings by segment for the first quarter of 2006
and 2005:

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

The increase in total operating
earnings from continuing operations was primarily due to the contribution from our
television stations partially offset by the decrease in revenue and continued competitive
pressure at our telecommunications business.

Our consolidated EBITDA in the first
quarter of 2006 was $35.7 million, an increase of $3.0 million, or 9.2%, compared to $32.7
million in the first quarter of 2005. We define EBITDA as net earnings excluding gain/loss
from discontinued operations, net, provision for income taxes, total other expense, net,
depreciation and amortization. We believe the presentation of EBITDA is relevant and
useful because it helps improve our investors ability to understand our operating
performance and makes it easier to compare our results with other companies that have
different financing and capital structures or tax rates. Our management uses EBITDA, among
other things, to evaluate our operating performance, to value prospective acquisitions and
as a component of incentive compensation targets for certain management personnel. In
addition, our lenders use EBITDA as one of the measures of our ability to service our
debt. EBITDA is not a measure of performance calculated in accordance with U.S. generally
accepted accounting principles. EBITDA should not be considered in isolation of, or as a
substitute for, net earnings as an indicator of operating performance or cash flows from
operating activities as a measure of liquidity. EBITDA, as we calculate it, may not be
comparable to EBITDA measures reported by other companies. In addition, EBITDA does not
represent funds available for discretionary use.

The following table presents a
reconciliation of our consolidated net earnings to consolidated EBITDA for the first
quarter of 2006 and 2005:

|                                      
|--------------------------------------
|(dollars in millions)                 
|Net earnings                          
|Gain from discontinued operations, net
|Provision for income taxes            
|Total other expense, net              
|Depreciation                          
|Amortization                          
|                                      
|EBITDA                                
|                                      

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

16

---

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

Revenue from publishing in the first
quarter of 2006 was $79.5 million, a decrease of $1.2 million, or 1.5%, compared to $80.7
million in the first quarter of 2005. Operating earnings from publishing in the first
quarter of 2006 were $7.6 million, an increase of $0.1 million, or 2.5%, compared to $7.5
million in the first quarter of 2005.

The following table presents our
publishing revenue and operating earnings for the first quarter of 2006 and 2005:

|                     
|---------------------
|Daily
Newspaper      
|(dollars in millions)
|Revenue              
|                     
|Operating earnings   
|                     

The following table, which reflects
these changes, presents our publishing revenue by category for the first quarter of 2006
and 2005:

|                           
|---------------------------
|Daily
Newspaper            
|(dollars in millions)      
|Advertising revenue:       
|Retail                     
|Classified                 
|National                   
|Direct Marketing           
|Other                      
|                           
|Total advertising revenue .
|Circulation revenue        
|Other revenue              
|                           
|Total revenue              
|                           

Advertising revenue in the first
quarter of 2006 accounted for 71.3% of total publishing revenue compared to 70.9% in the
first quarter of 2005.

Retail advertising revenue in first
quarter of 2006 was $33.6 million, a decrease of $0.2 million, or 0.4%, compared to $33.8
million in the first quarter of 2005. A $0.5 million decrease in community newspapers and
shoppers retail advertising was partially offset by the $0.3 million increase in daily
newspaper retail advertising. The $0.5 million decrease at our community newspapers and
shoppers was primarily due to a decrease in automotive advertising and the reduction in
business at our Louisiana publications from the impact of Hurricane Katrina. The $0.3
million increase at the daily newspaper was primarily due to increases in advertising at
Journal Interactive, preprints and shared mail, partially offset by a decrease in retail
ROP advertising. The decrease in retail ROP advertising is attributed to decreases in
automotive and department store advertising partially offset by increases in insurance and
financial services, food and real estate advertising.

Classified advertising revenue in the
first quarter of 2006 of $18.8 million was essentially even compared to the first quarter
of 2005. The decrease in automotive advertising of $0.9 million was partially offset by
increases in real estate advertising of $0.4 million and other advertising of $0.2 million
at our daily newspaper, and an increase in other advertising of $0.3 million at our
community newspapers and shoppers. Employment advertising, which accounted for 45.0% of
classified advertising at the daily newspaper in the first quarter of 2006, was
essentially even compared to the first quarter of 2005. The decrease in automotive
classified advertising combined with the decrease in retail advertising was $1.6 million,
or 29.6%. This decrease is consistent with the national trend.

National advertising revenue in the
first quarter of 2006 was $2.5 million, a decrease of $0.4 million, or 13.3%, compared to
$2.9 million in first quarter of 2005. The decrease was due to reductions in
transportation/airlines and entertainment ROP advertising partially offset by an increase
in movies ROP advertising. National preprint advertising decreased due to reductions in
business services, communications and manufacturers advertising.

17

---

The following table presents our
daily newspapers core newspaper advertising linage by category for the first quarter
of 2006 and 2005:

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

Total advertising linage in the first
quarter of 2006 decreased 9.7% compared to the first quarter of 2005. Full run advertising
linage in the first quarter of 2006 decreased 8.2% compared to the first quarter of 2005
due to a reduction in classified and retail advertising linage partially offset by an
increase in national advertising lineage. Retail ROP advertising linage decreased in the
automotive, entertainment and furniture store categories. The decrease in classified
advertising linage is primarily due to a decrease in automotive advertising. Part run
advertising linage decreased in the first quarter of 2006 due to a decrease in automotive
zoned classified and overall reductions in the zoned product. Preprint advertising pieces
increased 1.6% due to certain large advertisers switching advertising from ROP to
preprints.

The following table presents the full
pages of advertising and revenue per page for our community newspapers and shoppers
business for the first quarter of 2006 and 2005:

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

Total full pages of advertising for
our community newspapers and shoppers business in the first quarter of 2006 decreased 3.1%
compared to the first quarter of 2005. The decrease was due to the reduction in
advertising in our Louisiana publications due to the impact of Hurricane Katrina,
reformatting certain papers to more efficiently use the amount of available space on each
page and the merger of two shoppers into one new shopper. This was partially offset by an
increase in advertising in specialty products. Revenue per page increased 1.4% primarily
due to the decrease in total full pages of advertising and the increase in advertising
rates.

Direct marketing revenue, consisting
of revenue from direct mail efforts for our daily newspaper was $1.4 million in the first
quarter of 2006, an increase of $0.1 million, or 5.2%, compared to $1.3 million in the
first quarter of 2005. The increase was due to an increase in our solo mail initiatives.
Other advertising revenue, consisting of revenue from company-sponsored event advertising
at our community newspapers and shoppers, was $0.4 million in the first quarter of 2006
and 2005.

Circulation revenue accounted for
17.2% of total publishing revenue in the first quarter of 2006 and 2005. Circulation
revenue in the first quarter of 2006 was $13.7 million, a decrease of $0.2 million, or
1.7%, compared to $13.9 million in the first quarter of 2005. The decrease is primarily
due to lower daily average net paid circulation, partially offset by an increase in the
Sunday average rate per copy. Circulation revenue was essentially flat at our community
newspapers and shoppers.

Other revenue, which consists of
revenue from commercial printing at the printing plants for our community newspapers and
shoppers and promotional, commercial delivery, events and commercial printing revenue at
our daily newspaper, accounted for 11.5% of total publishing revenue in the first quarter
of 2006 compared to 11.9% in the first quarter of 2005. Other revenue in the first quarter
of 2006 was $9.1 million, a decrease of $0.5 million, or 5.4%, compared to $9.6 million in
the first quarter of 2005. The decrease was due to a $1.3 million decrease at our
community newspapers and shoppers primarily due to the closure of our Louisiana printing
facility due to the impact of Hurricane Katrina and was partially offset by a $0.8 million
increase in commercial delivery revenue and commercial printing revenue at the daily
newspaper.

Publishing operating earnings in the
first quarter of 2006 were $7.6 million, an increase of $0.1 million, or 2.5%, compared to
$7.5 million in the first quarter of 2005. Operating earnings increased $0.7 million in
the first quarter of 2006 at our community newspapers and shoppers due to reductions in
labor, legal, bad debt and depreciation expenses. Operating earnings decreased $0.6
million at the daily newspaper primarily due to increases in direct expenses, litigation,
relocation and recruitment expenses and paper costs. These expense increases were
partially offset by lower payroll and employee benefit expenses. Total newsprint and paper
cost in the first quarter of 2006 was $10.2 million, a decrease of $0.1 million, or 1.1%,
compared to $10.3 million in the first quarter of 2005. Average newsprint pricing per
metric ton was up 20.4% and consumption of newsprint tonnage was down by 14.6% at our
daily newspaper. In the second quarter of 2005, the daily newspaper switched to lighter
basis-weight newsprint.

18

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

Revenue from broadcasting in the
first quarter of 2006 was $51.7 million, an increase of $14.5 million, or 38.8%, compared
to $37.2 million in the first quarter of 2005. Operating earnings from broadcasting in
first quarter of 2006 were $11.6 million, an increase of $6.2 million, or 115.2%, compared
to $5.4 million in the first quarter of 2005.

The following table presents our
broadcasting revenue and operating earnings for the first quarter of 2006 and 2005:

|                     
|---------------------
|Radio                
|(dollars in millions)
|Revenue              
|                     
|Operating earnings   
|                     

Revenue from our radio stations in
the first quarter of 2006 was $17.6 million, a decrease of $0.6 million, or 3.5%, compared
to $18.2 million in the first quarter of 2005. The decrease was primarily attributed to a
$0.6 million decrease in local advertising revenue and a $0.1 million decrease in national
revenue, partially offset by a $0.1 million increase in political and issue advertising.

Operating earnings from our radio
stations were $3.8 million in the first quarter of 2006 and 2005. The decrease in revenue
was offset by decreases in sales commissions, technology, promotion and programming
expenses.

Revenue from our television stations
in the first quarter of 2006 was $34.1 million, an increase of $15.1 million, or 79.4%,
compared to $19.0 million in the first quarter of 2005. The increase was primarily
attributed to a $12.7 million contribution from the television operations we acquired in
December 2005, a $3.3 million increase in Olympics advertising revenue and a $0.1 million
increase in political and issue advertising partially offset by a $1.0 million decrease in
national advertising revenue.

Operating earnings from our
television stations in the first quarter of 2006 were $7.8 million, an increase of $5.2
million, or 386.2%, compared to $1.6 million in the first quarter of 2005. The increase in
operating earnings was primarily due to a $4.2 million contribution from the television
operations we acquired in December 2005 and a decrease in syndicated programming and
promotion expenses partially offset by an increase in sales, news and technology expenses.

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

Revenue from telecommunications in
the first quarter of 2006 was $32.8 million, a decrease of $4.7 million, or 12.3%,
compared to $37.5 million in the first quarter of 2005. Operating earnings from
telecommunications in the first quarter of 2006 were $4.2 million, a decrease of $3.6
million, or 45.8%, compared to $7.8 million in the first quarter of 2005.

Wholesale telecommunication services
provide network transmission solutions for other service providers by offering bulk
transmission capacity. Revenue from wholesale services in the first quarter of 2006 was
$17.7 million, a decrease of $2.7 million, or 13.0%, compared to $20.4 million in the
first quarter of 2005. The decrease was primarily due to lower prices on customer contract
renewals and service disconnections. Monthly recurring revenue from wholesale services at
the end of the first quarter of 2006 was $5.3 million compared to $5.8 million at the
beginning of the first quarter of 2006 and $6.3 million at the beginning of the first
quarter of 2005. During the first quarter of 2006, new circuit connections of $0.6 million
in monthly recurring revenue were more than offset by service disconnections and
repricings.

We have substantial business
relationships with a few large customers, including major long distance carriers. Our top
10 customers accounted for 39.6% and 36.3% of our telecommunications revenue in the first
quarter of 2006 and 2005, respectively. As expected, the terms of the new Verizon Business
(formerly MCI) contract were fully implemented in mid-March, further reducing monthly
recurring revenue, but resulting in a stable Verizon Business run-rate going forward.

Enterprise telecommunication services
provide advanced data communications and long distance service to small and medium-sized
businesses in the Upper Midwest, principally in Wisconsin, Michigan, Indiana, Minnesota
and Illinois. Revenue from enterprise services in the first quarter of 2006 was $15.1
million, a decrease of $2.0 million, or 11.5%, compared to $17.1 million in the first
quarter of 2005. The decrease was primarily due to a reduction in long-distance revenue
and aggressive competition from the Regional Bell Operating Companies. Monthly recurring
revenue from enterprise advanced data services at the end of the first quarter of 2006 was
$3.3 million, compared to $3.4 million at the beginning of the first quarter of 2006 and
$3.4 million at the beginning of the first quarter of 2005.

19

---

The decrease in operating earnings
from telecommunications was primarily due to the decrease in wholesale revenue and reduced
margins due to competitive pricing in the enterprise business. Partially offsetting these
revenue decreases were reductions in marketing, advertising and payroll expenses.

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

Revenue from printing services in the
first quarter of 2006 was $16.3 million, a decrease of $2.0 million, or 10.9%, compared to
$18.3 million in the first quarter of 2005. Operating earnings from printing services in
the first quarter of 2006 were $0.5 million, an increase of $0.1 million, compared to $0.4
million in the first quarter of 2005.

The decrease in printing services
revenue was primarily due to a $1.9 million decrease in revenue from our largest customer,
Dell Computer Corporation, and a $0.3 million decrease in revenue from other
computer-related customers. These decreases were partially offset by a $0.2 million
increase in revenue from the printing of publications. Dell accounted for 11.6% and 20.8%
of our printing services revenue in the first quarter of 2006 and 2005, respectively. As
previously discussed, we expect our revenue from Dell to decline by 85% in 2006 compared
to 2005 as we stopped producing software kits for Dell at the end of January 2006. We do
not expect this reduction in revenue to have an adverse impact on our results of
operations.

The increase in printing services
operating earnings was primarily attributed to cost reduction initiatives partially offset
by reductions in sales volume to computer-related customers.

| | Other
| | -----

Other revenue in the first quarter of
2006 was $8.8 million, a decrease of $1.7 million, or 16.4%, compared to $10.5 million in
the first quarter of 2005. Other operating earnings in the first quarter of 2006 were $0.1
million, a decrease of $0.1 million, compared to $0.2 million in first quarter of 2005.

The following table presents our
other revenue and operating earnings for the first quarter of 2006 and 2005:

|                         
|-------------------------
|Direct
Marketing
Services
|(dollars in millions)    
|Revenue                  
|                         
|Operating earnings       
|                         

The decrease in other revenue in the
first quarter of 2006 compared to the first quarter of 2005 was primarily attributed to a
decrease in postage amounts billed to customers at our direct marketing services business.
Included in revenue and operating costs and expenses from our direct marketing services
business is $4.9 million and $6.8 million of postage amounts billed to customers in the
first quarter of 2006 and 2005, respectively.

The decrease in other operating
earnings was primarily from the revenue decrease at our direct marketing business.

20

---

| | Non-Operating
Income and Taxes
| | ------------------------------

There were no interest income and
dividends in the first quarter of 2006 compared to $0.1 million in the first quarter of
2005. Interest expense in the first quarter of 2006 was $3.7 million, an increase of $3.1
million, compared to $0.6 million in the first quarter of 2005. Gross interest expense
from borrowings under our credit agreement was $3.6 million in the first quarter of 2006
and $0.5 million in the first quarter of 2005. The increase is primarily due to an
increase in debt outstanding relating to the television operations we acquired in December
2005, share repurchase activity and higher short-term interest rates. Amortization of
deferred financing fees was $0.1 million in both the first quarter of 2006 and 2005.

The effective tax rate from
continuing operations was 39.8% in the first quarter of 2006 and 39.6% in the first
quarter of 2005.

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

Our basic and diluted earnings per
share in the first quarter of 2006 were $0.17, a decrease of $0.07 and $0.06 compared to
basic and diluted earnings per share of $0.24 and $0.23, respectively, in the first
quarter of 2005. Our basic and diluted earnings per share from continuing operations were
$0.17 in the first quarter of 2006 and 2005. Basic and diluted earnings per share from
discontinued operations were $0.07 and $0.06, respectively, in first quarter of 2005.

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

In January 2005, we entered into a
definitive asset sale agreement with Multi-Color Corporation pursuant to which
Multi-Color Corporation acquired substantially all of the assets and certain liabilities
of NorthStar Print Group, Inc., our label printing business. The sale price, excluding
certain real estate holdings that we retained, was $26.1 million in cash. The operations
of NorthStar Print Group have been reflected as discontinued operations for all periods
presented in our consolidated condensed financial statements.

Revenue from discontinued operations
in the first quarter of 2005 was $4.1 million. Net assets of discontinued operations at March
26, 2006 were $0.2 million. Real estate holdings in
Green Bay, WI are to be sold to Multi-Color Corporation upon the achievement of certain
environmental standards. Gain from discontinued operations was $4.8 million in the first
quarter of 2005. Applicable income tax expense was $3.1 million in the first quarter of 2005.

# Liquidity and Capital
Resources

We have a $475 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 March 26, 2006,
we had borrowings of $269.8 million under the facility at a weighted average rate of
5.34%. Fees in connection with the facility of $1,717 are being amortized over the term of
the facility using the straight-line method which approximates the effective-interest
method. The material covenants of this agreement include the following:

| | A
consolidated funded debt ratio as determined for the four fiscal quarter period preceding
the date of determination.
|- | ----------------------------------------------------------------------------------------------------------------------

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

As of March 26, 2006, we are in compliance
with all of our material covenants.

Cash balances were $5.7 million at
March 26, 2006. We believe our expected cash flows from operations and borrowings
available under our credit facility will adequately meet our needs for the foreseeable
future. In April 2006, our Board of Directors authorized the repurchase of up to five
million additional shares of our class A common stock over the next 18 months. Under the
program, share purchases may be made at our discretion, from time to time, in the open
market and/or in private transactions. Our share purchases will depend on market
conditions, share price, trading volume and other factors. The action supplements the five
million share repurchase authorization approved in February 2005.

# Cash Flow

Cash provided by operating activities
was $25.7 million in the first quarter of 2006 compared to $29.8 million in the first
quarter of 2005. The decrease was primarily due to the decrease in working capital items.

Cash used for investing activities
was $6.8 million in the first quarter of 2006 compared to cash provided by investing
activities of $18.3 million in first quarter of 2005. Capital expenditures for property
and equipment were $6.8 million in the first quarter of 2006 compared to $6.5 million in
the first quarter of 2005. Partially offsetting these activities was the benefit from net
investing activities of discontinued operations of $24.7 million in the first quarter of
2005.

21

---

Cash used for financing activities
was $20.0 million in the first quarter of 2006 compared to $47.9 million in the first
quarter of 2005. Borrowings under our credit facility during the first quarter of 2006
were $48.8 million and we made payments of $53.6 million. In the first quarter of each of
2006 and 2005, employees purchased $0.6 million worth of our class B common stock under
our Employee Stock Purchase Plan. In the first quarter of 2006, we paid $10.9 million to
purchase and retire shares of our class A common stock under a share repurchase plan
compared to $1.9 million in the first quarter of 2005. We paid cash dividends of $4.9
million and $5.2 million in the first quarter of 2006 and 2005, respectively.

# New Accounting Standards

Effective December 26, 2005, we
adopted Statement of Financial Accounting Standards Statement No. 123(R), Share-Based
Payment (SFAS No. 123(R)), using the modified prospective application transition
method. Under the modified prospective application transition method, the fair value and
recognition provisions of SFAS No. 123(R) are applied to stock-based awards granted or
modified subsequent to the date of adoption and prior periods are not restated. Before we
adopted SFAS No. 123(R), we accounted for stock-based compensation by using the intrinsic
value-based method in accordance with Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees. Other than for restricted stock, no stock-based
employee compensation cost has been reflected in net earnings prior to December 26, 2005.

During the first quarter ended March
26, 2006, we recognized $0.2 million in stock-based compensation expense. Total income
tax benefit recognized related to stock-based compensation for the first quarter of 2006
was approximately $0.1 million. We recognize compensation expense on the grants of
stock-based compensation awards on a straight-line basis over the service period of each
award recipient. As of March 26, 2006, total unrecognized compensation cost related to
stock-based compensation awards was approximately $1.5 million, net of estimated
forfeitures, which we expect to recognize over a weighted average period of approximately
2.3 years. Stock-based compensation expense is included in selling and administrative
expenses in our consolidated condensed statement of earnings. There was no impact on
basic or diluted earnings per share from adopting SFAS No. 123(R).

# 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 25, 2005

# 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 25, 2005.

# ITEM 4.    CONTROLS AND
PROCEDURES

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

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

# PART II. OTHER
INFORMATION

# ITEM 1.    LEGAL PROCEEDINGS

Milwaukee Public Interest Media
Coalition Litigation. On November 1, 2005, the Milwaukee Public Interest Media
Coalition (MPIMC) filed a petition at the Federal Communications Commission
(the FCC) asking it to deny the pending license renewal applications of all
eleven commercial television stations in the Milwaukee Designated Market Area, including
our station, WTMJ-TV, on the grounds that the stations failed to provide adequate coverage
of state and local issues during the 2004 election campaign. We filed an opposition to the
petition at the FCC on December 15, 2005, and MPIMC filed a reply to our opposition on
January 18, 2006. The pleading cycle is now closed and the matter is under review by the
staff of the FCC. It is impossible to predict when the FCC will rule on this matter. We
believe the petition is without merit and will continue to defend the allegations against
us vigorously in any continuing proceedings before the FCC.

Shorewest Realtors Litigation.On
April 25, 2005, a lawsuit was filed against Journal Sentinel, Inc., a subsidiary of
Journal Communications, Inc., in Milwaukee County Circuit Court.  The plaintiff,
Shorewest Realtors, seeks to bring a class action lawsuit on behalf ofMilwaukee
Journal Sentinel advertisers, alleging that the newspaper improperly inflated its
circulation numbers since 1996. Shorewest is seeking disgorgement or restitution by
Journal Sentinel of alleged improperly collected charges (with interest), plus an
unspecified amount of damages. Journal Sentinel, Inc. filed a motion to dismiss the
plaintiffs claims on July 20, 2005. On October 10, 2005, the court ruled on Journal
Sentinels amended motion to dismiss.  The court dismissed the plaintiffs claims
based on breach of contract and breach of the duty of good faith and fair dealing and
allowed the plaintiffs to proceed with their other claims. We intend to continue to
defend the action vigorously. No litigation reserve has been recorded for this matter.

22

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# ITEM 1A.    RISK FACTORS

There are no material changes to the
disclosures regarding risk factors made in our Annual Report on Form 10-K for the year
ended December 25, 2005. Additionally, as recently announced, we intend to spin-off
Norlight, our telecommunications business, to our shareholders. In connection with the
spin-off, Norlight filed a Registration Statement on Form 10 (the Registration
Statement) with the SEC on April 25, 2006. We refer you to the section entitled
Risk Factors in the Information Statement (which is preliminary and subject to
completion) that is included as Exhibit 99 to the Registration Statement for additional
risk factors relating to our telecommunications business.

# ITEM 2.    UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In February 2005, we announced a
stock repurchase program of up to 5,000,000 of our class A common stock over a term to
expire in August 2006. The following table provides information about our repurchases of
our class A common stock in the first quarter ended March 26, 2006:

# Issuer Purchases of
Equity Securities

|                                     
|-------------------------------------
|Period                               
|December 26, 2005 to January 22, 2006
|January 23 to February 19, 2006      
|February 20 to March 26, 2006        

| | (1) | All
shares of class A common stock purchased by us were purchased pursuant to a
               repurchase program publicly announced on February 10, 2005 and commenced
on                March 14, 2005, pursuant to which our board of directors authorized the
               repurchase of up to 5,000,000 shares. These shares will remain authorized
but                unissued. The repurchase program is expected to expire in August 2006.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In April 2006, our Board of
Directors authorized the repurchase of up to five million additional shares of our class
A common stock over the next 18 months.

# ITEM 3.    DEFAULTS UPON
SENIOR SECURITIES

None.

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

None.

# ITEM 5.    OTHER INFORMATION

None.

# ITEM 6.    EXHIBITS

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

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

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

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

| | (32) | 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.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

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SIGNATURES

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

|                      | JOURNAL COMMUNICATIONS, INC.                                          
|--------------------- | ----------------------------------------------------------------------
|                      | Registrant                                                            
|Date:  April 27, 2006 | /s/ Steven J. Smith                                                   
|                      | Steven J. Smith, Chairman and Chief Executive Officer                 
|Date:  April 27, 2006 | /s/ Paul M. Bonaiuto                                                  
|                      | Paul M. Bonaiuto, Executive Vice President and Chief Financial Officer

24