# 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 29, 2009

or

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

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

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

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

|414-224-2000                                      
|--------------------------------------------------
|Registrants telephone number, including area code

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

# Yes [ X ] No [   ]

Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files) (Registrant is not yet required to
provide financial disclosure in an Interactive Data File format).

# Yes [   ] No [   ]

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

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

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

# Yes [   ] No [ X ]

Number of shares outstanding of each
of the issuers classes of common stock as of April 24, 2009 (excluding 8,676,705
shares of class B common stock held by our subsidiary, The Journal Company):

|Class                | Outstanding at April 24, 2009
|-------------------- | -----------------------------
|Class A Common Stock | 40,747,497                   
|Class B Common Stock | 10,461,815                   
|Class C Common Stock | 3,264,000                    

---

# JOURNAL
COMMUNICATIONS, INC.

# INDEX

|         |                       |                                                                         
|-------- | --------------------- | ------------------------------------------------------------------------
|         |                       |                                                                         
|Part I.  | Financial Information |                                                                         
|         | Item 1.               | Financial Statements                                                    
|         |                       | Unaudited Consolidated Condensed Balance Sheets as of                   
|         |                       | March 29, 2009 and December 28, 2008                                    
|         |                       | Unaudited Consolidated Condensed Statements of Operations               
|         |                       | for the First Quarter Ended March 29, 2009 and March 30, 2008           
|         |                       | Unaudited Consolidated Condensed Statement of                           
|         |                       | Shareholders Equity for the First Quarter Ended March 29, 2009         
|         |                       | Unaudited Consolidated Condensed Statements of                          
|         |                       | Cash Flows for the First Quarter Ended March 29, 2009 and March 30, 2008
|         |                       | Notes to Unaudited Consolidated Condensed                               
|         |                       | Financial Statements as of March 29, 2009                               
|         | 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                                                                

---

# PART I. FINANCIAL
INFORMATION

# ITEM 1. FINANCIAL
STATEMENTS

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

|                                                                           | March 29, 2009 | December 28, 2008
|-------------------------------------------------------------------------- | -------------- | -----------------
|ASSETS                                                                     |                |                  
|Current assets:                                                            |                |                  
|Cash and cash equivalents                                                  |                |                  
|Receivables, less allowance for doubtful accounts of $5,143 and $4,734     |                |                  
|Inventories, net                                                           |                |                  
|Prepaid expenses and other current assets                                  |                |                  
|Deferred income taxes                                                      |                |                  
|                                                                           |                |                  
|TOTAL CURRENT ASSETS                                                       |                |                  
|Property and equipment, at cost, less accumulated depreciation             |                |                  
|of $239,958 and $233,380                                                   |                |                  
|Goodwill                                                                   |                |                  
|Broadcast licenses                                                         |                |                  
|Other intangible assets, net                                               |                |                  
|Deferred income taxes                                                      |                |                  
|Other assets                                                               |                |                  
|                                                                           |                |                  
|TOTAL ASSETS                                                               |                |                  
|                                                                           |                |                  
|LIABILITIES AND SHAREHOLDERS EQUITY                                       |                |                  
|Current liabilities:                                                       |                |                  
|Accounts payable                                                           |                |                  
|Accrued compensation                                                       |                |                  
|Accrued employee benefits                                                  |                |                  
|Deferred revenue                                                           |                |                  
|Accrued income taxes                                                       |                |                  
|Other current liabilities                                                  |                |                  
|Current portion of long-term liabilities                                   |                |                  
|                                                                           |                |                  
|TOTAL CURRENT LIABILITIES                                                  |                |                  
|Accrued employee benefits                                                  |                |                  
|Long-term notes payable to banks                                           |                |                  
|Other long-term liabilities                                                |                |                  
|Shareholders' equity:                                                      |                |                  
|Preferred stock, $0.01 par - authorized 10,000,000 shares; no shares       |                |                  
|outstanding at March 29, 2009 and December 28, 2008                        |                |                  
|Common stock, $0.01 par:                                                   |                |                  
|Class C - authorized 10,000,000 shares; issued and outstanding:            |                |                  
|3,264,000 shares at March 29, 2009 and December 28, 2008                   |                |                  
|Class B - authorized 120,000,000 shares; issued and outstanding (excluding |                |                  
|treasury stock): 10,552,926 shares at March 29, 2009 and 9,938,816         |                |                  
|shares at December 28, 2008                                                |                |                  
|Class A - authorized 170,000,000 shares; issued and outstanding:           |                |                  
|40,661,086 shares at March 29, 2009 and 40,553,107 shares at               |                |                  
|December 28, 2008                                                          |                |                  
|Additional paid-in capital                                                 |                |                  
|Accumulated other comprehensive loss                                       |                |                  
|Retained earnings                                                          |                |                  
|Treasury stock, at cost (8,676,705 class B shares)                         |                |                  
|                                                                           |                |                  
|TOTAL SHAREHOLDERS EQUITY                                                 |                |                  
|                                                                           |                |                  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                 |                |                  
|                                                                           |                |                  

See accompanying notes
to unaudited consolidated condensed financial statements.

2

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

|                                                                   | First Quarter Ended
|------------------------------------------------------------------ | -------------------
|
|Revenue:                                                           |                    
|Publishing                                                         |                    
|Broadcasting                                                       |                    
|Printing services                                                  |                    
|Other                                                              |                    
|                                                                   |                    
|Total revenue                                                      |                    
|Operating costs and expenses:                                      |                    
|Publishing                                                         |                    
|Broadcasting                                                       |                    
|Printing services                                                  |                    
|Other                                                              |                    
|                                                                   |                    
|Total operating costs and expenses                                 |                    
|Selling and administrative expenses                                |                    
|Total operating costs and expenses and selling and                 |                    
|administrative expenses                                            |                    
|                                                                   |                    
|Operating earnings (loss)                                          |                    
|Other income and expense:                                          |                    
|Interest income                                                    |                    
|Interest expense                                                   |                    
|                                                                   |                    
|Total other income and (expense)                                   |                    
|                                                                   |                    
|Earnings (loss) from continuing operations before income taxes     |                    
|Provision (benefit) for income taxes                               |                    
|                                                                   |                    
|Earnings from continuing operations                                |                    
|Gain from discontinued operations, net of $0 applicable income tax |                    
|expense                                                            |                    
|                                                                   |                    
|Net earnings                                                       |                    
|                                                                   |                    
|Earnings (loss) per share:                                         |                    
|Basic - Class A and B common stock:                                |                    
|Continuing operations                                              |                    
|Discontinued operations                                            |                    
|                                                                   |                    
|Net earnings (loss)                                                |                    
|                                                                   |                    
|Diluted - Class A and B common stock:                              |                    
|Continuing operations                                              |                    
|Discontinued operations                                            |                    
|                                                                   |                    
|Net earnings (loss)                                                |                    
|                                                                   |                    
|Basic and diluted - Class C common stock:                          |                    
|Continuing operations                                              |                    
|Discontinued operations                                            |                    
|                                                                   |                    
|Net earnings                                                       |                    
|                                                                   |                    

See accompanying notes
to unaudited consolidated condensed financial statements

3

---

Journal Communications,
Inc. Consolidated Statements of Shareholders Equity  First Quarter Ended March 29, 2009
(in thousands, except per share amounts)

|                                                             | Preferred | Common Stock | Additional | Accumulated
Other
Comprehensive | Retained | Treasury
Stock, |    | Comprehensive
|------------------------------------------------------------ | --------- | ------------ | ---------- | ------------------------------- | -------- | --------------- | -- | -------------
|
|Balance at December 28, 2008                                 |           |              | $          | --                              |          | $               | 33 |              
|Comprehensive income:                                        |           |             
|Net earnings                                                 |           |              |            |                                 |          |                 |    |              
|Other comprehensive income, net:                             |           |             
|Change in pension and                                        |           |             
|postretirement (net of         deferred tax expense of $962) |           |              |            |                                 |          |                 |    |              
|                                                             |           |              |            |                                 |          |                 |    |              
|Comprehensive income                                         |           |              |            |                                 |          |                 |    |              
|                                                             |           |              |            |                                 |          |                 |    |              
|Dividends declared:                                          |           |             
|Class C ($0.142 per share)                                   |           |              |            |                                 |          |                 |    |              
|Class B ($0.02 per share)                                    |           |              |            |                                 |          |                 |    |              
|Class A ($0.02 per share)                                    |           |              |            |                                 |          |                 |    |              
|Issuance of shares:                                          |           |             
|Conversion of class B to class A                             |           |              |            |                                 |          |                 |    |              
|Stock grants                                                 |           |              |            |                                 |          |                 |    |              
|Employee stock purchase plan                                 |           |              |            |                                 |          |                 |    |              
|Shares withheld from employees     for tax withholding       |           |              |            |                                 |          |                 |    |              
|Stock-based compensation                                     |           |              |            |                                 |          |                 |    |              
|                                                             |           |              |            |                                 |          |                 |    |              
|Balance at March 29, 2009                                    |           |              | $          | --                              |          | $               | 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                                             |                    
|Non-cash stock-based compensation                                 |                    
|Curtailment gains for pension plans                               |                    
|Loss from disposal of assets                                      |                    
|Net changes in operating assets and liabilities, excluding effect |                    
|of sales and acquisitions:                                        |                    
|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                                     |                    
|Acquisition of businesses                                         |                    
|                                                                  |                    
|NET CASH USED FOR INVESTING ACTIVITIES                            |                    
|Cash flow from financing activities:                              |                    
|Proceeds from long-term notes payable to banks                    |                    
|Payments on long-term notes payable to banks                      |                    
|Proceeds from issuance of common stock                            |                    
|Redemption of common stock                                        |                    
|Cash dividends                                                    |                    
|                                                                  |                    
|NET CASH USED FOR FINANCING ACTIVTIES                             |                    
|Cash flow from discontinued operations:                           |                    
|Net operating activities                                          |                    
|                                                                  |                    
|NET CASH PROVIDED BY                                              |                    
|DISCONTINUED OPERATIONS                                           |                    
|                                                                  |                    
|NET DECREASE IN CASH AND CASH EQUIVALENTS                         |                    
|Cash and cash equivalents:                                        |                    
|Beginning of year                                                 |                    
|                                                                  |                    
|At March 29, 2009 and March 30, 2008                              |                    
|                                                                  |                    

See accompanying notes
to unaudited consolidated condensed financial statements.

5

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

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

| | The
accompanying unaudited consolidated condensed financial statements have been prepared by
Journal Communications, Inc. and its wholly owned subsidiaries in accordance with U.S.
generally accepted accounting principles and pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC) and reflect normal and recurring adjustments,
which we believe to be necessary for a fair presentation. As permitted by these
regulations, these statements do not include all of the information and footnotes
required by U.S. generally accepted accounting principles for annual financial
statements. However, we believe that the disclosures are adequate to make the information
presented not misleading. The balance sheet at December 28, 2008 has been derived from
the audited financial statements at that date, but does not include all the information
and footnotes required by U.S. generally accepted accounting principles for complete
financial statements. Adjustments related to NorthStar Print Group, Inc. have been
reflected as discontinued operations in our consolidated condensed financial statements
for the first quarter of 2008. The operating results for the first quarter ended March
29, 2009 are not necessarily indicative of the operating results that may be expected for
the fiscal year ending December 27, 2009. 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 28, 2008.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

| | In
April 2009, the FASB issued Financial Staff Position (FSP) FAS 107-1 and Accounting
Principal Board (APB) 28-1, Interim Disclosures about Fair Value of Financial
Instruments. This FSP amends FASB Statement No. 107, Disclosures about Fair
Value of Financial Instruments, to require an entity to provide disclosures about
fair value of financial instruments in interim financial information. This FSP also
amends APB Opinion No. 28, Interim Financial Reporting, to require those
disclosures in summarized financial information at interim reporting periods. Under this
FSP, a publicly traded company shall include disclosures about the fair value of its
financial instruments whenever it issues summarized financial information for interim
reporting periods. In addition, an entity shall disclose in the body or in the
accompanying notes of its summarized financial information for interim reporting periods
and in its financial statements for annual reporting periods the fair value of all
financial instruments for which it is practicable to estimate that value, whether
recognized or not recognized in the statement of financial position, as required by
Statement No. 107. FSP 107-1 and APB 28-1 are effective for interim periods ending after
June 15, 2009, with early adoption permitted for periods ending after March 15, 2009 only
if an entity also elects to early adopt FSP FAS 157-4 and FSP FAS 115-2 and FAS 124-2. We
will adopt FSP FAS 107-1 and APB 28-1 for the second quarter ended June 29, 2009. We do
not believe the effect of adopting FSP FAS 107-1 and APB 28-1 will have a material impact
on our consolidated financial statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2009, the FASB issued FASB Staff Position (FSP) FAS 157-4, Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly. This FSP:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Affirms
that the objective of fair value when the market for an asset is not active is the price
that would be received to sell the asset in an orderly transaction.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Clarifies
and includes additional factors for determining whether there has been a significant
decrease in market activity for an asset when the market for that asset is not active.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Eliminates
the proposed presumption that all transactions are distressed (not orderly) unless proven
otherwise. The FSP instead requires an entity to base its conclusion about whether a
transaction was not orderly on the weight of the evidence.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Includes
an example that provides additional explanation on estimating fair value when the market
activity for an asset has declined significantly.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Requires
an entity to disclose a change in valuation technique (and the related inputs) resulting
from the application of the FSP and to quantify its effects, if practicable.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Applies
to all fair value measurements when appropriate.
| | - | --------------------------------------------------------

6

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

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

| | FSP
FAS 157-4 must be applied prospectively and retrospective application is not permitted.
FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009,
with early adoption permitted for periods ending after March 15, 2009. An entity early
adopting FSP FAS 157-4 must also early adopt FSP FAS 115-2 and FAS 124-2, Recognition
and Presentation of Other-Than-Temporary Impairments. We will adopt FSP FAS 157-4
for the second quarter ended June 29, 2009. We do not believe the effect of adopting FSP
FAS 157-4 will have a material impact on our consolidated financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2009, the FASB issued FASB Staff Position (FSP) FAS 141(R)-1, Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies. This FSP amends the guidance in FASB Statement No. 141 (Revised
December 2007), Business Combinations, to:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |    
Require that assets acquired and liabilities assumed in a business combination that arise
from contingencies be recognized at fair value if fair value can be reasonably estimated.
If fair value of such an asset or liability cannot be reasonably estimated, the asset or
liability would generally be recognized in accordance with FASB Statement No. 5, Accounting
for Contingencies, and FASB Interpretation (FIN) No. 14, Reasonable
Estimation of the Amount of a Loss. Further, the FASB decided to remove the
subsequent accounting guidance for assets and liabilities arising from contingencies from
Statement No. 141R, and carry forward without significant revision the guidance in FASB
Statement No. 141, Business Combinations.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |    
Eliminate the requirement to disclose an estimate of the range of outcomes of recognized
contingencies at the acquisition date. For unrecognized contingencies, the FASB decided
to require that entities include only the disclosures required by Statement No. 5 and
that those disclosures be included in the business combination footnote.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |    
Require that contingent consideration arrangements of an acquiree assumed by the acquirer
in a business combination be treated as contingent consideration of the acquirer and
should be initially and subsequently measured at fair value in accordance with Statement
No. 141R.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | This
FSP is effective for assets or liabilities arising from contingencies in business
combinations for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008. We adopted FSP FAS
141(R)-1 in the first quarter of 2009. The adoption of FSP FAS 141(R)-1 did not have a
material impact on our consolidated financial statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | In
February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of
FASB Statement No. 157, which delays the effective date of Statement No. 157 for
all nonfinancial assets and liabilities, except those that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually) to fiscal
years beginning after November 15, 2008. We adopted FASB Staff Position FAS 157-2 and it
did not have a material impact on our consolidated financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

7

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

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

| | In
June 2008, the FASB issued EITF 08-3, Accounting by Lessees for Nonrefundable
Maintenance Deposits. EITF 08-3 requires that all nonrefundable maintenance
deposits should be accounted for as a deposit. When the underlying maintenance is
performed, the deposit is expensed or capitalized in accordance with the lessees
maintenance accounting policy. Once it is determined that an amount on deposit is not
probable of being used to fund future maintenance expense, it is recognized as additional
expense at the time such determination is made. EITF 08-3 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and interim periods
within those fiscal years. Earlier application is not permitted. We adopted EITF 08-3 in
the first quarter of 2009. The adoption of EITF 08-3 did not have a material impact on
our consolidated financial statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2008, the FASB issued FASB Staff Position FAS 132(R)-1, Employers
Disclosures about Postretirement Benefit Plan Assets, which amends FASB Statement
No. 132 (Revised 2003), Employers Disclosures about Pensions and Other
Postretirement Benefits, to provide guidance on an employers disclosures
about plan assets of a defined benefit pension or other postretirement plan. This
pronouncement is effective for fiscal years ending after December 15, 2009. Upon initial
application, the provisions of this FASB Staff Position are not required for earlier
periods that are presented for comparative purposes. Earlier application of the
provisions is permitted. We do not believe the effect of adopting FASB Staff Position FAS
132(R)-1 will have a material impact on our consolidated financial statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Basic
| | -----

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

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

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

| | (c) | The
remaining losses, which may include losses from discontinued operations                (undistributed
losses), are allocated to the class A and B common                stock.
Undistributed losses are not allocated to the class C common stock                because
the class C shares are not contractually obligated to share in the                losses.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

8

---

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

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

| | In
applying the two-class method, we have determined that undistributed earnings should be
allocated equally on a per share basis among each class of common stock due to the lack
of any contractual participation rights of any class to those undistributed earnings.
Undistributed losses are allocated to only the class A and B common stock for the reason
stated above.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
adopted EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities in the first quarter of 2009. Our
non-vested restricted stock awards contain nonforfeitable rights to dividends and are
included in the computation of earnings per share pursuant to the two-class method. The
adoption of EITF 03-6-1 did not have a material effect on our historically reported
earnings per share.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

9

---

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

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

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

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

| | Diluted
earnings per share for the first quarter of 2009 is computed based upon the assumption
that common shares are issued upon exercise of our non-statutory stock options or stock
appreciation rights when the exercise price is less than the current market price of our
common shares. Diluted earnings per share for the first quarter of 2008 is computed based
upon the assumption that common shares are issued upon exercise of our non-statutory
stock options or stock appreciation rights when the exercise price is less than the
current market price of our common shares and common shares will be outstanding upon
expiration of the vesting periods for our non-vested restricted stock. The class C shares
are not converted into class A and B shares because they are anti-dilutive for all
periods presented.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---

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

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

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

|                                                                 | First Quarter Ended
|---------------------------------------------------------------- | -------------------
|
|Numerator for diluted net earnings (loss) per share:             |                    
|Dividends on class A and B common stock                          |                    
|Total undistributed earnings (loss) from continuing operations.. |                    
|Total undistributed earnings from discontinued operations        |                    
|                                                                 |                    
|Net earnings (loss)                                              |                    
|                                                                 |                    
|Denominator for diluted net earnings (loss) per share:           |                    
|Weighted average shares outstanding - class A and B              |                    
|Impact of non-vested restricted stock                            |                    
|Assumed exercise of stock appreciation rights net of common      |                    
|shares assumed repurchased with the proceeds                     |                    
|                                                                 |                    
|Adjusted weighted average shares outstanding                     |                    
|                                                                 |                    
|Diluted earnings (loss) per share:                               |                    
|Continuing operations                                            |                    
|Discontinued operations                                          |                    
|                                                                 |                    
|Net earnings                                                     |                    
|                                                                 |                    

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

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

|5 | STOCK-BASED
COMPENSATION
|- | ------------------------

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

| | Subject
to adjustment as provided in the 2007 Plan, the aggregate number of shares of class A
common stock or class B common stock reserved and available for issuance pursuant to
awards granted under the 2007 Plan is 4,800,000 shares which may be awarded in the form
of nonstatutory or incentive stock options, stock appreciation rights, restricted stock,
restricted or deferred stock units, performance awards, dividend equivalents, other
stock-based awards and cash-based awards. The 2007 Plan replaced the 2003 Equity
Incentive Plan (2003 Plan) and, as of May 3, 2007, all equity grants have been made from
the 2007 Plan. We will not grant any additional awards under the 2003 Plan. As of March
29, 2009, there are 3,209,275 shares available for issuance under the 2007 Plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

11

---

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

|5 | STOCK-BASED
COMPENSATION continued
|- | ----------------------------------

| | During
the first quarter ended March 29, 2009 and March 30, 2008, we recognized $348 and $356,
respectively, in stock-based compensation expense. Total income tax benefit recognized
related to stock-based compensation for the first quarter ended March 29, 2009 and March
30, 2008 was $150 and $139, respectively. We recognize stock-based compensation expense
on a straight-line basis over the service period based upon the fair value of the award
on the grant date. As of March 29, 2009, total unrecognized compensation cost related to
stock-based compensation awards was $2,189 net of estimated forfeitures, which we expect
to recognize over a weighted average period of 1.2 years. Stock-based compensation
expense is reported in selling and administrative expenses in our consolidated statements
of earnings.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | A
summary of stock option activity during the first quarter of 2009 is:
| | -----------------------------------------------------------------------

|                                             
|---------------------------------------------
|Outstanding at December 28, 2008             
|Expired                                      
|                                             
|Outstanding and exercisable at March 29, 2009
|                                             

| | The
aggregate intrinsic value of stock options outstanding and exercisable at the end of the
first quarter of 2009 is zero because the fair market value of our class B common stock
on March 29, 2009 was lower than the weighted average exercise price of the options.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | A
summary of SAR activity during the first quarter of 2009 is:
| | --------------------------------------------------------------

|                                
|--------------------------------
|Outstanding at December 28, 2008
|Forfeited                       
|                                
|Outstanding at March 29, 2009   
|                                
|Exercisable at March 29, 2009   
|                                

12

---

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

|5 | STOCK-BASED
COMPENSATION continued
|- | ----------------------------------

| | The
aggregate intrinsic value of the SARs outstanding and exercisable at the end of the first
quarter of 2009 is zero because the fair market value of our class B common stock on
March 29, 2009 was lower than the weighted average exercise price of the SARs.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stock
grants 
The
compensation committee of our board of directors has granted class B common stock to
employees and directors under our 2003 Plan and our 2007 Plan. Each stock grant may have
been accompanied by restrictions, or may have been made without any restrictions, as the
compensation committee of our board of directors determined. Such restrictions could have
included requirements that the participant remain in our continuous employment for a
specified period of time, or that we or the participant meet designated performance
goals. We value non-vested restricted stock grants at the closing market prices of our
class A common stock on the grant date. A summary of stock grant activity during the
first quarter of 2009 is:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               
|-------------------------------
|Non-vested at December 28, 2008
|Granted                        
|Vested                         
|Forfeited                      
|                               
|Non-vested at March 29, 2009   
|                               

| | Our
non-vested restricted stock grants vest from one to five years from the grant date. We
expect our non-vested restricted stock grants to fully vest over the weighted average
remaining service period of 1.6 years. The total fair value of shares vesting during the
first quarter of 2009 was $503. There was an aggregate of 48,726 unrestricted and
non-vested restricted stock grants issued to our directors and employees in the first
quarter of 2008 at a weighted average fair value of $7.62 per share, of which none of the
non-vested restricted shares have since vested.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Employee
stock purchase plan 
The
2003 Employee Stock Purchase Plan permits eligible employees to purchase our class B
common stock at 90% of the fair market value measured as of the closing market price of
our class A common stock on the day of purchase. We recognize compensation expense equal
to the 10% discount of the fair market value. Subject to certain adjustments, 3,000,000
shares of our class B common stock are authorized for sale under this plan. There were
85,980 class B common shares sold to employees under this plan in the first quarter of
2009 at a weighted average fair value of $2.21. As of March 29, 2009, there are 2,557,009shares
available for sale under the plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6 | INCOME
TAXES
|- | ------------

| | We
file tax returns in the United States federal jurisdiction, as well as approximately 15
state and local jurisdictions. The statute of limitations for assessing additional taxes
is three years for federal purposes and typically between three and four years for state
and local purposes. Accordingly, our 2005 through 2007 tax returns are open for federal
purposes, and our 2004 through 2007 tax returns remain open for state tax purposes.
The statute of limitations has been extended for the state of Wisconsin and we are currently under
audit for our 2003 through 2007 tax returns.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of March 29, 2009, our liability for unrecognized tax benefits was $1,130, which, if
recognized, $1,017 would have an impact on our effective tax rate. We recognize interest
income/expense and penalties related to unrecognized tax benefits in our provision for
income taxes. As of March 29, 2009 we had $293 accrued for interest expense and
penalties. During the first quarter of 2009, we recognized $24 in interest expense.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the first quarter of 2009, we effectively settled an income and franchise tax audit
assessment issued by the Wisconsin Department of Revenue for the years 1998 through 2002.
The total impact of this settlement on our benefit for income taxes in the first quarter
of 2009 was $1,167 for our liability of unrecognized tax benefits, interest and penalties
and the interest income on our $9,452 prepayment. The Wisconsin Department of Revenue
will return to us $8,641 of our prepayment, which we received early in the second
quarter of 2009. As of March 29, 2009, $8,641 is included in receivables in our
consolidated condensed balance sheet.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

---

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

|6 | INCOME
TAXES continued
|- | ----------------------

| | During
the first quarter of 2009, our liability for unrecognized tax benefits and interest and
penalties decreased by $1,348 and $931, respectively, due to a reduction for a state audit settlement. As of March 29, 2009, it is
possible for $293 of unrecognized tax benefits and related interest to be recognized
within the next 12 months due to settlements with taxing authorities.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7 | INVENTORIES
|- | -----------

| | Inventories
are stated at the lower of cost (first in, first out method) or market. Inventories at
March 29, 2009 and December 28, 2008 consisted of the following:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | March 29, 2009 | December 28, 2008
|------------------------- | -------------- | -----------------
|Paper and supplies        |                |                  
|Work in process           |                |                  
|Finished goods            |                |                  
|Less obsolescence reserve |                |                  
|                          |                |                  
|Inventories, net          |                |                  
|                          |                |                  

|8 | NOTES
PAYABLE TO BANKS
|- | ----------------------

| | We
have a $475,000 unsecured revolving facility that expires on June 2, 2011. The interest
rate on borrowings is either LIBOR plus a margin that ranges from 37.5 basis points to
87.5 basis points, depending on our leverage, or the base rate, which equals the higher
of the prime rate set by U.S. Bank, N.A. or the Federal Funds Rate plus 100 basis points.
As of March 29, 2009 and December 28, 2008, we had borrowings of $200,310 and $215,090,
respectively, under the facility at a weighted average rate of 1.19% and 2.10%,
respectively. Cash provided by operating activities was used primarily to decrease our
borrowings during the first quarter of 2009. Fees in connection with the facility of
$1,717 are being amortized over the term of the facility using the straight-line method.
The facility includes the following two financial covenants:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |    
A consolidated funded debt ratio of not greater than 4-to-1, as determined for the four
fiscal quarter period preceding the date of determination. This ratio compares, for any
period, our funded debt to our earnings before interest, taxes, depreciation and
amortization, as adjusted for non-operational impairment charges recorded as a result of
FASB Statement No. 142, Goodwill and Other Intangible Assets. As of March 29,
2009, we were in compliance with this financial covenant.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |    
An interest coverage ratio of not less than 3-to-1, as determined for the four fiscal
quarter period preceding the date of determination. This ratio compares, for any period,
our earnings before interest, taxes, depreciation and amortization, as adjusted for
non-operational impairment charges recorded as a result of FASB Statement No. 142, Goodwill
and Other Intangible Assets, to our interest expense. As of March 29, 2009, we were
in compliance with this financial covenant.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
actual operating and cash flow results over the next 12 months are lower than current
projections, the margins by which we will comply with the covenants will decrease. In a
recessionary economy, a significant risk to achieving our projections is meeting our
revenue and earnings forecasts. To remain in compliance with the terms of our credit
agreement, we could face increased pressure to reduce or delay capital expenditures,
dispose of assets or operations, further reduce the size of our workforce or take other
steps to revise our capital structure or our business operations. In addition, to remain
in compliance with the terms of our credit agreement, we may seek to amend or replace our
current credit facility with one or more capital sources on appropriate terms. We cannot
assure you that we will have the ability to take any of these actions or that these
actions would be successful. If it is determined we are not in compliance with these
financial covenants, the lenders in our credit facility syndicate will be entitled to
take certain actions, including acceleration of all amounts due under the facility. If
the lenders take such action, we may be forced to amend the terms of the credit
agreement, obtain a waiver or find alternative sources of capital. If we are unable to
obtain alternative sources of capital, it may be necessary to significantly restructure
our business.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Given
the current economic crisis, including the current instability of financial institutions,
one or more of the lenders in our credit facility syndicate could fail or be unable to
fund future draws thereunder or take other positions adverse to us. In such an event, our
liquidity could be severely constrained with an adverse impact on our ability to operate
our businesses and we may be forced to take the actions described above. We continue to
monitor our current lenders and compliance with our credit agreement terms and are
working on possible strategies in the event one or more of our lenders is unable or
unwilling to fund future borrowing requests.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

---

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

|9 | GUARANTEES
|- | ----------

| | We
provided a guarantee to the landlord of our former New England community newspapers and
shopper business, which was sold in 2007, with respect to tenant liabilities and
obligations associated with a lease which expires in December 2016. Our maximum potential
obligation pursuant to the guarantee is $1,340 as of March 29, 2009.  As part of the
sales transaction, we received a guarantee from the buyer of our New England business
that they will satisfy all the liabilities and obligations of the assigned lease.  In
the event that they fail to satisfy their liabilities and obligations and the landlord
invokes our guarantee, we have a right to indemnification from the buyer.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10 | 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                                           |                 
|Curtailment gain                                                |                 
|                                                                |                 
|Net periodic benefit cost included in total operating costs and |                 
|expenses, and selling and administrative expenses               |                 
|                                                                |                 

| | The
pension plan curtailment gain was the result of an amendment to the plans adopted on
March 25, 2009. The amendment suspended benefit accruals in our qualified and
non-qualified plans for all active employees for the 18-month period beginning July 1,
2009. Due to the plan amendment, recent measurements of both plan assets and obligations
were calculated. The obligations are based upon a 7.1% discount rate. The benefit
obligation and plan assets at the end of the first quarter 2009 were $130,355 and
$85,071, respectively. The plans are underfunded by $45,284.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
fund our defined benefit pension plan at the minimum amount required by the Pension
Protection Act of 2006. We do not expect to contribute to our qualified defined benefit
pension plan in 2009. We expect to contribute $5,300 to our qualified defined benefit
pension plan in 2010. We expect to contribute $289 and $316 to our unfunded non-qualified
pension plan in 2009 and 2010, respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                | Other Postretirement Benefits
|--------------------------------------------------------------- | -----------------------------
|
|
|Service cost                                                    |                              
|Interest cost                                                   |                              
|Amortization of:                                                |                              
|Unrecognized prior service cost                                 |                              
|Unrecognized net transition obligation                          |                              
|                                                                |                              
|Net periodic benefit cost included in total operating costs and |                              
|expenses and selling and administrative expenses                |                              
|                                                                |                              
|                                                                |                              

15

---

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

|11 | GOODWILL
AND OTHER INTANGIBLE ASSETS
|-- | ------------------------------------

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

| | Amortization
expense was $491 for the first quarter ended March 29, 2009, and $492 for the first
quarter ended March 30, 2008. Estimated amortization expense for our next five fiscal
years is $1,958 for 2009, $1,909 for 2010, $1,551 for 2011, $1,468 for 2012 and $1,349
for 2013.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
gross carrying amount, accumulated amortization and net carrying amount of the major
classes of definite-lived intangible assets as of March 29, 2009 and December 28, 2008
are as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | Gross
Carrying
Amount | Accumulated
Amortization | Net
Carrying
Amount
|------------------------------ | --------------------- | ------------------------ | -------------------
|March 29, 2009                 |                       |                          |                    
|Network affiliation agreements |                       |                          | $                  
|Customer lists                 |                       |                          |                    
|Non-compete agreements         |                       |                          |                    
|Other                          |                       |                          |                    
|                               |                       |                          |                    
|Total                          |                       |                          | $                  
|                               |                       |                          |                    
|December 28, 2008              |                       |                         
|Network affiliation agreements |                       |                          | $                  
|Customer lists                 |                       |                          |                    
|Non-compete agreements         |                       |                          |                    
|Other                          |                       |                          |                    
|                               |                       |                          |                    
|Total                          |                       |                          | $                  
|                               |                       |                          |                    

| | Indefinite-lived
Intangibles 
Broadcast
licenses are deemed to have indefinite useful lives because we have renewed these
agreements without issue in the past and we intend to renew them indefinitely in the
future. Accordingly, we expect the cash flows from our broadcast licenses to continue
indefinitely.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | There
were no changes in the net carrying amount of our broadcast licenses in the first quarter
ended March 29, 2009.
| | ---------------------------------------------------------------------------------------------------------------------

| | Goodwill 
There
were no adjustments in the carrying amount of goodwill for the first quarter ended March
29, 2009.
| | ------------------------------------------------------------------------------------------------------------------

|12 | DISCONTINUED
OPERATIONS
|-- | -----------------------

| | NorthStar
Print Group, Inc. 
In
the first quarter of 2008, we recorded a gain on discontinued operations of $400 for a
reduction in the reserve related to a settlement with the Environmental Protection
Agency. We made payment on this settlement in the third quarter of 2008.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16

---

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

|13 | WORKFORCE
REDUCTIONS
|-- | --------------------

| | We
continue to align our costs with our declining revenues. During the first quarter of
2009, we recorded a pre-tax charge of $323 for workforce separation benefits. These
charges are recorded in operating costs and expenses and selling and administrative
expenses in the consolidated statement of operations. Activity associated with the
workforce reduction and business initiatives during the first quarter of 2009 was as
follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  | Balance at
December 28, 2008 | Charge for
Separation
Benefits | Payments for
Separation
Benefits | Balance at
March 29, 2009
|--------------------------------- | ---------------------------- | ------------------------------ | -------------------------------- | -------------------------
|Publishing                        |                              |                                |                                  |                          
|Daily newspaper                   |                              |                                | $                                | 557                      
|Community newspapers and shoppers |                              |                                |                                  | 53                       
|                                  |                              |                                |                                  |                          
|Total Publishing                  |                              |                                |                                  | 610                      
|Broadcasting                      |                              |                                |                                  | 30                       
|Printing services                 |                              |                                |                                  | --                       
|Direct marketing services         |                              |                                |                                  | 177                      
|                                  |                              |                                |                                  |                          
|Total                             |                              |                                | $                                | 817                      
|                                  |                              |                                |                                  |                          

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

| | Our
business segments are based on the organizational structure used by management for making
operating and investment decisions and for assessing performance. Our reportable business
segments are: (i) publishing; (ii) broadcasting; (iii) printing services; and (iv) other.
As of March 29, 2009, our publishing segment consisted of the Milwaukee Journal
Sentinel, which serves as the only major daily newspaper for the Milwaukee
metropolitan area, and more than 50 community newspapers and shoppers in Wisconsin and
Florida. Our broadcasting segment consists of 35 radio stations and 12 television
stations in 12 states and the operation of a television station under a local marketing
agreement. We also provide a wide range of commercial printing services, including
printing of publications, professional journals and documentation material, through our
printing services segment. Our other segment consists of a direct marketing services
business and corporate expenses and eliminations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following tables summarize revenue, operating earnings (loss), depreciation and
amortization and capital expenditures for the first quarters ended March 29, 2009 and
March 30, 2008 and identifiable total assets at March 29, 2009 and December 28, 2008:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

17

---

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

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

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

|                          | March 29, 2009 | December 28, 2008
|------------------------- | -------------- | -----------------
|Identifiable total assets |                |                  
|Publishing                |                |                  
|Broadcasting              |                |                  
|Printing service          |                |                  
|Other                     |                |                  
|                          |                |                  
|                          |                |                  
|                          |                |                  

|15 | SUBSEQUENT
EVENT
|-- | ----------------

| | On
April 23, 2009, Journal Broadcast Group, Inc. and Journal Broadcast Corporation, our
broadcasting businesses, closed on the asset purchase of KNIN-TV from Banks Boise, Inc.
for $6,600. KNIN-TV, Analog Channel 9 and Digital Channel 10, is the CW Network affiliate
serving the Boise, Idaho market. We own KIVI-TV, the ABC affiliate, and six radio
stations in Boise, Idaho. The purchase of KNIN-TV builds our cross-media business in
Boise to better serve advertisers and viewers in the Treasure Valley, builds a stronger
community presence in Boise, and enhances our margin with multiple media properties.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

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

The following discussion of our
financial condition and results of operations should be read together with our unaudited
consolidated condensed financial statements for the first quarter ended March 29, 2009,
including the notes thereto.

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

# Forward-Looking
Statements

We make certain statements in this
Quarterly Report on Form 10-Q (including the information that we incorporate by reference
herein) that are forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended. We intend these forward-looking
statements to be covered by the safe harbor provisions for forward-looking statements
contained in that Act, and we are including this statement for purposes of those safe
harbor provisions. These forward-looking statements generally include all statements other
than statements of historical fact, including statements regarding our future financial
position, business strategy, budgets, projected revenues and expenses, expected regulatory
actions and plans and objectives of management for future operations. We often use words
such as may, will, intend, anticipate,
believe, or should and similar expressions in this Quarterly
Report on Form 10-Q to identify forward-looking statements. These forward-looking
statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control. These risks,
uncertainties and other factors could cause actual results to differ materially from those
expressed or implied by those forward-looking statements. Among such risks, uncertainties
and other factors that may impact us are the following as well as those contained in Item
1A, Risk Factors of our Annual Report on Form 10-K for the year ended December
28, 2008:

| | changes
in advertising demand or the buying strategies of advertisers or the migration of
advertising to the Internet;
|- | ----------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

| | quality
and rating of network over-the-air broadcast programs, including programs changing
networks and changing competitive dynamics regarding how and when programs are made
available to our viewers;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | an
other than temporary decline in operating results and enterprise value that could lead to
further non-cash impairment charges due to the impairment of goodwill, broadcast
licenses, other intangible assets and property, plant and equipment;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | the
impact of changing economic and financial market conditions and interest rates on our
liquidity, on the value of our pension plan assets and on the availability of capital;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | our
ability to remain in compliance with the terms of our credit agreement;
|- | ---------------------------------------------------------------------------

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

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

| | energy
costs;
|- | -------------

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

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

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.

19

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# Overview

Our business segments are based on
the organizational structure used by management for making operating and investment
decisions and for assessing performance. Our reportable business segments are: (i)
publishing; (ii) broadcasting; (iii) printing services; and (iv) other. Our publishing
segment consists of the Milwaukee Journal Sentinel, which serves as the only major
daily newspaper for the Milwaukee metropolitan area, and more than 50 community newspapers
and shoppers in Wisconsin and Florida. Our broadcasting segment consists of 35 radio
stations and 13 television stations in 12 states and the operation of a television station
under a local marketing agreement. Our interactive media assets include approximately 120
online enterprises that are associated with our publishing and broadcasting segments. We
also provide a wide range of commercial printing services, including printing of
publications, professional journals and documentation material, through our printing
services segment. Our other segment consists of a direct marketing services business and
corporate expenses and eliminations.

Over the past few years, fundamentals
in the newspaper industry have deteriorated significantly. Continuing weakness in the
automobile industry has resulted in a decline in automotive advertising. Reductions in
retail and classified run-of-press (ROP) advertising (due in part to department store
consolidation, weakened employment and real estate economics and a migration of
advertising to the internet), circulation declines and online competition have also
negatively impacted newspaper industry revenues. Additionally, the continued housing
market downturn has adversely impacted the newspaper industry, including real estate
classified advertising as well as the home improvement, furniture and financial services
advertising categories. These conditions, along with a weak economy, persisted in the
first quarter of 2009 and we see little sign of improvement as we enter the second quarter
of 2009.

Our publishing business continued to
be challenged in the first quarter of 2009 due to the current economic recession and the
continued softening of business conditions driven by the secular and cyclical influences
affecting the newspaper industry. We have seen advertisers reduce their advertising
spending in virtually all revenue categories. Classified advertising revenue, specifically
for employment, real estate and automotive, decreased $6.6 million, or 49.2%, in the first
quarter of 2009 compared to the first quarter of 2008. Retail advertising also decreased
in the first quarter of 2009 compared to the first quarter of 2008 with weakness in a
number of consumer-driven categories, including the furniture and furnishings,
finance/insurance, home improvement, dining and entertainment, small-retailers, health
services and real estate categories. Interactive revenue decreased $1.6 million, or 44.3%,
at our publishing businesses in the first quarter of 2009 compared to the first quarter of
2008. Revenue from automotive online classifieds was negatively impacted by our daily
newspapers transition to a new franchise relationship with CarSoup.com. Our
publishing business continues to reduce its expense platform to align it with a reduced
revenue base. Total expenses decreased $6.7 million, or 11.9%, in the first quarter of
2009 compared to the first quarter of 2008 primarily due to a decrease of $4.2 million in
payroll-related costs.

Revenues in the broadcast industry
are derived primarily from the sale of advertising time to local, national and political
advertisers and to a lesser extent from barter, digital revenues, retransmission fees,
network compensation and other revenues. Because television and radio broadcasters rely
upon advertising revenue, they are subject to cyclical changes in the economy. The size of
advertisers budgets, which are affected by broad economic trends, affects the
radio industry in general and the revenue of individual television stations, in particular.
The broadcast industry continues to experience softness in television and radio
advertising resulting from general economic pressure now impacting local and national
economies, primarily in the automobile, housing and retail segments.

Revenue from broadcasting in the
first quarter of 2009 decreased 20.5% compared to the first quarter of 2008 due to
decreases in local, national and political and issue advertising revenue, partially offset
by increases in retransmission revenue. The current economic recession has negatively
impacted our broadcasting advertising revenue across most categories, the most significant
being our largest revenue category  automotive. Operating earnings from broadcasting
decreased 88.0% in the first quarter of 2009 compared to the first quarter of 2008 due the
impact from the decrease in revenue. In an effort to overcome the decrease in operating
earnings due to the decrease in revenue, we reduced total broadcasting expenses by $3.8
million, or 9.1%, in the first quarter of 2009 compared to the first quarter of 2008.

Revenue at our printing services
business decreased 13.5% in the first quarter of 2009 compared to the first quarter of
2008 primarily due to the effects of the current economic recession. Customers are
reducing their print volumes, ceasing to print and/or are taking their printing needs out
for bid in order to achieve lower pricing. Operating earnings at our printing services
business decreased primarily due to the impact from the decrease in revenue, partially
offset by a decrease in payroll-related costs and variable costs. Revenue at our direct
marketing services business decreased 32.2% in the first quarter of 2009 compared to the
first quarter of 2008 primarily due to a decrease in mailing services revenue. The
operating loss at our direct marketing services business increased in the first quarter of
2009 compared to the first quarter of 2008 primarily due to the operating earnings impact
of the decrease in revenue, partially offset by a decrease in payroll-related costs.

# Results of Operations

# First Quarter Ended
March 29, 2009 compared to the First Quarter Ended March 30, 2008

Our consolidated revenue in the first
quarter of 2009 was $106.8 million, a decrease of $27.5 million, or 20.4%, compared to
$134.3 million in the first quarter of 2008. Our consolidated operating costs and expenses
in the first quarter of 2009 were $70.2 million, a decrease of $7.7 million, or 9.9%,
compared to $77.9 million in the first quarter of 2008. Our consolidated selling and
administrative expenses in the first quarter of 2009 were $37.2 million, a decrease of
$6.6 million, or 14.9%, compared to $43.8 million in the first quarter of 2008.

20

---

The following table presents our
total revenue by segment, total operating costs and expenses, selling and administrative
expenses and total operating earnings (loss) as a percent of total revenue for the first
quarter of 2009 and the first quarter of 2008:

|                                               | 2009 | Percent of
Total
Revenue | 2008 | Percent of
Total
Revenue
|---------------------------------------------- | ---- | ------------------------ | ---- | ------------------------
|
|Revenue:                                       |      |                          |      |                         
|Publishing                                     |      |                          | $    | 48.1                    
|Broadcasting                                   |      |                          |      | 39.2                    
|Printing services                              |      |                          |      | 14.3                    
|Other                                          |      |                          |      | 5.2                     
|                                               |      |                          |      |                         
|Total revenue                                  |      |                          |      | 106.8                   
|Total operating costs and expenses             |      |                          |      | 70.2                    
|Selling and administrative expenses            |      |                          |      | 37.2                    
|                                               |      |                          |      |                         
|Total operating costs and expenses and selling |      |                         
|and administrative expenses                    |      |                          |      | 107.4                   
|                                               |      |                          |      |                         
|Total operating earnings (loss)                |      |                          | $    | (0.6                    
|                                               |      |                          |      |                         

In addition to the secular influences
affecting the newspaper industry discussed above, the current economic recession
negatively impacted our publishing, broadcasting and direct marketing services advertising
revenue and commercial printing revenue in the first quarter of 2009.

In the newspaper industry, classified
advertising is generally the most sensitive to economic cycles because it is driven by the
demand of employment, real estate transactions and automotive sales. Newspaper classified
advertising also has been the most impacted by secular changes affecting the newspaper
industry. Classified advertising continues to move away from printed products to online
products. While we offer online products and seek to retain classified advertising, we
face increasing competition for this business, are losing the benefit of a strong base of
print classified advertising against which we can upsell online advertisements, and have
reduced margins on our online, as compared with our print classified business. Our
publishing business experienced a significant decrease in classified advertising revenue
in the first quarter of 2009 compared to the first quarter of 2008. Retail ROP and
preprint advertising decreased by 21.0% in the first quarter of 2009
compared to the first quarter of 2008, primarily in consumer-driven categories. As consumers have less discretionary income, our
advertisers are decreasing their spending on advertising. The most significant decreases
were in the furniture and furnishings, finance/insurance, home improvement, dining and
entertainment, small-retailers, health services and real estate categories. Secular
changes affecting the newspaper industry also are resulting in pressure to reduce costs
and adjust our business model in the face of decreasing revenues.

At our broadcasting business,
advertising revenue decreased in the first quarter across most categories, the most
significant being our largest revenue category  automotive. Automotive advertising
revenue decreased $4.4 million, or 45.2%, in the first quarter of 2009 compared to the
first quarter of 2008 as the domestic automobile industry is experiencing an unprecedented
decrease in automotive sales. While there will be some political and issue advertising
revenue in 2009, it is generally considered to be a non-election year, and, accordingly,
we will experience a significant decrease in the political and issue advertising revenue
category throughout the year in our comparisons to 2008. In the first quarter of 2009,
political and issue advertising revenue decreased $1.8 million compared to the first
quarter of 2008. This is part of the normal two-year advertising cycle which affects our
television stations in particular. Our broadcasting business also is affected by audience fragmentation
as audiences have an increasing number of ways to access news and other
programming. Retransmission revenue increased $1.0 million in the first quarter of 2009 compared
to the first quarter of 2008, partially offsetting the decrease in advertising revenue.

The decrease in printing services
revenue was primarily due to the effects of the current economic recession. Revenue from
printing publications and revenue from Dell Computer Corporation (Dell) and other
computer-related customers decreased in the first quarter of 2009 compared to the first
quarter of 2008. At our direct marketing services business, revenue from mailing services
and postage decreased in the first quarter of 2009 compared to the first quarter of 2008
as as the demand for direct marketing advertising continues to decrease.

For all of our advertising-based
businesses, we believe that when there is an improvement in the current economic
environment, advertising revenue will begin to stabilize and eventually increase from its
current level. We do not expect, however, that revenues at our daily newspaper will return
to revenue levels reported in the last five years given the secular changes affecting the
newspaper industry.

21

---

The decrease in total operating costs
and expenses was primarily due to the decrease in revenue and a decrease in
payroll-related costs reflecting the savings from workforce reduction initiatives taken in
2008. The decrease in selling and administrative expenses is primarily due to decreases in
payroll-related costs reflecting the savings from workforce reduction initiatives in 2008
and overall cost reduction initiatives as our businesses continue to reduce expense
platforms in response to the decrease in revenue. These expense decreases were partially
offset by an increase in bad debt expense as our publishing, broadcasting and printing
services businesses are each encountering an increase in slow-paying customers as well as
customers who have filed bankruptcy.

Our consolidated operating loss in
the first quarter of 2009 was $0.6 million compared to operating earnings of $12.6 million
in the first quarter of 2008. The following table presents our operating earnings (loss)
by segment for the first quarter of 2009 and the first quarter 2008:

|                                | 2009 | Percent of
Total
Operating
Earnings | 2008 | Percent of
Total
Operating
Earnings
|------------------------------- | ---- | ----------------------------------- | ---- | -----------------------------------
|
|Publishing                      |      |                                     | $    | (1.6                               
|Broadcasting                    |      |                                     |      | 0.9                                
|Printing services               |      |                                     |      | --                                 
|Other                           |      |                                     |      | 0.1                                
|                                |      |                                     |      |                                    
|Total operating earnings (loss) |      |                                     | $    | (0.6                               
|                                |      |                                     |      |                                    

The decrease in total operating
earnings was primarily due to the decrease in revenue at our publishing, broadcasting,
printing services and direct marketing services businesses.

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

Revenue from publishing in the first
quarter of 2009 was $48.1 million, a decrease of $12.6 million, or 20.7%, compared to
$60.7 million in the first quarter of 2008. Operating loss from publishing in the first
quarter of 2009 was $1.6 million compared to operating earnings of $4.3 million in the
first quarter of 2008.

The following table presents our
publishing revenue by category and operating earnings (loss) for the first quarter of 2009
and the first quarter of 2008:

|                            | 2009 | 2008
|--------------------------- | ---- | ----
|
|
|Advertising revenue:        |      |     
|Retail                      |      |     
|Classified                  |      |     
|National                    |      |     
|Direct Marketing            |      |     
|Other                       |      |     
|                            |      |     
|Total advertising revenue.. |      |     
|Circulation revenue         |      |     
|Other revenue               |      |     
|                            |      |     
|Total revenue               |      |     
|                            |      |     
|Operating earnings (loss).. |      |     
|                            |      |     

Advertising revenue accounted for
61.7% of total publishing revenue in the first quarter of 2009 compared to 70.8% in the
first quarter of 2008. The current economic recession and on going secular changes in the
newspaper industry have caused advertisers to decrease their advertising spending across
all of our advertising revenue categories. This rapid decline in advertising revenue has
been partially offset by an increase in circulation revenue and commercial delivery and
printing revenue.

Retail advertising revenue in the
first quarter of 2009 was $21.0 million, a decrease of $5.6 million, or 21.0%, compared to
$26.6 million in the first quarter of 2008. The $4.8 million decrease at our daily
newspaper was primarily due to a decrease in ROP and preprint advertising in
consumer-driven categories. As consumers have less discretionary income, advertisers are
decreasing their spending. The most significant decreases were in the
furniture and furnishings, finance/insurance, home improvement, dining and entertainment,
small-retailers, health services and real estate categories. The same trends persisted in
our community newspapers and shoppers business. The $0.8 million decrease at our community
newspapers and shoppers was primarily due to decreases in automotive and real estate
advertising, partially offset by revenue from publications acquired in Northern Wisconsin
and Florida in 2008.

22

---

Classified advertising is generally
the most sensitive to economic cycles because it is driven by the demand of employment,
real estate transactions and automotive sales. As a result of the current economic
recession and the on going secular trend of classified advertising transitioning to the
internet, our publishing business experienced a significant decrease in classified
advertising revenue in the first quarter of 2009 compared to the first quarter of 2008.
Classified advertising revenue in the first quarter of 2009 was $6.9 million, a decrease
of $6.6 million, or 49.2%, compared to $13.5 million in the first quarter of 2008. At our
daily newspaper, print and online classified advertising revenue decreased by over 50%
from the first quarter of 2008. Specifically, the employment category decreased $3.5
million, or 66.4%; automotive decreased $1.5 million, or 61.7%; and real estate decreased
$1.3 million, or 50.2%. At our community newspapers and shoppers business, an increase in
classified advertising revenue from newly acquired publications in Northern Wisconsin and
Florida in 2008 was partially offset by a decrease in classified advertising revenue from
the other publications.

The total decrease in retail and
classified automotive advertising at our daily newspaper in the first quarter of 2009 was
$1.6 million, or 51.8%, compared to the first quarter of 2008. The decrease was due to a
decline in demand for advertising from local dealers and regional dealer associations.
Consumers have decreased their purchases of new automobiles and, in response, local
dealers and regional dealer associations are reducing their costs, including advertising
costs.

Interactive advertising revenue is
reported in the various advertising revenue categories. Total retail and classified
interactive advertising revenue at our publishing business was $2.0 million in the first
quarter of 2009, a decrease of $1.6 million, or 44.3%, compared to $3.6 million in the
first quarter of 2008. Interactive classified advertising revenue at the daily newspaper
was $1.0 million in the first quarter of 2009, a decrease of $1.1 million, or 54.3%,
compared to $2.1 million in the first quarter of 2008.  The $1.1 million decrease was
primarily due to decreases in automotive classified advertising of $0.6 million, or 85.6%
and employment classified advertising of $0.5 million, or 45.7%. The current economic
recession has negatively impacted automotive and employment online advertising revenue. In
the first quarter of 2009, revenue from automotive online classified advertising at our
daily newspaper was negatively impacted by the transition to a new franchise relationship
with CarSoup.com.

National advertising revenue in the
first quarter of 2009 was $1.4 million, a decrease of $0.6 million, or 30.6%, compared to
$2.0 million in the first quarter of 2008. The decrease was primarily due to a decrease in
ROP and preprint advertising in the dining and entertainment and airline and travel
categories, which are predominantly consumer-driven.

Direct marketing revenue, consisting
of revenue from the sale of direct mail products of our daily newspaper, was $0.3 million
in the first quarter of 2009, a decrease of $0.5 million, or 56.7%, compared to $0.8
million in the first quarter of 2008. This revenue category was also negatively impacted
by the current economic recession as the demand for direct marketing advertising continues
to decrease. In March 2009, we announced that we will be ceasing the operations of our
Milwaukee-area direct marketing facility. The near-term and long-term business prospects
did not support continuing this product offering. We are now focusing our direct marketing
efforts on our total market coverage product. We will transition from a mail-delivered
product to a carrier-delivered product beginning in the second quarter of 2009. We expect
to save $1.5 million annually in costs by eliminating postal delivery. We anticipate being
able to increase the weight of each package without concern regarding increased delivery
costs.

Other advertising revenue, consisting
of revenue from company-sponsored event advertising at our community newspapers and
shoppers, was $0.1 million in both the first quarter of 2009 and the first quarter of
2008.

Circulation revenue in the first
quarter of 2009 accounted for 27.2% of total publishing revenue compared to 20.7% in the
first quarter of 2008. The increase as a percentage of total revenue is due to the
decrease in advertising revenue and the overall decline in total revenue. Circulation
revenue of $13.1 million in the first quarter of 2009 increased $0.5 million, or 4.0%,
compared to $12.6 million in the first quarter of 2008. At our daily newspaper,
circulation revenue increased due to an increase in daily single copy revenue, following a
price increase to 75 cents per daily paper in the Milwaukee-metro market in January 2009.
Circulation average rates for the daily and Sunday editions increased on the strength of
pricing gains that more than offset a slight decrease in home delivery and single copy
sales. We believe this demonstates that readers still value our newspaper. The
Milwaukee Journal Sentinel ranks number one among newspapers in the top 50 markets
in the United States for integrated newspaper audience, showing strength in
print and online, according to the Scarborough Reports. At our community newspapers and
shoppers, circulation revenue increased due to the publications acquired in Northern
Wisconsin and Florida in 2008.

Other revenue, which consists of
revenue from promotional and commercial distribution and commercial printing revenue at
our daily newspaper and commercial printing at the printing plants for our community
newspapers and shoppers, accounted for 11.1% of total publishing revenue in the first
quarter of 2009 compared to 8.5% in the first quarter of 2008. The increase as a
percentage of total revenue is due to the decrease in advertising revenue and the overall
decline in total revenue. Other revenue in the first quarter of 2009 was $5.3 million, an
increase of $0.2 million, or 4.6%, compared to $5.1 million in the first quarter of 2008.
The $0.2 million increase at our daily newspaper was primarily due to an increase in
commercial printing and delivery revenue from USA Today for additional routes and from
La Raza, which we began printing in the second quarter of 2008. These increases
were partially offset by volume declines as certain customers reduced page counts and
number of copies and the loss of a commercial printing customer.

23

---

Publishing operating loss in the
first quarter of 2009 was $1.6 million compared to operating earnings of $4.3 million in
the first quarter of 2008. The decrease in operating earnings was due to the impact of the
decrease in advertising revenue. Our publishing business continues to reduce its expense
platform to align it with the reduced revenue base. Total expenses decreased $6.7 million,
or 11.9%, in the first quarter of 2009 compared to the first quarter of 2008 primarily due
to a decrease of $4.2 million in payroll-related costs. Since the end of 2007, our
full-time employee count for our publishing business has decreased by 15.2%. Variable
costs decreased $1.2 million in the first quarter of 2009 compared to the first quarter of
2008, the most significant of which was newsprint and paper costs. Total newsprint and
paper costs for our publishing businesses in the first quarter of 2009 were $5.3 million,
a decrease of $0.5 million, or 9.3%, compared to $5.8 million in the first quarter of 2008
primarily due to a 24.9% decrease in newsprint consumption, partially offset by a 22.7%
increase in average newsprint pricing per metric ton. Consumption of metric tonnes of
newsprint in the first quarter of 2009 decreased primarily due to decreases in editorial
pages, ROP advertising and average net paid circulation. Online fees decreased by $0.5
million in the first quarter of 2009 compared to the first quarter of 2008 primarily due
to the daily newspapers transition to a new franchise relationship with CarSoup.com.
Bad debt expense increased $0.4 million at our publishing business in the first quarter of
2009 compared to the first quarter of 2008. Due to the current economic recession, our
publishing business is encountering an increase in slow-paying customers as well as
customers who have filed bankruptcy.

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

Revenue from broadcasting in the
first quarter of 2009 was $39.2 million, a decrease of $10.2 million, or 20.5%, compared
to $49.4 million in the first quarter of 2008. Operating earnings from broadcasting in the
first quarter of 2009 were $0.9 million, a decrease of $6.2 million, or 88.0%, compared to
$7.1 million in the first quarter of 2008.

The following table presents our
broadcasting revenue and operating earnings for the first quarter of 2009 and the first
quarter of 2008:

|                   | 2009 | 2008
|------------------ | ---- | ----
|
|
|Revenue            |      |     
|                   |      |     
|Operating earnings |      |     
|                   |      |     

Revenue from our television stations
in the first quarter of 2009 was $26.0 million, a decrease of $6.4 million, or 19.8%,
compared to $32.4 million in the first quarter of 2008. The revenue decrease was
experienced by all of our television stations across all of our markets. Compared to the
first quarter of 2008, local advertising revenue decreased $3.7 million, or 16.5%;
national advertising revenue decreased $2.0 million or 26.8%; and political and issue
advertising revenue decreased $1.7 million, or 99.2%, which includes additional revenue
credits for rebates we believe are due to certain political advertisers for 2008 and 2006
of $0.1 million and $0.1 million, respectively. 2009 is generally considered a
non-election year, and, accordingly, we will experience a significant decrease in the
political and issue advertising revenue category throughout the year in our comparisons to
2008. Television advertising revenue and rates in even-numbered years benefit from
political and issue advertising because there is more pressure on inventory as advertising
increases, which drives rates upward. The current economic recession has negatively
impacted our advertising revenue across most categories, the most significant being our
largest revenue category  automotive, which represented 14.0% of television
advertising revenue in the first quarter of 2009 compared to 21.9% in the first quarter of
2008. Automotive advertising revenue decreased $3.5 million in the first quarter of
2009 compared to the first quarter of 2008 as the automobile industry is experiencing an
unprecedented decrease in automotive sales. The other consumer-driven categories that felt
the impact of the economic recession and caused revenue decreases included professional
services, furniture and electronics, retail, medical and restaurants. In an effort to
overcome the decrease in automotive and other consumer-driven advertising revenue, our
television stations are working to replace this lost revenue with developmental revenue.
Developmental revenue refers to non-transactional revenue that targets non-traditional
advertisers. While developmental revenue decreased $0.4 million in the first quarter of
2009 compared to the first quarter of 2008, it increased as a percentage of total revenue
from our television stations to 13.8%, up from 12.1%. Interactive revenue was $0.3 million
in the first quarter of 2009, a decrease of $0.1 million, or 22.0%, compared to $0.4
million in the first quarter of 2008. Both interactive and developmental revenue are
reported in local advertising revenue. Partially offsetting the revenue decreases,
retransmission revenue increased $1.0 million in the first quarter of 2009 to $1.3
million, compared to $0.3 million in the first quarter of 2008. We have finalized 45
retransmission contracts covering more than 50% of the subscribers in our markets. These contracts will
continue to generate incremental revenue through the remainder of 2009 and into the next
three to four years.

Operating earnings from our
television stations in the first quarter of 2009 were $0.1 million, a decrease of $3.5
million, or 98.1%, compared to $3.6 million in the first quarter of 2008. The decrease in
operating earnings was due to the impact of the decrease in advertising revenue. In an
effort to overcome the decrease in operating earnings due to the decrease in revenue, we
reduced total television expenses by $2.8 million, or 9.9%, in the first quarter of 2009
compared to the first quarter of 2008. The 9.9% decrease in total expenses includes
additional expenses of $0.5 million from television stations acquired in 2008. The
decrease in total expenses was primarily due to a decrease of $1.9 million in
employee-related payroll and benefit costs and $0.9 million from various other cost
reductions. Our television stations continue to reduce their expense platform to align it
with a reduced revenue base.

24

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Revenue from our radio stations in
the first quarter of 2009 was $13.2 million, a decrease of $3.8 million, or 21.9%,
compared to $17.0 million in the first quarter of 2008. The revenue decrease was
experienced by all of our radio stations across all of our markets. Compared to the first
quarter of 2008, local advertising revenue decreased $3.2 million, or 21.1%; national
advertising revenue decreased $0.4 million or 30.5%; and political and issue advertising
revenue decreased $0.1 million, or 68.3%. 2009 is generally considered a non-election
year, and therefore, we will experience a decrease in the political and issue advertising
revenue category throughout the year in our comparisons to 2008. The current economic
recession has negatively impacted our advertising revenue across most categories, the most
significant being our largest revenue category  automotive, which represented 12.5%
of radio advertising revenue in the first quarter of 2009 compared to 15.0% in the first
quarter of 2008. Automotive advertising revenue decreased $0.9 million in the first
quarter of 2009 compared to the first quarter of 2008 as the domestic automobile industry
is experiencing an unprecedented decrease in automotive sales. The other consumer-driven
categories that felt the impact of the economic recession and caused revenue decreases
included communications, retail, home improvement, medical, restaurants and furniture and
electronics. In an effort to overcome the decrease in automotive and other consumer-driven
advertising revenue, our radio stations are working to replace this lost revenue with
developmental revenue. Developmental revenue refers to non-transactional revenue that
targets non-traditional advertisers. While developmental revenue decreased $0.5 million in
the first quarter of 2009 compared to the first quarter of 2008, it actually increased as
a percentage of total revenue from our radio stations to 21.7%, up from 19.9%. Interactive
revenue was $0.5 million in the first quarter of 2009 and the first quarter of 2008. Both
interactive and developmental revenue are reported in local advertising revenue.

Operating earnings from our radio
stations in the first quarter of 2009 were $0.8 million, a decrease of $2.7 million, or
77.5%, compared to $3.5 million in the first quarter of 2008. The decrease in operating
earnings was due to the impact of the decrease in advertising revenue. In an effort to
overcome the decrease in operating earnings due to the decrease in revenue, we decreased
total radio expenses by $1.0 million, or 7.5%, in the first quarter of 2009 compared to
the first quarter of 2008. The decrease in total expenses was primarily due to a decrease
of $1.0 million in payroll-related costs. Our radio stations continue to reduce their
expense platform to to align it with a reduced revenue base.

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

Revenue from printing services in the
first quarter of 2009 was $14.3 million, a decrease of $2.2 million, or 13.5%, compared to
$16.5 million in the first quarter of 2008. Operating earnings from printing services in
the first quarter of 2009 were zero compared to $0.8 million in the first quarter of 2008.

The decrease in printing services
revenue was primarily due to the effects of the current economic recession. Revenue from
printing publications and revenue from Dell and other computer-related customers decreased
in the first quarter of 2009 compared to the first quarter of 2008. Our printing
services customers continue to reduce their print volumes, cease to print and/or
take their printing needs out for bid in order to achieve lower pricing. We expect these
trends to continue throughout 2009. We believe our revenue from Dell, which was $1.1
million in the first quarter of 2009, will cease in mid-2009.

The decrease in printing services
operating earnings was primarily due to the impact from the decrease in revenue. Total
expenses decreased $1.5 million, or 9.3%, in the first quarter of 2009 compared to the
first quarter of 2008. The decrease in total expenses was primarily due to a decrease of
$1.0 million in payroll-related costs. Variable costs decreased $0.5 million in the first
quarter of 2009 compared to the first quarter of 2008, the most significant of which was
raw materials. Other cost reduction initiatives and production efficiencies accounted for
the balance of the expense decreases.

| | Other
| | -----

Other revenue in the first quarter of
2009 was $5.2 million, a decrease of $2.5 million, or 32.5%, compared to $7.7 million in
the first quarter of 2008. Other operating earnings were $0.1 million in the first quarter
of 2009, a decrease of $0.3 million, or 76.0%, compared to $0.4 million in the first
quarter of 2008.

The following table presents our
other revenue and operating earnings for the first quarter of 2009 and the first quarter
of 2008:

|                          | 2009 | 2008
|------------------------- | ---- | ----
|
|
|Revenue                   |      |     
|                          |      |     
|Operating earnings (loss) |      |     
|                          |      |     

The decrease in direct marketing
services revenue was primarily due to the effects of the current economic recession.
Revenue from mailing services and postage decreased in the first quarter of 2009 compared
to the first quarter of 2008 as the demand for direct marketing advertising continues to
decrease. This decrease was partially offset by an increase in laser and offset and
printing revenue. Included in revenue and operating costs and expenses from our direct
marketing services business is $2.9 million and $4.4 million of postage amounts billed to
customers in the first quarter of 2009 and the first quarter of 2008, respectively.

The decrease in operating earnings at
our other segment was primarily due to the operating earnings impact of the
decrease in revenue at our direct marketing services business, partially offset by a
decrease in payroll-related costs at corporate and at our direct marketing services
business.

25

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

There was no interest income in the
first quarter of 2009 and interest income was insignificant in the first quarter of 2008.
Interest expense was $0.8 million in the first quarter of 2009 compared to $2.3 million in
the first quarter of 2008. The decrease is primarily due to a decrease in our weighted
average interest rate in the first quarter of 2009 compared to the first quarter of 2008.
Amortization of deferred financing costs was $0.1 million in the first quarter of 2009 and
the first quarter of 2008.

Our effective tax benefit rate was
108.3% in the first quarter of 2009 compared to an effective tax provision rate of 39.1%
in the first quarter of 2008. We reached a settlement with the Wisconsin Department of
Revenue (WDR) that favorably impacted our effective tax benefit rate for the first quarter
of 2009. In connection with the settlement, we expect to receive a refund from the deposit
we made with the WDR in 2007 of approximately $8.6 million in the second quarter of 2009.

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

There were no results from
discontinued operations in the first quarter 2009. In the first quarter of 2008, we
recorded a gain on discontinued operations of $0.4 million for a reduction in the reserve
related to a settlement between the Environmental Protection Agency and NorthStar Print
Group, Inc.

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

Our net earnings in the first quarter
of 2009 were $0.1 million compared to net earnings of $6.7 million in the first quarter of
2008. The decrease was due to the decrease in operating earnings from continuing
operations for the reasons described above and the decrease in gain from discontinued
operations, partially offset by decreases in interest expense and provision for income
taxes.

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

In the first quarter of 2009, basic
and diluted net loss per share of class A and B common stock were $0.01 for both. This
compared to net earnings per share of $0.11 for both in the first quarter of 2008. Basic
and diluted loss per share of class A and B common stock from continuing operations were
$0.01 for both in the first quarter of 2009 compared to earnings per share of $0.10 for
both in the first quarter of 2008. Basic and diluted earnings per share of class A and B
common stock from discontinued operations were $0.00 for both in the first quarter of 2009
compared to $0.01 for both in the first quarter of 2008.

# Liquidity and Capital
Resources

Cash balances were $3.0 million at
March 29, 2009. We believe our expected cash flows from operations and borrowings
available under our credit facility will meet our needs for the next twelve months.

We have a $475.0 million unsecured
revolving facility that expires on June 2, 2011. The interest rate on borrowings is either
LIBOR plus a margin that ranges from 37.5 basis points to 87.5 basis points, depending on
our leverage, or the base rate, which equals the higher of the prime rate set by U.S.
Bank, N.A. or the Federal Funds Rate plus 100 basis points. As of March 29, 2009 and
December 28, 2008, we had borrowings of $200.3 million and $215.1 million, respectively,
under the facility at a weighted average rate of 1.19% and 2.10%, respectively. Cash
provided by operating activities was used primarily to decrease our borrowings during the
first quarter of 2009. Fees in connection with the facility of $1.7 million are being
amortized over the term of the facility using the straight-line method. The facility
includes the following two financial covenants:

    A consolidated funded debt ratio of
not greater than 4-to-1, as determined for the four fiscal quarter period preceding the
date of determination. This ratio compares, for any period, our funded debt to our
earnings before interest, taxes, depreciation and amortization, as adjusted for
non-operational impairment charges recorded as a result of FASB Statement No. 142,
Goodwill and Other Intangible Assets. As of March 29, 2009, our consolidated
funded debt ratio was 2.93-to-1, resulting in a current maximum borrowing capacity of
$273.8 million.

    An interest coverage ratio of not
less than 3-to-1, as determined for the four fiscal quarter period preceding the date of
determination. This ratio compares, for any period, our earnings before interest, taxes,
depreciation and amortization, as adjusted for non-operational impairment charges recorded
as a result of FASB Statement No. 142, Goodwill and Other Intangible Assets,
to our interest expense. As of March 29, 2009, our interest coverage ratio was 10.20
to-1.

Our consolidated adjusted EBITDA in
the first quarter of 2009 was $6.5 million, a decrease of $13.4 million, or 67.2%,
compared to $19.9 million in the first quarter of 2008. We define adjusted EBITDA as net
earnings (loss) excluding gain from discontinued operations, net, provision (benefit) for
income taxes, total other expense, net (which is entirely comprised of interest income and
expense), depreciation and amortization and, if any, non-cash impairment charges. This
calculation of adjusted EBITDA, as defined in our credit facility, is used in our two
financial covenants. Management primarily uses adjusted EBITDA to monitor our borrowing
capacity, a key component to our overall liquidity. Management also uses adjusted EBITDA,
among other things, to evaluate our operating performance compared to our operating plans
and/or prior years and its impact on our borrowing capacity and to value prospective
acquisitions. We believe the presentation of this measure is relevant and useful for
investors because it allows investors to view performance in a manner similar to the
method used by management and our lenders, helps to improve their ability to understand
our operating performance and our borrowing capacity and makes it easier to compare our
results with other companies that have different financing and capital structures or tax
rates. Adjusted EBITDA is also a primary measure used externally by our investors and our
peers in our industry for purposes of valuation and comparing our operating performance to
other companies in the industry. Adjusted EBITDA is not a measure of performance or
liquidity calculated in accordance with accounting principles generally accepted in the
United States. Adjusted 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. Adjusted EBITDA, as we calculate it, may
not be comparable to EBITDA measures reported by other companies.

26

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The following table presents a
reconciliation of our consolidated net earnings to consolidated adjusted EBITDA for the
first quarter of 2009 and the first quarter of 2008:

|                                       | 2009 | 2008
|-------------------------------------- | ---- | ----
|
|Net earnings (loss)                    |      |     
|Gain from discontinued operations, net |      |     
|Provision (benefit) for income taxes   |      |     
|Total other expense, net               |      |     
|Depreciation                           |      |     
|Amortization                           |      |     
|                                       |      |     
|Adjusted EBITDA                        |      |     
|                                       |      |     

Adjusted EBITDA for the four fiscal
quarter period preceding March 29, 2009 was $ 68.4 million.

Our ability to remain in compliance with
these financial covenants may be impacted by a number of factors, including our ability to
continue to generate sufficient revenues and cash flows, as well as interest rates and
other risks and uncertainties set forth in Item 1A. Risk Factors of our most
recent Annual Report on Form 10-K. If it is determined we are not in compliance with these
financial covenants, the lenders in our credit facility syndicate will be entitled to take
certain actions, including acceleration of all amounts due under the facility. If actual
operating and cash flow results over the next 12 months are lower than current
projections, the margins by which we will comply with the covenants will decrease. In such
case, we may seek to amend or replace our current credit facility with one or more capital
sources on appropriate terms. If we were unable to remain in compliance with these
covenants or to amend or replace our current facility on appropriate terms, we could face
increased pressure to reduce or delay capital expenditures, dispose of assets or
operations, further reduce the size of our workforce or take other steps to revise our
capital structure or our business operations. We cannot assure you that we will have the
ability to take any of these actions or that these actions would be successful.

Given the current economic crisis,
including the current instability of financial institutions, one or more of the lenders in
our credit facility syndicate could fail or be unable to fund future draws thereunder or
take other positions adverse to us. In such an event, our liquidity could be severely
constrained with an adverse impact on our ability to operate our businesses and we may be
forced to take the actions described above. We continue to monitor our current lenders and
compliance with our credit agreement terms and are working on possible strategies in the
event one or more of our lenders is unable or unwilling to fund future demands.

We have $0.5 million of standby
letters of credit for business insurance purposes.

In February 2009, we suspended our
matching contribution to our 401(k) plan through the remainder of 2009. In March 2009, our
board of directors approved an amendment to our 401(k) plan to suspend the annual employer
contribution for all active employees for 18 months beginning July 1, 2009. In April 2009,
a 6% employee-wage reduction program was initiated for most full-time employees for the
remainder of 2009. Collectively, we expect these actions to save $3.0 million in cash, net
of taxes, in 2009. These actions were taken in order to help maintain financial
flexibility in this difficult economic environment.

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

Our board of directors made a
decision to reduce our first quarter 2009 dividend on our class A and class B shares to
$0.02 per share from $0.08 per shares in each quarter of 2008.  The quarterly
dividend on our class C shares remained at its historical level for the first quarter of
2009.  In April 2009, our board of directors suspended dividends on our class A and
class B shares given the challenging economic environment.  Our board of directors
also suspended the cumulative dividend on our class C shares.  The accumulated class
C dividend of approximately $0.14 per share must be paid prior to the payment of any
future dividends on our class A and class B shares.  Our board of directors
consistently reviews our dividend payment policy, as well as our ability to pay dividends,
at each quarterly board of directors meeting.

27

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# Cash Flow

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

Cash provided by operating activities
was $17.2 million in the first quarter of 2009 compared to $10.6 million in the first
quarter of 2008. The increase was primarily due to cash provided by changes in working
capital.

Cash used for investing activities
was $2.2 million in the first quarter of 2009 compared to $9.3 million in the first
quarter of 2008. Capital expenditures were $2.2 million in the first quarter of 2009
compared to $3.2 million in the first quarter of 2008. Our capital expenditures at our
daily newspaper in the first quarter of 2009 related primarily to building improvements
and software upgrades for production equipment. Our capital expenditures in our
broadcasting segment in the first quarter of 2009 related primarily to technology
upgrades, including investments in television and radio digital infrastructure and
building improvements. We believe these expenditures will help us to better serve our
advertisers and viewers and will help to facilitate our cost control initiatives. In 2009,
our capital expenditures are expected to be significantly less than the amount of capital
expenditures in 2008.

There was no cash used for
acquisitions in the first quarter of 2009 compared to $6.1 million in the first quarter of
2008. In the first quarter of 2008, our broadcast business acquired a television station
and our community newspapers and shoppers acquired several publications in Northern
Wisconsin.

Cash used for financing activities
was $16.1 million in the first quarter of 2009 compared to $4.1 million in the first
quarter of 2008. Borrowings under our credit facility in the first quarter of 2009 were
$36.0 million and we made payments of $50.8 million, reflecting a $14.8 million decrease
in our debt outstanding compared to borrowings of $64.9 million and payments of $33.7
million in the first quarter of 2008. The increase in borrowings in the first quarter of
2008 was used to finance the repurchase our class A common stock for $30.7 million. We
paid cash dividends of $1.5 million and $4.9 million in the first quarter of 2009 and the
first quarter of 2008, respectively.

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

There was no cash provided by
discontinued operations in the first quarter of 2009 compared to $0.4 million in the first
quarter of 2008, which reflected a reduction in the reserve related to a settlement
between the Environmental Protection Agency and NorthStar Print Group, Inc.

# New Accounting Standards

In April 2009, the FASB issued
Financial Staff Position (FSP) FAS 107-1 and Accounting Principal Board (APB) 28-1,
Interim Disclosures about Fair Value of Financial Instruments. This FSP amends
FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments,
to require an entity to provide disclosures about fair value of financial instruments in
interim financial information. This FSP also amends APB Opinion No. 28, Interim
Financial Reporting, to require those disclosures in summarized financial
information at interim reporting periods. Under this FSP, a publicly traded company shall
include disclosures about the fair value of its financial instruments whenever it issues
summarized financial information for interim reporting periods. In addition, an entity
shall disclose in the body or in the accompanying notes of its summarized financial
information for interim reporting periods and in its financial statements for annual
reporting periods the fair value of all financial instruments for which it is practicable
to estimate that value, whether recognized or not recognized in the statement of financial
position, as required by Statement No. 107. FSP 107-1 and APB 28-1 are effective for
interim periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009 only if an entity also elects to early adopt FSP FAS 157-4 and
FSP FAS 115-2 and FAS 124-2. We will adopt FSP FAS 107-1 and APB 28-1 for the second
quarter ended June 29, 2009. We do not believe the effect of adopting FSP FAS 107-1 and
APB 28-1 will have a material impact on our consolidated financial statements.

In April 2009, the FASB issued FASB
Staff Position (FSP) FAS 157-4, Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly. This FSP:

    Affirms that the objective of fair
value when the market for an asset is not active is the price that would be received to
sell the asset in an orderly transaction.

    Clarifies and includes additional
factors for determining whether there has been a significant decrease in market activity
for an asset when the market for that asset is not active.

    Eliminates the proposed presumption
that all transactions are distressed (not orderly) unless proven otherwise. The FSP
instead requires an entity to base its conclusion about whether a transaction was not
orderly on the weight of the evidence.

    Includes an example that provides
additional explanation on estimating fair value when the market activity for an asset has
declined significantly.

    Requires an entity to disclose a
change in valuation technique (and the related inputs) resulting from the application of
the FSP and to quantify its effects, if practicable.

28

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    Applies to all fair value
measurements when appropriate.

FSP FAS 157-4 must be applied
prospectively and retrospective application is not permitted. FSP FAS 157-4 is effective
for interim and annual periods ending after June 15, 2009, with early adoption permitted
for periods ending after March 15, 2009. An entity early adopting FSP FAS 157-4 must also
early adopt FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments. We will adopt FSP FAS 157-4 for the second quarter
ended June 29, 2009. We do not believe the effect of adopting FSP FAS 157-4 will have a
material impact on our consolidated financial statements.

In April 2009, the FASB issued FASB
Staff Position (FSP) FAS 141(R)-1, Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies. This FSP amends the
guidance in FASB Statement No. 141 (Revised December 2007), Business
Combinations, to:

    Require that assets acquired and
liabilities assumed in a business combination that arise from contingencies be recognized
at fair value if fair value can be reasonably estimated. If fair value of such an asset or
liability cannot be reasonably estimated, the asset or liability would generally be
recognized in accordance with FASB Statement No. 5, Accounting for
Contingencies, and FASB Interpretation (FIN) No. 14, Reasonable
Estimation of the Amount of a Loss. Further, the FASB decided to remove the
subsequent accounting guidance for assets and liabilities arising from contingencies from
Statement No. 141R, and carry forward without significant revision the guidance in FASB
Statement No. 141, Business Combinations.

    Eliminate the requirement to
disclose an estimate of the range of outcomes of recognized contingencies at the
acquisition date. For unrecognized contingencies, the FASB decided to require that
entities include only the disclosures required by Statement No. 5 and that those
disclosures be included in the business combination footnote.

    Require that contingent
consideration arrangements of an acquiree assumed by the acquirer in a business
combination be treated as contingent consideration of the acquirer and should be initially
and subsequently measured at fair value in accordance with Statement No. 141R.

This FSP is effective for assets or
liabilities arising from contingencies in business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. We adopted FSP FAS 141(R)-1 in the first quarter of 2009. The
adoption of FSP FAS 141(R)-1 did not have a material impact on our consolidated financial
statements.

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

In February 2008, the FASB issued
FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which
delays the effective date of Statement No. 157 for all nonfinancial assets and
liabilities, except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually) to fiscal years beginning after
November 15, 2008. We adopted FASB Staff Position FAS 157-2 and it did not have a material
impact on our consolidated financial statements.

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

In June 2008, the FASB issued EITF
08-3, Accounting by Lessees for Nonrefundable Maintenance Deposits. EITF 08-3
requires that all nonrefundable maintenance deposits should be accounted for as a deposit.
When the underlying maintenance is performed, the deposit is expensed or capitalized in
accordance with the lessees maintenance accounting policy. Once it is determined
that an amount on deposit is not probable of being used to fund future maintenance
expense, it is recognized as additional expense at the time such determination is made.
EITF 08-3 is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. Earlier application is
not permitted. We adopted EITF 08-3 in the first quarter of 2009. The adoption of EITF
08-3 did not have a material impact on our consolidated financial statements.

29

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In December 2008, the FASB issued
FASB Staff Position FAS 132(R)-1, Employers Disclosures about Postretirement
Benefit Plan Assets, which amends FASB Statement No. 132 (Revised 2003),
Employers Disclosures about Pensions and Other Postretirement Benefits,
to provide guidance on an employers disclosures about plan assets of a defined
benefit pension or other postretirement plan. This pronouncement is effective for fiscal
years ending after December 15, 2009. Upon initial application, the provisions of this
FASB Staff Position are not required for earlier periods that are presented for
comparative purposes. Earlier application of the provisions is permitted. We do not
believe the effect of adopting FASB Staff Position FAS 132(R)-1 will have a material
impact on our consolidated financial statements.

# Critical Accounting
Policies

There are no material changes to the disclosures
regarding critical accounting policies made in our Annual Report on Form 10-K for the year
ended December 28, 2008.

# 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 28, 2008.

# 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 Securities
Exchange Act of 1934, as amended, Rule 13a-15(e)) as of the end of the period covered by
this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed in our Securitites 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.

30

---

# PART II. OTHER
INFORMATION

# ITEM 1.    LEGAL PROCEEDINGS

None.

# ITEM 1A.    RISK FACTORS

There are no material changes to the
disclosures regarding risk factors made in Part I, Item 1A. of our Annual Report on Form
10-K for the year ended December 28, 2008.

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

The following table provides
information about our repurchases of our class B common stock in the first quarter ended
March 29, 2009:

# Issuer Purchases of
Equity Securities

|                                     
|-------------------------------------
|Period                               
|December 29, 2008 to January 25, 2009
|January 26 to February 22, 2009      
|February 23 to March 29, 2009        

| | (1) | Represents
shares of class B common stock transferred from employees to us to                satisfy
tax withholding requirements in connection with the vesting of                restricted
stock under the 2003 Equity Incentive Plan.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | We
publicly announced a share repurchase program on May 1, 2008, and commenced
               our repurchases on May 12, 2008, pursuant to which our board of directors
               authorized the repurchase of up to 5,000,000 class A shares over the
following                18 months. After repurchasing 2,629,500 class A shares, we
suspended our share                repurchase program in October 2008 given the current
difficult economic                enviroment.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# ITEM 3.   DEFAULTS UPON
SENIOR SECURITIES

None.

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

None.

# ITEM 5.   OTHER INFORMATION

None.

31

---

# 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 Andre J. Fernandez, Executive Vice President, Finance &          Strategy 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           Andre J.
Fernandez, Executive Vice President, Finance & Strategy 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.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

32

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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:  May 1, 2009 | /s/ Steven J. Smith                                             
|                   | Steven J. Smith, Chairman and Chief Executive Officer           
|Date:  May 1, 2009 | /s/ Andre J. Fernandez                                          
|                   | Andre J. Fernandez, Executive Vice President, Finance & Strategy
|                   | and Chief Financial Officer                                     

33