# 

# 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: September 26, 2004
| | --------------------------------------------------

or

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

| | For
the transition period from _____________________ to _____________________
| | -----------------------------------------------------------------------------

Commission File Number:  1-31805

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

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

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

Indicate by check mark whether the
 registrant  (1) has filed all reports  required to be filed by Section 13 or 15 (d) of
the  Securities  Exchange Act of 1934 during the  preceding  12 months (or for such
shorter  period that the registrant was required to file such reports),  and (2) has been
subject to such filing  requirements  for the past 90 days.     Yes  X
     No

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)     Yes  
     No  X

Number of shares outstanding of each of the issuers classes
of common stock as of October 29, 2004 (excluding
4,338,352 and 4,338,353 shares of class B-1 and B-2 common stock, respectively, held by our subsidiary, The
Journal Company):

|Class                  | Outstanding at October 29, 2004
|---------------------- | -------------------------------
|Class A Common Stock   | 27,013,436                     
|Class B-1 Common Stock | 9,654,569                      
|Class B-2 Common Stock | 35,549,109                     
|Class C Common Stock   | 3,264,000                      

---

# JOURNAL
COMMUNICATIONS, INC.

# INDEX

|        |                       | PageNo.                                                    
|------- | --------------------- | -----------------------------------------------------------
|        |                       |                                                            
|Part I  | Financial Information |                                                            
|        |                       |                                                            
|        | Item 1.               | Financial Statements                                       
|        |                       |                                                            
|        |                       | Consolidated Condensed Balance Sheets as of                
|        |                       | September 26, 2004 (Unaudited) and December 31, 2003       
|        |                       |                                                            
|        |                       | Unaudited Consolidated Condensed Statements of Earnings    
|        |                       | for the Third Quarter and Three Quarters Ended             
|        |                       | September 26, 2004 and September 28, 2003                  
|        |                       |                                                            
|        |                       | Unaudited Consolidated Condensed Statement of              
|        |                       | Shareholders' Equity for the Three Quarters Ended          
|        |                       | September 26, 2004                                         
|        |                       |                                                            
|        |                       | Unaudited Consolidated Condensed Statements of             
|        |                       | Cash Flows for the Three Quarters Ended September 26, 2004 
|        |                       | and September 28, 2003                                     
|        |                       |                                                            
|        |                       | Notes to Unaudited Consolidated Condensed                  
|        |                       | Financial Statements as of September 26, 2004              
|        |                       |                                                            
|        | Item 2.               | Management's Discussion and Analysis of Financial Condition
|        |                       | and Results of Operations                                  
|        |                       |                                                            
|        | Item 3.               | Quantitative and Qualitative Disclosure of Market Risk     
|        |                       |                                                            
|        | Item 4.               | Controls and Procedures                                    
|        |                       |                                                            
|        |                       |                                                            
|Part II | Other Information     |                                                            
|        |                       |                                                            
|        | Item 1.               | Legal Proceedings                                          
|        |                       |                                                            
|        | Item 2.               | Unregistered Sales of Equity Securities and Use of Proceeds
|        |                       |                                                            
|        | Item 3.               | Defaults Upon Senior Securities                            
|        |                       |                                                            
|        | Item 4.               | Submission of Matters to a Vote of Security Holders        
|        |                       |                                                            
|        | Item 5.               | Other Information                                          
|        |                       |                                                            
|        | Item 6.               | Exhibits                                                   

1

---

# PART I. FINANCIAL
INFORMATION

# ITEM 1.  FINANCIAL
STATEMENTS

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

|                                                                     | September 26,        2004 | December 31,2003
|-------------------------------------------------------------------- | ------------------------- | ----------------
|                                                                     |                           | (Unaudited)     
|ASSETS                                                               |                           |                 
|Current assets:                                                      |                           |                 
|Cash and cash equivalents                                            |                           |                 
|Receivables, less allowance for doubtful accounts                    |                           |                 
|of $8,394 and $6,836                                                 |                           |                 
|Inventories                                                          |                           |                 
|Prepaid expenses                                                     |                           |                 
|Deferred income taxes                                                |                           |                 
|                                                                     |                           |                 
|TOTAL CURRENT ASSETS                                                 |                           |                 
|Property and equipment, at cost, less accumulated depreciation       |                           |                 
|of $361,321 and $331,658                                             |                           |                 
|Goodwill                                                             |                           |                 
|Broadcast licenses                                                   |                           |                 
|Other intangible assets, net                                         |                           |                 
|Prepaid pension costs                                                |                           |                 
|Other assets, net                                                    |                           |                 
|                                                                     |                           |                 
|TOTAL ASSETS                                                         |                           |                 
|                                                                     |                           |                 
|LIABILITIES AND SHAREHOLDERS' EQUITY                                 |                           |                 
|Current liabilities:                                                 |                           |                 
|Accounts payable                                                     |                           |                 
|Accrued compensation                                                 |                           |                 
|Deferred revenue                                                     |                           |                 
|Accrued employee benefits                                            |                           |                 
|Other current liabilities                                            |                           |                 
|Current portion of long-term liabilities                             |                           |                 
|                                                                     |                           |                 
|TOTAL CURRENT LIABILITIES                                            |                           |                 
|Accrued employee benefits                                            |                           |                 
|Long-term notes payable to banks                                     |                           |                 
|Deferred income taxes                                                |                           |                 
|Other long-term liabilities                                          |                           |                 
|Shareholders' equity:                                                |                           |                 
|Preferred stock, $0.01 par - authorized 10,000,000 shares; no shares |                           |                 
|outstanding at September 26, 2004 and at December 31, 2003           |                           |                 
|Common stock, $0.01 par:                                             |                           |                 
|Class C - authorized 10,000,000 shares; issued and outstanding:      |                           |                 
|3,264,000 shares at September 26, 2004 and December 31, 2003         |                           |                 
|Class B-2 - authorized 60,000,000 shares; issued and outstanding:    |                           |                 
|35,549,109 shares at September 26, 2004 and 38,301,224 shares        |                           |                 
|at December 31, 2003                                                 |                           |                 
|Class B-1 - authorized 60,000,000 shares; issued and outstanding:    |                           |                 
|9,707,476 shares at September 26, 2004 and 14,972,117 shares         |                           |                 
|at December 31, 2003                                                 |                           |                 
|Class A - authorized 170,000,000 shares; issued and outstanding:     |                           |                 
|26,960,529 shares at September 26, 2004 and 20,191,542 shares        |                           |                 
|at December 31, 2003                                                 |                           |                 
|Additional paid-in capital                                           |                           |                 
|Unearned compensation                                                |                           |                 
|Retained earnings                                                    |                           |                 
|Treasury stock, at cost                                              |                           |                 
|                                                                     |                           |                 
|TOTAL SHAREHOLDERS' EQUITY                                           |                           |                 
|                                                                     |                           |                 
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           |                           |                 
|                                                                     |                           |                 

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

See accompanying notes
to unaudited consolidated condensed financial statements.

2

---

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

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

See accompanying notes
to unaudited consolidated condensed financial statements.

3

---

Journal Communications,
Inc.Unaudited Consolidated
Condensed Statement of Shareholders' Equity For the Three Quarters ended September
26, 2004 (dollars in thousands, except per-share amounts)

|                                                      | Pre- |  | Common Stock |    | Additional |   | Unearned |  |   |     | Treasury |   |     |   | Compre-hensive |    
|----------------------------------------------------- | ---- |  | ------------ | -- | ---------- | - | -------- |  | - | --- | -------- | - | --- | - | -------------- | ---
|
|Balance at   December 31, 2003                        |      |  | $            | -- |            | $ | 33       |  | $ | 427 |          | $ | 193 |   | $              | 201
|                                                      |      |  |              |    |            |   |          |  |   |     |         
|Net earnings and   other comprehensive   income       |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|                                                      |      |  |              |    |            |   |          |  |   |     |          |  
|Dividends declared:                                   |      | 
|Class C ($0.142       per share)                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Class B ($0.065       per share)                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Class A ($0.065       per share)                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Issuance of shares:                                   |      | 
|Conversion of       class B to class A                |      |  |              |    |            |   |          |  |   | (1  | )        |   |     |   |                | 1  
|Amortization of   unearned compensation               |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|                                                      |      |  |              |    |            |   |          |  |   |     |         
|Balance at   March 28, 2004                           |      |  | $            | -- |            | $ | 33       |  | $ | 426 |          | $ | 193 |   | $              | 202
|                                                      |      |  |              |    |            |   |          |  |   |     |         
|Net earnings and other   comprehensive income         |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|                                                      |      |  |              |    |            |   |          |  |   |     |          |  
|Dividends declared:                                   |      | 
|Class C ($0.142       per share)                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Class B ($0.065       per share)                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Class A ($0.065       per share)                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Issuance of shares:                                   |      | 
|Follow-on equity       offering                       |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                | 67 
|Nonvested restricted       stock                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Amortization of   unearned   compensation             |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Shares purchased    and redeemed in   tender offer    |      |  |              |    |            |   |          |  |   | (28 | )        |   | (52 | ) |                |    
|                                                      |      |  |              |    |            |   |          |  |   |     |         
|Balance at   June 27, 2004                            |      |  | $            | -- |            | $ | 33       |  | $ | 398 |          | $ | 141 |   | $              | 269
|                                                      |      |  |              |    |            |   |          |  |   |     |         
|Net earnings and other   comprehensive income         |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|                                                      |      |  |              |    |            |   |          |  |   |     |          |  
|Dividends declared:                                   |      | 
|Class C ($0.142       per share)                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Class B ($0.065       per share)                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Class A ($0.065       per share)                      |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Issuance of shares:                                   |      | 
|Conversion of       class B to class A                |      |  |              |    |            |   |          |  |   |     |          |   | (1  | ) |                | 1  
|Follow-on equity       offering                       |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Employee stock       purchase plan                    |      |  |              |    |            |   |          |  |   | 1   |          |   |     |   |                |    
|Amortization of   unearned   compensation             |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|Finalization of costs   associated with  tender offer |      |  |              |    |            |   |          |  |   |     |          |   |     |   |                |    
|                                                      |      |  |              |    |            |   |          |  |   |     |         
|Balance at   September 26, 2004                       |      |  | $            | -- |            | $ | 33       |  | $ | 399 |          | $ | 140 |   | $              | 270
|                                                      |      |  |              |    |            |   |          |  |   |     |         

4

---

Journal Communications,
Inc.Unaudited Consolidated Condensed Statements of Cash
Flows (in thousands)

|                                                 | Three Quarters Ended
|------------------------------------------------ | --------------------
|
|Cash flow from operating activities:             |                     
|Net earnings                                     |                     
|Adjustments for non-cash items:                  |                     
|Depreciation                                     |                     
|Amortization                                     |                     
|Provision for doubtful accounts                  |                     
|Deferred income taxes                            |                     
|Net (gain) loss from disposal of assets          |                     
|Net changes in operating assets and liabilities: |                     
|Receivables                                      |                     
|Inventories                                      |                     
|Accounts payable                                 |                     
|Other assets and liabilities                     |                     
|                                                 |                     
|NET CASH PROVIDED BY OPERATING ACTIVITIES        |                     
|Cash flow from investing activities:             |                     
|Capital expenditures for property and equipment  |                     
|Proceeds from sales of assets                    |                     
|Acquisition of business                          |                     
|                                                 |                     
|NET CASH USED FOR INVESTING ACTIVITIES           |                     
|Cash flow from financing activities:             |                     
|Net decrease in short-term borrowings            |                     
|Proceeds from long-term notes payable to banks   |                     
|Payments on long-term notes payable to banks     |                     
|Proceeds from issuance of common stock, net      |                     
|Purchase and redemption of common stock, net     |                     
|Cash dividends                                   |                     
|                                                 |                     
|NET CASH USED FOR FINANCING ACTIVITIES           |                     
|                                                 |                     
|NET DECREASE IN CASH AND CASH EQUIVALENTS        |                     
|Cash and cash equivalents:                       |                     
|Beginning of year                                |                     
|                                                 |                     
|At September 26, 2004 and September 28, 2003     |                     
|                                                 |                     

See accompanying notes
to unaudited consolidated condensed financial statements.

5

---

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

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

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

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

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

| | Prior
to fiscal 2004, we divided our calendar year into 13 four-week accounting periods, except
that the first and thirteenth periods were longer or shorter to the extent necessary to
make each accounting year end on December 31 and we followed a practice of reporting our
quarterly financial statements at the end of the third accounting period (the first
quarter), at the end of the sixth accounting period (the second quarter), and at the end
of the tenth accounting period (the third quarter). The results of the third quarter and
three quarters ended September 28, 2003 have been presented on a basis which conforms to
the quarterly reporting of operating results adopted effective January 1, 2004.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Basic
earnings per share are computed by dividing net earnings available to class A and B
common shareholders by the weighted average number of class A and B shares outstanding
during the period. Diluted earnings per share are computed based upon the assumption that
the class C shares outstanding were converted into class A and B shares, the assumed
common shares purchased upon exercise of certain of our non-statutory stock options and
the assumed common shares outstanding upon expiration of the vesting periods for our
non-vested restricted stock. In the third quarter and three quarters ended September 28,
2003, basic and diluted earnings were the same because there were no dilutive securities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

---

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

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

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

|                                             | Third Quarter Ended | Three Quarters Ended
|-------------------------------------------- | ------------------- | --------------------
|
|Basic earnings:                              |                     |                     
|Net earnings                                 |                     |                     
|Less dividends on class C common stock       |                     |                     
|                                             |                     |                     
|Net earnings available to class A and B      |                     |                     
|common shareholders                          |                     |                     
|                                             |                     |                     
|                                             |                     |                     
|Weighted average class A and B               |                     |                     
|shares outstanding                           |                     |                     
|                                             |                     |                     
|Basic earnings per share                     |                     |                     
|                                             |                     |                     
|                                             |                     |                     
|Diluted earnings:                            |                     |                     
|Net earnings available to class A and B      |                     |                     
|common shareholders                          |                     |                     
|Plus dividends on class C common stock       |                     |                     
|                                             |                     |                     
|Net earnings                                 |                     |                     
|                                             |                     |                     
|                                             |                     |                     
|Weighted average shares outstanding          |                     |                     
|Assumed exercise of stock options, net of    |                     |                     
|common shares assumed repurchased            |                     |                     
|with the proceeds                            |                     |                     
|Assumed vesting of restricted stock          |                     |                     
|Incremental class A and B shares for assumed |                     |                     
|conversion of class C shares                 |                     |                     
|                                             |                     |                     
|Adjusted weighted average shares outstanding |                     |                     
|                                             |                     |                     
|                                             |                     |                     
|Diluted earnings per share                   |                     |                     
|                                             |                     |                     
|                                             |                     |                     

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

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

| | We
account for stock-based compensation by using the intrinsic value-based method in
accordance with Accounting Principles Board Opinion (APB) No. 25, Accounting for
Stock Issued to Employees. Under APB No. 25, we do not recognize compensation
expense for our stock options because the exercise price equals the market price of the
underlying stock on the grant date. We recognize compensation expense related to
restricted stock grants over the vesting period. As permitted, we have elected to adopt
the disclosure only provisions of Statement No. 123, Accounting for Stock-Based
Compensation, and Statement No. 148, Accounting for Stock-Based Compensation
 Transition and Disclosure  an Amendment of FASB Statement No. 123.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Statement
No. 123, as amended by Statement No. 148, establishes a fair value-based method of
accounting for employee stock-based compensation plans and encourages companies to adopt
that method. However, it also allows companies to continue to apply the intrinsic
value-based method currently prescribed under APB No. 25. We have chosen to continue to
report stock-based compensation in accordance with APB No. 25, and provide the following
pro forma disclosure of the effects of applying the fair value method to all applicable
awards granted. The following table illustrates the effect on net earnings and net
earnings per share if we had applied the fair value recognition provisions of Statement
No. 123:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

---

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

|4 | STOCK-BASED
COMPENSATION, continued
|- | -----------------------------------

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

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

| | Inventories
 are  stated at the  lower of cost  (first  in,  first  out  method)  or  market.
 Inventories  at September 26, 2004 and December 31, 2003 consisted of the following:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | September 26,     2004 | December 31,2003
|------------------------- | ---------------------- | ----------------
|Paper and supplies        |                        |                 
|Work in process           |                        |                 
|Finished goods            |                        |                 
|Less obsolescence reserve |                        |                 
|                          |                        |                 
|Inventories               |                        |                 
|                          |                        |                 

|6 | LONG-TERM
NOTES PAYABLE TO BANKS
|- | --------------------------------

| | We
have a $350 million unsecured revolving credit facility expiring on September 4, 2008.
The interest rate on borrowings is either LIBOR plus a margin that ranges from 87.5 basis
points to 150 basis points, depending on our leverage, or the Base Rate, which
equals the higher of the prime rate set by U.S. Bank, N.A. or the Federal Funds Rate plus
one percent per annum. As of September 26, 2004, we had borrowings of $55,453 under the
facility at the weighted average interest rate of 2.8%. Fees of $1,959 in connection with
the facility are being amortized over the term of the facility using the straight-line
method which approximates the effective-interest method.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | FASB
Staff Position 106-2, Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the FSP),
was issued on May 19, 2004 and is effective as of the first interim or annual period
beginning after June 15, 2004. The FSP provides guidance on accounting for the effects of
the new Medicare prescription drug legislation and also contains guidance on transition.
Our postretirement health benefit plans provide for prescription drug benefits. We have
determined that certain of our plans provide benefits that are actuarially equivalent to
the Medicare Part D benefit under the Act. Upon retroactive adoption of the Act (fourth
quarter of 2004), the accumulated postretirement benefit obligation will be reduced by
approximately $5,100, which will result in a decrease in our net periodic other
postretirement benefit cost of approximately $160 for each of the first three quarters of
2004.  A similar decrease is anticipated for the fourth quarter of 2004.  Certain
definitions and interpretations, yet to be issued by the federal government, could require
us to adjust future estimates.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

---

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

|7 | EMPLOYEE
BENEFIT PLANS, continued
|- | ---------------------------------

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

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

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

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

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

| | Amortization
expense was $193 for the third quarter ended September 26, 2004 and $1,105 for the three
quarters ended September 26, 2004. Estimated amortization expense for our next five
fiscal years is $1,336 for 2004, $763 for 2005, $748 for 2006, $710 for 2007 and $662 for
2008.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

---

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

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

| | The
gross carrying amount, accumulated amortization and net carrying amount of the major
classes of definite-lived intangible assets as of September 26, 2004 and December 31,
2003 is as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | Gross
Carrying
Amount |  | Accumulated
Amortization |        | Net
Carrying
Amount |  
|------------------------------ | --------------------- |  | ------------------------ | ------ | ------------------- | -
|As of September 26, 2004       |                       |  |                          |        |                     |  
|Network affiliation agreements |                       |  | $                        | 7,759  |                     | $
|Customer lists                 |                       |  |                          | 18,010 |                     |  
|Non-compete agreements         |                       |  |                          | 24,838 |                     |  
|Other                          |                       |  |                          | 3,439  |                     |  
|                               |                       |  |                          |        |                     |  
|Total                          |                       |  | $                        | 54,046 |                     | $
|                               |                       |  |                          |        |                     |  
|                               |                       |  |                         
|As of December 31, 2003        |                       | 
|Network affiliation agreements |                       |  | $                        | 7,759  |                     | $
|Customer lists                 |                       |  |                          | 17,771 |                     |  
|Non-compete agreements         |                       |  |                          | 24,838 |                     |  
|Other                          |                       |  |                          | 3,080  |                     |  
|                               |                       |  |                          |        |                     |  
|Total                          |                       |  | $                        | 53,448 |                     | $
|                               |                       |  |                          |        |                     |  
|                               |                       |  |                         

| | Indefinite-lived
IntangiblesBroadcast
licenses are deemed to have indefinite useful lives because we have renewed these
agreements without issue in the past and we intend to renew them indefinitely in the
future. Accordingly, we expect the cash flows from our broadcast licenses to continue
indefinitely. There were no changes to the carrying amount of broadcast licenses in the
three quarters ended September 26, 2004.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | GoodwillThere
were no changes in the carrying amount of goodwill in the three quarters ended September
26, 2004.
| | ----------------------------------------------------------------------------------------------------------------

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

| | Activity
associated with our daily newspapers and printing services workforce
reduction and business improvement initiatives during the three quarters ended September
26, 2004 is as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | Balance at
December 31, 2003 | Additions | Payments | Balance at
September 26, 2004
|------------------------------- | ---------------------------- | --------- | -------- | -----------------------------
|Employee severance and benefits |                              |           | $        | 347                          
|Facility costs                  |                              |           |          | 131                          
|                                |                              |           |          |                              
|                                |                              |           | $        | 478                          
|                                |                              |           |          |                              

| | The
obligations for our workforce reduction and business improvement initiatives are included
in other current liabilities in the consolidated balance sheets. The remaining costs
associated with these actions are expected to be paid in 2004, except for portions of the
$63 liability representing the remaining operating lease obligation for the closed CD-ROM
mastering and replication facility, which obligation expires in June 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | We
conduct our operations through four reportable segments: publishing, broadcasting,
telecommunications and printing services. In addition, our label printing business, our
direct marketing services business and certain administrative activities are aggregated
and reported as other. All operations primarily conduct their business in the
United States. We publish the Milwaukee Journal Sentinel and more than 90 weekly
shopper and community newspapers in eight states. Our broadcasting segment consists of 38
radio stations and seven television stations in 11 states and we operate an additional
television station under a local marketing agreement. Our telecommunications segment
consists of wholesale and business-to-business telecommunications services provided
through a high speed fiber optic telecommunications network that covers more than 4,400
route miles in seven states, of which we operate about 3,800 route miles. Our printing
services segment reflects the operations of our printing and assembly and fulfillment
business.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---

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

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

| | The
following tables summarize operating revenue, operating earnings, depreciation and
amortization and capital expenditures for the third quarter and three quarters ended
September 26, 2004 and September 28, 2003 and identifiable total assets at September 26,
2004 and December 31, 2003:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | Third Quarter Ended | Three Quarters Ended
|----------------------------- | ------------------- | --------------------
|
|Operating revenue             |                     |                     
|Publishing                    |                     |                     
|Broadcasting                  |                     |                     
|Telecommunications            |                     |                     
|Printing services             |                     |                     
|Other                         |                     |                     
|                              |                     |                     
|                              |                     |                     
|                              |                     |                     
|Operating earnings (loss)     |                     |                     
|Publishing                    |                     |                     
|Broadcasting                  |                     |                     
|Telecommunications            |                     |                     
|Printing services             |                     |                     
|Other                         |                     |                     
|                              |                     |                     
|                              |                     |                     
|                              |                     |                     
|Depreciation and amortization |                     |                     
|Publishing                    |                     |                     
|Broadcasting                  |                     |                     
|Telecommunications            |                     |                     
|Printing services             |                     |                     
|Other                         |                     |                     
|                              |                     |                     
|                              |                     |                     
|                              |                     |                     
|Capital expenditures          |                     |                     
|Publishing                    |                     |                     
|Broadcasting                  |                     |                     
|Telecommunications            |                     |                     
|Printing services             |                     |                     
|Other                         |                     |                     
|                              |                     |                     
|                              |                     |                     
|                              |                     |                     

|                          | September 26,        2004 | December 31,2003
|------------------------- | ------------------------- | ----------------
|Identifiable total assets |                           |                 
|Publishing                |                           |                 
|Broadcasting              |                           |                 
|Telecommunications        |                           |                 
|Printing services         |                           |                 
|Other                     |                           |                 
|                          |                           |                 
|                          |                           |                 
|                          |                           |                 

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

| | On
October 6, 2004, we acquired the business and certain assets of NBC-affiliate WGBA-TV, in
Green Bay, Wisconsin and certain assets of UPN affiliate WACY-TV, which is licensed to
serve Appleton, Wisconsin. We also assumed an existing local marketing agreement between
WGBA-TV and WACY-TV. The aggregate purchase price for WGBA-TV was $43,250, which was
funded by available borrowings under our credit facility and proceeds from our follow-on
public equity offering of class A common stock.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

---

# JOURNAL
COMMUNICATIONS, INC.

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

The following discussion of our
financial condition and results of operations should be read together with our unaudited
consolidated condensed financial statements for the third quarter and three quarters ended
September 26, 2004, including the notes thereto. The results of the third quarter and
three quarters ended September 28, 2003 have been presented on a basis which conforms to
the quarterly reporting of operating results adopted effective January 1, 2004.

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

# Forward-Looking
Statements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

| | energy
costs;
|- | -------------

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

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

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

# Overview

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

12

---

The financial performance of Journal
Communications in the third quarter of 2004 benefited  as it has all year  by
broad-based advertising revenue growth at our television and radio stations and daily
newspaper. In the third quarter of 2004, our operating earnings in the publishing and
broadcast groups, increased 25.0% and 63.9%, respectively, compared to the third quarter
of 2003. Despite tougher year-over-year comparisons of productivity gains at the new daily
newspaper facility  which we have now operated for more than a year  we
continued to benefit from efficiencies and cost-savings. At the daily newspaper,
classified and retail advertising increased in the quarter and we continued to record
gains in our online products and solo and shared mail. Additionally, commercial printing
at our community newspapers and shoppers contributed to revenue growth in the quarter.
Operating earnings at our television stations increased 136.0%, in part reflecting
significant political advertising at our operations in Milwaukee and Las Vegas  both
located in political swing states  and Olympics advertising at our NBC
affiliates in Milwaukee and Palm Springs. Our radio stations reported increased earnings
in seven of our eight markets. We are encouraged that our telecommunications segment
continues to grow its enterprise revenue, up 7.6% in the third quarter of 2004. As
expected, the wholesale telecommunications business experienced continued pricing pressure
and service disconnections in the quarter, resulting in a 10.2% drop in revenue. We
reported a second consecutive quarter of losses at our printing services company, due to
reduced sales volume from several computer-related customers and a charge for a
discontinued software system implementation project. For the remainder of the year, we
anticipate strong contributions from our daily newspaper and broadcast businesses. Further
economic recovery, new revenue initiatives, strong political advertising prior to the
Presidential election on November 2ndand the addition of our Green Bay
television acquisition  which closed early in the fourth quarter  should drive
increased earnings. We expect our telecommunications business to continue to grow its
enterprise business, at a slower pace than previous quarters, while experiencing ongoing
revenue decline on the wholesale side. Our printing services business should begin to see
some operational recovery, as its newly installed printing press will support print
revenue growth and address production inefficiencies.

# Results of Operations

| | Third
Quarter Ended September 26, 2004 compared to Third Quarter Ended September 28, 2003
| | -----------------------------------------------------------------------------------------

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

Our consolidated operating revenue in
the third quarter of 2004 was $204.4 million, an increase of $5.3 million, or 2.7%,
compared to $199.1 million in the third quarter of 2003. Our consolidated operating costs
and expenses in the third quarter of 2004 were $115.4 million, an increase of $0.7
million, or 0.6%, compared to $114.7 million in the third quarter of 2003. Our
consolidated selling and administrative expenses in the third quarter of 2004 were $56.5
million, an increase of $3.6 million, or 7.0%, compared to $52.9 million in the third
quarter of 2003.

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

|                                               | 2004                  | Percent of
Total
Operating
Revenue | 2003 | Percent of
Total
Operating
Revenue
|---------------------------------------------- | --------------------- | ---------------------------------- | ---- | ----------------------------------
|                                               | (dollars in millions)
|Operating revenue:                             |                       |                                    |      |                                   
|Publishing                                     |                       |                                    | $    | 81.5                              
|Broadcasting                                   |                       |                                    |      | 44.0                              
|Telecommunications                             |                       |                                    |      | 35.8                              
|Printing services                              |                       |                                    |      | 17.9                              
|Other                                          |                       |                                    |      | 25.2                              
|                                               |                       |                                    |      |                                   
|Total operating revenue                        |                       |                                    |      | 204.4                             
|                                               |                       |                                    |      |                                   
|Total operating costs and expenses             |                       |                                    |      | 115.4                             
|Selling and administrative expenses            |                       |                                    |      | 56.5                              
|                                               |                       |                                    |      |                                   
|Total operating costs and expenses and selling |                       |                                   
|and administrative expenses                    |                       |                                    |      | 171.9                             
|                                               |                       |                                    |      |                                   
|Total operating earnings                       |                       |                                    | $    | 32.5                              
|                                               |                       |                                    |      |                                   

13

---

The increase in total operating
revenue was due to revenue increases at our television stations, increases in classified,
direct mail and Journal Interactive advertising revenue at our daily newspaper, an
increase in commercial services revenue at our telecommunications business, increases in
local advertising revenue at our radio stations and an increase in gravure label printing
revenue. These increases were partially offset by a decrease in revenue from several
computer-related customers in our printing services business and a decrease in wholesale
telecommunications revenue due to customer disconnections and contract repricings.

The increase in total operating costs
and expenses is due to an increase in newsprint expense at our publishing businesses, an
increase in postage and freight expense associated with mailing services revenue at our
direct marketing business and an increase in news and programming expenses at our
television stations. These increases were offset by the decrease in revenue at our
printing services business, the decrease in revenue at our our telecommunications
business, cost savings initiatives at our community newspapers and shoppers and increased
operating efficiencies and productivity benefits at our daily newspapers new
production facility.

The increase in selling and
administrative expenses is primarily due to the gain on the sale of property in our other
segment in the third quarter of 2003, which reduced selling and administrative expenses in
the third quarter of 2003.

Our consolidated operating earnings
in the third quarter of 2004 were $32.5 million, an increase of $1.0 million, or 3.1%,
compared to $31.5 million in the third quarter of 2003. Excluding the gain on the sale of
property in the third quarter of 2003 operating earnings in the third quarter would have
increased by $4.2 million or 14.8%. The following table presents our operating earnings
(loss) by segment for the third quarter of 2004 and 2003:

|                         | 2004                  | Percent of
Total
Operating
Earnings | 2003 | Percent of
Total
Operating
Earnings
|------------------------ | --------------------- | ----------------------------------- | ---- | -----------------------------------
|                         | (dollars in millions)
|Publishing               |                       |                                     | $    | 11.0                               
|Broadcasting             |                       |                                     |      | 11.8                               
|Telecommunications       |                       |                                     |      | 8.7                                
|Printing services        |                       |                                     |      | (0.7                               
|Other                    |                       |                                     |      | 1.7                                
|                         |                       |                                     |      |                                    
|Total operating earnings |                       |                                     | $    | 32.5                               
|                         |                       |                                     |      |                                    

The increase in total operating
earnings was primarily due to operating revenue increases at our television stations, at
our daily newspaper, and at our radio stations, cost reduction initiatives at our
community newpapers and shoppers and cost reductions and productivity benefits from the
daily newspapers new production facility. These increases were partially offset by a
gain on the sale of property recorded in the third quarter of 2003, a decrease in sales
volume and production inefficiencies and a charge for some of the costs incurred for a
discontinued software system implementation project at our printing services business,
wholesale telecommunications service disconnections and contract repricings, and increases
in bad debt expense, principally at our community newspapers and shoppers business.

Our consolidated EBITDA in the third
quarter of 2004 was $43.5 million, a decrease of $0.1 million, or 0.2%, compared to $43.6
million in the third quarter of 2003. We define EBITDA as net earnings plus provision for
income taxes, total other income and expense (primarily interest expense), depreciation
and amortization. We believe the presentation of EBITDA is relevant and useful because it
helps improve our investors ability to understand our operating performance and
makes it easier to compare our results with other companies that have different financing
and capital structures or tax rates. Our management uses EBITDA, among other things, to
evaluate our operating performance, to value prospective acquisitions and as a component
of incentive compensation targets for certain management personnel. In addition, our
lenders use EBITDA as one of the measures of our ability to service our debt. EBITDA is
not a measure of performance calculated in accordance with accounting principles generally
accepted in the United States. EBITDA should not be considered in isolation of, or as a
substitute for, net earnings as an indicator of operating performance or cash flows from
operating activities as a measure of liquidity. EBITDA, as we calculate it, may not be
comparable to EBITDA measures reported by other companies. In addition, EBITDA does not
represent funds available for discretionary use.

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

|                               | 2004                  |  | 2003 |     
|------------------------------ | --------------------- |  | ---- | ----
|                               | (dollars in millions)
|Net earnings                   |                       |  | $    | 19.2
|Provision for income taxes     |                       |  |      | 12.8
|Total other income and expense |                       |  |      | 0.5 
|Depreciation                   |                       |  |      | 10.8
|Amortization                   |                       |  |      | 0.2 
|                               |                       |  |      |     
|EBITDA                         |                       |  | $    | 43.5
|                               |                       |  |      |     

14

---

EBITDA in third quarter of 2004 was
essentially even compared to the third quarter of 2003. The increase in net earnings is
consistent with increases in operating earnings in our broadcasting and publishing
segments offset by a decrease in operating earnings at our other, printing services and
telecommunications segments. Depreciation decreased $0.8 million due to certain assets
becoming fully depreciated.

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

Operating revenue from publishing in
the third quarter of 2004 was $81.5 million, an increase of $3.4 million, or 4.3%,
compared to $78.1 million in the third quarter of 2003. Operating earnings from publishing
were $11.0 million, an increase of $2.2 million, or 25.0%, compared to $8.8 million in the
third quarter of 2003.

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

|                   | 2004 |  | 2003                  |      |  |  
|------------------ | ---- |  | --------------------- | ---- |  | -
|
|                   |      |  | (dollars in millions)
|Operating revenue  |      |  | $                     | 56.8 |  | $
|                   |      |  |                       |      |  |  
|Operating earnings |      |  | $                     | 9.6  |  | $
|                   |      |  |                       |      |  |  
|                   |      |  |                       |      |  |  

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

|                          | 2004 |  | 2003                  |      |  |  
|------------------------- | ---- |  | --------------------- | ---- |  | -
|
|                          |      |  | (dollars in millions)
|Advertising revenue:      |      |  |                       |      |  |  
|Retail                    |      |  | $                     | 19.8 |  | $
|Classified                |      |  |                       | 17.1 |  |  
|General                   |      |  |                       | 2.5  |  |  
|Other                     |      |  |                       | 5.5  |  |  
|                          |      |  |                       |      |  |  
|Total advertising revenue |      |  |                       | 44.9 |  |  
|Circulation revenue       |      |  |                       | 10.9 |  |  
|Other revenue             |      |  |                       | 1.0  |  |  
|                          |      |  |                       |      |  |  
|Total operating revenue   |      |  | $                     | 56.8 |  | $
|                          |      |  |                       |      |  |  

Advertising revenue in the third quarter
of 2004 accounted for 75.4% of total publishing revenue compared to 74.8% in the third
quarter of 2003.

Retail advertising revenue in the
third quarter of 2004 was $33.6 million, an increase of $0.4 million, or 1.7%, compared to
$33.2 million in the third quarter of 2003. A $0.6 million increase in daily newspaper
retail advertising was offset by a $0.2 million decrease in community newspapers and
shopper retail advertising. The $0.6 million increase at the daily newspaper was primarily
due to an increase in automotive, financial and furniture advertising offset by a decrease
in telecommunications and department store advertising. The increase in retail automotive
advertising is due to certain advertisers switching their ad placement from the classified
section to the retail sections of the paper, taking advantage of the enhanced color
capabilities of our new presses. Combined retail and classified automotive advertising
increased 5.3% in the third quarter of 2004 compared to the third quarter of 2003. The
$0.2 million decrease at our community newspapers and shoppers was primarily due to a
reduction in preprint insert advertising.

Classified advertising revenue in the
third quarter of 2004 was $19.5 million, an increase of $1.3 million, or 7.1%, compared to
$18.2 million in the third quarter of 2003. At our daily newspaper, increases in
employment advertising of $0.9 million, real estate advertising of $0.4 million and
general/other advertising of $0.3 million were partially offset by a decrease in
automotive advertising of $0.3 million. Classified advertising at our community newspapers
and shoppers in the third quarter of 2004 was even compared to the third quarter of 2003.
Employment advertising, which accounted for 37.4% of classified advertising at our daily
newspaper in the third quarter of 2004, increased 17.3% compared to the third quarter of
2003. We believe the increase in employment advertising is due to an improving economy.
The decrease in automotive advertising is due to certain advertisers switching their ad
placement to the retail section of the paper from the classified section.

General advertising revenue in both
the third quarter of 2004 and 2003 was $2.5 million. Increases in preprints from national
advertisers were offset by decreases in airline/travel industry ROP (run-of-press).

15

---

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

|                               | 2004 |  | 2003 |         | Percent Change
|------------------------------ | ---- |  | ---- | ------- | --------------
|Advertising linage (inches):   |      |  |      |         |               
|Full run                       |      | 
|Retail                         |      |  |      | 178,625 |               
|Classified                     |      |  |      | 225,431 |               
|General                        |      |  |      | 11,793  |               
|                               |      |  |      |         |               
|Total full run                 |      |  |      | 415,849 |               
|Part run                       |      |  |      | 50,929  |               
|                               |      |  |      |         |               
|Total advertising linage       |      |  |      | 466,778 |               
|                               |      |  |      |         |               
|Preprint pieces (in thousands) |      |  |      | 192,895 |               
|                               |      |  |      |         |               

Total advertising linage in the third
quarter of 2004 increased 0.6% compared to the third quarter of 2003. The increase was due
to a 41.6% increase in part run advertising linage. Part run advertising linage increased
in the third quarter of 2004 due to an increase in zoned classified advertising. Full run
advertising linage in the third quarter of 2004 decreased 2.8% compared to the third
quarter of 2003 due to a 7.5% decrease in general ROP advertising linage and a 4.3%
decrease in classified advertising linage. Retail ROP advertising linage in the third
quarter of 2004 was essentially flat compared to the third quarter of 2003. The decrease
in general advertising linage is due to a decrease in general ROP advertising in the daily
edition in the third quarter of 2004 compared to the third quarter of 2003. The decrease
in classified advertising linage is due to a decrease in automotive advertising partially
offset by an increase in employment advertising. Preprint advertising pieces decreased
3.8% due to lower average net paid circulation, the in-house printing of a local
advertisers insert which was previously measured as a preprint piece and the
elimination of Kmart preprints in the daily newspaper due to the closing of several area
stores.

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

|                                | 2004 |  | 2003 |        | Percent Change
|------------------------------- | ---- |  | ---- | ------ | --------------
|Full pages of advertising:      |      |  |      |        |               
|Community newspapers            |      |  |      | 25,586 |               
|Shoppers and specialty products |      |  |      | 27,949 |               
|                                |      |  |      |        |               
|Total full pages of advertising |      |  |      | 53,535 |               
|                                |      |  |      |        |               
|Revenue per page                |      |  | $    | 280.98 |               
|                                |      |  |      |        |               
|                                |      |  |     

Total full pages of advertising for
our community newspapers and shoppers in the third quarter of 2004 decreased 5.5%
compared to the third quarter of 2003. The decrease was due to reformatting certain
papers to more efficiently use the amount of available space on each page and
discontinuing certain papers, partially offset by an increase in specialty products.
Revenue per page increased 6.2% primarily due to the decrease in total full pages of
advertising while increasing or maintaining the same advertising rates.

Other advertising revenue in the
third quarter of 2004, consisting of revenue from direct mail and event marketing efforts,
and Journal Interactive for our daily newspaper and company-sponsored event advertising
for our community newspapers and shoppers, was $5.9 million, an increase of $1.4 million,
or 30.3%, compared to $4.5 million in the third quarter of 2003. The increase was due to a
$0.8 million increase in direct mail advertising and a $0.6 million increase in Journal
Interactive advertising at our daily newspaper. Company-sponsored event advertising at our
community newspapers and shoppers in the the third quarter of 2004 was even compared to
the third quarter of 2003.

Circulation revenue in the third
quarter of 2004 accounted for 14.4% of total publishing revenue compared to 15.2% in the
third quarter of 2003. Circulation revenue in the third quarter of 2004 was $11.7 million,
a decrease of $0.2 million, or 2.5%, compared to $11.9 million in the third quarter of
2003. The decrease is primarily due to lower daily and Sunday avergage net paid
circulation due in part to additional copies sold during the Harley Davidson Reunion in
the third quarter of 2003 and a lower average rate per copy for the Sunday edition.
Average net paid circulation for the Milwaukee Journal Sentinels daily
edition decreased 2.9% in the third quarter of 2004 compared to the third quarter of 2003.
Average net paid circulation for the Milwaukee Journal Sentinels Sunday
edition decreased 0.6% in the third quarter of 2004 compared to the third quarter of 2003.
Average paid circulation for our community newspapers and shoppers decreased 2.7% in the
third quarter of 2004 compared to the third quarter of 2003 primarily due to less
discounting and fewer promotions on home delivery.

Other revenue, which consists of
revenue from commercial printing opportunities at the printing plants for our community
newspapers and shoppers and promotional, distribution and commercial printing revenue at
our daily newspaper, accounted for 10.2% of total publishing revenue in the third quarter
of 2004 compared to 10.0% in the third quarter of 2003. Other revenue in the third quarter
of 2004 was $8.3 million, an increase of $0.5 million, or 5.2%, compared to $7.8 million
in the third quarter of 2003. The increase was due to an $0.4 million increase in printing
revenue at our community newspapers and shoppers primarily due to sales volume increases
and a $0.2 million increase in distribution revenue at the daily newspaper offset by a
$0.1 million decrease in commercial printing revenue at the daily newspaper.

16

---

Publishing operating earnings in the
third quarter of 2004 were $11.0 million, an increase of $2.2 million, or 25.0%, compared
to $8.8 million in the third quarter of 2003. The increase was primarily due to $0.6
million in savings from cost reduction initiatives at our community newspapers and
shoppers business, $0.5 million in productivity benefits related to the daily
newspapers new production facility and the increase in revenue at our daily
newspaper and our community newspapers and shoppers. These operating earnings increases
were partially offset by an increase in newsprint costs at our daily newspaper and
community newspapers and shoppers and increased bad debt expense at our community
newspapers and shoppers. Newsprint costs in the third quarter of 2004 were $11.2 million,
an increase of $1.1 million, or 10.9%, compared to $10.1 million in the third quarter of
2003. The increase in the cost of newsprint was primarily attributed to price increases
totaling $0.8 million, or a 8.2% average price increase per metric ton.

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

Operating revenue from broadcasting
in the third quarter of 2004 was $44.0 million, an increase of $5.5 million, or 14.2%,
compared to $38.5 million in the third quarter of 2003. Operating earnings from
broadcasting in the third quarter of 2004 were $11.8 million, an increase of $4.6 million,
or 63.9%, compared to $7.2 million in the third quarter of 2003.

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

|                   | 2004 |  | 2003                  |      |  |  
|------------------ | ---- |  | --------------------- | ---- |  | -
|
|                   |      |  | (dollars in millions)
|Operating revenue  |      |  | $                     | 21.8 |  | $
|                   |      |  |                       |      |  |  
|Operating earnings |      |  | $                     | 5.9  |  | $
|                   |      |  |                       |      |  |  
|                   |      |  |                       |      |  |  

Operating revenue from our radio
stations in the third quarter of 2004 was $21.8 million, an increase of $0.9 million, or
4.3%, compared to $20.9 million in the third quarter of 2003. The increase was primarily
attributed to a $1.3 million increase in local advertising revenue and a $0.3 million
increase in political and issue advertising offset by a $0.6 million decrease in national
advertising and a $0.1 million decrease in other revenue.

Operating earnings from our radio
stations in the third quarter of 2004 were $5.9 million, an increase of $1.2 million, or
25.5%, compared to $4.7 million in the third quarter of 2003. The increase was primarily
attributed to the increase in revenue and reduced national sales commissions.

Operating revenue from our television
stations in the third quarter of 2004 was $22.2 million, an increase of $4.6 million, or
26.1%, compared to $17.6 million in the third quarter of 2003. The increase was primarily
attributed to a $2.9 million increase in political and issue advertising, a $2.5 million
increase in Olympic advertising revenue and a $0.3 million increase in local advertising
and other revenue offset by a $1.1 million decrease in national advertising.

Operating earnings from our
television stations in the third quarter of 2004 were $5.9 million, an increase of $3.4
million, or 136.0%, compared to $2.5 million in the third quarter of 2003. The increase
was primarily attributed to the increase in revenue offset by increases in news,
programming and selling expenses.

On October 6, 2004, we acquired the
business and certain assets of NBC-affiliate WGBA-TV, in Green Bay, Wisconsin and certain assets of UPN
affiliate WACY-TV, which is licensed to serve Appleton, Wiscosnin. We also assumed an
existing local marketing agreement between WGBA-TV and WACY-TV. The aggregate purchase
price for WGBA-TV was $43.3 million.

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

Operating revenue from
telecommunications in the third quarter of 2004 was $35.8 million, a decrease of $1.2
million, or 3.3%, compared to $37.0 million in the third quarter of 2003. Operating
earnings from telecommunications in the third quarter of 2004 were $8.7 million, a
decrease of $0.5 million, or 6.0%, compared to $9.2 million in the third quarter of 2003.

Wholesale telecommunication services
provide network transmission solutions for other service providers by offering bulk
transmission capacity. Operating revenue from wholesale services in the third quarter of
2004 was $20.2 million, a decrease of $2.3 million, or 10.2%, compared to $22.5 million in
the third quarter of 2003. The decrease was primarily due to customer service
disconnections and lower pricing on customer contract renewals. Monthly recurring revenue
from wholesale services at the end of the third quarter of 2004 was $6.3 million compared
to $6.6 million at the beginning of the third quarter 2004 and $7.2 million at the end of
the third quarter of 2003. During the third quarter of 2004, new circuit connections of
$0.1 million in monthly recurring revenue were more than offset by service disconnections
and repricings.

17

---

MCI and Global Crossing together
accounted for 16.0% and 18.0% of our telecommunications revenue in the third quarter of
2004 and 2003, respectively. During the third quarter of 2004, we signed a three-year
master capacity agreement with Global Crossing to provide carrier services throughout the
Great Lakes Region. This agreement establishes reduced price levels from those that had
previously been in effect. Global Crossing is now in the process of determining which
circuit service orders to enter into under the new master capacity agreement, which will
determine the level of monthly recurring revenue we will receive. We are in the process of
negotiating contract extensions with MCI for our current contracts and we believe they
will remain a significant customer. These new contracts will likely result in a re-pricing
of services and could result in providing them additional capacity. We have continued to
record monthly revenues from MCI that are not wholly reflective of the coming transition
to contract renewal terms. We expect these contract changes to result in a significant
decrease in our telecommunications operating earnings. The loss of the ongoing business
from either of these two customers would have a significant adverse effect on our results
of operations.

Commercial telecommunication services
provide advanced data communications and long distance service to small and medium-sized
businesses in the Upper Midwest, principally in Wisconsin, Michigan, Indiana, Minnesota
and Illinois. Operating revenue from commercial services in the third quarter of 2004 was
$15.6 million, an increase of $1.1 million, or 7.6%, compared to $14.5 million in the
third quarter of 2003. The increase was primarily attributed to an increase in the
services utilized by our existing customers. Monthly recurring revenue from commercial
advanced data services at the end of the third quarter of 2004 and at the beginning of the
third quarter of 2004 was $3.5 million compared to $3.3 million at the end of the third
quarter of 2003. In the third quarter of 2003, regulators approved SBC Communications
Inc.s application to offer long distance service in Wisconsin, Indiana, Illinois and
Michigan. We believe this increased competition for commercial telecommunication services
is adversely impacting us through the loss of existing customers or by reducing the
success rate of securing new customers. We have been proactively working with our
customers by leveraging our customer service abilities and adding new bundled services as
we extend contracts at reduced prices.

The decrease in operating earnings
from telecommunications was primarily attributed to the decrease in wholesale revenue and
higher operating costs and expenses associated with the higher mix of commercial revenue.
Partially offsetting these earnings decreases were decreases on selling and promotional
expenses, a lease impairment charge in the third quarter of 2003 and a decrease in
depreciation expense.

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

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

Operating revenue from printing
services in the third quarter of 2004 was $17.9 million, a decrease of $2.8 million, or
13.3%, compared to $20.7 million in the third quarter of 2003. Our operating loss from
printing services in the third quarter of 2004 was $0.7 million, a decrease of $1.4
million compared to operating earnings of $0.7 million in the third quarter of 2003.

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

Dell Computer Corporation accounted
for 25.3% and 30.7% of our printing services revenue in the third quarter of 2004 and
2003, respectively. Dell has decided to eliminate supplying its customers with certain
items that we produce. We expect the transition period to be a few months in duration as
we wind down the process of supplying Dell with these products. We anticipate Dell
revenues will decline by approximately 32%, or $8.0 million, this year. This changing
relationship with Dell represents an important step in our long-term strategy to minimize
our reliance on a single customer in our printing services segment and to return to our
core printing business. This decrease in revenue from Dell is being accompanied by
significant cost reduction initiatives in order to mitigate the material adverse effect on
our results of operations.

The decrease in printing services
operating earnings was primarily attributed to the decrease in sales volume, production
inefficiencies on print work, a charge for some of the costs incurred for a discontinued
software system implementation project and a charge for workforce reductions. These
earnings decreases were partially offset by lower production costs due to the decrease in
sales volume and cost reduction initiatives.

| | Other
| | -----

Other operating revenue in the third
quarter of 2004 was $25.2 million, an increase of $0.4 million, or 1.9%, compared to $24.8
million in the third quarter of 2003. Other operating earnings in the third quarter of
2004 were $1.7 million, a decrease of $3.9 million, or 69.6%, compared to operating
earnings of $5.6 million in the third quarter of 2003.

18

---

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

|                   | 2004 |  | 2003                  |      |  |  
|------------------ | ---- |  | --------------------- | ---- |  | -
|
|                   |      |  | (dollars in millions)
|Operating revenue  |      |  | $                     | 15.0 |  | $
|                   |      |  |                       |      |  |  
|Operating earnings |      |  | $                     | 0.9  |  | $
|                   |      |  |                       |      |  |  
|                   |      |  |                       |      |  |  

The increase in other operating
revenue in the third quarter of 2004 compared to the third quarter of 2003 was primarily
attributed to an increase in gravure label sales, including sales to our largest customer,
SAB/Miller Brewing Company, at our label printing business and an increase in postage
amounts at our direct marketing services business partially offset by a decrease in list
and printing services at our direct marketing services business due to the loss of a
customer. Included in operating revenue and operating costsand expenses from our
direct marketing services business is $6.6 million and $6.1 million of postage amounts
billed to customers in the third quarter of 2004 and 2003, respectively.

The decrease in other operating
earnings was primarily attributed to recording a $3.2 million gain on the sale of property
in the third quarter of 2003, changes in business mix at our direct marketing business and
a charge for a bad debt expense in the third quarter of 2004.

SAB/Miller Brewing Company accounted
for 42.8% and 43.3% of our label printing business revenue in the third quarter of
2004 and 2003, respectively. In 2004, we signed a three-year contract extension with
SAB/Miller Brewing Company which expires on December 31, 2008. We agreed to certain price
reductions as a result of this new contract and SAB/Miller Brewing Company has the right
to re-bid the work covered by the contract each year beginning in 2006, subject to similar
quality standards. The loss of this customer could have a material adverse effect on our
results of operations.

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

Interest income and dividends was
$0.1 million in the third quarter of 2004 and 2003. Interest expense, representing gross
interest expense from borrowings under our credit agreement, in the third quarter of 2004
was $0.5 million, an increase of $0.1 million, compared to $0.4 million in the third
quarter of 2003. Amortization of deferred financing costs were $0.1 million in the third
quarter of 2004. There was no amortization of deferred financing costs in the third
quarter of 2003.

The effective tax rate was 40.0% in
the third quarter of 2004 and 40.5% in the third quarter of 2003.

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

Our basic and diluted earnings per
share in the third quarter of 2004 were $0.26 and $0.25, respectively, an increase of
$0.02 and $0.01, respectively, compared to basic and diluted earnings per share of $0.24
in the third quarter of 2003. Earnings per share amounts reflect our new capital structure
as of September 29, 2003 and our follow-on equity offering and tender offer completed in
June 2004.

| | Three
Quarters Ended September 26, 2004 compared to Three Quarters Ended September 28, 2003
| | -------------------------------------------------------------------------------------------

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

Our consolidated operating revenue in
the three quarters of 2004 was $605.1 million, an increase of $16.7 million, or 2.8%,
compared to $588.4 million in the three quarters of 2003. Our consolidated operating costs
and expenses in the three quarters of 2004 were $342.3 million, an increase of $2.8
million, or 0.8%, compared to $339.5 million in the three quarters of 2003. Our
consolidated selling and administrative expenses in the three quarters of 2004 were $168.5
million, a decrease of $1.2 million, or 0.6%, compared to $169.7 million in the three
quarters of 2003.

19

---

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

|                                               | 2004                  | Percent of
Total
Operating
Revenue | 2003 | Percent of
Total
Operating
Revenue
|---------------------------------------------- | --------------------- | ---------------------------------- | ---- | ----------------------------------
|                                               | (dollars in millions)
|Operating revenue:                             |                       |                                    |      |                                   
|Publishing                                     |                       |                                    | $    | 241.8                             
|Broadcasting                                   |                       |                                    |      | 120.8                             
|Telecommunications                             |                       |                                    |      | 108.1                             
|Printing services                              |                       |                                    |      | 57.2                              
|Other                                          |                       |                                    |      | 77.2                              
|                                               |                       |                                    |      |                                   
|Total operating revenue                        |                       |                                    |      | 605.1                             
|Total operating costs and expenses             |                       |                                    |      | 342.3                             
|Selling and administrative expenses            |                       |                                    |      | 168.5                             
|                                               |                       |                                    |      |                                   
|Total operating costs and expenses and selling |                       |                                   
|and administrative expenses                    |                       |                                    |      | 510.8                             
|                                               |                       |                                    |      |                                   
|Total operating earnings                       |                       |                                    | $    | 94.3                              
|                                               |                       |                                    |      |                                   

The increase in total operating
revenue was due to increases in political and issue, Olympic and local advertising revenue
at our television stations, increases in classified, retail and other advertising revenue
at our daily newspaper, an increase in commercial services revenue at our
telecommunications business, an increase in postage and freight revenue associated with
mailing services at our direct marketing services business, increases in local advertising
revenue at our radio stations, an increase in printing revenue at our community newspapers
and shoppers and an increase in gravure label printing revenue. These increases were
partially offset by a decrease in wholesale telecommunications revenue due to customer
disconnections and contract repricings and a decrease in revenue from several
computer-related customers in our printing services business.

The increase in total operating costs
and expenses is due to an increase in postage and freight expense associated with mailing
services revenue at our direct marketing business, an increase in newsprint expense at our
publishing businesses and an increase in news and programming expenses at our television
stations. These increases were offset by the decrease in revenue at our printing services
business, increased operating efficiencies and productivity benefits at our daily
newspapers new production facility, cost reduction initiatives at our community
newspapers and shoppers business and the decrease in revenue at our telecommunications
business.

The decrease in selling and
administrative expenses is primarily due to cost reduction initiatives, which were
partially offset by a gain on the sale of property in our other segment in the third
quarter of 2003, an increase in bad debt expense, principally at our community newspapers
and shoppers business, and a charge for some of the costs incurred for a discontinued
software system implementation project.

Our consolidated operating earnings
in the three quarters of 2004 were $94.3 million, an increase of $15.1 million, or 19.0%,
compared to $79.2 million in the three quarters of 2003. The following table presents our
operating earnings by segment for the three quarters of 2004 and 2003:

|                         | 2004                  | Percent of
Total
Operating
Earnings | 2003 | Percent of
Total
Operating
Earnings
|------------------------ | --------------------- | ----------------------------------- | ---- | -----------------------------------
|                         | (dollars in millions)
|                         |                       |                                     |      |                                    
|Publishing               |                       |                                     | $    | 32.7                               
|Broadcasting             |                       |                                     |      | 29.4                               
|Telecommunications       |                       |                                     |      | 26.5                               
|Printing services        |                       |                                     |      | (0.4                               
|Other                    |                       |                                     |      | 6.1                                
|                         |                       |                                     |      |                                    
|Total operating earnings |                       |                                     | $    | 94.3                               
|                         |                       |                                     |      |                                    

The increase in total operating
earnings was primarily due to the operating revenue increase at our daily newspaper,
productivity benefits from the daily newspapers new production facility, operating
revenue increases at our television stations and radio stations, and cost reduction
initiatives at our community newpapers and shoppers. These increases were partially offset
by a gain on the sale of property recorded in the three quarters of 2003, a decrease in
sales volume and production inefficiencies and a charge for some of the costs incurred for
a discontinued software system implementation project at our printing services business,
wholesale telecommunications service disconnections and contract repricings, and an
increase in bad debt expense, principally at our community newspapers and shoppers
business.

20

---

Our consolidated EBITDA in the three
quarters of 2004 was $128.5 million, an increase of $13.5 million, or 11.7%, compared to
$115.0 million in the three quarters of 2003. We define EBITDA as net earnings plus
provision for income taxes, total other income and expense (primarily interest expense),
depreciation and amortization. We believe the presentation of EBITDA is relevant and
useful because it helps improve our investors ability to understand our operating
performance and makes it easier to compare our results with other companies that have
different financing and capital structures or tax rates. Our management uses EBITDA, among
other things, to evaluate our operating performance, to value prospective acquisitions and
as a component of incentive compensation targets for certain management personnel. In
addition, our lenders use EBITDA as one of the measures of our ability to service our
debt. EBITDA is not a measure of performance calculated in accordance with accounting
principles generally accepted in the United States. EBITDA should not be considered in
isolation of, or as a substitute for, net earnings as an indicator of operating
performance or cash flows from operating activities as a measure of liquidity. EBITDA, as
we calculate it, may not be comparable to EBITDA measures reported by other companies. In
addition, EBITDA does not represent funds available for discretionary use.

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

|                               | 2004 |  | 2003                  |      
|------------------------------ | ---- |  | --------------------- | -----
|                               |      |  | (dollars in millions)
|Net earnings                   |      |  | $                     | 55.8 
|Provision for income taxes     |      |  |                       | 37.2 
|Total other income and expense |      |  |                       | 1.3  
|Depreciation                   |      |  |                       | 33.1 
|Amortization                   |      |  |                       | 1.1  
|                               |      |  |                       |      
|EBITDA                         |      |  | $                     | 128.5
|                               |      |  |                       |      

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

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

Operating revenue from publishing in
the three quarters of 2004 was $241.8 million, an increase of $9.2 million, or 3.9%,
compared to $232.6 million in the three quarters of 2003. Operating earnings from
publishing were $32.7 million, an increase of $10.9 million, or 49.5%, compared to $21.8
million in the three quarters of 2003.

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

|                   | 2004 |  | 2003                  |       |  |  
|------------------ | ---- |  | --------------------- | ----- |  | -
|
|                   |      |  | (dollars in millions)
|Operating revenue  |      |  | $                     | 168.0 |  | $
|                   |      |  |                       |       |  |  
|Operating earnings |      |  | $                     | 28.4  |  | $
|                   |      |  |                       |       |  |  
|                   |      |  |                       |       |  |  

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

|                          | 2004 |  | 2003                  |       |  |  
|------------------------- | ---- |  | --------------------- | ----- |  | -
|
|                          |      |  | (dollars in millions)
|Advertising revenue:      |      |  |                       |       |  |  
|Retail                    |      |  | $                     | 59.1  |  | $
|Classified                |      |  |                       | 48.8  |  |  
|General                   |      |  |                       | 8.5   |  |  
|Other                     |      |  |                       | 15.0  |  |  
|                          |      |  |                       |       |  |  
|Total advertising revenue |      |  |                       | 131.4 |  |  
|Circulation revenue       |      |  |                       | 32.3  |  |  
|Other revenue             |      |  |                       | 4.3   |  |  
|                          |      |  |                       |       |  |  
|Total operating revenue   |      |  | $                     | 168.0 |  | $
|                          |      |  |                       |       |  |  

21

---

Advertising revenue in the three quarters
of 2004 accounted for 75.0% of total publishing revenue compared to 74.8% in the three
quarters of 2003.

Retail advertising revenue in the
three quarters of 2004 was $100.6 million, an increase of $1.3 million, or 1.2%, compared
to $99.3 million in the three quarters of 2003. A $1.6 million increase in daily newspaper
retail advertising was partially offset by a $0.3 million decrease in community newspapers
and shoppers retail advertising. The $1.6 million increase at the daily newspaper was
primarily due to an increase in automotive advertising caused by certain advertisers
switching their ad placement from the classified section to the retail section of the
paper, taking advantage of the enhanced color capabilities of our new presses plus
increases in real estate, financial and furniture. Combined retail and classified
automotive advertising increased 2.7% in the three quarters of 2004 compared to the third
quarter of 2003. The $0.3 million decrease at our community newspapers and shoppers was
primarily due to a reduction in automotive and preprint insert advertising.

Classified advertising revenue in the
three quarters of 2004 was $55.7 million, an increase of $3.1 million, or 6.0%, compared
to $52.6 million in the three quarters of 2003. At our daily newspaper, increases in
employment advertising of $1.5 million, real estate advertising of $0.9 million,
general/other advertising of $0.9 million and an increase of $0.4 million at our community
newspapers and shoppers were partially offset by a decrease in automotive advertising of
$0.6 million. Employment advertising, which accounted for 37.0% of classified advertising
at the daily newspaper in the three quarters of 2004, increased 9.3% compared to the three
quarters of 2003. We believe the increase in employment advertising is due to an improving
economy. The decrease in automotive advertising is due to certain advertisers switching
their ad placement from the classified section to the retail section of the paper.

General advertising revenue in the
three quarters of 2004 was $8.5 million, an increase of $0.6 million, or 7.7%, compared to
$7.9 million in the three quarters of 2003. The increase was due to an increase in
preprints from national advertisers and an increase in airline/travel industry ROP
advertising.

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

|                               | 2004 |  | 2003 |           | Percent Change
|------------------------------ | ---- |  | ---- | --------- | --------------
|Advertising linage (inches):   |      |  |      |           |               
|Full run                       |      | 
|Retail                         |      |  |      | 525,055   |               
|Classified                     |      |  |      | 650,326   |               
|General                        |      |  |      | 40,141    |               
|                               |      |  |      |           |               
|Total full run                 |      |  |      | 1,215,522 |               
|Part run                       |      |  |      | 121,471   |               
|                               |      |  |      |           |               
|Total advertising linage       |      |  |      | 1,336,993 |               
|                               |      |  |      |           |               
|Preprint pieces (in thousands) |      |  |      | 566,643   |               
|                               |      |  |      |           |               

Total advertising linage in the three
quarters of 2004 increased 2.0% compared to the three quarters of 2003. The increase was
due to a 41.1% increase in part run advertising linage. Part run advertising linage
increased in the three quarters of 2004 due to an increase in zoned classified
advertising. Full run advertising linage in the three quarters of 2004 decreased 0.8%
compared to the three quarters of 2003 due to a 2.4% decrease in classified ROP
advertising linage partially offset by a 9.2% increase in general ROP advertising linage.
Retail ROP advertising linage in the three quarters of 2004 was essentially even compared
to the three quarters of 2003. The decrease in classified advertising linage is due to a
decrease in automotive advertising partially offset by an increase in employment
advertising. The increase in general advertising linage is consistent with the increases
in general ROP advertising revenue. Preprint advertising pieces decreased 6.9% due to
lower average net paid circulation, the in-house printing of a local advertisers
insert which was previously measured as a preprint piece and the elimination of Kmart
preprints in the daily newspaper due to the closing of several area stores.

The following table presents the full
pages of advertising and revenue per page of our community newspapers and shoppers and specialty products for the
three quarters of 2004 and 2003:

|                                | 2004 |  | 2003 |         | Percent Change
|------------------------------- | ---- |  | ---- | ------- | --------------
|Full pages of advertising:      |      |  |      |         |               
|Community newspapers            |      |  |      | 74,956  |               
|Shoppers and specialty products |      |  |      | 81,557  |               
|                                |      |  |      |         |               
|Total full pages of advertising |      |  |      | 156,513 |               
|                                |      |  |      |         |               
|Revenue per page                |      |  | $    | 283.53  |               
|                                |      |  |      |         |               
|                                |      |  |     

Total full pages of advertising for
our community newspapers and shoppers in the three quarters of 2004 decreased 6.7%
compared to the three quarters of 2003. The decrease was due to reformatting certain
papers to more efficiently use the amount of available space on each page and
discontinuing certain papers, partially offset by an increase in specialty products. Revenue per page increased 7.7% primarily due to the
decrease in total full pages of advertising while increasing or maintaining the same
advertising rates.

22

---

Other advertising revenue in the
three quarters of 2004, consisting of revenue from direct mail and event marketing
efforts, and Journal Interactive for our daily newspaper and company-sponsored event
advertising for our community newspapers and shoppers, was $16.5 million, an increase of
$2.3 million, or 15.2%, compared to $14.2 million in the three quarters of 2003. The
increase was due to a $1.2 million increase in Journal Interactive advertising and a $1.1
million increase in direct mail advertising at our daily newspaper. Other advertising
revenue at our community newspapers and shoppers in the three quarters of 2004 was
essentially even compared to the three quarters of 2003.

Circulation revenue in the three
quarters of 2004 accounted for 14.3% of total publishing revenue compared to 14.9% in the
three quarters of 2003. Circulation revenue in the three quarters of 2004 was $34.5
million, a decrease of $0.2 million, or 0.4%, compared to $34.7 million in the three
quarters of 2003. The decrease is primarily due to lower daily and Sunday avergage net
paid circulation caused in part to additional copies sold during the Harley Davidson
Reunion during the third quarter of 2003 and a lower average rate per copy for the Sunday
edition. Average net paid circulation for the Milwaukee Journal Sentinels
daily edition in the three quarters of 2004 decreased 2.6% compared to the three quarters
of 2003. Average net paid circulation for the Milwaukee Journal Sentinels
Sunday edition in the three quarters of 2004 decreased 0.6% compared to the three quarters
of 2003. Average paid circulation for our community newspapers and shoppers decreased 2.0%
in the three quarters of 2004 compared to the three quarters of 2003 primarily due to less
discounting and fewer promotions on home delivery.

Other revenue, which consists of
revenue from commercial printing opportunities at the printing plants for our community
newspapers and shoppers and promotional, distribution and commercial printing revenue at
our daily newspaper, accounted for 10.7% of total publishing revenue in the three quarters
of 2004 compared to 10.3% in the three quarters of 2003. Other revenue in the three
quarters of 2004 was $26.0 million, an increase of $2.1 million, or 8.9%, compared to
$23.9 million in the three quarters of 2003. The increase was due to a $1.4 million
increase in printing revenue at our community newspapers and shoppers primarily due to
sales volume increases and a $0.7 million increase in commercial printing and other
revenue at the daily newspaper.

Publishing operating earnings in the
three quarters of 2004 were $32.7 million, an increase of $10.9 million, or 49.5%,
compared to $21.8 million in the three quarters of 2003. The increase was primarily due to
$4.7 million in productivity benefits related to the daily newspapers new production
facility, $2.1 million in savings from cost reduction initiatives at our community
newspapers and shoppers and the increase in revenue at our daily newspaper and our
community newspapers and shoppers. These operating earnings increases were partially
offset by an increase in newsprint costs at our daily newspaper and community newspapers
and shoppers and increased bad debt expense at our community newspapers and shoppers.
Newsprint costs in the three quarters of 2004 were $31.5 million, an increase of $2.3
million, or 7.9%, compared to $29.2 million in the three quarters of 2003. The increase in
the cost of newsprint was primarily attributed to price increases totaling $3.0 million,
or a 10.9% average price increase per metric ton.

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

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

Operating revenue from broadcasting
in the three quarters of 2004 was $120.8 million, an increase of $12.4 million, or 11.5%,
compared to $108.4 million in the three quarters of 2003. Operating earnings from
broadcasting in the three quarters of 2004 were $29.4 million, an increase of $10.8
million, or 57.8%, compared to $18.6 million in the three quarters of 2003.

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

|                   | 2004 |  | 2003                  |      |  |  
|------------------ | ---- |  | --------------------- | ---- |  | -
|
|                   |      |  | (dollars in millions)
|Operating revenue  |      |  | $                     | 58.9 |  | $
|                   |      |  |                       |      |  |  
|Operating earnings |      |  | $                     | 14.0 |  | $
|                   |      |  |                       |      |  |  
|                   |      |  |                       |      |  |  

Operating revenue from our radio
stations in the three quarters of 2004 was $58.9 million, an increase of $2.8 million, or
5.0%, compared to $56.1 million in the three quarters of 2003. The increase was primarily
attributed to a $3.7 million increase in local advertising revenue and a $0.4 million
increase in political and issue advertising offset by a $1.1 million decrease in national
advertising and a $0.2 million decrease in other revenue.

Operating earnings from our radio
stations in the three quarters of 2004 were $14.0 million, an increase of $3.3 million, or
30.8%, compared to $10.7 million in the three quarters of 2003. The increase was primarily
attributed to the increase in revenue and reduced national sales commissions and sports
programming rights fees.

23

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In 2004, we agreed to a contract
extension with the Milwaukee Brewers through the 2008 Major League Baseball season.

Operating revenue from our television
stations in the three quarters of 2004 was $61.9 million, an increase of $9.6 million, or
18.4%, compared to $52.3 million in the three quarters of 2003. The increase was primarily
attributed to a $5.5 million increase in political and issue advertising, a $2.5 million
increase in Olympic advertising revenue, a $2.4 million increase in local advertising and
a $0.2 million increase in other revenue offset by a $1.0 million decrease in national
advertising.

Operating earnings from our
television stations in the three quarters of 2004 were $15.4 million, an increase of $7.5
million, or 94.9%, compared to $7.9 million in the three quarters of 2003. The increase
was primarily attributed to the increase in revenue partially offset by increases in news
and programming expenses.

On October 6, 2004, we acquired the
business and certain assets of NBC-affiliate WGBA-TV, in Green Bay, Wisconsin and certain
assets of UPN affiliate WACY-TV, which is licensed to serve Appleton, Wisconsin. We also
assumed an existing local marketing agreement between WGBA-TV and WACY-TV. The aggregate
purchase price for WGBA-TV was $43.3 million.

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

Operating revenue from
telecommunications in the three quarters of 2004 was $108.1 million, a decrease of $3.0
million, or 2.7%, compared to $111.1 million in the three quarters of 2003. Operating
earnings from telecommunications in the three quarters of 2004 were $26.5 million, a
decrease of $2.3 million, or 7.9%, compared to $28.8 million in the three quarters of
2003.

Wholesale telecommunication services
provide network transmission solutions for other service providers by offering bulk
transmission capacity. Operating revenue from wholesale services in the three quarters of
2004 was $61.9 million, a decrease of $7.1 million, or 10.3%, compared to $69.0 million in
the three quarters of 2003. The decrease was primarily due to customer service
disconnections and lower pricing on customer contract renewals. While we are not always
able to determine the specific reason a customer may disconnect service, we believe the
trend of customers focusing on reducing their network costs by consolidating traffic on
least cost routes will continue. Monthly recurring revenue from wholesale services at the
end of the three quarters of 2004 was $6.3 million compared to $6.9 million at the
beginning of 2004 and $7.2 million at the end of the three quarters of 2003. During the
three quarters of 2004, new circuit connections of $0.4 million in monthly recurring
revenue were more than offset by service disconnections and repricings.

MCI and Global Crossing together
accounted for 16.2% and 18.5% of our telecommunications revenue in the three quarters of
2004 and 2003, respectively. During the third quarter of 2004, we signed a three-year
master capacity agreement with Global Crossing to provide carrier services throughout the
Great Lakes Region. This agreement establishes reduced price levels from those that had
previously been in effect. Global Crossing is now in the process of determining which
circuit service orders to enter into under the new master capacity agreement, which will
determine the level of monthly recurring revenue we will receive. MCI filed for Chapter 11
bankruptcy protection in July 2002 and emerged in April 2004. We continue to provide
services to MCI and receive advance or timely payment for those services. We are in the
process of negotiating contract extensions with MCI for our current contracts and we
believe they will remain a significant customer. These new contracts will likely result in
a re-pricing of services and could result in providing them additional capacity. We have
continued to record monthly revenues from MCI that have remained at recent levels and are
not wholly reflective of the coming transition to contract renewal terms. We expect these
contract changes to result in a significant decrease in our telecommunications operating
earnings. The loss of the ongoing business from either of these two customers would have a
significant adverse effect on our results of operations.

Commercial telecommunication services
provide advanced data communications and long distance service to small and medium-sized
businesses in the Upper Midwest, principally in Wisconsin, Michigan, Indiana, Minnesota
and Illinois. Operating revenue from commercial services in the three quarters of 2004 was
$46.2 million, an increase of $4.1 million, or 9.7%, compared to $42.1 million in the
three quarters of 2003. The increase was primarily attributed to an increase in the
services utilized by our exisitng customers. Monthly recurring revenue from commercial
advanced data services at the end of the three quarters of 2004 was $3.5 million compared
to $3.3 million at the beginning of 2004 and $3.3 million at the end of the three quarters
of 2003. In the third quarter of 2003, regulators approved SBC Communications Inc.s
application to offer long distance service in Wisconsin, Indiana, Illinois and Michigan.
We believe this increased competition for commercial telecommunication services is
adversely impacting us through the loss of existing customers or by reducing the success
rate of securing new customers. We have been proactively working with our customers by
leveraging our customer service abilities and adding new bundled services as we extend
contracts at reduced prices.

The decrease in operating earnings
from telecommunications was primarily attributed to the decrease in wholesale revenue and
higher operating costs and expenses associated with the higher mix of commercial revenue.
Offsetting these earnings decreases were decreases in selling and promotional expenses, a
lease impairment charge in the three quarters of 2003 and lower payroll expenses.

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

24

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

Operating revenue from printing
services in the three quarters of 2004 was $57.2 million, a decrease of $7.0 million, or
10.9%, compared to $64.2 million in the three quarters of 2003. Operating loss from
printing services in the three quarters of 2004 was $0.4 million, a decrease of $2.9
million, compared to operating earnings of $2.5 million in the three quarters of 2003.

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

Dell Computer Corporation accounted
for 24.5% and 29.1% of our printing services revenue in the three quarters of 2004 and
2003, respectively. Dell has decided to eliminate supplying its customers with certain
items that we produce. We expect the transition period to be a few months in duration as
we wind down the process of supplying Dell with these products. We anticipate Dell
revenues will decline by approximately 32%, or $8.0 million, this year. This changing
relationship with Dell represents an important step in our long-term strategy to minimize
our reliance on a single customer in our printing services segment and to return to our
core printing business. This decrease in revenue from Dell is being accompanied by
significant cost reduction initiatives in order to mitigate the material adverse effect on
our results of operations.

The decrease in printing services
operating earnings was primarily attributed to the decrease in sales volume, production
inefficiencies on print work, a charge for some of the costs incurred for a discontinued
software system implementation project and a charge for workforce reductions. These
earnings decreases were partially offset by lower production costs due to the decrease in
sales volume and cost reduction initiatives.

| | Other
| | -----

Other operating revenue in the three
quarters of 2004 was $77.2 million, an increase of $5.1 million, or 7.1%, compared to
$72.1 million in the three quarters of 2003. Other operating earnings in the three
quarters of 2004 were $6.1 million, a decrease of $1.4 million, or 18.7%, compared to $7.5
million in the three quarters of 2003.

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

|                   | 2004 |  | 2003                  |      |  |  
|------------------ | ---- |  | --------------------- | ---- |  | -
|
|                   |      |  | (dollars in millions)
|Operating revenue  |      |  | $                     | 44.5 |  | $
|                   |      |  |                       |      |  |  
|Operating earnings |      |  | $                     | 2.9  |  | $
|                   |      |  |                       |      |  |  
|                   |      |  |                       |      |  |  

The increase in other operating
revenue in the third quarter of 2004 compared to the third quarter of 2003 was primarily
attributed to an increase in postage amounts and mailing services at our direct marketing
services business and an increase in gravure label sales, including sales to our largest
customer, SAB/Miller Brewing Company, at our label printing business partially offset by a
decrease in list and printing services at our direct marketing services business due to
the loss of a customer. Included in operating revenue and operating costs and expenses
from our direct marketing services business is $20.2 million and $16.5 million of postage
amounts billed to customers in the three quarters of 2004 and 2003, respectively.

The decrease in other operating
earnings was primarily attributed to recording a $3.2 million gain on the sale of property
in the third quarter of 2003, changes in business mix at our direct marketing business and
a charge for a bad debt expense in the third quarter of 2004.

SAB/Miller Brewing Company accounted
for 45.8% and 44.7% of our label printing business revenue in the three quarters of
2004 and 2003, respectively. We signed a three-year contract extension with SAB/Miller
Brewing Company which expires on December 31, 2008. We agreed to certain price reductions
as a result of this new contract and SAB/Miller Brewing Company has the right to re-bid
the work covered by the contract each year beginning in 2006, subject to similar quality
standards. The loss of this customer could have a material adverse effect on our results
of operations.

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

Interest income and dividends was
$0.2 million in the three quarters of 2004 and 2003. Interest expense in the three
quarters of 2004 was $1.6 million, a decrease of $0.2 million, or 13.0%, compared to $1.8
million in the three quarters of 2003. Gross interest expense from borrowings under our
credit agreement was $1.2 million in the three quarters of 2004 and $1.4 million in the
three quarters of 2003. Amortization of deferred financing costs was $0.4 million in the
three quarters of 2004. There was no amortization in the three quarters of 2003.

25

---

The effective tax rate was 40.0% in
the three quarters of 2004 and 40.4% in the three quarters of 2003.

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

Our basic and diluted earnings per
share in the three quarters of 2004 were $0.74 and $0.72, respectively, an increase of
$0.14 and $0.12, respectively, compared to basic and diluted earnings per share of $0.60
in the three quarters of 2003. Earnings per share amounts reflect our new capital
structure as of September 29, 2003 and our follow-on equity offering and tender offer
completed in June 2004.

# Follow-On Public Equity
Offering and Tender Offer

In June 2004, we completed a public
offering of 6,725,000 shares of our class A common stock at $18.25 per share, including
the underwriters over-allotments. The net proceeds from the offering of $115.9
million were used to repay outstanding indebtedness under our unsecured revolving credit
facility, to fund a portion of our subsequent tender offer, to fund the Green Bay
(Wisconsin) television acquisition and for general corporate purposes.

On June 15, 2004, we completed a
tender offer for our class B common stock at $18.55 per share, in which we purchased
8,005,203 shares, or $148.7 million worth of our class B common stock. We used additional
borrowings available under our $350 million debt facility and a portion of the net
proceeds of the follow-on equity offering to fund the tender offer.

# Liquidity and Capital
Resources

We have a $350 million unsecured
revolving credit facility expiring on September 4, 2008. The interest rate on borrowings
is either LIBOR plus a margin that ranges from 87.5 basis points to 150 basis points,
depending on our leverage, or the Base Rate, which equals the higher of the
prime rate set by U.S. Bank, N.A. or the Federal Funds Rate plus one percent per annum. As
of September 26, 2004, we had borrowings of $55.5 million under the facility at the
weighted average interest rate of 2.8%. Fees of $2.0 million in connection with the
facility are being amortized over the term of the facility using the straight-line method
which approximates the effective-interest method. The material covenants of this agreement
include the following:

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

| | A
fixed charge coverage ratio as determined for the four fiscal quarter period preceding
the date of determination.
|- | -------------------------------------------------------------------------------------------------------------------

| | A
consolidated tangible net worth as of the end of any quarter.
|- | ---------------------------------------------------------------

| | Consolidated
capital expenditures during any fiscal year.
|- | ---------------------------------------------------------

| | A
consolidated rent expense during any fiscal year.
|- | ---------------------------------------------------

As of September 26, 2004, we are in
compliance with all of our material covenants.

Cash balances were $7.0 million at
September 26, 2004. We believe our expected cash flows from operations and borrowings
available under our credit facility will adequately meet our needs for the foreseeable
future. Early in the fourth quarter of 2004, we acquired WGBA-TV, in Green Bay, Wisconsin
and also received proceeds from the sale of property. These two transactions have the net
effect of increasing long term notes payable to banks by approximately $38.7 million.

# Cash Flow

Cash provided by operating activities
was $96.0 million in the three quarters of 2004 compared to $98.5 million in the three
quarters of 2003. Increased net earnings was more than offset by changes in working
capital and non-cash items.

Cash used for investing activities
was $21.1million in the three quarters of 2004 compared to $31.7 million in the three
quarters of 2003. Capital expenditures for property and equipment were $20.5 million in
the three quarters of 2004 and $35.7 million in the three quarters of 2003. In the three
quarters of 2003, we were making the final payments for our daily newspapers new
production facility.

Cash used for financing activities
was $76.4 million in the three quarters of 2004 compared to $67.0 million in the three
quarters of 2003. Borrowings under our new credit facility during the three quarters of
2004 were $196.2 million and we made payments of $224.8 million. We decreased our
borrowing under our old credit agreement by $43.7 million in the three quarters of 2003.
In the three quarters of 2004, we received $116.5 million in proceeds from the issuance of
common stock, of which we received $115.9 million in net proceeds from the issuance of our
class A common stock and employees purchased $0.5 million worth of our class B-2 common
stock. We paid $148.7 million to purchase and redeem our class B common stock in the three
quarters of 2004. We paid cash dividends of $15.6 million and $23.3 million in the three
quarters of 2004 and 2003, respectively.

26

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# Critical Accounting
Policies

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

# ITEM 3.  QUANTITATIVE AND
QUALITATIVE DISCLOSURE OF MARKET RISK

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

# ITEM 4.  CONTROLS AND
PROCEDURES

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

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

# PART II. OTHER
INFORMATION

# ITEM 1.  LEGAL PROCEEDINGS

National Advertising
Representative Litigation.In September 2003, we hired a new national television
advertising representative due to our assessment of the performance of the prior
representative. On September 11, 2003, the prior representative, TeleRep, Inc. and
Harrington, Righter & Parsons, Inc. (which are affiliated entities), filed suits
against our subsidiary, Journal Broadcast Group, Inc., in the Supreme Court of the State
of New York, County of New York, demanding a lump sum payment under certain contractual
provisions in the aggregate amount of approximately $9.0 million. On May 12, 2004, the
parties reached an out-of-court settlement. We must pay the remaining amount of $7.4
million to the prior representative over a period of time. A receivable of $7.4 million is
due to us from the new national representative over the same period of time under our
contract with the new national representative. The liability to our prior national
representative is included in the consolidated condensed balance sheet in other current
liabilities and other long-term liabilities and the receivable from the new national
representative is included in the consolidated condensed balance sheet in receivables and
other assets, net of applicable reserves.

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

In connection with our second quarter follow-on
offering of class A common stock, we filed a registration statement on Form S-1 (Reg. No.
333-114974) with the Securities and Exchange Commission registering a total of 6,900,000
shares. The registration statement was declared effective under the Securities Act of 1933
on June 9, 2004. Pursuant to the registration statement, we sold 6,725,000 shares of our
class A common stock, including 725,000 shares subject to the underwriters
over-allotment option, at $18.25 per share. The net proceeds from our sale of of class A
shares in the offering were used to repay outstanding indebtedness under our unsecured
relvolving credit facility, to fund a portion of our subsequent tender offer, to fund the
Green Bay (Wisconsin) television acquisition and for general corporate purposes.

# ITEM 3.  DEFAULTS UPON
SENIOR SECURITIES

None.

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

None.

27

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# ITEM 5.  OTHER INFORMATION

Presented below is our unaudited
consolidated condensed statements of earnings covering the four quarters ended September
26, 2004, which covers the period September 29, 2003 to September 26, 2004.

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

|                                                                           | Four Quarters Ended
September 26, 2004
|-------------------------------------------------------------------------- | --------------------------------------
|Operating revenue:                                                         |                                       
|Publishing                                                                 |                                       
|Broadcasting                                                               |                                       
|Telecommunications                                                         |                                       
|Printing services                                                          |                                       
|Other                                                                      |                                       
|                                                                           |                                       
|Total operating revenue                                                    |                                       
|Operating costs and expenses:                                              |                                       
|Publishing                                                                 |                                       
|Broadcasting                                                               |                                       
|Telecommunications                                                         |                                       
|Printing services                                                          |                                       
|Other                                                                      |                                       
|                                                                           |                                       
|Total operating costs and expenses                                         |                                       
|Selling and administrative expenses                                        |                                       
|                                                                           |                                       
|Total operating costs and expenses and selling and administrative expenses |                                       
|                                                                           |                                       
|Operating earnings                                                         |                                       
|Other income and expense:                                                  |                                       
|Interest income and dividends                                              |                                       
|Interest expense, net                                                      |                                       
|                                                                           |                                       
|Total other income and expense                                             |                                       
|                                                                           |                                       
|Earnings before income taxes                                               |                                       
|Provision for income taxes                                                 |                                       
|                                                                           |                                       
|Net earnings                                                               |                                       
|                                                                           |                                       
|Net earnings available to class A and B common shareholders                |                                       
|                                                                           |                                       
|Earnings per share:                                                        |                                       
|Basic                                                                      |                                       
|                                                                           |                                       
|Diluted                                                                    |                                       
|                                                                           |                                       

28

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# ITEM 6.  EXHIBITS

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

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

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

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

29

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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:  November 5, 2004 | /s/ Steven J. Smith                                                   
|                        | Steven J. Smith, Chairman and Chief Executive Officer                 
|Date:  November 5, 2004 | /s/ Paul M. Bonaiuto                                                  
|                        | Paul M. Bonaiuto, Executive Vice President and Chief Financial Officer

30