# 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 24, 2006

or

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

| | For
the transition period from ______ to __________Commission File Number: 1-31805
| | ----------------------------------------------------------------------------------

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

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

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

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

# Yes [ X ]  No [   ]

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

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

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

# Yes [   ]  No [ X ]

Number of shares outstanding of each
of the issuers classes of common stock as of October 20, 2006 (excluding 8,676,705
shares of class B common stock, respectively, held by our subsidiary, The Journal
Company):

|Class                | Outstanding at October 20, 2006
|-------------------- | -------------------------------
|Class A Common Stock | 47,604,002                     
|Class B Common Stock | 19,484,972                     
|Class C Common Stock | 3,264,000                      

---

# JOURNAL
COMMUNICATIONS, INC.

# INDEX

|         |                       |                                                            
|-------- | --------------------- | -----------------------------------------------------------
|         |                       |                                                            
|Part I.  | Financial Information |                                                            
|         | Item 1.               | Financial Statements                                       
|         |                       | Consolidated Condensed Balance Sheets as of                
|         |                       | September 24, 2006 (Unaudited) and December 25, 2005       
|         |                       | Unaudited Consolidated Condensed Statements of Earnings    
|         |                       | for the Third Quarter and Three Quarters Ended             
|         |                       | September 24, 2006 and September 25, 2005                  
|         |                       | Unaudited Consolidated Condensed Statement of              
|         |                       | Shareholders Equity for the Three Quarters Ended          
|         |                       | September 24, 2006                                         
|         |                       | Unaudited Consolidated Condensed Statements of             
|         |                       | Cash Flows for the Three Quarters Ended September 24, 2006 
|         |                       | and September 25, 2005                                     
|         |                       | Notes to Unaudited Consolidated Condensed                  
|         |                       | Financial Statements as of September 24, 2006              
|         | Item 2.               | Managements Discussion and Analysis of Financial Condition
|         |                       | and Results of Operations                                  
|         | Item 3.               | Quantitative and Qualitative Disclosure of Market Risk     
|         | Item 4.               | Controls and Procedures                                    
|Part II. | Other Information    
|         | Item 1.               | Legal Proceedings                                          
|         | Item 1A.              | Risk Factors                                               
|         | Item 2.               | Unregistered Sales of Equity Securities and Use of Proceeds
|         | Item 3.               | Defaults Upon Senior Securities                            
|         | Item 4.               | Submission of Matters to a Vote of Security Holders        
|         | Item 5.               | Other Information                                          
|         | Item 6.               | Exhibits                                                   

1

---

# PART I. FINANCIAL
INFORMATION

# ITEM 1. FINANCIAL
STATEMENTS

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

|September 24, 2006                                                   | December 25, 2005
|-------------------------------------------------------------------- | -----------------
|(unaudited)                                                         
|Current assets:                                                      |                  
|Cash and cash equivalents                                            |                  
|Receivables, less allowance for doubtful accounts                    |                  
|of $4,417 and $4,581                                                 |                  
|Inventories                                                          |                  
|Prepaid expenses                                                     |                  
|Deferred income taxes                                                |                  
|                                                                     |                  
|TOTAL CURRENT ASSETS                                                 |                  
|Property and equipment, at cost, less accumulated depreciation       |                  
|of $372,001 and $345,838                                             |                  
|Goodwill                                                             |                  
|Broadcast licenses                                                   |                  
|Other intangible assets, net                                         |                  
|Prepaid pension costs                                                |                  
|Other assets, net                                                    |                  
|Non-current assets of discontinued operations                        |                  
|                                                                     |                  
|TOTAL ASSETS                                                         |                  
|                                                                     |                  
|LIABILITIES AND SHAREHOLDERS' EQUITY                                 |                  
|Current liabilities:                                                 |                  
|Accounts payable                                                     |                  
|Accrued compensation                                                 |                  
|Accrued employee benefits                                            |                  
|Deferred revenue                                                     |                  
|Other current liabilities                                            |                  
|Current liabilities of discontinued operations                       |                  
|Current portion of long-term liabilities                             |                  
|                                                                     |                  
|TOTAL CURRENT LIABILITIES                                            |                  
|Accrued employee benefits                                            |                  
|Long-term notes payable to banks                                     |                  
|Deferred income taxes                                                |                  
|Other long-term liabilities                                          |                  
|Shareholders' equity:                                                |                  
|Preferred stock, $0.01 par - authorized 10,000,000 shares; no shares |                  
|outstanding at September 24, 2006 and December 25, 2005              |                  
|Common stock, $0.01 par:                                             |                  
|Class C - authorized 10,000,000 shares; issued and outstanding:      |                  
|3,264,000 shares at September 24, 2006 and December 25, 2005         |                  
|Class B - authorized 120,000,000 shares; issued: 28,541,718 shares   |                  
|at September 24, 2006 and 35,439,487 shares at                       |                  
|December 25, 2005                                                    |                  
|Class A - authorized 170,000,000 shares; issued and outstanding:     |                  
|47,222,094 shares at September 24, 2006 and 42,188,974 shares        |                  
|at December 25, 2005                                                 |                  
|Additional paid-in capital                                           |                  
|Unearned compensation                                                |                  
|Retained earnings                                                    |                  
|Treasury stock, at cost (8,676,705 class B shares)                   |                  
|                                                                     |                  
|TOTAL SHAREHOLDERS' EQUITY                                           |                  
|                                                                     |                  
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           |                  
|                                                                     |                  

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

See accompanying notes
to unaudited consolidated condensed financial statements.

2

---

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

|                                               | Third Quarter Ended | Three Quarters Ended
|---------------------------------------------- | ------------------- | --------------------
|
|Continuing operations:                         |                     |                     
|Revenue:                                       |                     |                     
|Publishing                                     |                     |                     
|Broadcasting                                   |                     |                     
|Telecommunications                             |                     |                     
|Printing services                              |                     |                     
|Other                                          |                     |                     
|                                               |                     |                     
|Total revenue                                  |                     |                     
|Operating costs and expenses:                  |                     |                     
|Publishing                                     |                     |                     
|Broadcasting                                   |                     |                     
|Telecommunications                             |                     |                     
|Printing services                              |                     |                     
|Other                                          |                     |                     
|                                               |                     |                     
|Total operating costs and expenses             |                     |                     
|Selling and administrative expenses            |                     |                     
|                                               |                     |                     
|Total operating costs and expenses and selling |                     |                     
|and administrative expenses                    |                     |                     
|                                               |                     |                     
|Operating earnings                             |                     |                     
|Other income and expense:                      |                     |                     
|Interest income                                |                     |                     
|Interest expense                               |                     |                     
|                                               |                     |                     
|Total other income and expense                 |                     |                     
|                                               |                     |                     
|Earnings from continuing operations before     |                     |                     
|income taxes                                   |                     |                     
|Provision for income taxes                     |                     |                     
|                                               |                     |                     
|Earnings from continuing operations            |                     |                     
|Gain (loss) from discontinued operations, net  |                     |                     
|of tax (benefit) expense of ($673), $1,        |                     |                     
|($673) and $3,062, respectively                |                     |                     
|                                               |                     |                     
|Net earnings                                   |                     |                     
|                                               |                     |                     
|Earnings available to class A and B            |                     |                     
|common shareholders                            |                     |                     
|                                               |                     |                     
|Earnings per share:                            |                     |                     
|Basic:                                         |                     |                     
|Continuing operations                          |                     |                     
|Discontinued operations                        |                     |                     
|                                               |                     |                     
|Net earnings                                   |                     |                     
|                                               |                     |                     
|Diluted:                                       |                     |                     
|Continuing operations                          |                     |                     
|Discontinued operations                        |                     |                     
|                                               |                     |                     
|Net earnings                                   |                     |                     
|                                               |                     |                     

See accompanying notes
to unaudited consolidated condensed financial statements.

3

---

Journal Communications,
Inc. Unaudited Consolidated Condensed Statement of Shareholders' Equity         For the
Three Quarters Ended September 24, 2006        (dollars in thousands, except per-share
amounts)

|                                            | Preferred | Common Stock | Additional | Unearned | Retained | Treasury Stock, |    | Comprehensive
|------------------------------------------- | --------- | ------------ | ---------- | -------- | -------- | --------------- | -- | -------------
|
|Balance at December 25, 2005                |           |              | $          | --       |          | $               | 33 |              
|Net earnings and other comprehensive income |           |              |            |          |          |                 |    |              
|                                            |           |              |            |          |          |                 |    |              
|Dividends declared:                         |           |              |            |          |          |                 |    |              
|Class C ($0.142 per share)                  |           |              |            |          |          |                 |    |              
|Class B ($0.065 per share)                  |           |              |            |          |          |                 |    |              
|Class A ($0.065 per share)                  |           |              |            |          |          |                 |    |              
|Issuance of shares:                         |           |             
|Conversion of class B to class A            |           |              |            |          |          |                 |    |              
|Stock grants                                |           |              |            |          |          |                 |    |              
|Employee stock purchase plan                |           |              |            |          |          |                 |    |              
|Shares purchased and retired                |           |              |            |          |          |                 |    |              
|Adoption of SFAS 123 (R)                    |           |              |            |          |          |                 |    |              
|Stock -based compensation                   |           |              |            |          |          |                 |    |              
|                                            |           |              |            |          |          |                 |    |              
|Balance at March 26, 2006                   |           |              |            | --       |          |                 | 33 |              
|                                            |           |              |            |          |          |                 |    |              
|Net earnings and other comprehensive income |           |              |            |          |          |                 |    |              
|                                            |           |              |            |          |          |                 |    |              
|Dividends declared:                         |           |              |            |          |          |                 |    |              
|Class C ($0.142 per share)                  |           |              |            |          |          |                 |    |              
|Class B ($0.065 per share)                  |           |              |            |          |          |                 |    |              
|Class A ($0.065 per share)                  |           |              |            |          |          |                 |    |              
|Issuance of shares:                         |           |              |            |          |          |                 |    |              
|Conversion of class B to class A            |           |              |            |          |          |                 |    |              
|Stock grants                                |           |              |            |          |          |                 |    |              
|Shares purchased and retired                |           |              |            |          |          |                 |    |              
|Stock -based compensation                   |           |              |            |          |          |                 |    |              
|                                            |           |              |            |          |          |                 |    |              
|Balance at June 25, 2006                    |           |              |            | --       |          |                 | 33 |              
|                                            |           |              |            |          |          |                 |    |              
|Net earnings and other comprehensive income |           |              |            |          |          |                 |    |              
|                                            |           |              |            |          |          |                 |    |              
|Dividends declared:                         |           |              |            |          |          |                 |    |              
|Class C ($0.142 per share)                  |           |              |            |          |          |                 |    |              
|Class B ($0.065 per share)                  |           |              |            |          |          |                 |    |              
|Class A ($0.065 per share)                  |           |              |            |          |          |                 |    |              
|Issuance of shares:                         |           |              |            |          |          |                 |    |              
|Conversion of class B to class A            |           |              |            |          |          |                 |    |              
|Stock grants                                |           |              |            |          |          |                 |    |              
|Employee stock purchase plan                |           |              |            |          |          |                 |    |              
|Shares purchased and retired                |           |              |            |          |          |                 |    |              
|Stock -based compensation                   |           |              |            |          |          |                 |    |              
|                                            |           |              |            |          |          |                 |    |              
|Balance at September 24, 2006               |           |              | $          | --       |          | $               | 33 |              
|                                            |           |              |            |          |          |                 |    |              

See accompanying notes
to unaudited consolidated condensed financial statements.

4

---

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

|                                                    | Three Quarters Ended
|--------------------------------------------------- | --------------------
|
|Cash flow from operating activities:                |                     
|Net earnings                                        |                     
|Less gain (loss) from discontinued operations       |                     
|                                                    |                     
|Earnings from continuing operations                 |                     
|Adjustments for non-cash items:                     |                     
|Depreciation                                        |                     
|Amortization                                        |                     
|Provision for doubtful accounts                     |                     
|Deferred income taxes                               |                     
|Non-cash compensation                               |                     
|Net loss from disposal of assets                    |                     
|Net operating activities of discontinued operations |                     
|Net changes in operating assets and liabilities:    |                     
|Receivables                                         |                     
|Inventories                                         |                     
|Accounts payable                                    |                     
|Other assets and liabilities                        |                     
|                                                    |                     
|NET CASH PROVIDED BY OPERATING ACTIVITIES           |                     
|Cash flow from investing activities:                |                     
|Capital expenditures for property and equipment     |                     
|Deposits for acquisitions                           |                     
|Proceeds from sales of assets                       |                     
|Purchase price adjustment                           |                     
|Net investing activities of discontinued operations |                     
|                                                    |                     
|NET CASH USED FOR INVESTING ACTIVITIES              |                     
|Cash flow from financing activities:                |                     
|Proceeds from long-term notes payable to banks      |                     
|Payments on long-term notes payable to banks        |                     
|Proceeds from issuance of common stock              |                     
|Redemption of common stock, net                     |                     
|Cash dividends                                      |                     
|                                                    |                     
|NET CASH USED FOR FINANCING ACTIVITIES              |                     
|NET INCREASE IN CASH AND CASH EQUIVALENTS           |                     
|Cash and cash equivalents:                          |                     
|Beginning of year                                   |                     
|                                                    |                     
|At September 24, 2006 and September 25, 2005        |                     
|                                                    |                     

See accompanying notes
to unaudited consolidated condensed financial statements.

5

---

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

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

| | The
accompanying unaudited consolidated condensed financial statements have been prepared by
Journal Communications, Inc. and its wholly owned subsidiaries in accordance with U.S.
generally accepted accounting principles for interim financial information and pursuant
to the rules and regulations of the Securities and Exchange Commission and reflect normal
and recurring adjustments, which we believe to be necessary for a fair presentation. As
permitted by these regulations, these statements do not include all of the information
and footnotes required by U.S. generally accepted accounting principles for annual
financial statements. However, we believe that the disclosures are adequate to make the
information presented not misleading. The operating results for the third quarter and
three quarters ended September 24, 2006 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2006. You should read these
unaudited consolidated condensed financial statements in conjunction with the
consolidated financial statements and the notes thereto included in our Annual Report on
Form 10-K for the year ended December 25, 2005.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Our
fiscal year is a 52-53 week year ending on the last Sunday of December in each year. In
addition, we have four quarterly reporting periods, each consisting of 13 weeks and
ending on a Sunday, provided that once every six years, the fourth quarterly reporting
period will be 14 weeks. The 2006 fiscal year ends on December 31st and is a 53-week year
with a 14-week fourth quarter.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | In
September 2006, the FASB issued Statement No. 158, Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans  An Amendment of FASB
Statements No. 87, 88, 106, and 132(R), which requires an employer to: (a)  recognize
in its statement of financial position an asset for a plans overfunded status or a
liability for a plans underfunded status; (b) measure a plans assets
and its obligations that determine its funded status as of the end of the employers
fiscal year (with limited exceptions); and (c) recognize changes in the funded
status of a defined benefit postretirement plan in the year in which the changes occur.
Those changes will be reported in comprehensive income. In accordance with the new
standard, we will adopt Statement No. 158 in the fourth quarter of 2006. We are required
to measure plan assets and benefit obligations as of the date of our fiscal year-end
statement of financial position effective for our fiscal year ending December 30, 2008.
We do not believe the effect of adopting Statement No. 158 will have a material impact on
our consolidated financial statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2006, the FASB issued Statement No. 157, Fair Value Measurements, which
provides guidance for using fair value to measure assets and liabilities. Statement No.
157 applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value but does not expand the use of fair value in any new
circumstances. Under Statement No. 157, fair value refers to the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants in the market in which the reporting entity transacts. In
this standard, the FASB clarifies the principle that fair value should be based on the
assumptions market participants would use when pricing the asset or liability. In support
of this principle, Statement No. 157 establishes a fair value hierarchy that prioritizes
the information used to develop those assumptions. The fair value hierarchy gives the
highest priority to quoted prices in active markets and the lowest priority to
unobservable data, for example, the reporting entitys own data. Under the standard,
fair value measurements would be separately disclosed by level within the fair value
hierarchy. In accordance with the new rule, we will adopt Statement No. 157 in the first
quarter of 2008. We do not believe the effect of adopting Statement No. 157 will have a
material impact on our consolidated financial statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
July 2006, the FASB issued Interpretation (FIN) No. 48, Accounting for Uncertainty
in Income Taxes  An Interpretation of FASB Statement No. 109 (FIN 48). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an enterprises
financial statements in accordance with FASB Statement No. 109, Accounting for
Income Taxes. FIN 48 also prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods, disclosure and
transition. The provisions of FIN 48 are effective for fiscal years beginning after
December 15, 2006. We will adopt FIN 48 in the first quarter of 2007. We do not believe
the effect of adoption FIN 48 will have a material impact on our consolidated financial
statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

6

---

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

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

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

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

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

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

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

7

---

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

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

| | During
the third quarter and three quarters ended September 24, 2006, we recognized $238 and
$840, respectively, in stock-based compensation expense. Total income tax benefit
recognized related to stock-based compensation for the third quarter and three quarters
ended September 24, 2006 was $96 and $337, respectively. We recognize compensation
expense on a straight-line basis over the service period based upon the fair value of the
award on the grant date. There was no impact on cash flows from operating
or financing activities during the three quarters of 2006. As of September 24, 2006, total
unrecognized compensation cost related to stock-based compensation awards was
approximately $1,075, net of estimated forfeitures, which we expect to recognize over a
weighted average period of approximately 1.9 years. Stock-based compensation expense is
included in selling and administrative expenses in our consolidated condensed statement of
earnings. As a result of adopting Statement No. 123(R), our earnings before income taxes
and net earnings for the three quarters of 2006 are $47 and $28 lower, respectively, than
if we had continued to account for share-based compensation under APB No. 25. There was no
impact on basic or diluted earnings per share from adopting Statement No. 123(R).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | The
compensation committee of our board of directors may grant non-statutory stock options to
employees and directors at a purchase price equal to at least the fair market value of
our class B common stock on the grant date for an exercise term determined by the
committee, not to exceed ten years from the grant date. As of September 24, 2006, there
are 5,734,104 shares available for issuance in the form of non-statutory stock options
under the Plan.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
2004, certain of our employees were granted options to purchase class B common stock. The
fair value of these options of $5.94 per option was calculated using the Black-Scholes
option pricing model. These options become exercisable three years from the grant date
and will remain exercisable for a period of up to seven years. There were no options
granted in 2005 or in the three quarters of 2006.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
summary of non-statutory stock option activity during the three quarters of 2006 is:
| | --------------------------------------------------------------------------------------

|                                 
|---------------------------------
|Outstanding at December 26, 2005 
|Forfeited                        
|Expired                          
|                                 
|Outstanding at September 24, 2006
|                                 
|Exercisable at September 24, 2006
|                                 

| | The
aggregate intrinsic value of stock options outstanding and exercisable at the end of the
three quarters of 2006 is zero because the fair market value of our class B common stock
on September 24, 2006 was lower than the weighted average exercise price of the options.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the third quarter of 2006, 2,750 non-statutory stock options granted to employees of
Norlight Telecommunications, Inc. (Norlight), our telecommunications services business,
became exercisable as a result of the acceleration by the compensation committee of our
board of directors of the vesting period of these options in contemplation of the
proposed spin-off of Norlight.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Each
stock grant may be accompanied by restrictions, or may be made without any restrictions,
as the compensation committee of the board of directors determines. Such restrictions may
include requirements that the participant remain in our continuous employment for a
specified period of time, or that we or the participant meet designated performance
goals. We value restricted stock grants at the closing market price of our class A common
stock on the grant date. As of September 24, 2006, there are 2,798,354 shares available
for issuance in the form of stock grants under the Plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

---

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

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

| | A
summary of stock grant activity during the three quarters of 2006 is:
| | -----------------------------------------------------------------------

|                                   | 
|---------------------------------- | 
|Outstanding at December 26, 2005   | 
|Granted                            | 
|Vested                             | 
|Forfeited                          | 
|                                   | 
|Outstanding at September 24, 2006  | 
|                                   | 
|Fully vested at September 24, 2006 | 
|                                   | 

| | During
the three quarters of 2005, 86,313 vested and non-vested stock grants were issued to our
directors and employees at a weighted-average fair value of $15.98, of which 9,075 shares
have since been forfeited. There were 100 stock grants vested during the three quarters
of 2006. Our non-vested stock grants vest either three or five years from the grant date.
We expect our unvested stock grants to fully vest over the weighted average remaining
service period of 2.1 years.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Performance
unit grants
| | -----------------------

| | Each
performance unit grant will be accompanied by restrictions as may be determined in the
discretion of the committee. Such restrictions may include, without limitation,
requirements that the participant remain in our continuous employment for a specified
period of time or meet designated performance goals. There were 21,513 performance units
granted in 2005. There were no performance units granted in the three quarters of 2006.
The number of performance units granted is determined by multiplying the participants
base salary by his or her target percentage of salary, which target ranges by participant
from 100% to 50%, then dividing by the initial performance unit value of $100 per unit. A
Total Shareholder Return calculation is performed at the end of the performance period,
which will be December 31, 2006 for the current performance cycle, to determine the value
of each performance unit. Each participant will receive an amount payable that ranges
between $0 and $150 per performance unit payable 50% in cash and 50% in our class B
common stock. At September 24, 2006, there are 20,274 performance units outstanding.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
per share fair value of performance units granted on February 8, 2005 was $48.47, which
we determined using a Monte Carlo simulation and the following assumptions:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             |  | 
|-------------------------------------------- |  | 
|Average risk-free interest rate              |  | 
|Expected dividend yield                      |  | 
|Expected volatility (Journal Communications) |  | 
|Expected volatility (S&P 500 index)          |  | 

| | The
average risk-free interest rate is based on the two-year U.S. treasury bond rate in
effect as of the grant date. The expected dividend yield is based on the expected annual
dividend as a percentage of the market value of our class A common stock as of the grant
date. We determined the expected volatility based on historical volatility over two years
using daily stock price observation.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the second quarter of 2006, the cash liability portion of the performance unit grants of
$774 was reversed into income because payment of the award is no longer expected to
occur. In the third quarter of 2006, we recognized $53 in compensation expense for the
stock portion of the performance unit awards in accordance with Statement No. 123(R). As
of September 24, 2006, $368 is accrued for the stock portion of the performance unit
awards.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | The
2003 Employee Stock Purchase Plan permits eligible employees to purchase our class B
common stock at 90% of the fair market value measured as the closing market price of our
class A common stock on the day of purchase. We recognize compensation expense equal to
the 10% discount of the fair market value. Subject to certain adjustments, 3,000,000
shares of our class B common stock are authorized for sale under this plan. During the
three quarters of 2006 and 2005, 85,463 and 75,384 of our class B common shares,
respectively, were sold to employees under this plan at a weighted average fair value of
$11.28 and $15.67, respectively. As of September 24, 2006, there are 2,793,176 shares
available for sale under the plan.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

---

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

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

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

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

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

|6 | INVENTORIES
|- | -----------

| | Inventories
are stated at the lower of cost (first in, first out method) or market. Inventories at
September 24, 2006 and December 25, 2005 consisted of the following:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | September 24, 2006 | December 25, 2005
|------------------------- | ------------------ | -----------------
|Paper and supplies        |                    |                  
|Work in process           |                    |                  
|Finished goods            |                    |                  
|Less obsolescence reserve |                    |                  
|                          |                    |                  
|Inventories, net          |                    |                  
|                          |                    |                  

|7 | NOTES
PAYABLE TO BANKS
|- | ----------------------

| | We
have a $475 million unsecured revolving credit facility that expires on June 2, 2011. The
interest rate on borrowings is either LIBOR plus a margin that ranges from 37.5 basis
points to 87.5 basis points, depending on our leverage, or the base rate, which equals
the higher of the prime rate set by U.S. Bank, N.A. or the Federal Funds Rate plus 100
basis points. As of September 24, 2006, we had borrowings of $260,235 under the facility
at a weighted average rate of 5.97%. Fees in connection with the facility of $1,717 are
being amortized over the term of the facility using the straight-line method which
approximates the effective-interest method.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---

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

|8 | EMPLOYEE
BENEFIT PLANS
|- | ----------------------

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

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

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

| | The
curtailment gain is the result of a pension plan amendment adopted on April 27, 2006. The
amendment froze participation in the plan for new employees as of April 30, 2006. In
addition, employees eligible to participate in our pension plan have made a one-time
irrevocable election to either (i) continue participation in the pension plan or (ii)
cease the accrual of benefits under the pension plan as of December 31, 2006 and receive
an annual contribution of 3% of eligible wages into the Investment Savings Plan (ISP)
beginning in 2007. Future pension benefit accruals will be reduced for participants
electing to receive the contribution into their ISP account.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9 | GOODWILL
AND OTHER INTANGIBLE ASSETS
|- | ------------------------------------

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

| | Our
definite-lived intangible assets consist primarily of network affiliation agreements,
customer lists and non-compete agreements. We amortize the network affiliation agreements
over a period of 25 years based on our good relationships with the networks, our long
history of renewing these agreements and because 25 years is deemed to be the length of
time before a material modification of the underlying contract would occur. We amortize
the customer lists over periods of 5 to 40 years and the non-compete agreements over the
terms of the contracts.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Amortization
expense was $587 for the third quarter ended September 24, 2006 and $1,752 for the three
quarters ended September 24, 2006. Estimated amortization expense for our next five
fiscal years is $2,347 for 2006, $2,317 for 2007, $2,257 for 2008, $1,978 for 2009 and
$1,607 for 2010.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

---

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

|9 | 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 24, 2006 and December 25,
2005 is as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | Gross
Carrying
Amount | Accumulated
Amortization | Net
Carrying
Amount
|------------------------------ | --------------------- | ------------------------ | -------------------
|September 24, 2006             |                       |                          |                    
|Network affiliation agreements |                       |                          | $                  
|Customer lists                 |                       |                          |                    
|Non-compete agreements         |                       |                          |                    
|Other                          |                       |                          |                    
|                               |                       |                          |                    
|Total                          |                       |                          | $                  
|                               |                       |                          |                    
|December 25, 2005              |                       |                         
|Network affiliation agreements |                       |                          | $                  
|Customer lists                 |                       |                          |                    
|Non-compete agreements         |                       |                          |                    
|Other                          |                       |                          |                    
|                               |                       |                          |                    
|Total                          |                       |                          | $                  
|                               |                       |                          |                    

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

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

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

| | The
change in the carrying amount of goodwill in the three quarters ended September 24, 2006
is as follows:
| | -----------------------------------------------------------------------------------------------------------

|Goodwill at
December 25, 2005     | Adjustment to
Preliminary
Purchase Price
Allocation | Goodwill at
September 24, 2006
|--------------------------------- | --------------------------------------------------- | ------------------------------
|Daily newspaper                   |                                                     |                               
|Community newspapers and shoppers |                                                     |                               
|Broadcasting                      |                                                     |                               
|Telecommunications                |                                                     |                               
|Direct marketing services         |                                                     |                               
|                                  |                                                     |                               
|Total                             |                                                     |                               
|                                  |                                                     |                               

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

12

---

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

|10 | ACQUISITION
|-- | -----------

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

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

|                                                      | Third Quarter Ended | Three Quarters Ended
|----------------------------------------------------- | ------------------- | --------------------
|
|Revenue                                               |                     |                     
|Earnings from continuing operations                   |                     |                     
|Earnings per common share from continuing operations: |                     |                     
|Basic                                                 |                     |                     
|Diluted                                               |                     |                     

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

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

| | Due
to the length of time to complete the purchase price allocation for an acquisition of
this size and complexity, as of year end 2005, we recorded a preliminary purchase price
allocation based upon a preliminary valuation provided by an independent, professional
appraiser of all components of the acquisition. A final purchase price allocation was
recorded in the first quarter of 2006 based upon the detailed valuation of all components
of the acquisition completed by the same independent, professional appraiser. The final
purchase price allocation does not reflect the purchase of the broadcast license for
KMTV-TV in Omaha, the sale of which is subject to certain Federal Communications
Commission (FCC) regulations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

---

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

|11 | DISCONTINUED
OPERATIONS
|-- | -----------------------

| | On
January 25, 2005, we entered into a definitive asset sale agreement with Multi-Color
Corporation pursuant to which Multi-Color Corporation acquired substantially all of the
assets and certain liabilities of NorthStar Print Group, Inc. (NorthStar), our label
printing business. The purchase price, excluding certain real estate holdings that we
retained, was $26,144 in cash and resulted in a gain on discontinued operations before
income taxes of $8,382, of which $7,920 was recognized in the three quarters of 2005. The
revenue of NorthStar for the period December 27, 2004 through the date of sale totaled
$4,112.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the third quarter of 2006, we recorded a loss from discontinued operations, net of income
taxes, of $1,003 from a purchase price adjustment.
| | -----------------------------------------------------------------------------------------------------------------------------------------------

|12 | SEGMENT
INFORMATION
|-- | -------------------

| | We
conduct our operations through four reportable segments: publishing, broadcasting,
telecommunications and printing services. In addition, our direct marketing services
business and certain administrative activities are aggregated and reported as other. All
operations conduct their business in the United States. We publish a daily newspaper, the
Milwaukee JournalSentinel, and about 80 weekly shoppers and community
newspapers in eight states. Our broadcasting segment consists of 37 radio stations and
nine television stations in 12 states, as well as the operation of two additional
television stations under local marketing agreements. Our telecommunications segment
consists of wholesale and commercial (previously referred to as business-to-business or
enterprise) telecommunications services provided through a high speed fiber optic
telecommunications network that covers about 4,600 route miles in seven states, of which
we operate about 4,240 route miles. Our printing services segment includes the operations
of our printing and assembly and fulfillment business.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following tables summarize revenue, operating earnings, depreciation and amortization and
capital expenditures for the third quarter and three quarters ended September 24, 2006
and September 25, 2005 and identifiable total assets at September 24, 2006 and December
25, 2005:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

14

---

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

|12 | SEGMENT
INFORMATION continued
|-- | -----------------------------

|                     | Third Quarter Ended | Three Quarters Ended
|-------------------- | ------------------- | --------------------
|
|Capital expenditures |                     |                     
|Publishing           |                     |                     
|Broadcasting         |                     |                     
|Telecommunications   |                     |                     
|Printing services    |                     |                     
|Other                |                     |                     
|                     |                     |                     
|                     |                     |                     
|                     |                     |                     

|                                  | September 24, 2006 | December 25, 2005
|--------------------------------- | ------------------ | -----------------
|Audited                          
|Identifiable total assets         |                    |                  
|Publishing                        |                    |                  
|Broadcasting                      |                    |                  
|Telecommunications                |                    |                  
|Printing services                 |                    |                  
|Other and discontinued operations |                    |                  
|                                  |                    |                  
|                                  |                    |                  
|                                  |                    |                  

|13 | SUBSEQUENT
EVENTS
|-- | -----------------

| | On
September 25, 2006, Journal Broadcast Group, our broadcasting business, sold
KBBX-FM in Omaha, Nebraska for net proceeds of approximately $7,200. The divestiture of
KBBX-FM is part of Journal Broadcast Groups compliance with the FCCs
cross-ownership rules as a result of our December 2005 agreement to acquire KMTV-TV,
Omaha from Emmis Communications Corporation. Based upon a preliminary allocation of
broadcast reporting unit goodwill to KBBX-FM, the net book value of assets held for sale
is approximately $4,800 and the after-tax gain on the sale is estimated to be $1,400. The
final goodwill allocation and gain calculation will be completed in the fourth quarter of
2006.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15

---

# 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 24, 2006, including the notes thereto.

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

# Forward-Looking
Statements

We make certain statements in this
Quarterly Report on Form 10-Q (including the information that we incorporate by reference
herein) that are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. We intend these forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained in that
Act, and we are including this statement for purposes of those safe harbor provisions.
These forward-looking statements generally include all statements other than statements of
historical fact, including statements regarding our future financial position, business
strategy, budgets, projected revenues and expenses, expected regulatory actions and plans
and objectives of management for future operations. We often use words such as
may, will, intend, anticipate,
believe, or should and similar expressions in this Quarterly
Report on Form 10-Q to identify forward-looking statements. These forward-looking
statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control. These risks,
uncertainties and other factors could cause actual results to differ materially from those
expressed or implied by those forward-looking statements. Among such risks, uncertainties
and other factors that may impact us are the following:

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

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

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

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

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

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

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

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

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

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

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

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

| | the
proposed spin-off of the common stock of Norlight Telecommunications, Inc. to our
shareholders;
|- | ---------------------------------------------------------------------------------------------------

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

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

| | energy
costs;
|- | -------------

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

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

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

# Overview

Our business segments are based on
the organizational structure used by management for making operating and investment
decisions and for assessing performance. Our reportable business segments are: (i)
publishing; (ii) broadcasting; (iii) telecommunications; (iv) printing services; and (v)
other. Our publishing segment consists of a daily newspaper, the Milwaukee Journal
Sentinel, and about 80 community newspapers and shoppers in eight states. Our
broadcasting segment consists of 37 radio stations and nine television stations in 12
states, as well as the operation of two additional television stations under local
marketing agreements. Our telecommunications segment consists of wholesale and commercial
(previously referred to as business-to-business or enterprise) telecommunications services
provided through a high speed fiber optic telecommunications network that covers about
4,600 route miles in seven states. Our printing services segment reflects the operations
of our printing and kit assembly and fulfillment business. Our other segment consists of a
direct marketing services business and corporate expenses and eliminations.

16

---

In the third quarter of 2006, our
broadcasting business continued its strong performance, recording growth in revenue and
operating earnings. We experienced increases in political and issue advertising revenue at
our television stations as well as solid growth in national advertising revenue at our
radio stations. Our three new television operations acquired in December 2005 continued to
perform better than our expectations. Our daily newspaper had a disappointing third
quarter, negatively impacted by continued weakness in automotive advertising and a
decrease in retail advertising. Interactive revenue continues to increase, up 32.5% to
$2.5 million in the third quarter of 2006. Our daily newspaper remains focused on cost
containment, with total operating expenses essentially even and payroll expenses decreased
2.4% compared to the third quarter of 2005. Operating earnings increased at our community
newspapers and shoppers due to the $1.6 million hurricane-related costs recorded in the
third quarter of 2005 and overall expense reductions while revenue decreased due to the
2005 closure of our Louisiana printing facility in New Orleans in late 2005 and weakness
in automotive and real estate retail advertising. Our telecommunications business
continues to be impacted by the anticipated lower contract pricing in the wholesale
business and significant competitive pricing pressure in the commercial business, which
has resulted in decreased revenues and operating earnings. Additionally in the third
quarter of 2006, we recorded $0.7 million in spin-off related expenses and $0.6 million in
start-up costs for the IP Live initiative at our telecommunications business.
As expected, revenue decreased at our printing services business due to the decrease in
revenue from Dell Computer Corporation and our direct marketing services business due to
the loss of a large customer.

# Results of Operations

# Third Quarter Ended
September 24, 2006 compared to Third Quarter Ended September 25, 2005

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

Our consolidated revenue from continuing
operations in the third quarter of 2006 was $194.3 million, an increase of $6.9 million,
or 3.7%, compared to $187.4 million in the third quarter of 2005. Our consolidated
operating costs and expenses from continuing operations in the third quarter of 2006 were
$109.5 million, an increase of $0.9 million, or 0.9%, compared to $108.6 million in the
third quarter of 2005. Our consolidated selling and administrative expenses from
continuing operations in the third quarter of 2006 were $56.5 million, an increase of $1.9
million, or 3.5%, compared to $54.6 million in the third quarter of 2005.

The following table presents our
total revenue by segment, total operating costs and expenses, selling and administrative
expenses and total operating earnings as a percent of total revenue for the third quarter
of 2006 and 2005:

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

The increase in total revenue from
continuing operations was due to the contribution from the television operations we
acquired in December 2005 and an increase in political and issue and local advertising
revenue at our television and radio stations. Partially offsetting these revenue increases
was a decrease in wholesale revenue at our telecommunications business due to service
disconnections and repricings, a decrease in commercial services revenue at our
telecommunications business due to a reduction in long-distance services and aggressive
competition, a decrease in automotive advertising at our daily newspaper, a decrease in
other revenue at our community newspapers and shoppers due to the closure of our Louisiana
printing facility in New Orleans in late 2005, a decrease in commercial printing revenue,
a decrease in postage amounts billed to customers and in mail services revenue at our
direct marketing business due to the loss of a customer and a decrease in revenue from
Dell Computer Corporation at our printing services business.

17

---

Total operating costs and expenses
from continuing operations increased primarily due to the television operations we
acquired in December 2005 partially offset by decreases in total operating costs and
expenses due to the decreases in revenue at our direct marketing services business,
printing services business and telecommunications business and other revenue at our
community newspapers and shoppers.

Selling and administrative expenses
from continuing operations increased primarily due to the television operations acquired
in December 2005, an increase in sales expenses and incentive compensation expenses at our
television stations and spin-off related expenses and start-up costs for the IP
Live initiative at our telecommunications business. These expense increases were
partially offset by a decrease at our community newspapers and shoppers due to the
hurricane-related costs in the third quarter of 2005, a decrease in bad debt expense, and
a decrease in payroll and incentive compensation expenses at our daily newspaper.

Our consolidated operating earnings
from continuing operations in the third quarter of 2006 were $28.3 million, an increase of
$4.1 million, or 17.0%, compared to $24.2 million in the third quarter of 2005. The
following table presents our operating earnings by segment for the third quarter of 2006
and 2005:

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

The increase in total operating
earnings from continuing operations was primarily due to the contribution from the
television operations we acquired in December 2005, the increase in revenue at our
television stations on a same station basis, the hurricane-related costs in the third
quarter of 2005 at our community newspapers and shoppers and the increase in revenue at
our radio stations. Partially offsetting these operating earnings increases were the
decrease in wholesale and commercial revenue and spin-off related expenses and start-up
costs for the IP Live initiative at our telecommunications business, and
decreases in revenue at our daily newspaper and direct marketing services business.

Our consolidated EBITDA in the third
quarter of 2006 was $39.9 million, an increase of $4.9 million, or 14.0%, compared to
$35.0 million in the third quarter of 2005. We define EBITDA as net earnings excluding
gain/loss from discontinued operations, net, provision for income taxes, total other
expense (which is entirely comprised of interest income and expense), depreciation and
amortization. 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. EBITDA is not a measure of
performance calculated in accordance with accounting principles generally accepted in the
United States. EBITDA should not be considered in isolation of, or as a substitute for,
net earnings as an indicator of operating performance or cash flows from operating
activities as a measure of liquidity. EBITDA, as we calculate it, may not be comparable to
EBITDA measures reported by other companies.

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

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

The increase in EBITDA is consistent
with the increase in operating earnings at our broadcasting segment partially offset by
decreases in operating earnings in our telecommunications, publishing, other and printing
services segments for the reasons described above.

18

---

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

Revenue from publishing in the third
quarter of 2006 was $80.4 million, a decrease of $4.3 million, or 5.1%, compared to $84.7
million in the third quarter of 2005. Operating earnings from publishing were $9.7
million, a decrease of $0.7 million, or 6.6%, compared to $10.4 million in the third
quarter of 2005.

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

|                          |                                
|------------------------- | -------------------------------
|Daily
Newspaper           | Community
Newspapers
& Shoppers
|(dollars in millions)    
|Advertising revenue:      |                                
|Retail                    |                                
|Classified                |                                
|National                  |                                
|Direct Marketing          |                                
|Other                     |                                
|                          |                                
|Total advertising revenue |                                
|Circulation revenue       |                                
|Other revenue             |                                
|                          |                                
|Total revenue             |                                
|                          |                                
|Operating earnings        |                                
|                          |                                

Advertising revenue in the third
quarter of 2006 accounted for 72.6% of total publishing revenue compared to 73.6% in the
third quarter of 2005.

Retail advertising revenue in the
third quarter of 2006 was $34.8 million, a decrease of $1.5 million, or 4.1%, compared to
$36.3 million in the third quarter of 2005. The $0.7 million decrease at our daily
newspaper was primarily due to a decrease in ROP (run-of-press) and shared mail
advertising partially offset by increases in online and preprints advertising. The
decrease in retail ROP advertising is due to decreases in the health services, automotive,
insurance and financial services and department stores categories partially offset by
increases in the building/hardware/lawn and garden, entertainment, real estate and food
categories. The $0.8 million decrease at our community newspapers and shoppers was
primarily due to shoppers that were discontinued and replaced with a shared mail product
of our daily newspaper and decreases in automotive and real estate advertising.

Classified advertising revenue in the
third quarter of 2006 was $19.6 million, a decrease of $2.2 million, or 10.0%, compared to
$21.8 million in the third quarter of 2005. The $2.0 million decrease at our daily
newspaper was primarily due to decreases in automotive advertising of $1.4 million,
employment advertising of $0.2 million, real estate advertising of $0.2 million and other
advertising of $0.2 million. Employment advertising accounted for 42.7% of classified
advertising at the daily newspaper in the third quarter of 2006. The $0.2 million decrease
at our community newspapers and shoppers is primarily due to the decrease in automotive
advertising.

The decrease in automotive
advertising at our daily newspaper in the third quarter of 2006 was $1.8 million, or
31.4%, compared to the third quarter of 2005. This decrease is consistent with the
national trend.

Total retail and classified Journal
Interactive revenue at our daily newspaper was $2.5 million in the third quarter of 2006,
an increase of $0.6 million, or 32.5%, compared to $1.9 million in the third quarter of
2005. During the third quarter of 2006, our daily newspaper continued investing in online
products by purchasing the Milwaukeemoms.com website for $0.2 million.

National advertising revenue in the
third quarter of 2006 was $2.6 million, an increase of $0.3 million, or 13.8%, compared to
$2.3 million in the third quarter of 2005. A $0.5 million increase in ROP advertising in
the other, business services, movies and communications categories was partially offset by
a $0.2 million decrease in preprint advertising in the manufacturers, communications and
other categories.

19

---

The following table presents our
daily newspapers core newspaper advertising linage by category and core newspaper
and shared mail preprint pieces for the third quarter of 2006 and 2005:



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

Total  advertising  linage in the
third quarter of 2006  decreased  14.3% compared to the third quarter of 2005.  Full run
 advertising linage in the third quarter of 2006  decreased  11.5%  compared to the third
quarter of 2005 due to a decrease in classified and retail advertising linage partially
offset by an increase in national advertising  lineage.  The decrease in classified
 advertising linage is primarily due to a decrease in the automotive  category.  Retail
ROP advertising linage primarily  decreased in the automotive,  health services,
 department stores and insurance and financial services  categories.  National
 advertising linage primarily increased in the other,  business  services and movies
 categories.  Part run advertising  linage  decreased 38.7% in the third quarter of 2006
due to a decrease in automotive  zoned  classifieds.  Preprint  advertising  pieces
 decreased 3.2% in the third quarter of 2006 compared to the third quarter of 2005 due to
the decrease in preprint and shared mail advertising revenue.

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 2006 and 2005:

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

Total full pages of  advertising
 for our  community  newspapers  and shoppers  business in the third quarter of 2006
 decreased  11.4% compared to the third  quarter of 2005.  The decrease was primarily due
to a special  automotive  supplement  that was produced in 2005 and not continued in
2006,  reformatting  certain  papers to more  efficiently  use the amount of available
 space on each page and the decrease  in retail  advertising  revenue.  Revenue  per page
 increased  6.2%  primarily  due to the  decrease  in total full pages of advertising and
the increase in advertising rates.

Direct marketing  revenue,
 consisting of revenue from direct mail efforts for our daily newspaper was $1.3 million,
a decrease of $0.5 million,  or 29.2%,  compared  to $1.8  million in the third  quarter
of 2005.  The  decrease  was due to The  Bon-Ton  Stores,  Inc.'s consolidation of all
Boston Store mail programs and a decrease in postage revenue billed to our solo mail
customers.

Other advertising  revenue,
 consisting of revenue from  company-sponsored  event advertising at our community
newspapers and shoppers, was $0.1 million in the third quarter of 2006 and 2005.

Circulation  revenue in the third
 quarter of 2006  accounted  for 17.2% of total  publishing  revenue  compared  to 16.5%
in the third quarter of 2005.  Circulation  revenue of $13.8  million in the third
quarter of 2006  decreased  $0.2  million,  or 1.7%,  compared to $14.0  million in the
third  quarter of 2005  primarily  due to a lower daily average rate per copy and a
decrease in daily average net paid circulation  partially offset by an increase in the
Sunday average rate per copy at our daily newspaper.  Circulation  revenue was flat at
our community newspapers and shoppers.

Other revenue,  which consists of
revenue from  commercial  printing at the printing  plants for our community  newspapers
and shoppers and promotional,  commercial  delivery,  events and commercial  printing
 revenue at our daily newspaper,  accounted for 10.2% of total publishing  revenue in the
third quarter of 2006  compared to 9.9% in the third  quarter of 2005.  Other revenue of
$8.2 million in the third  quarter of 2006  decreased  $0.2  million,  or 2.9%,  compared
 to $8.4  million in the third  quarter of 2005.  A $1.0  million decrease at our
 community  newspapers  and shoppers due to the closure of our Louisiana  printing
 facility in late 2005 was partially offset by a $0.8 million increase in commercial
delivery, commercial printing and other revenue at the daily newspaper.

In the third  quarter  of 2006,  our
daily  newspaper  signed a  five-year  agreement  to print the  national  edition of USA
TODAY for distribution in the northern and western  suburbs of Chicago,  Illinois and the
eastern half of Wisconsin.  Printing  commenced in late October 2006. With this
agreement,  our daily newspaper has now essentially  reached its $5.0 million capacity
for commercial  printing at the new production facility.

20

---

In the third quarter of 2006, we
announced the closure of our Hartland,  Wisconsin  commercial printing plant. Our
community newspapers and shoppers'  Wisconsin-based  printing will be  consolidated  at
our printing  operations in Waupaca,  Wisconsin to enhance  capacity utilization  and
 streamline  printing  operations.  We  anticipate  fourth  quarter  2006  expenses
 related  to the  move,  including employee-related charges, to approximate $0.7 million,
and annualized savings to be between $0.6 million and $0.8 million.

Publishing  operating earnings in
the third quarter of 2006 were $9.7 million, a decrease of $0.7 million,  or 6.6%,
 compared to $10.4 million in the third quarter of 2005.  Operating earnings  decreased
$2.4 million at the daily newspaper  primarily due to the decrease in revenue while total
 operating costs and expenses in the third quarter of 2006 were  essentially  even
compared to the third quarter of 2005.  Operating  earnings  increased $1.7 million in
the third quarter of 2006 at our community  newspapers and shoppers  primarily due to
 hurricane-related  costs of $1.6 million in the third quarter of 2005 and a decrease in
bad debt expense.  Total  newsprint and paper  costs for our  publishing  businesses  in
the third  quarter of 2006 was $11.0  million,  a decrease of $0.4  million,  or 3.6%,
compared to $11.4 million in the third  quarter of 2005  primarily  due to a decrease in
 consumption  and the closure of our Louisiana printing  facility in New Orleans in late
2005.  Partially  offsetting  this savings was a 5.7% increase in average  newsprint
 pricing per metric ton at our daily  newspaper and community  newspapers  and shoppers.
 Consumption of metric tonnes of newsprint in the third quarter of 2006  decreased  15.3%
 compared to the third quarter of 2005 due to the switch to a lighter  basis-weight
 newsprint by the daily newspaper and the 2005 closure of our Louisiana printing facility.

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

Revenue from  broadcasting in the
third quarter of 2006 was $58.3 million,  an increase of $17.8 million,  or 43.8%,
 compared to $40.5 million in the third  quarter of 2005.  Operating  earnings  from
 broadcasting  in the third  quarter of 2006 were $15.1  million,  an increase of $7.9
million, or 108.4%, compared to $7.2 million in the third quarter of 2005.

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

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

Revenue from our radio stations in
the third quarter of 2006 was $23.0 million, an increase of $1.1 million, or 4.7%,
compared to $21.9 million in the third quarter of 2005. The increase was due to a $0.4
million increase in political and issue advertising revenue, a $0.4 million increase in
national advertising revenue, a $0.2 million increase in other revenue and a $0.1 million
increase in local advertising revenue.

Operating earnings from our radio
stations in the third quarter of 2006 were $7.4 million, an increase of $1.2 million, or
18.9%, compared to $6.2 million in the third quarter of 2005. The increase in operating
earnings was primarily due to the increase in revenue, and a decrease in technology,
promotional, news and benefit expenses partially offset by an increase in programming and
sales expenses.

Revenue from our television stations
in the third quarter of 2006 was $35.3 million, an increase of $16.7 million, or 90.0%,
compared to $18.6 million in the third quarter of 2005. The increase was primarily due to
a $12.6 million contribution from the television operations we acquired in December 2005
and, on a same station basis, a $2.8 million increase in political and issue advertising
and a $1.4 million increase in local advertising partially offset by a $0.1 million
decrease in national advertising revenue.

Operating earnings from our
television stations in the third quarter of 2006 were $7.7 million, an increase of $6.7
million, or 667.5%, compared to $1.0 million in the third quarter of 2005. The increase in
operating earnings was primarily due to a $3.7 million contribution from the television
operations we acquired in December 2005 and the increase in revenue on a same station
basis. An increase in sales, news, incentive compensation and technology expenses were
partially offset by a decrease in syndicated programming and promotional expenses.

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

Revenue from telecommunications in
the third quarter of 2006 was $31.0 million, a decrease of $2.8 million, or 8.3%, compared
to $33.8 million in the third quarter of 2005. Operating earnings from telecommunications
in the third quarter of 2006 were $2.4 million, a decrease of $2.5 million, or 50.4%,
compared to $4.9 million in the third quarter of 2005.

21

---

Wholesale telecommunication services
provide network transmission solutions for other service providers by offering bulk
transmission capacity. Revenue from wholesale services in the third quarter of 2006 was
$16.8 million, a decrease of $1.5 million, or 7.8%, compared to $18.3 million in the third
quarter of 2005. The decrease was primarily due to anticipated lower prices on customer
contract renewals. Monthly recurring revenue from wholesale services was $5.3 million at
the end and beginning of the third quarter of 2006 and $5.8 million at the end of the
third quarter of 2005. During the third quarter of 2006, new circuit connections of $0.3
million in monthly recurring revenue were offset entirely by service disconnections.

We have substantial business
relationships with a few large customers, including major long distance carriers. Our top
10 customers accounted for 40.5% and 37.0% of our telecommunications revenue in the third
quarter of 2006 and 2005, respectively.

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. Revenue from commercial services in the third quarter of 2006 was $14.2
million, a decrease of $1.3 million, or 8.8%, compared to $15.5 million in the third
quarter of 2005. The decrease was primarily due to aggressive competition in the market.
Monthly recurring revenue from commercial advanced data services was $3.2 million at the
end of the third quarter of 2006 compared to $3.3 million at the beginning of the third
quarter of 2006 and $3.4 million at the end of the third quarter of 2005. We expect to
begin recording revenue from our IP Live initiative in the fourth quarter of
2006.

The decrease in operating earnings
from telecommunications was primarily due to the decrease in wholesale and commercial
revenue, reduced margins due to competitive pricing in the commercial business,
approximately $0.7 million in spin-off related expenses and $0.6 million in start-up costs
related to the IP Live initiative, an integrated voice and data solution for
small and medium businesses. Partially offsetting these operating earnings decreases were
reductions in marketing and advertising expenses.

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

Revenue from printing services in the
third quarter of 2006 was $15.4 million, a decrease of $1.9 million, or 10.4%, compared to
$17.3 million in the third quarter of 2005. Operating earnings from printing services in
the third quarter of 2006 were $0.4 million, a decrease of $0.2 million, or 27.9%,
compared to $0.6 million in the third quarter of 2005.

The decrease in printing services
revenue was primarily due to a $2.4 million decrease in revenue from Dell Computer
Corporation partially offset by a $0.5 million increase in revenue from the printing of
publications and product manuals. Dell accounted for 6.6% and 20.0% of our printing
services revenue in the third quarter of 2006 and 2005, respectively. As previously
discussed, we have fully exited the Dell software business, which will continue to result
in revenue decreases in 2006 compared to 2005. We do not expect this reduction in revenue
to have an adverse impact on our results of operations.

The decrease in printing services
operating earnings was primarily due to start-up costs for a rebuilt binding line.

| | Other
| | -----

Other revenue in the third quarter of
2006 was $9.2 million, a decrease of $1.9 million, or 16.6%, compared to $11.1 million in
the third quarter of 2005. Other operating earnings in the third quarter of 2006 were $0.7
million, a decrease of $0.4 million, or 36.3%, compared to operating earnings of $1.1
million in the third quarter of 2005.

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

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

The decrease in other revenue in the
third quarter of 2006 compared to the third quarter of 2005 was primarily due to a
decrease in postage amounts billed to customers and a decrease in mailing services at our
direct marketing services business due to the loss of a large customer. Included in
revenue and operating costs and expenses at our direct marketing services business is $5.5
million and $7.0 million of postage amounts billed to customers in the third quarter of
2006 and 2005, respectively.

The decrease in other operating
earnings was primarily due to the revenue decrease at our direct marketing services
business and an increase in certain corporate expenses.

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

Interest income was insignificant in
the third quarter of 2006 and 2005. Interest expense was $4.0 million in the third quarter
of 2006 compared to $0.7 million in the third quarter of 2005. The increase is primarily
due to an increase in debt outstanding related to the television operations we acquired in
December 2005, share repurchase activity and higher short-term interest rates.
Amortization of deferred financing costs was $0.1 million in the third quarter of 2006 and
2005.

22

---

The effective tax rate for continuing
operations was 40.3% in the third quarter of 2006 and 40.4% in the third quarter of 2005.

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

Loss from discontinued operations,
net of income taxes, was $1.0 million in the third quarter of 2006 from a purchase price
adjustment related to the January 2005 sale of NorthStar Print Group, Inc. The gain from
discontinued operations was insignificant in the third quarter of 2005. Income tax benefit
applicable to discontinued operations was $0.7 million in the third quarter of 2006.

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

Our net earnings in the third quarter
of 2006 were $13.5 million, a decrease of $0.5 million, or 3.5% compared to $14.0 million
in the third quarter of 2005. The decrease was primarily due to an increase in interest
expense for the reasons described above and the loss from discontinued operations
partially offset by an increase in operating earnings.

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

Our basic and diluted earnings per
share from continuing operations were $0.21 and $0.20 respectively, for the third quarter
of 2006 compared to basic and diluted earnings per share from continuing operations of
$0.19 for the third quarter of 2005. Our loss from discontinued operations had a negative
impact of $0.02 and $0.01, respectively, on our basic and diluted earnings per share for
the third quarter of 2006.

# Three Quarters Ended
September 24, 2006 compared to Three Quarters Ended September 25, 2005

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

Our consolidated revenue from
continuing operations in the three quarters of 2006 was $580.7 million, an increase of
$11.6 million, or 2.0%, compared to $569.1 million in the three quarters of 2005. Our
consolidated operating costs and expenses from continuing operations in the three quarters
of 2006 was $328.4 million, an increase of $0.8 million, or 0.3%, compared to $327.6
million in the three quarters of 2005. Our consolidated selling and administrative
expenses from continuing operations in the three quarters of 2006 were $170.6 million, an
increase of $5.1 million, or 3.0%, compared to $165.5 million in the three quarters of
2005.

The following table presents our
total revenue by segment, total operating costs and expenses, selling and administrative
expenses and total operating earnings as a percent of total revenue for the three quarters
of 2006 and 2005:

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

The increase in total revenue from
continuing operations was due to the contribution from the television operations we
acquired in December 2005, an increase in political and issue advertising revenue, Olympic
advertising revenue at our NBC affiliates and local advertising revenue at our television
stations, an increase in political and issue advertising revenue and national advertising
revenue at our radio stations and an increase in interactive revenue at our daily
newspaper. These revenue increases were partially offset by a decrease in retail and
classified automotive advertising revenue and the reduction in revenue at our daily
newspaper for credits to be issued toward 2007 advertising in the Milwaukee Journal
Sentinel under a settlement agreement with a classified advertiser as well as a
voluntary offer made to preprint advertisers, a decrease in wholesale revenue at our
telecommunications business due to service disconnections and repricings, a decrease in
postage revenue at our direct marketing services business due to the loss of a customer, a
decrease in revenue from several computer-related customers in our printing services
business, decreases in other and retail advertising revenue at our community newspapers
and shoppers due to the reduction in business and closure of our Louisiana printing
facility in New Orleans in late 2005 and a decrease in commercial services revenue at our
telecommunications business due to a reduction in long-distance services and aggressive
competition.

23

---

The increase in total operating costs
and expenses from continuing operations was due to the television operations we acquired
in December 2005 and an increase in commercial printing and other paper costs at our daily
newspaper. These increases were partially offset by a decrease in total operating costs
and expenses at our printing services business due to the decrease in revenue, a decrease
in postage and freight expense at our direct marketing services business, a decrease in
production costs at our community newspapers and shoppers due to the 2005 closure of our
Louisiana printing facility in New Orleans, a decrease in operating costs and expenses in
commercial services at our telecommunications business due to the decrease in revenue, a
decrease in technology expenses at our radio stations and a decrease in syndicated
programming expenses at our television stations.

The increase in selling and
administrative expenses from continuing operations is primarily due to the television
operations we acquired in December 2005, legal and advertising credit-claim processing
costs for the Shorewest settlement at our daily newspaper, an increase in sales
commissions and incentive compensation expense at our television operations and spin-off
related expenses and start-up costs for the IP Live initiative at our
telecommunications business. These increases were partially offset by a pension plan
curtailment gain at our publishing and broadcasting businesses, a decrease in incentive
compensation expense and corporate welfare benefit expenses in our other segment,
hurricane-related costs in the third quarter of 2005 and insurance proceeds received from
a business interruption claim from the impact of the hurricane at our community newspapers
and shoppers business and a decrease in sales and promotional expenses at our radio
stations.

Our consolidated operating earnings
from continuing operations in the three quarters of 2006 were $81.7 million, an increase
of $5.7 million, or 7.4%, compared to $76.0 million in the three quarters of 2005.

The following table presents our
operating earnings by segment for the three quarters of 2006 and 2005:

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

The increase in total operating
earnings from continuing operations was primarily due to the contribution from the
television operations we acquired in December 2005, the increase in revenue at our
television and radio stations, the hurricane-related costs recorded in the three quarters
of 2005, insurance proceeds received from a business interruption claim from the impact of
Hurricane Katrina at our community newspapers and shoppers business, a pension plan
curtailment gain and a reversal of previously recognized performance-based incentive
compensation expense. Partially offsetting these operating earnings increases were the
decreases in operating earnings due to the impact of the decrease in revenue at our daily
newspaper, telecommunications business and direct marketing services business.

Our consolidated EBITDA in the three
quarters of 2006 was $116.8 million, an increase of $7.6 million, or 6.9%, compared to
$109.2 million in the three quarters of 2005. The following table presents a
reconciliation of our consolidated net earnings to consolidated EBITDA for the three
quarters of 2006 and 2005:

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

The increase in EBITDA is consistent
with increases in operating earnings in our broadcasting, other and printing services
segments partially offset by a decrease in operating earnings at our telecommunications
and publishing segments for the three quarters of 2006 for the reasons described above.

24

---

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

Revenue from publishing in the three
quarters of 2006 was $239.2 million, a decrease of $14.4 million, or 5.7%, compared to
$253.6 million in the three quarters of 2005. Operating earnings from publishing were
$25.8 million, a decrease of $6.4 million, or 19.8%, compared to $32.2 million in the
three quarters of 2005.

The following table presents our
publishing revenue by category and operating earnings for the three quarters of 2005 and
2006:

|                          |                                
|------------------------- | -------------------------------
|Daily
Newspaper           | Community
Newspapers
& Shoppers
|(dollars in millions)    
|Advertising revenue:      |                                
|Retail                    |                                
|Classified                |                                
|National                  |                                
|Direct Marketing          |                                
|Other                     |                                
|                          |                                
|Total advertising revenue |                                
|Circulation revenue       |                                
|Other revenue             |                                
|                          |                                
|Total revenue             |                                
|                          |                                
|Operating earnings        |                                
|                          |                                

Advertising revenue in the three
quarters of 2006 accounted for 72.0% of total publishing revenue compared to 72.8% in the
three quarters of 2005.

Retail advertising revenue in the
three quarters of 2006 was $101.3 million, a decrease of $7.6 million, or 7.0%, compared
to $108.9 million in the three quarters of 2005. The $5.8 million decrease at our daily
newspaper was primarily due to a $5.1 million reduction in revenue for credits to be
issued toward 2007 advertising in the Milwaukee Journal Sentinel under a settlement
agreement with a classified advertiser as well as a voluntary offer made to preprint
advertisers related to changes made in 2003 and 2004 reported net paid circulation
numbers. The additional decrease in retail ROP advertising is due to decreases in
automotive, health services, department store and communications categories partially
offset by increases in the building/hardware/lawn and garden, food and real estate
categories. The $1.8 million decrease at our community newspapers and shoppers was
primarily due to the decrease in automotive and retail advertising, shoppers that were
discontinued and replaced with a shared mail product of our daily newspaper and a
reduction in business at our Louisiana publications.

Classified advertising revenue in the
three quarters of 2006 was $58.3 million, a decrease of $3.9 million, or 6.3%, compared to
$62.2 million in the three quarters of 2005. The $4.3 million decrease at our daily
newspaper was primarily due to decreases in automotive advertising of $3.8 million,
employment advertising of $0.6 million and other advertising of $0.2 million partially
offset by a $0.3 million increase in real estate advertising. Employment advertising
accounted for 43.0% of classified advertising at the daily newspaper in the three quarters
of 2006. The $0.4 million increase at our community newspapers and shoppers is primarily
due to the cross-sell program established with the daily newspaper.

The decrease in automotive
advertising at our daily newspaper in the three quarters of 2006 was $5.4 million, or
31.7%, compared to the three quarters of 2005. This decrease is consistent with the
national trend.

Total retail and classified Journal
Interactive revenue at our daily newspaper was $6.9 million in the three quarters of 2006,
an increase of $1.6 million, or 30.1%, compared to $5.3 million in the three quarters of
2005. During the three quarters of 2006, our daily newspaper continued investing in online
products by launching eight new web sites and purchasing the Milwaukeemoms.com website for
$0.2 million.

National advertising revenue in the
three quarters of 2006 was $7.8 million, an decrease of $0.1 million, or 1.9%, compared to
$7.9 million for the three quarters of 2005. The decrease was primarily due to decreases
in the entertainment, transportation, and manufacturers categories partially offset by an
increase in the business services, movies and communications categories.

25

---

The following table presents our
daily newspapers core newspaper advertising linage by category and core newspaper
and shared mail pieces for the three quarters of 2006 and 2005:

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

Total  advertising  linage in the
three quarters of 2006 decreased  12.3% compared to the three quarters of 2005.  Full run
advertising linage in the three  quarters of 2006  decreased  10.1%  compared to the
three  quarters of 2005 due to a reduction in  classified  and retail  advertising
 linage partially offset by an increase in national  advertising  lineage.  The decrease
in classified  advertising linage is  primarily  due to a decrease  in the  automotive
 category.  Retail ROP  advertising  linage  decreased  due to the  revenue decreases
 described above.  National  advertising linage primarily  increased in the business
services category.  Part run advertising linage decreased 32.6% in the three quarters of
2006 due to a decrease in automotive zoned  classifieds.  Preprint  advertising  pieces
decreased 0.8% in the three quarters of 2006 compared to the three quarters of 2005.

The  following  table  presents  the
full pages of  advertising  and revenue per page of our  community  newspapers  and
 shoppers  and speicalty products for the three quarters of 2006 and 2005:

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

Total full pages of  advertising
 for our community  newspapers  and shoppers  business in the three  quarters of 2006
 decreased  6.0% compared to the three  quarters of 2005.  The decrease was due to the
reduction in  advertising  in our Louisiana  publications  due to the impact of Hurricane
Katrina,  a special automotive  supplement that was produced in 2005 and not continued in
2006 and reformatting certain papers to more  efficiently  use the amount of available
 space on each page.  Revenue per page increased 2.6% primarily due to the decrease in
total full pages of advertising and the increase in advertising rates.

Direct marketing  revenue,
 consisting of revenue from direct mail efforts for our daily newspaper was $4.1 million,
a decrease of $0.7 million,  or 14.1%,  compared to $4.8  million in the three  quarters
of 2005.  The  decrease  was due to The  Bon-Ton  Stores,  Inc.'s consolidation of all
Boston Store mail programs and a decrease in postage revenue billed to our solo mail
customers.

Other advertising  revenue,
 consisting of revenue from  company-sponsored  event advertising at our community
newspapers and shoppers, was $0.7 million in the three quarters of 2006 compared to $0.8
million in the three quarters of 2005.

Circulation  revenue in the three
 quarters of 2006  accounted  for 17.1% of total  publishing  revenue  compared to 16.6%
in the three quarters of 2005.  Circulation  revenue of $41.0 million in the three
 quarters of 2006 decreased  $1.0 million,  or 2.3%,  compared to $42.0  million in the
three  quarters  of 2005  primarily  due to  decreases  in daily and Sunday  average net
paid  circulation  and a decrease in the daily average rate per copy partially  offset by
an increase in the Sunday average rate per copy.  Circulation  revenue in the three
quarters of 2006 decreased $0.1 million at our community newspapers and shoppers.

Other revenue,  which consists of
revenue from  commercial  printing at the printing  plants for our community  newspapers
and shoppers and promotional,  commercial  delivery,  events and commercial  printing
 revenue at our daily newspaper,  accounted for 10.9% of total publishing  revenue in the
three  quarters of 2006 compared to 10.6% in the three  quarters of 2005.  Other revenue
of $26.0 million in the three  quarters of 2006 decreased  $1.0 million,  or 3.8%,
 compared to $27.0 million in the three quarters of 2005. A $3.5 million decrease at our
 community  newspapers  and shoppers due to the closure of our Louisiana  printing
 facility in late 2005 was partially offset by a $2.5 million increase in commercial
printing, commercial delivery and other revenue at the daily newspaper.

In September  2006, our daily
newspaper  signed a five-year  agreement to print the national  edition of USA TODAY for
 distribution in the northern and western  suburbs of Chicago,  Illinois and the eastern
half of  Wisconsin.  Printing  commenced in late October  2006. With this  agreement,
 our daily  newspaper has now essentially  reached its $5.0 million  capacity for
commercial  printing at the new production facility.

26

---

Also in September 2006, we announced
the closure of our Hartland,  Wisconsin  commercial  printing plant. Our community
 newspapers and shoppers'  Wisconsin-based  printing  will be  consolidated  at our
 printing  operations  in Waupaca,  Wisconsin  to enhance  capacity utilization  and
 streamline  printing  operations.  We  anticipate  fourth  quarter  2006  expenses
 related  to the  move,  including employee-related charges, to approximate $0.7 million,
and annualized savings to be between $0.6 million and $0.8 million.

Publishing  operating  earnings in
the three quarters of 2006 were $25.8  million,  a decrease of $6.4 million,  or 19.8%,
 compared to $32.2 million in the three quarters of 2005.  Operating  earnings  decreased
$10.5 million at the daily newspaper  primarily due to the operating  earnings  impact
from the  decrease in revenue and  increases  in direct  expenses,  commercial  printing
 costs,  legal and professional  fees and  recruitment and relocation  expenses.  These
expenses were partially  offset by decreases in benefit  expenses, including a $0.7
million pension plan curtailment  gain,  payroll expenses  reflecting a decrease in
full-time  employees and incentive compensation  expense.  Operating  earnings  increased
 $4.1  million in the three  quarters of 2006 at our  community  newspapers  and shoppers
 primarily due to $1.6 million of hurricane  related costs in the three quarters of 2005,
 $1.1 million in insurance  proceeds received from a business  interruption  claim from
the impact of Hurricane  Katrina,  a decrease in paper costs, a $0.4 million pension plan
 curtailment  gain and  reductions in bad debt and  depreciation  expenses.  Total
 newsprint  and paper costs for our  publishing businesses  in the third quarter of 2006
were $32.5  million,  a decrease of $0.8  million,  or 2.2%,  compared to $33.3 million
in the third quarter of 2005 primarily due to a decrease in consumption and the closure
of our Louisiana  printing  facility in New Orleans in late  2005.  Partially  offsetting
 this  savings  was an 11.3%  increase  in  average  newsprint  pricing  per metric ton
at our daily newspaper  and community  newspapers  and shoppers.  Consumption  of metric
tonnes of newsprint in the third quarter of 2006  decreased 16.0% compared to the third
quarter of 2005 due to the switch to a lighter  basis-weight  newsprint by the daily
newspaper and the 2005 closure of our Louisiana printing facility.

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

Revenue from  broadcasting  in the
three  quarters of 2006 was $168.4  million,  an increase of $47.8  million,  or 39.6%,
 compared to $120.6 million in the three quarters of 2005.  Operating  earnings from
 broadcasting in the three quarters of 2006 were $42.8 million, an increase of $21.3
million, or 98.8%, compared to $21.5 million in the three quarters of 2005.

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

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

Revenue from our radio stations in
the three quarters of 2006 was $62.7 million, an increase of $1.2 million, or 1.2%,
compared to $61.5 million in the three quarters of 2005. The increase was due to a $0.8
million increase in political and issue advertising revenue, a $0.4 million increase in
national advertising revenue and a $0.4 million increase in other revenue partially offset
by a $0.4 million decrease in local advertising revenue.

Operating earnings from our radio
stations in the three quarters of 2006 were $18.0 million, an increase of $2.6 million, or
16.6%, compared to $15.4 million in the three quarters of 2005. The increase in operating
earnings was primarily due to the increase in revenue and decreases in technology,
employee benefits, including a $0.2 million pension plan curtailment gain, promotional and
sales expenses.

Revenue from our television stations
in the three quarters of 2006 was $105.7 million, an increase of $46.6 million, or 78.9%,
compared to $59.1 million in the three quarters of 2005. The increase was primarily
attributed to a $39.5 million contribution from the television operations we acquired in
December 2005 and on a same station basis, a $3.3 million increase in political and issue
advertising revenue, a $3.3 million increase in Olympic advertising revenue and a $2.4
million increase in local advertising revenue partially offset by a $1.9 million decrease
in national advertising revenue and a $0.1 million decrease in other revenue.

Operating earnings from our
television stations in the three quarters of 2006 were $24.8 million, an increase of $18.7
million, or 306.6%, compared to $6.1 million in the three quarters of 2005. The increase
in operating earnings was primarily due to a $13.1 million contribution from the
television operations we acquired in December 2005 and the increase in revenue on a same
station basis. An increase in sales commissions, incentive compensation, news and
technology expenses was partially offset by a decrease in syndicated programming expenses,
a $0.3 million pension plan curtailment gain and a decrease in promotional expenses.

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

Revenue from telecommunications in
the three quarters of 2006 was $95.9 million, a decrease of $11.5 million, or 10.7%,
compared to $107.4 million in the three quarters of 2005. Operating earnings from
telecommunications in the three quarters of 2006 were $9.3 million, a decrease of $10.0
million, or 51.8%, compared to $19.3 million in the three quarters of 2005.

27

---

Wholesale telecommunication services
provide network transmission solutions for other service providers by offering bulk
transmission capacity. Revenue from wholesale services in the three quarters of 2006 was
$51.7 million, a decrease of $6.4 million, or 11.1%, compared to $58.1 million in the
three quarters of 2005. The decrease was primarily due to anticipated service
disconnections and lower prices on customer contract renewals. Monthly recurring revenue
from wholesale data services at the end of the three quarters of 2006 was $5.3 million
compared to $5.8 million at the beginning of 2006 and $5.8 million at the end of the three
quarters of 2005. During the three quarters of 2006, new circuit connections of $1.2
million in monthly recurring revenue were more than offset by service disconnections and
re-pricings.

We have substantial business
relationships with a few large customers, including major long distance carriers. Our top
10 customers accounted for 39.3% and 37.2% of our telecommunications revenue in the three
quarters of 2006 and 2005, respectively. As expected, the terms of the new Verizon
Business contract were fully implemented in mid-March 2006, further reducing monthly
recurring revenue as part of a new long-term agreement.

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. Revenue from commercial services in the three quarters of 2006 was $44.2
million, a decrease of $5.1 million, or 10.2%, compared to $49.3 million in 2005. The
decrease was primarily due to a reduction in long-distance revenue, a reduction in premise
based equipment sales, the loss of several significant customers and aggressive
competition in the market partially offset by new customer sales. Monthly recurring
revenue from commercial advanced data services at the end of the three quarters of 2006
was $3.2 million compared to $3.4 million at the beginning of 2006 and $3.4 million at the
end of the three quarters of 2005. We expect to begin recording revenue from our IP
Live initiative in the fourth quarter of 2006.

The decrease in operating earnings
from telecommunications was primarily due to the decrease in wholesale and commercial
revenue, reduced margins due to competitive pricing in the commercial services business,
approximately $1.7 million in spin-off related expenses and $0.8 million in start-up costs
related to the IP Live initiative, an integrated voice and data solution for
small and medium businesses. Partially offsetting these operating earnings decreases were
reductions in marketing, advertising and incentive compensation expenses.

On April 25, 2006, we announced a
plan to spin-off our telecommunications business, Norlight Telecommunications, Inc., as an
independent public company.

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

Revenue from printing services in the
three quarters of 2006 was $48.5 million, a decrease of $5.2 million, or 9.7%, compared to
$53.7 million in the three quarters of 2005. Operating earnings from printing services in
the three quarters of 2006 were $1.5 million, an increase of $0.1 million, or 5.8%,
compared to $1.4 million in the three quarters of 2005.

The decrease in printing services
revenue was primarily due to a $6.5 million decrease in revenue from our largest customer,
Dell Computer Corporation, and a $1.3 million decrease in revenue from other
computer-related customers. These decreases were partially offset by a $2.6 million
increase in revenue from the printing of publications and product manuals. Dell accounted
for 8.4% and 19.7% of our printing services revenue in the three quarters of 2006 and
2005, respectively. As previously discussed, we have fully exited the Dell software
business, which will continue to result in revenue decreases in 2006 compared to 2005. We
do not expect this reduction in revenue to have an adverse impact on our results of
operations.

The increase in printing services
operating earnings was primarily attributed to a decrease in payroll, benefits, and
depreciation expenses partially offset by reductions in sales volume to computer-related
customers and start-up costs for a rebuilt binding line.

| | Other
| | -----

Other revenue in the three quarters
of 2006 was $28.7 million, a decrease of $5.1 million, or 15.2%, compared to $33.8 million
in the three quarters of 2005. Other operating earnings in the three quarters of 2006 were
$2.3 million, an increase of $0.7 million, or 43.9%, compared to operating earnings of
$1.6 million in the three quarters of 2005.

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

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

28

---

The decrease in other revenue in the
three quarters of 2006 compared to the three quarters of 2005 was primarily attributed to
a decrease in postage amounts billed to customers at our direct marketing services
business due to the loss of a customer. Included in revenue and operating costs and
expenses from our direct marketing services business is $16.8 million and $21.7 million of
postage amounts billed to customers in the three quarters of 2006 and 2005, respectively.

The increase in other operating
earnings was primarily due to a reduction of performance-based incentive compensation
expense and corporate benefit expenses partially offset by the decrease in revenue and an
increase in bad debt, commission, temporary labor and benefit expenses at our direct
marketing services business.

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

Interest income was insignificant in
the three quarters of 2006 and $0.3 million in the three quarters of 2005. Interest
expense was $11.6 million in the three quarters of 2006 compared to $1.8 million in the
three quarters of 2005. The increase is primarily due to an increase in debt outstanding
related to the television operations we acquired in December 2005, share repurchase
activity and higher short-term interest rates. Amortization of deferred financing costs
was $0.3 million in the three quarters of 2006 and 2005.

The effective tax rate for continuing
operations was 40.1% in the three quarters of 2006 and 40.0% in the three quarters of
2005.

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

Loss from discontinued operations,
net of income taxes, was $1.0 million in the three quarters of 2006 from a purchase price
adjustment related to the January 2005 sale of NorthStar Print Group, Inc. Income tax
benefit was $0.7 million in the three quarters of 2006. Revenue from discontinued
operations in the three quarters of 2005 was $4.1 million. Gain from discontinued
operations, net of income taxes, was $4.9 million in the three quarters of 2005. Income
tax expense was $3.1 million in the three quarters of 2005. Net assets of discontinued
operations at September 24, 2006 were $0.3 million. Real estate holdings in Green Bay, WI,
classified as discontinued operations, are to be sold to Multi-Color Corporation upon the
achievement of certain environmental standards.

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

Our net earnings in the three
quarters of 2006 were $41.0 million, a decrease of $8.5 million, or 17.2%, compared to
$49.5 million in the three quarters of 2005. The decrease was primarily due to the
increase in interest expense for the reasons described above and the gain on discontinued
operations in 2005 partially offset by the increase in operating earnings.

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

Our basic and diluted earnings per
share from continuing operations were $0.60 and $0.58, respectively, for the three
quarters of 2006, compared to basic and diluted earnings per share from continuing
operations of $0.60 and $0.59, respectively, for the three quarters of 2005. Our loss from
discontinued operations had a negative impact of $0.01 on our basic and diluted earnings
per share in the three quarters of 2006 compared to a gain from discontinued operations
which had a favorable impact of $0.07 and $0.06, respectively, for the three quarters of
2005.

# Liquidity and Capital
Resources

We have a $475 million unsecured
revolving credit facility that expires on June 2, 2011. The interest rate on borrowings is
either LIBOR plus a margin that ranges from 37.5 basis points to 87.5 basis points,
depending on our leverage, or the base rate, which equals the higher of the prime rate set
by U.S. Bank, N.A. or the Federal Funds Rate plus 100 basis points. As of September 24,
2006, we had borrowings of $260.2 million under the facility at a weighted average rate of
5.97%. Fees in connection with the facility of $1.7 million are being amortized over the
term of the facility using the straight-line method which approximates the
effective-interest method. The material covenants of this agreement include the following:

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

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

As of September 24, 2006, we are in
compliance with all of our material covenants.

Cash balances were $7.2 million at
September 24, 2006. We believe our expected cash flows from operations and borrowings
available under our credit facility will adequately meet our needs for the foreseeable
future.

In late September 2006, Journal
Broadcast Group, our broadcasting business, sold KBBX-FM for $7.5 million. The divestiture
of KBBX-FM in Omaha, Nebraska is part of Journal Broadcast Groups compliance with
the Federal Communications Commissions cross-ownership rules as a result of our
December 2005 agreement to acquire KMTV-TV, Omaha from Emmis Communications Corporation.

29

---

In April 2006, our Board of Directors
authorized the repurchase of up to five million additional shares of our class A common
stock over the following 18 months. Under the program, share purchases may be made at our
discretion, from time to time, in the open market and/or in private transactions. Our
share purchases will depend on market conditions, share price, trading volume and other
factors. The action supplements the five million share repurchase authorization approved
in February 2005 and completed in June 2006. During the three quarters of 2006, we
repurchased 2.0 million of our class A shares under our February 2005 and April 2006
buy-back programs.

# Cash Flow

Cash provided by operating activities
was $80.6 million in the three quarters of 2006 compared to $81.2 million in the three
quarters of 2005. The decrease was primarily due to a decrease in earnings from continuing
operations due to decreases in revenue at our telecommunications, publishing and printing
services business, spin-off related expenses at our telecommunications business and the
increase in interest expense.

Cash used for investing activities
was $27.7 million in the three quarters of 2006 compared to $23.1 million in the three
quarters of 2005. Capital expenditures for property and equipment were $26.1 million in
the three quarters of 2006 compared to $24.8 million in the three quarters of 2005. Our
capital expenditures in our telecommunications business, which account for 46% of our
total capital expenditures, are primarily targeted towards network maintenance and
increased capacity and investments in our VoIP growth initiative (IP Live). We believe
these expenditures will optimize its results and position it well for its future. In our
broadcasting business, our capital expenditures are targeted towards technology upgrades,
including investments in digital radio and for our television stations acquired in 2005.
The cash used for investing activities in the three quarters of 2006 includes a $1.7
million purchase price adjustment for the sale of NorthStar Print Group in January 2005
and the three quarters of 2005 includes the $26.1 million proceeds received from the sale
of NorthStar Print Group.

Cash used for financing activities
was $52.6 million in the three quarters of 2006 compared to $56.3 million in the three
quarters of 2005. Borrowings under our credit facility during the three quarters of 2006
were $164.5 million and we made payments of $178.8 million compared to borrowings of
$172.4 million and payments of $179.1 million in the three quarters of 2005. Our operating
cash flow has allowed us to pay down our borrowings by $14.3 million from December 25,
2005. In the three quarters of 2006 and 2005, we received $1.1 million and $1.2 million,
respectively, in proceeds from the issuance of our class B common stock to our employees
under our Employee Stock Purchase Plan. In the three quarters of 2006 and 2005, we paid
$24.8 million and $35.5 million, respectively, to purchase our class A common stock. We
paid cash dividends of $14.6 million and $15.3 million in the three quarters of 2006 and
2005, respectively.

# New Accounting Standards

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

During the third quarter and three
quarters ended September 24, 2006, we recognized $0.2 million and $0.8 milion,
respectively, in stock-based compensation expense. Total income tax benefit recognized
related to stock-based compensation for the third quarter and three quarters ended
September 24, 2006 was $0.1 million and $0.3 million, respectively. We recognize
compensation expense on a straight-line basis over the service period based upon the fair
value of the award on the grant date. There was no impact on cash flows from operating or
financing activities during the three quarters of 2006. As of September 24, 2006, total
unrecognized compensation cost related to stock-based compensation awards was
approximately $1.1 million, net of estimated forfeitures, which we expect to recognize
over a weighted average period of approximately 1.9 years. Stock-based compensation
expense is included in selling and administrative expenses in our consolidated condensed
statement of earnings. As a result of adopting Statement No. 123(R), our earnings before
income taxes and net earnings for the three quarters of 2006 were not materially different
than if we had continued to account for share-based compensation under APB No. 25. There
was no impact on basic or diluted earnings per share from adopting Statement No. 123(R).

In July 2006, the Financial
Accounting Standards Board issued FASB Interpretation (FIN) No. 48, Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109 (FIN
48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprises financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 also prescribes a recognition threshold
and measurement attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim periods,
disclosure, and transition. The provisions of FIN 48 are effective for fiscal years
beginning after December 15, 2006. We will adopt FIN 48 in the first quarter of 2007. We
do not believe the effect of adopting FIN 48 will have a material impact on our
consolidated financial statements.

30

---

In September 2006, the FASB issued
Statement No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans  An Amendment of FASB Statements No. 87, 88, 106, and
132(R), which requires an employer to: (a)  recognize in its statement
of financial position an asset for a plans overfunded status or a liability for a
plans underfunded status; (b) measure a plans assets and its
obligations that determine its funded status as of the end of the employers fiscal
year (with limited exceptions); and (c) recognize changes in the funded status of a
defined benefit postretirement plan in the year in which the changes occur. Those changes
will be reported in comprehensive income. In accordance with the new standard, we will
adopt Statement No. 158 in the fourth quarter of 2006. We are required to measure plan
assets and benefit obligations as of the date of our fiscal year-end statement of
financial position effective for our fiscal year ending December 30, 2008. We do not
believe the effect of adopting Statement No. 158 will have a material impact on our
consolidated financial statements.

In September 2006, the FASB issued
Statement No. 157, Fair Value Measurements, which provides guidance for
using fair value to measure assets and liabilities. Statement No. 157 applies whenever
other standards require (or permit) assets or liabilities to be measured at fair value but
does not expand the use of fair value in any new circumstances. Under Statement No. 157,
fair value refers to the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants in the market in which
the reporting entity transacts. In this standard, the FASB clarifies the principle that
fair value should be based on the assumptions market participants would use when pricing
the asset or liability. In support of this principle, Statement No. 157 establishes a fair
value hierarchy that prioritizes the information used to develop those assumptions. The
fair value hierarchy gives the highest priority to quoted prices in active markets and the
lowest priority to unobservable data, for example, the reporting entitys own data.
Under the standard, fair value measurements would be separately disclosed by level within
the fair value hierarchy. In accordance with the new rule, we will adopt Statement No. 157
in the first quarter of 2008. We do not believe the effect of adopting Statement No. 157
will have a material impact on our consolidated financial statements.

# Critical Accounting
Policies

There are no material changes to the disclosures
regarding critical accounting policies made in our Annual Report on Form 10-K for the year
ended December 25, 2005.

# ITEM 3.    QUANTITATIVE AND
QUALITATIVE DISCLOSURE OF MARKET RISK

There are no material changes to the
disclosures regarding interest rate risk and foreign currency exchange risk made in our
Annual Report on Form 10-K for the year ended December 25, 2005.

# ITEM 4.    CONTROLS AND
PROCEDURES

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

On April 25, 2005, a lawsuit was
filed against Journal Sentinel, Inc., a subsidiary of Journal Communications, Inc., in
Milwaukee County Circuit Court.  The plaintiff, Shorewest Realtors, sought to bring a
class action lawsuit on behalf ofMilwaukee Journal Sentinel advertisers, alleging
that the newspaper improperly inflated its circulation numbers from 1996 on. Shorewest
sought disgorgement or restitution by Journal Sentinel of alleged improperly collected
charges (with interest), plus an unspecified amount of damages. Journal Sentinel, Inc.
filed a Motion to Dismiss the plaintiffs claims on July 20, 2005 and
Shorewests contract-base cause of action was subsequently dismissed by the court. On
May 30, 2006, the parties filed a proposed settlement agreement with the court. Although
Journal Sentinel and its counsel continue to believe the claims lack merit, and Shorewest
and its counsel continue to believe the claims have merit, by agreeing to a settlement,
the parties avoid the costs and risks of additional litigation on terms that are mutually
agreeable. The settlement is on behalf of a proposed class of advertisers similar to
Shorewest who placed ads in the Milwaukee Journal Sentinel between January 1, 1999
and December 31, 2005. The proposed settlement received approval from the court on
September 29, 2006. Members of the class will be eligible to receive a credit to be used
toward future advertising in the Milwaukee Journal Sentinel. In the second quarter
of 2006, Journal Sentinel recorded a $5.1 million reduction in revenue for credits to be
issued toward 2007 advertising in the Milwaukee Journal Sentinel under the
settlement as well as for a voluntary offer made by Journal Sentinel to preprint
advertisers related to changes made in 2003 and 2004 in Audit Bureau of Circulations
reported net paid circulation numbers. Journal Sentinel expects to record $2.2 million for
litigation related expenses, of which $1.9 million has been recorded. We expect to record
the remainder of the expenses in the fourth quarter of 2006.

31

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# ITEM 1A.    RISK FACTORS

There are no material changes to the
disclosures regarding risk factors made in our Annual Report on Form 10-K for the year
ended December 25, 2005. Additionally, Norlight, our telecommunications business filed a
Registration Statement on Form 10 (Registration Statement) with the Securities and
Exchange Commission on August 23, 2006. We refer you to the section entitled Risk
Factors in the Information Statement (which is preliminary and subject to
completion) that is included as Exhibit 99 to the Registration Statement for additional
risk factors relating to our telecommunications business.

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

The following table provides
information about our repurchases of our class A common stock in the third quarter ended
September 24, 2006:

# Issuer Purchases of
Equity Securities

|                               
|-------------------------------
|Period                         
|
|
|June 26 to July 23, 2006       
|July 24 to August 20, 2006     
|August 21 to September 24, 2006

|(1) | all shares
of class A common stock purchased by us were purchased pursuant to a repurchase program
publicly announced on April 25, 2006 and commenced on June 15, 2006, pursuant to which
our board of directors authorized the repurchase of up to 5,000,000 shares. These shares
will remain authorized but unissued. The repurchase program will expire in October 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# ITEM 3.    DEFAULTS UPON
SENIOR SECURITIES

None.

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

None.

# ITEM 5.    OTHER INFORMATION

None.

32

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# ITEM 6.    EXHIBITS

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

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

| | (3.1) | Amendments
to the Amended and Restated Articles of Incorporation of Journal
               Communications, Inc. (incorporated by reference to Exhibit 3.1 to the
               Companys Current Report on Form 8-K dated June 30, 2006).
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3.2) | Amended
and Restated Articles of Incorporation of Journal Communications, Inc.,                as
amended, through June 30, 2006 (incorporated by reference to the                Companys
Current Report on Form 8-K dated June 30, 2006).
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (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.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

33

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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 1, 2006 | /s/ Steven J. Smith                                                   
|                       | Steven J. Smith, Chairman and Chief Executive Officer                 
|Date: November 1, 2006 | /s/ Paul M. Bonaiuto                                                  
|                       | Paul M. Bonaiuto, Executive Vice President and Chief Financial Officer

34