# 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 30, 2007

or

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

| | For
the transition period from _________________    to  _________________________
| | ---------------------------------------------------------------------------------

| | Commission
File Number:       1-31805
| | -------------------------------------

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

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

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

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

# Yes [X] No [   ]

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, 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 31, 2007 (excluding 8,676,705
shares of class B common stock held by our subsidiary, The Journal Company):

|                     |                                
|-------------------- | -------------------------------
|Class                | Outstanding at October 31, 2007
|Class A Common Stock | 47,125,709                     
|Class B Common Stock | 11,760,790                     
|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 30, 2007 (Unaudited) and December 31, 2006                
|         |                       | Unaudited Consolidated Condensed Statements of Earnings             
|         |                       | for the Third Quarter and Three Quarters Ended                      
|         |                       | September 30, 2007 and September 24, 2006                           
|         |                       | Unaudited Consolidated Condensed Statement of                       
|         |                       | Shareholders Equity for the Three Quarters Ended September 30, 2007
|         |                       | Unaudited Consolidated Condensed Statements of                      
|         |                       | Cash Flows for the Three Quarters Ended September 30, 2007          
|         |                       | and September 24, 2006                                              
|         |                       | Notes to Unaudited Consolidated Condensed                           
|         |                       | Financial Statements as of September 30, 2007                       
|         | 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 30, 2007 | December 31, 2006
|-------------------------------------------------------------------- | ------------------ | -----------------
|(unaudited)                                                         
|ASSETS                                                               |                    |                  
|Current assets:                                                      |                    |                  
|Cash and cash equivalents                                            |                    |                  
|Receivables, less allowance for doubtful accounts                    |                    |                  
|of $4,007 and $3,885                                                 |                    |                  
|Inventories, net                                                     |                    |                  
|Prepaid expenses and other current assets                            |                    |                  
|Deferred income taxes                                                |                    |                  
|Assets of discontinued operations                                    |                    |                  
|                                                                     |                    |                  
|TOTAL CURRENT ASSETS                                                 |                    |                  
|Property and equipment, at cost, less accumulated depreciation       |                    |                  
|of $218,114 and $201,848                                             |                    |                  
|Goodwill                                                             |                    |                  
|Broadcast licenses                                                   |                    |                  
|Other intangible assets, net                                         |                    |                  
|Prepaid pension costs                                                |                    |                  
|Other assets                                                         |                    |                  
|Non-current assets of discontinued operations                        |                    |                  
|                                                                     |                    |                  
|TOTAL ASSETS                                                         |                    |                  
|                                                                     |                    |                  
|LIABILITIES AND SHAREHOLDERS EQUITY                                 |                    |                  
|Current liabilities:                                                 |                    |                  
|Accounts payable                                                     |                    |                  
|Accrued compensation                                                 |                    |                  
|Accrued employee benefits                                            |                    |                  
|Deferred revenue                                                     |                    |                  
|Accrued income taxes                                                 |                    |                  
|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 30, 2007 and December 31, 2006              |                    |                  
|Common stock, $0.01 par:                                             |                    |                  
|Class C - authorized 10,000,000 shares; issued and outstanding:      |                    |                  
|3,264,000 shares at September 30, 2007 and December 31, 2006         |                    |                  
|Class B - authorized 120,000,000 shares; issued and outstanding:     |                    |                  
|11,954,649 shares at September 30, 2007 and 18,231,716               |                    |                  
|shares at December 31, 2006                                          |                    |                  
|Class A - authorized 170,000,000 shares; issued and outstanding:     |                    |                  
|47,504,979 shares at September 30, 2007 and 48,140,935               |                    |                  
|shares at December 31, 2006                                          |                    |                  
|Additional paid-in capital                                           |                    |                  
|Accumulated other comprehensive loss                                 |                    |                  
|Retained earnings                                                    |                    |                  
|Treasury stock, at cost (8,676,705 class B shares)                   |                    |                  
|                                                                     |                    |                  
|TOTAL SHAREHOLDERS EQUITY                                           |                    |                  
|                                                                     |                    |                  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                           |                    |                  
|                                                                     |                    |                  

Note: The balance sheet at December
31, 2006 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                                   |                     |                     
|Printing services                              |                     |                     
|Other                                          |                     |                     
|                                               |                     |                     
|Total revenue                                  |                     |                     
|Operating costs and expenses:                  |                     |                     
|Publishing                                     |                     |                     
|Broadcasting                                   |                     |                     
|Printing services                              |                     |                     
|Other                                          |                     |                     
|                                               |                     |                     
|Total operating costs and expenses             |                     |                     
|Selling and administrative expenses            |                     |                     
|                                               |                     |                     
|Total operating costs and expenses and selling |                     |                     
|and administrative expenses                    |                     |                     
|                                               |                     |                     
|Operating earnings                             |                     |                     
|Other income and expense:                      |                     |                     
|Interest income                                |                     |                     
|Interest expense, net                          |                     |                     
|                                               |                     |                     
|Total other income and (expense)               |                     |                     
|                                               |                     |                     
|Earnings from continuing operations before     |                     |                     
|income taxes                                   |                     |                     
|Provision for income taxes                     |                     |                     
|                                               |                     |                     
|Earnings from continuing operations            |                     |                     
|Gain from discontinued operations, net         |                     |                     
|of tax expense of $739, $878,                  |                     |                     
|$43,209 and $4,926, 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 30, 2007
         (dollars in thousands, except per-share amounts)

|                                      | Preferred | Common Stock | Additional
Paid-in- | Accumulated
Other
Comprehensive | Retained | Treasury
Stock, |    | Comprehensive
|------------------------------------- | --------- | ------------ | ------------------- | ------------------------------- | -------- | --------------- | -- | -------------
|
|Balance at December 31, 2006          |           |              | $                   | --                              |          | $               | 33 |              
|Net earnings                          |           |              |                     |                                 |          |                 |    |              
|Change in pension and post-retirement |           |             
|(net of tax of $233)                  |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|Dividends declared:                   |           |             
|Class C ($0.142 per share)            |           |              |                     |                                 |          |                 |    |              
|Class B ($0.075 per share)            |           |              |                     |                                 |          |                 |    |              
|Class A ($0.075 per share)            |           |              |                     |                                 |          |                 |    |              
|Issuance of shares:                   |           |             
|Conversion of class B to class A      |           |              |                     |                                 |          |                 |    |              
|Stock grants                          |           |              |                     |                                 |          |                 |    |              
|Shares purchased and retired          |           |              |                     |                                 |          |                 |    |              
|Adoption of FIN 48                    |           |              |                     |                                 |          |                 |    |              
|Stock-based compensation              |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|Balance at April 1, 2007              |           |              |                     | --                              |          |                 | 33 |              
|                                      |           |              |                     |                                 |          |                 |    |              
|Net earnings                          |           |              |                     |                                 |          |                 |    |              
|Change in pension and post-retirement |           |             
|(net of tax of $211)                  |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|Dividends declared:                   |           |             
|Class C ($0.142 per share)            |           |              |                     |                                 |          |                 |    |              
|Class B ($0.075 per share)            |           |              |                     |                                 |          |                 |    |              
|Class A ($0.075 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 July 1, 2007               |           |              |                     | --                              |          |                 | 33 |              
|                                      |           |              |                     |                                 |          |                 |    |              
|Net earnings                          |           |              |                     |                                 |          |                 |    |              
|Change in pension and post-retirement |           |             
|(net of tax of $4,943)                |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|Dividends declared:                   |           |             
|Class C ($0.142 per share)            |           |              |                     |                                 |          |                 |    |              
|Class B ($0.075 per share)            |           |              |                     |                                 |          |                 |    |              
|Class A ($0.075 per share)            |           |              |                     |                                 |          |                 |    |              
|Issuance of shares:                   |           |             
|Conversion of class B to class A      |           |              |                     |                                 |          |                 |    |              
|Stock grants                          |           |              |                     |                                 |          |                 |    |              
|Shares purchased and retired          |           |              |                     |                                 |          |                 |    |              
|Stock-based compensation              |           |              |                     |                                 |          |                 |    |              
|                                      |           |              |                     |                                 |          |                 |    |              
|Balance at September 30, 2007         |           |              | $                   | --                              |          | $               | 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 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 (gain) from disposal of assets                           |                     
|Net changes in operating assets and liabilities, excluding effect |                     
|of sales of businesses:                                           |                     
|Receivables                                                       |                     
|Inventories                                                       |                     
|Accounts payable                                                  |                     
|Other assets and liabilities                                      |                     
|                                                                  |                     
|NET CASH PROVIDED BY OPERATING ACTIVITIES                         |                     
|Cash flow from investing activities:                              |                     
|Capital expenditures for property and equipment                   |                     
|Proceeds from sales of assets                                     |                     
|Proceeds from sales of businesses                                 |                     
|Acquisition of businesses                                         |                     
|                                                                  |                     
|NET CASH PROVIDED BY (USED FOR)                                   |                     
|INVESTING ACTIVITIES                                              |                     
|Cash flow from financing activities:                              |                     
|Proceeds from long-term notes payable to banks                    |                     
|Payments on long-term notes payable to banks                      |                     
|Proceeds from issuance of common stock                            |                     
|Redemption of common stock                                        |                     
|Cash dividends                                                    |                     
|                                                                  |                     
|NET CASH USED FOR FINANCING ACTIVTIES                             |                     
|Cash flow from discontinued operations:                           |                     
|Net operating activities                                          |                     
|Net investing activities                                          |                     
|                                                                  |                     
|NET CASH PROVIDED BY (USED FOR)                                   |                     
|DISCONTINUED OPERATIONS                                           |                     
|                                                                  |                     
|NET DECREASE IN CASH AND CASH EQUIVALENTS                         |                     
|Cash and cash equivalents:                                        |                     
|Beginning of year                                                 |                     
|                                                                  |                     
|At September 30, 2007 and September 24, 2006                      |                     
|                                                                  |                     

See accompanying notes
to unaudited consolidated condensed financial statements.

5

---

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

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

| | The
accompanying unaudited consolidated condensed financial statements have been prepared by
Journal Communications, Inc. and its wholly owned subsidiaries in accordance with U.S.
generally accepted accounting principles for interim financial information and pursuant
to the rules and regulations of the Securities and Exchange Commission 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 operations of Norlight Telecommunications,
Inc., our former telecommunications segment, and the regional publishing and printing
operations of our community newspapers and shoppers business in Ohio, Louisiana and New
England have been reflected as discontinued operations in our consolidated condensed
financial statements for all periods presented. The operating results for the third
quarter and three quarters ended September 30, 2007 are not necessarily indicative of the
results that may be expected for the fiscal year ending December 30, 2007. You should
read these unaudited consolidated condensed financial statements in conjunction with the
consolidated financial statements and the notes thereto included in our Annual Report on
Form 10-K for the year ended December 31, 2006.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 fourth quarter ended December 31, 2006 consisted of 14
weeks.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | On
February 15, 2007, the FASB issued Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities  Including an Amendment of FASB
Statement No. 115.This standard permits an entity to choose to measure many
financial instruments and certain other items at fair value that were not previously
allowed. Statement No. 159 is effective for fiscal years beginning after November 15,
2007. Early adoption is permitted as of the beginning of the previous fiscal year
provided that the entity makes that choice in the first 120 days of that fiscal year and
also elects to apply the provisions of FASB Statement No. 157, Fair Value
Measurements. We will adopt Statement No. 159 in the first quarter of 2008. We do
not believe the effect of adopting Statement No. 159 will have a material impact on our
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 assumption that the class C shares outstanding were converted
into class A and B shares, common shares are issued upon exercise of our non-statutory
stock options when the current exercise price is less than the market price of our common
shares, 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
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 common stock           |                     |                     
|                                             |                     |                     
|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
|- | ------------------------

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

| | Our
shareholders approved the 2007 Journal Communications, Inc. Omnibus Incentive Plan (2007
Plan) at the Annual Meeting of Shareholders held on May 3, 2007. The purpose of the 2007
Plan is to promote our success by linking personal interests of our employees, officers
and directors to those of our shareholders, and by providing participants with an
incentive for outstanding performance. The 2007 Plan is also intended to enhance our
ability to attract, motivate and retain the services of employees, officers, and
directors upon whose judgment, interest, and special effort the successful conduct of our
operation is largely dependent.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Subject
to adjustment as provided in the 2007 Plan, the aggregate number of shares of class A
common stock or class B common stock reserved and available for issuance pursuant to
awards granted under the 2007 Plan is 4,800,000 shares in the form of nonstatutory or
incentive stock options, stock appreciation rights (SARs), restricted stock, restricted
or deferred stock units, performance awards, dividend equivalents, other stock-based
awards and cash-based awards. The 2007 Plan replaces the 2003 Equity Incentive Plan (2003
Plan) and, as of May 3, 2007, all equity grants are made from the 2007 Plan. We will not
grant any additional awards under the 2003 Plan. As of September 30, 2007, there are
4,797,371 shares available for issuance under the 2007 Plan.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

---

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

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

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

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

| | During
the third quarter and three quarters ended September 30, 2007, we recognized $260 and
$1,490, respectively, in stock-based compensation expense, including $0 and $96,
respectively, recorded in gain from discontinued operations. Total income tax benefit
recognized related to stock-based compensation for the third quarter and three quarters
ended September 30, 2007 was $92 and $563, 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 associated with stock-based compensation during the three quarters of 2007. As
of September 30, 2007, total unrecognized compensation cost related to stock-based
compensation awards was $2,052, net of estimated forfeitures, which we expect to
recognize over a weighted average period of 2.2 years. Stock-based compensation expense
is reported in selling and administrative expenses and gain on discontinued operations in
our consolidated condensed statements of earnings.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

| | A
summary of stock option activity during the three quarters of 2007 is:
| | ------------------------------------------------------------------------

|                                 
|---------------------------------
|Outstanding at December 31, 2006 
|Expired                          
|                                 
|Outstanding at September 30, 2007
|                                 
|Exercisable at September 30, 2007
|                                 

| | The
aggregate intrinsic value of stock options outstanding and exercisable at the end of the
third quarter is zero because the fair market value of our class B common stock on
September 30, 2007 was lower than the weighted average exercise price of the options.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | On
February 16, 2007, the compensation committee of our board of directors granted a
combination of 453,000 fixed price and 155,000 escalating price SARs to certain of our
named executive officers. Each SAR has a term of 10 years from the date of grant and is
subject to annual pro-rata vesting over a three year period. It is our policy to
recognize compensation cost for awards with graded vesting on a straight-line basis over
the vesting period for the entire award.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

---

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

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

| | The
fixed price SARs have a fixed base value equal to the closing price of our class A common
stock on the date of grant. The escalating price SARs have an escalating base value that
starts with the closing price of our class A common stock on the date of grant and
increases by six percent per year for each year that the SARs remain outstanding,
starting on the first anniversary of the grant date.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fair
value for SARs granted in the three quarters of 2007 was calculated using the
Black-Scholes option pricing model, with the following weighted-average assumptions:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Dividend yield                                          | 2.60% 
|------------------------------------------------------- | ------
|Expected volatility                                     | 21.00%
|Risk-free rate of return                                | 4.44% 
|Expected life of SARs (in years)                        | 6     
|Weighted average fair value of fixed price SARs granted | $2.85 
|Weighted average fair value of escalating price SARs   
|granted                                                 | $1.36 

| | The
expected life was based on the midpoint between the vesting date and the end of the
contractual term.  The risk free rate of return was based on the United States
Treasury yield curve in effect on the date of grant for the respective life of the SAR.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
dividend yield was based on the most recent quarterly dividend payment divided by the
average trailing twelve-month daily stock price and annualizing the rate.  The
expected volatility was based on the historical volatility of our common stock and was
benchmarked to our peers historical volatility over the same time period.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
summary of SAR activity during the three quarters of 2007 is:
| | ---------------------------------------------------------------

|                                 
|---------------------------------
|Outstanding at December 31, 2006 
|Granted                          
|                                 
|Outstanding at September 30, 2007
|                                 
|Exercisable at September 30, 2007
|                                 

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

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

| | A
summary of stock grant activity during the three quarters of 2007 is:
| | -----------------------------------------------------------------------

|                                                 |         
|------------------------------------------------ | --------
|Outstanding and non-vested at December 31, 2006  | 126,605 
|Granted                                          | 100,894 
|Vested                                           | (63,914)
|Forfeited                                        | (10,220)
|                                                 |         
|Outstanding and non-vested at September 30, 2007 | 153,365 
|                                                 |         
|Fully vested at September 30, 2007               | 169,553 
|                                                 |         

9

---

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

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

| | Our
non-vested restricted stock grants vest either three or five years from the grant date.
We expect our non-vested restricted stock grants to fully vest over the weighted average
remaining service period of 1.5 years. The total fair value of shares vesting during the
three quarters of 2007 was $888. There were 108,083 vested unrestricted and non-vested restricted
stock grants issued to our directors and employees in the three quarters of 2006 at a
weighted average fair value of $12.41, of which 67,016 shares have since vested with a
total fair value of $805.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | The
2003 Employee Stock Purchase Plan permits eligible employees to purchase our class B
common stock at 90% of the fair market value measured as of the closing market price of
our class A common stock on the day of purchase. We recognize compensation expense equal
to the 10% discount of the fair market value. Subject to certain adjustments, 3,000,000
shares of our class B common stock are authorized for sale under this plan. There were
27,503 class B common shares sold to employees under this plan in the three quarters of
2007 at a weighted average fair value of $11.71. As of September 30, 2007, there are
2,734,127shares available for sale under the plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | We
file tax returns in the United States federal jurisdiction, as well as approximately 35
state and local jurisdictions. The statute of limitations for assessing additional taxes
is three years for federal purposes and typically between three and four years for state
and local purposes. Accordingly, our 2004 through 2006 tax returns are open for federal
purposes, and our 2003 through 2006 tax returns remain open for state tax purposes,
unless the statute of limitations has been previously extended. Currently, we are under
audit in Wisconsin, Michigan, and Kansas. During the three quarters of 2007, we deposited
$10.4 million with the Wisconsin Department of Revenue for an income and franchise tax
audit assessment for the years 1998 through 2002. We are currently disputing the
assessment. We believe our position will be upheld through the appeals process and any
overpayment of tax will be returned to us.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
January 1, 2007, we adopted the provisions of FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes  An interpretation of FASB Statement No. 109 (FIN
48). As a result of our adoption of FIN 48, we reduced our liability for
unrecognized tax benefits by $45 and increased the January 1, 2007 retained earnings
balance. As of the date of adoption and after the impact of reducing our liability, we
had total unrecognized tax benefits of $3,088, which, if recognized, would have an impact
on our effective tax rate. It is possible for $154 of unrecognized tax benefits to be
recognized within the next 12 months due to settlements with taxing authorities and the
expiration of the statute of limitations.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
recognize penalties and interest related to unrecognized tax benefits in our provision
for income taxes. We had approximately $1,929 accrued for interest and penalties at
January 1, 2007 and we recognized $127 in interest expense related to unrecognized tax
benefits in the three quarters of 2007. It is possible for approximately $57 of interest
expense to be recognized within the next 12 months due to settlements with taxing
authorities and the expiration of the statute of limitations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the third quarter of 2007, our liability for unrecognized tax benefits and related
interest decreased by $825 due to the lapse of a certain statute of limitations. This was
the primary reason our effective income tax rate decreased from 39.1% in the two quarters of 2007 to 37.8% in the three quarters of 2007 and had an $825 effect on our earnings
from continuing operations and a $0.01 effect on our basic and diluted earnings per
share.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Inventories
are stated at the lower of cost (first in, first out method) or market. Inventories at
September 30, 2007 and December 31, 2006 consisted of the following:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | September 30, 2007 | December 31, 2006
|------------------------- | ------------------ | -----------------
|Paper and supplies        |                    |                  
|Work in process           |                    |                  
|Finished goods            |                    |                  
|Less obsolescence reserve |                    |                  
|                          |                    |                  
|Inventories, net          |                    |                  
|                          |                    |                  

10

---

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

|8 | 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 30, 2007, we had borrowings of $149,120 under the facility
at a weighted average interest 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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9 | 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 credit                          |                 
|                                            |                 
|Net periodic benefit cost included in total |                 
|operating costs and expenses,               |                 
|selling and administrative expenses         |                 
|and discontinued operations                 |                 
|                                            |                 
|                                           
|
|
|
|Service cost                                |                 
|Interest cost                               |                 
|Amortization of:                            |                 
|Unrecognized prior service cost             |                 
|Unrecognized net transition obligation      |                 
|Unrecognized net loss                       |                 
|                                            |                 
|Net periodic benefit cost included in total |                 
|operating costs and expenses and            |                 
|selling and administrative expenses         |                 
|                                            |                 

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

| | In
the second quarter of 2007, a pension plan curtailment gain of $58 was recorded as a
result of the sale of Journal Community Publishing Groups Central Ohio Advertiser
Network (Ohio publishing and printing) to Gannett Co., Inc. on June 25, 2007. The
curtailment gain reflects a reduction in future pension benefit accruals for the pension
participants of the Ohio publishing and printing operations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

---

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

|9 | EMPLOYEE
BENEFIT PLANS continued
|- | --------------------------------

| | In
the third quarter of 2007, a pension plan curtailment gain of $184 was recorded as a
result of the sale of Journal Community Publishing Groups Louisiana publishing
operations to an affiliate of Target Media Partners on July 6, 2007 and the sale of
Journal Community Publishing Groups New England publishing and printing operations
to Hersam Acorn Community Publishing, LLC on August 2, 2007. The curtailment gain
reflects a reduction in future pension benefit accruals for the pension participants of
these operations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
net periodic pension benefit cost related to the three regional publishing and printing
operations of our community newspapers and shoppers business reported in discontinued
operations was $19 and $173 for the third quarter and three quarters of 2007,
respectively and $118 and $349 for the third quarter and three quarters of 2006,
respectively. Due to this pension plan change, the measurement of the net periodic
pension benefit cost from the sale of all three regional publishing and printing
operations of our community newspapers and shoppers business to the end of 2007 is based
upon a 6.35% discount rate.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
curtailment credit in the above table is the result of a pension plan amendment adopted
on April 27, 2006.
| | --------------------------------------------------------------------------------------------------------------

|10 | GOODWILL
AND OTHER INTANGIBLE ASSETS
|-- | ------------------------------------

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

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

| | Amortization
expense was $497 and $1,448 for the third quarter and three quarters ended September 30,
2007, respectively, and $482 and $1,437 for the third quarter and three quarters ended
September 24, 2006. Estimated amortization expense for our next five fiscal years is
$1,953 for 2007, $1,885 for 2008, $1,637 for 2009, $1,587 for 2010 and $1,229 for 2011.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
gross carrying amount, accumulated amortization and net carrying amount of the major
classes of definite-lived intangible assets as of September 30, 2007 and December 31,
2006 are as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | Gross
Carrying
Amount | Accumulated
Amortization | Net
Carrying
Amount
|------------------------------ | --------------------- | ------------------------ | -------------------
|As of September 30, 2007       |                       |                          |                    
|Network affiliation agreements |                       |                          | $                  
|Customer lists                 |                       |                          |                    
|Non-compete agreements         |                       |                          |                    
|Other                          |                       |                          |                    
|                               |                       |                          |                    
|Total                          |                       |                          | $                  
|                               |                       |                          |                    
|As of December 31, 2006        |                       |                         
|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. Adjustments of $27,258 and ($388) were made to the carrying value of the
broadcast licenses for the acquisition of the KMTV-TV FCC license and the divestiture of
the KOMJ-AM FCC license, respectively, which occurred contemporaneously on March 27,
2007. The net carrying amount of our broadcast licenses was $223,529 and $196,659 as of
September 30, 2007 and December 31, 2006, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

---

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

|10 | GOODWILL
AND OTHER INTANGIBLE ASSETS continued
|-- | ----------------------------------------------

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

| | The
change in the carrying amount of goodwill for the three quarters ended September 30, 2007
is as follows:
| | ------------------------------------------------------------------------------------------------------------

|Reporting unit                  | Goodwill at
December 31, 2006 | Adjustment | Goodwill at
September 30, 2007
|------------------------------- | ----------------------------- | ---------- | ------------------------------
|Daily newspaper                 |                               |            | $                             
|Community newspapers & shoppers |                               |            |                               
|Broadcasting                    |                               |            |                               
|Direct marketing services       |                               |            |                               
|                                |                               |            |                               
|Total                           |                               |            | $                             
|                                |                               |            |                               

| | The
changes to the carrying amount of goodwill in the three quarters ended September 30, 2007
represent the divestiture of KOMJ-AM, Omaha, Nebraska, to Cochise Broadcasting LLC on
March 27, 2007 and the acquisition of the Wisconsin Trails and Milwaukee Home & Fine
Living magazines on February 23, 2007.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | On
August 2, 2007, Hersam Acorn Community Publishing, LLC acquired Journal Community
Publishing Groups New England publishing and printing operations. Proceeds, net of
transaction expenses, were $15.4 million and resulted in a loss on discontinued
operations before income taxes of $0.2 million.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 6, 2007, an affiliate of Target Media Partners acquired Journal Community Publishing
Groups Louisiana publishing operation. Proceeds, net of transaction expenses, were
$4.4 million and resulted in a gain on discontinued operations before income taxes of
$1.6 million.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
June 25, 2007, Gannett Co., Inc. acquired Journal Community Publishing Groups
Central Ohio Advertiser Network and its commercial printing business. Proceeds, net of
transaction expenses, were $8.9 million and resulted in a gain on discontinued operations
before income taxes of $1.9 million.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
operations of these three regional publishing and printing operations of our community
newspapers and shoppers business have been reflected as discontinued operations in our
consolidated condensed financial statements for all periods presented.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table summarizes the three regional publishing and printing operationsresults
of operations which are included in discontinued operations in our consolidated condensed
statement of earnings for the third quarter and three quarters of 2007 and 2006:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    | Third Quarter Ended | Three Quarters Ended
|----------------------------------- | ------------------- | --------------------
|
|Revenue                             |                     |                     
|(Loss) earnings before income taxes |                     |                     

13

---

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

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

| | The
three regional publishing and printing operations current assets and current
liabilities reported as discontinued operations in our consolidated condensed balance
sheets at September 30, 2007 and December 31, 2006 consisted of the following:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             | September 30, 2007 | December 31, 2006
|---------------------------- | ------------------ | -----------------
|Receivables                  |                    |                  
|Inventories, net             |                    |                  
|Prepaid expenses             |                    |                  
|Property and equipment, net  |                    |                  
|Goodwill                     |                    |                  
|Other intangible assets, net |                    |                  
|Other assets                 |                    |                  
|                             |                    |                  
|Total current assets         |                    |                  
|                             |                    |                  
|Deferred revenue             |                    |                  
|Other liabilities            |                    |                  
|                             |                    |                  
|Total current liabilities    |                    |                  
|                             |                    |                  

| | The
long-term assets and long-term liabilities as of December 31, 2006 were classified as
current because the sales were expected to occur within one year.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | On
February 26, 2007, Q-Comm acquired 100% of the stock of Norlight, our former
telecommunications subsidiary, for $185 million in cash, subject to certain working
capital and long-term liability adjustments. Proceeds, net of transaction expenses, were
$175.9 million and resulted in a gain on discontinued operations before income taxes of
$101.8 million. The operations of Norlight have been reflected as discontinued operations
in our consolidated condensed financial statements for all periods presented.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table summarizes Norlights results of operations which are included in
the gain from discontinued operations in our consolidated condensed statement of earnings
for the third quarter and three quarters of 2007 and 2006:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    | Third Quarter Ended | Three Quarters Ended
|----------------------------------- | ------------------- | --------------------
|
|Revenue                             |                     |                     
|(Loss) earnings before income taxes |                     |                     

| | Norlights
current assets and current liabilities reported as discontinued operations in the
consolidated condensed balance sheets at September 30, 2007 and December 31, 2006
consisted of the following:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         | September 30, 2007 | December 31, 2006
|---------------------------------------- | ------------------ | -----------------
|Receivables                              |                    |                  
|Inventories, net                         |                    |                  
|Prepaid expenses                         |                    |                  
|Property and equipment, net              |                    |                  
|Goodwill                                 |                    |                  
|Other intangible assets, net             |                    |                  
|Other assets                             |                    |                  
|                                         |                    |                  
|Total current assets                     |                    |                  
|                                         |                    |                  
|Accounts payable                         |                    |                  
|Accrued compensation                     |                    |                  
|Current portion of long-term liabilities |                    |                  
|Accrued employee benefits                |                    |                  
|Other liabilities                        |                    |                  
|                                         |                    |                  
|Total current liabilities                |                    |                  
|                                         |                    |                  

14

---

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

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

| | Norlights
long-term assets and long-term liabilities as of December 31, 2006 were classified as
current because the sale was expected to occur within one year. Accordingly, Norlights
property and equipment and other intangible assets were classified as held-for-sale and
were not depreciated or amortized since November 13, 2006, the date the decision was made
to sell Norlight.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | 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. We retained certain real estate and liabilities for environmental
clean-up. In the third quarter of 2006, we recorded a loss from discontinued operations,
before income taxes, of $1.7 million from a purchase price adjustment.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | NorthStars
current and non-current assets and current liabilities reported as discontinued
operations in the consolidated condensed balance sheets at September 30, 2007 and
December 31, 2006 consisted of the following:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             | September 30, 2007 | December 31, 2006
|-------------------------------------------- | ------------------ | -----------------
|Receivables                                  |                    |                  
|                                             |                    |                  
|Total current assets                         |                    |                  
|                                             |                    |                  
|Property and equipment, net                  |                    |                  
|                                             |                    |                  
|Total non-current assets                     |                    |                  
|                                             |                    |                  
|Accounts payable (environmental liabilities) |                    |                  
|                                             |                    |                  
|Total current liabilities                    |                    |                  
|                                             |                    |                  

15

---

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

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

| | Our
business segments are based on the organizational structure used by management for making
operating and investment decisions and for assessing performance. Our reportable business
segments are: (i) publishing; (ii) broadcasting; (iii) printing services; and (iv) other.
Our publishing segment consists of the Milwaukee Journal Sentinel, which serves as
the only major daily newspaper for the Milwaukee metropolitan area, and 45 community
newspapers and shoppers in two states. Our broadcasting segment consists of 35 radio
stations and 10 television stations in 12 states and the operation of two television
stations under local marketing agreements. Our interactive media assets include more than
75 online enterprises that are associated with our publishing and broadcasting segments.
We also provide a wide range of commercial printing services, including printing of
publications, professional journals and documentation material, through our printing
services segment. Our other segment consists of a direct marketing services business and
corporate expenses and eliminations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following tables summarize revenue, operating earnings, depreciation and amortization and
capital expenditures from continuing operations for the third quarter and three quarters
ended September 30, 2007 and September 24, 2006 and identifiable total assets at
September 30, 2007 and December 31, 2006.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|                                                      | September 30, 2007 | December 31, 2006
|----------------------------------------------------- | ------------------ | -----------------
|
|Identifiable total assets                             |                    |                  
|Publishing                                            |                    |                  
|Broadcasting                                          |                    |                  
|Printing services                                     |                    |                  
|Other including corporate and discontinued operations |                    |                  
|                                                      |                    |                  
|                                                      |                    |                  
|                                                      |                    |                  

16

---

# 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 30, 2007, 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 and printing industries,
including general business issues, competitive issues and the introduction of new
technologies;
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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) printing services; and (iv) other. Our publishing
segment consists of the Milwaukee Journal Sentinel, which serves as the only major
daily newspaper for the Milwaukee metropolitan area, and 45 community newspapers and
shoppers in two states. Our broadcasting segment consists of 35 radio stations and 10
television stations in 12 states and the operation of two television stations under a
local marketing agreement. Our interactive media assets include more than 75 online
enterprises that are associated with our publishing and broadcasting segments. We also
provide a wide range of commercial printing services, including printing of publications,
professional journals and documentation material, through our printing services segment.
Our other segment consists of a direct marketing services business and corporate expenses
and eliminations.

17

---

Over the past two years, fundamentals
in the newspaper industry have deteriorated significantly. Continuing weakness in
automotive advertising (driven primarily by the domestic automobile industry), reductions
in retail and classified run-of-press advertising (due in part to department store
consolidation and weakened employment and real estate economics), circulation declines and
online competition have negatively impacted newspaper industry revenues. Additionally, the
recent housing market downturn has adversely impacted the newspaper industry, including
real estate classified advertising as well as the home improvement, furniture and
financial services advertising categories.

The weak advertising environment
persisted in our publishing and broadcasting businesses in the third quarter of 2007.
Publishing continued to face softness in employment and real estate classified
advertising as well as in retail advertising. Third quarter advertising revenue at our
daily newspaper was disappointing, with weakness in a number of categories including
small to mid-size retailers, furniture, entertainment and department stores. However,
total retail and classified automobile advertising in all products at our daily newspaper
increased 2.8% in the third quarter of 2007 compared to the third quarter of 2006.
Interactive revenue growth, up to $3.4 million at the daily newspaper, continues to be
strong with a 32.8% increase in the third quarter of 2007 compared to the third quarter
of 2006. In an effort to offset the advertising decreases, our daily newspapers
focus on expense control resulted in total operating expenses decreasing about 6%,
excluding an insurance settlement.  Recently, the daily newspaper announced an employee
separation program to better align the size of its business with the changing dynamics of
the newspaper industry. The daily newspaper expects to record a charge of $3.0 million to
$3.3 million in the fourth quarter of 2007.  At our community newspapers and shoppers
business, revenue decreased 15.4% in the third quarter of 2007 compared to the third
quarter of 2006. This reflects in large part the product changes that we have made at
Community Newspapers (our Milwaukee area publications group). In late September 2007, we
partnered with Monster Worldwide, Inc. (Monster®) and launched the co-branded
employment site, JobNoggin.com, which combines the promotional strength of our daily
newspaper, JSOnline.com and our Milwaukee television and radio properties with Monster®s
product and brand. In Omaha, where we own a television station and five radio stations,
we recently launched ONow.com, a free classified website.

Our television business was also
challenged in the third quarter of 2007, reflecting tougher comparisons due to an
off-cycle year in political and issue advertising, a decrease in national advertising and
a decrease in automotive advertising. Revenue from our radio stations decreased modestly
in the third quarter of 2007; however, on a same-station basis (excluding revenue
generated by KBBX-FM, which was sold in September 2006 and KOMJ-AM, which was sold earlier
in 2007), the revenue decrease was only 0.5% compared to the third quarter of 2006. On a
positive note, we experienced revenue and operating earnings growth at our Boise,
Knoxville, Springfield and Tulsa radio clusters.

Our printing services business
recorded a significant increase in revenue and operating earnings and achieved its best
quarterly performance since our initial public offering four years ago. We are benefiting
from new revenue opportunities in online, developmental programs and targeted products as
well as from production efficiencies. We are also continuing our focus on cost containment
initiatives that will have an ongoing impact on the operation of our businesses.

We completed the sales of our New
England- Ohio- and Louisiana-based community publishing and printing operations in the
second and third quarters of 2007. These divestitures will allow us to concentrate on
growing our community newspaper and shopper business in the markets in which we currently
operate. In aggregate, proceeds for the assets of the three clusters, net of transaction
expenses, were $28.7 million and the after-tax gain was $2.0 million.

Results presented in our financial
statements are for continuing operations only and exclude the performance of our former
telecommunications segment, which was sold in February 2007, and the regional publishing
and printing operations of our community newspapers and shoppers business in Ohio, New
England and Louisiana. These businesses are shown as discontinued operations and their
results are excluded from revenues, operating expenses and operating earnings but are
included in 2007 and 2006 net earnings and earnings per share. In the third quarter and
three quarters of 2007, net earnings from discontinued operations were $1.3 million and
$67.8 million, respectively, compared to $1.3 million and $7.2 million in the third
quarter and three quarters of 2006, respectively.

In late September 2007, we entered
into an agreement to purchase KPSE-LP, the My-Network affiliate in Palm Springs,
California, where we currently own the NBC affiliate, KMIR-TV. We began operating KPSE-LP
under a local marketing agreement on October 1, 2007.

# Results of Operations

| | Third
Quarter Ended September 30, 2007 compared to the Third Quarter Ended September 24, 2006
| | ---------------------------------------------------------------------------------------------

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

Our consolidated revenue in the third
quarter of 2007 was $144.4 million, a decrease of $8.6 million, or 5.6%, compared to
$153.0 million in the third quarter of 2006. Our consolidated operating costs and expenses
in the third quarter of 2007 were $79.5 million, a decrease of $2.0 million, or 2.4%,
compared to $81.5 million in the third quarter of 2006. Our consolidated selling and
administrative expenses in the third quarter of 2007 were $43.4 million, a decrease of
$3.6 million, or 7.7%, compared to $47.0 million in the third quarter of 2006.

18

---

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 2007 and 2006:

|                                               | 2007 | Percent of
Total
Revenue | 2006 | Percent of
Total
Revenue
|---------------------------------------------- | ---- | ------------------------ | ---- | ------------------------
|
|Continuing Operations:                         |      |                          |      |                         
|Revenue:                                       |      |                         
|Publishing                                     |      |                          | $    | 65.2                    
|Broadcasting                                   |      |                          |      | 53.7                    
|Printing services                              |      |                          |      | 18.3                    
|Other                                          |      |                          |      | 7.2                     
|                                               |      |                          |      |                         
|Total revenue                                  |      |                          |      | 144.4                   
|Total operating costs and expenses             |      |                          |      | 79.5                    
|Selling and administrative expenses            |      |                          |      | 43.4                    
|                                               |      |                          |      |                         
|Total operating costs and expenses and selling |      |                         
|and administrative expenses                    |      |                          |      | 122.9                   
|                                               |      |                          |      |                         
|Total operating earnings                       |      |                          | $    | 21.5                    
|                                               |      |                          |      |                         

The decrease in total revenue was due
to the decrease in political and issue advertising at our television stations, the
decrease in classified and retail ROP (run-of-press) advertising at our publishing
business, the decrease in postage amounts billed to customers and the decrease in offset
printing services at our direct marketing services. These revenue decreases were partially
offset by an increase in revenue from computer-related customers from the printing of
publications and manuals at our printing services business, an increase in Interactive
advertising revenue at our daily newspaper and television and radio stations and an
increase in commercial printing and delivery revenue at our daily newspaper.

The decrease in total operating costs
and expenses was due to a decrease in postage and freight expense at our direct marketing
services business and a decrease in paper costs at our publishing businesses. These cost
decreases were partially offset by an increase in programming expenses associated with
additional newscasts and programming expenses at our television stations, an
increase in sports rights fees at one of our Milwaukee radio stations for Green Bay
Packers and Milwaukee Brewers games, and an increase in operating expenses due to the
increase in revenue at our printing services business.

The decrease in selling and
administrative expenses is primarily due to a $0.7 million insurance settlement received
in 2007 associated with legal expenses recorded in 2006, a decrease in selling expenses
due to the changes made to the Milwaukee-area community newspapers at our community
newspapers and shoppers business and a decrease in incentive compensation at our
television and radio stations.

Our consolidated operating earnings
in the third quarter of 2007 were $21.5 million, a decrease of $3.0 million, or 12.3%,
compared to $24.5 million in the third quarter of 2006. The following table presents our
operating earnings by segment for the third quarter of 2007 and 2006:

|                         | 2007 | Percent of
Total
Operating
Earnings | 2006 | Percent of
Total
Operating
Earnings
|------------------------ | ---- | ----------------------------------- | ---- | -----------------------------------
|
|Publishing               |      |                                     | $    | 9.4                                
|Broadcasting             |      |                                     |      | 9.7                                
|Printing services        |      |                                     |      | 2.4                                
|Other                    |      |                                     |      | --                                 
|                         |      |                                     |      |                                    
|Total operating earnings |      |                                     | $    | 21.5                               
|                         |      |                                     |      |                                    

The decrease in total operating
earnings was primarily due to the operating earnings impact from the decrease in
television advertising revenue and the increase in programming expenses associated with
additional newscasts and programming expenses at our television stations, a
decrease in classified and retail ROP advertising revenue at our publishing businesses and
an increase in sports rights fees at one of our Milwaukee radio stations for Green Bay
Packers and Milwaukee Brewers games. Partially offsetting these operating earnings
decreases were a decrease in paper costs at our publishing businesses, the operating
earnings impact of the increase in revenue at our printing services business and an
insurance settlement at our daily newspaper.

19

---

Our consolidated EBITDA in the third
quarter of 2007 was $28.7 million, a decrease of $2.7 million, or 8.6%, compared to $31.4
million in the third quarter of 2006. We define EBITDA as net earnings excluding gain 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 and to
value prospective acquisitions. EBITDA is not a measure of performance calculated in
accordance with accounting principles generally accepted in the United States. EBITDA
should not be considered in isolation of, or as a substitute for, net earnings as an
indicator of operating performance or cash flows from operating activities as a measure of
liquidity. EBITDA, as we calculate it, may not be comparable to EBITDA measures reported
by other companies.

The following table presents a
reconciliation of our consolidated net earnings to consolidated EBITDA for the third
quarter of 2007 and 2006:

|                                       | 2007 | 2006
|-------------------------------------- | ---- | ----
|
|Net earnings                           |      |     
|Gain from discontinued operations, net |      |     
|Provision for income taxes             |      |     
|Total other expense, net               |      |     
|Depreciation                           |      |     
|Amortization                           |      |     
|                                       |      |     
|EBITDA                                 |      |     
|                                       |      |     

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

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

Revenue from publishing in the third
quarter of 2007 was $65.2 million, a decrease of $4.4 million, or 6.4%, compared to $69.6
million in the third quarter of 2006. Operating earnings from publishing were $9.4
million, an increase of $0.4 million, or 4.0%, compared to $9.0 million in the third
quarter of 2006.

The following table presents our
publishing revenue by category and operating earnings for the third quarter of 2007 and
2006:

|                            | 2007 | 2006
|--------------------------- | ---- | ----
|
|
|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 2007 accounted for 74.4% of total publishing revenue compared to 76.3% in the
third quarter of 2006.

Retail advertising revenue in the
third quarter of 2007 was $28.6 million, a decrease of $1.7 million, or 5.6%, compared to
$30.3 million in the third quarter of 2006. The $0.4 million decrease at our daily
newspaper was due to a decrease in ROP advertising primarily in the small to mid-size
retailers, furniture, entertainment and department stores categories, partially offset by
increases in Interactive, specialty magazines and shared mail advertising. The $1.3
million decrease at our community newspapers and shoppers was primarily due to revenue
from a mid-week shared mail product previously reported within the division that is now
reported under the daily newspaper and a decrease in automotive and real estate
advertising.

20

---

Classified advertising revenue in the
third quarter of 2007 was $16.6 million, a decrease of $2.2 million, or 12.1%, compared to
$18.8 million in the third quarter of 2006. Decreases in ROP classified advertising at our
daily newspaper were partially offset by an increase in Interactive and Marketplace (our
TMC or Total Market Coverage product) classified advertising. The $1.8 million decrease in
classified advertising revenue at our daily newspaper was primarily due to decreases in
employment advertising of $1.0 million and real estate advertising of $1.0 million,
partially offset by an increase in other advertising of $0.2 million. Automotive
classified advertising revenue in the third quarter of 2007 was essentially even compared
to the third quarter of 2006. Employment advertising accounted for 41.0% of classified
advertising revenue at the daily newspaper in the third quarter of 2007. The $0.4 million
decrease in classified advertising revenue at our community newspapers and shoppers is
primarily due to a mid-week shared mail product previously reported by that division and
now reported under the daily newspaper.

The total increase in retail and
classified automotive advertising in all products at our daily newspaper in the third
quarter of 2007 was $0.1 million, or 2.8%, compared to the third quarter of 2006.

Total retail and classified
Interactive revenue at our daily newspaper was $3.4 million in the third quarter of 2007,
an increase of $0.8 million, or 32.8%, compared to $2.6 million in the third quarter of
2006.

National advertising revenue in the
third quarter of 2007 was $2.4 million, a decrease of $0.2 million, or 7.2%, compared to
$2.6 million in the third quarter of 2006.

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 2007 and 2006:

|                               | 2007 | 2006 | Percent
Change
|------------------------------ | ---- | ---- | --------------
|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 2007 decreased 15.8% compared to the third quarter of 2006. Full run
advertising linage in 2006 decreased 12.3% compared to the third quarter of 2006 primarily
due to a reduction in classified and retail advertising linage. The decrease in classified
advertising linage is primarily due to a decrease in the real estate, automotive and
employment categories and the decrease in retail advertising linage is primarily due to
decreases in the small to mid-size retailers, furniture, entertainment and department
stores categories. National advertising linage decreased primarily due to decreases in the
other and business services categories. Part run advertising linage decreased 59.4% in the
third quarter of 2007 compared to the third quarter of 2006 due to the elimination of
daily zoned editions. Preprint advertising pieces decreased 3.5% in the third quarter of
2007 compared to the third quarter of 2006 due to a decrease in national preprints
partially offset by an increase in retail preprints.

The following table presents total
pages and revenue per page for our community newspapers and shoppers and specialty
products for the third quarter of 2007 and 2006:

|                                | 2007 | 2006 | Percent
Change
|------------------------------- | ---- | ---- | --------------
|Total pages:                    |      |      |               
|Community newspapers            |      |      |               
|Shoppers and specialty products |      |      |               
|                                |      |      |               
|Total pages                     |      |      |               
|                                |      |      |               
|Revenue per page                |      |      | $             
|                                |      |      |               

Total pages for our community
newspapers and shoppers business in the third quarter of 2007 decreased 22.0% compared to
the third quarter of 2006. The decrease was primarily due to the reduction of 18 weekly
Milwaukee-area community newspapers to eight and a mid-week shared mail product previously
reported as a community shopper and now reported under the daily newspaper. Revenue per
page increased 5.2% primarily due to the decrease in total full pages of advertising.

Direct marketing revenue, consisting
of revenue from direct mail efforts for our daily newspaper, was $0.8 million in the third
quarter of 2007, a decrease of $0.5 million, or 37.1%, compared to $1.3 million in the
third quarter of 2006. The decrease was due to 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 both the third quarter of 2007 and 2006.

21

---

Circulation revenue in the third
quarter of 2007 accounted for 20.1% of total publishing revenue compared to 19.7% in the
third quarter of 2006. Circulation revenue of $13.1 million in the third quarter of 2007
decreased $0.6 million, or 4.0%, compared to $13.7 million in the third quarter of 2006
primarily due to decreases in daily and Sunday average net paid circulation at our daily
newspaper and a change to a free distribution model of the community newspapers in the
Milwaukee area at our community newspapers and shoppers business.

Other revenue, which consists of
revenue from commercial printing at the printing plants for our community newspapers and
shoppers and promotional, distribution and commercial printing revenue at our daily
newspaper, accounted for 5.5% of total publishing revenue in the third quarter of 2007
compared to 4.0% in the third quarter of 2006. Other revenue in the third quarter of 2007
was $3.6 million, an increase of $0.8 million, or 26.0%, compared to $2.8 million in the
third quarter of 2006. The $0.5 million increase at our daily newspaper was primarily due
to an increase in commercial printing revenue from an agreement signed by our daily
newspaper in late 2006 to print the USA Today in northern Illinois and eastern
Wisconsin. The $0.3 million increase at our community newspapers and shoppers is due to an
increase in commercial printing revenue from new customers.

In September 2007, our daily
newspaper signed a three-year agreement to print the Chicago Reader for
distribution in the greater Chicago, Illinois area. Printing commenced in October 2007.

Publishing operating earnings in the
third quarter of 2007 were $9.4 million, an increase of $0.4 million, or 4.0%, compared to
$9.0 million in the third quarter of 2006. Operating earnings increased $1.4 million in
the third quarter of 2007 at the daily newspaper primarily due to a $1.9 million decrease
in newsprint and paper costs, a $0.7 million insurance settlement and cost control
initiatives, partially offset by the impact from the decrease in retail and classified ROP
advertising. Operating earnings decreased $1.0 million in the third quarter of 2007 at our
community newspapers and shoppers primarily due to the impact from the decreases in
revenue. Total newsprint and paper costs for our publishing businesses in the third
quarter of 2007 were $6.4 million, a decrease of $2.0 million, or 23.8%, compared to $8.4
million in the third quarter of 2006, primarily due to an 11.8% decrease in newsprint
consumption and a 15.9% decrease in average newsprint pricing per metric ton. Consumption
of metric tonnes of newsprint in the third quarter of 2007 decreased primarily due to
decreases in ROP advertising, average net paid circulation and reductions in the web-width
at our daily newspaper.

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

Revenue from broadcasting in the
third quarter of 2007 was $53.7 million, a decrease of $4.6 million, or 7.9%, compared to
$58.3 million in the third quarter of 2006. Operating earnings from broadcasting in the
third quarter of 2007 were $9.7 million, a decrease of $5.4 million, or 35.4%, compared to
$15.1 million in the third quarter of 2006.

The following table presents our
broadcasting revenue and operating earnings for the third quarter of 2007 and 2006:

|                   | 2007 | 2006 | Percent
|------------------ | ---- | ---- | -------
|
|
|Revenue            |      |      | $      
|                   |      |      |        
|Operating earnings |      |      | $      
|                   |      |      |        

Revenue from our radio stations in
the third quarter of 2007 was $22.5 million, a decrease of $0.5 million, or 2.3%, compared
to $23.0 million in the third quarter of 2006. The decrease was primarily due to a $0.2
million decrease in political and issue advertising, a $0.1 million decrease in local
advertising, a $0.1 million decrease in national advertising and a $0.1 million decrease
in other revenue. On a same-station basis (excluding revenue generated by KBBX-FM, which
was sold in September 2006 and KOMJ-AM, which was sold earlier this year), radio revenue
decreased 0.5% in the third quarter of 2007 compared to the third quarter of 2006.

Operating earnings from our radio
stations were $6.3 million in the third quarter of 2007, a decrease of $1.1 million, or
14.5%, compared to $7.4 million in the third quarter of 2006. The decrease in operating
earnings was due to an increase in programming expenses associated with sports rights fees
at one of our Milwaukee radio stations for Green Bay Packers and Milwaukee Brewers games
that occurred during the third quarter of 2007, the impact from the decrease in revenue
and an increase in payroll expense, partially offset by a decrease in incentive
compensation expense.

Revenue from our television stations
in the third quarter of 2007 was $31.2 million, a decrease of $4.1 million, or 11.6%,
compared to $35.3 million in the third quarter of 2006. The decrease was primarily due to
a $3.6 million decrease in political and issue advertising and an $0.8 million decrease in
national advertising and in the automotive category, partially offset by a $0.2
million increase in local advertising and a $0.1 million increase in other revenue.

Operating earnings from our
television stations in the third quarter of 2007 were $3.4 million, a decrease of $4.3
million, or 55.8%, compared to $7.7 million in the third quarter of 2006. The decrease in
operating earnings was primarily due to the impact of the decrease in revenue, an increase
in programming expenses associated with additional newscasts, increases in programming and
Interactive costs and an increase in bad debt expense, partially offset by a decrease in
incentive compensation expense.

22

---

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

Revenue from printing services in the
third quarter of 2007 was $18.3 million, an increase of $2.9 million, or 18.6%, compared
to $15.4 million in the third quarter of 2006. Operating earnings from printing services
in the third quarter of 2007 were $2.4 million, an increase of $2.0 million, or 464.1%,
compared to $0.4 million in the third quarter of 2006.

The increase in printing services
revenue was primarily due to a $1.6 million increase in revenue from Dell Computer
Corporation (Dell) and computer-related customers and a $1.3 million increase in revenue from the
printing of publications and manuals. We do not expect the same level of business from Dell
to continue in future periods and we believe our revenue from Dell will decrease in 2008.

The increase in printing services
operating earnings was primarily due to the increase in revenue, production efficiencies,
a decrease in waste and a change in business mix.

| | Other
| | -----

Other revenue in the third quarter of
2007 was $7.2 million, a decrease of $2.5 million, or 25.1%, compared to $9.7 million in
the third quarter of 2006. Other operating earnings were insignificant in the third
quarter of 2007 and the third quarter of 2006.

The following table presents our
other revenue and operating earnings for the third quarter of 2007 and 2006:

|                          | 2007 | 2006
|------------------------- | ---- | ----
|
|
|Revenue                   |      |     
|                          |      |     
|Operating earnings (loss) |      |     
|                          |      |     

The decrease in other revenue in the
third quarter of 2007 compared to the third quarter of 2006 was primarily due to a
decrease in postage amounts billed to customers and a decrease in offset printing services
at our direct marketing services business. Included in revenue and operating costs and
expenses from our direct marketing services business is $3.9 million and $5.5 million of
postage amounts billed to customers in the third quarter of 2007 and 2006, respectively.

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

Interest income was insignificant in
the third quarter of 2007 and 2006. Interest expense was $1.9 million in the third quarter
of 2007 compared to $4.0 million in the third quarter of 2006. The decrease is primarily
due to a decrease in debt outstanding, which was reduced with the proceeds from the sales
of Norlight Telecommunications, Inc. (Norlight), our former telecommunications subsidiary,
and the three regional publishing and printing operations of our community newspapers and
shoppers business, partially offset by share repurchases by us. Amortization of deferred
financing costs was $0.1 million in the third quarter of 2007 and 2006.

The effective tax rate for continuing
operations was 35.5% in the third quarter of 2007 compared to 40.3% in the third quarter
of 2006. In the third quarter of 2007, the effective tax rate for continuing operations
was impacted by an $0.8 million decrease in our liability for unrecognized tax benefits
and related interest due to the lapse of certain statute of limitations.

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

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

Revenue from discontinued operations
in the third quarter of 2007 was $2.3 million compared to $41.6 million in the third
quarter of 2006. We recorded a $1.3 million net gain on the sale of the Louisiana
publishing and the New England publishing and printing operations in the third quarter of
2007 compared to $2.3 million net gain from the operating results of our discontinued
operations in the third quarter of 2006. In the third quarter of 2006, we recorded a loss
from discontinued operations, net of income taxes, of $1.0 million from a purchase price
adjustment related to the January 2005 sale of NorthStar Print Group, Inc. Income tax
expense related to discontinued operations was $0.7 million in the third quarter of 2007
compared to $0.9 million in the third quarter of 2006.

23

---

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

Our net earnings in the third quarter
of 2007 were $13.9 million, an increase of $0.4 million, or 2.9%, compared to $13.5
million in the third quarter of 2006. The increase was primarily due to the decrease in
interest expense and the decrease in provision for income taxes in the third quarter of
2007, partially offset by the decrease in operating earnings from continuing operations in
the third quarter of 2007 for the reasons described above.

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

Basic and diluted earnings per share
from continuing operations were $0.20 and $0.19, respectively, in the third quarter of
2007 compared to $0.17 for both in the third quarter of 2006. Basic and diluted earnings
per share from discontinued operations were $0.02 for both in the third quarters of 2007
and 2006. Basic and diluted net earnings per share were $0.22 and $0.21, respectively, for
the third quarter of 2007 and $0.19 for both in the third quarter of 2006.

# Three Quarters Ended
September 30, 2007 compared to the Three Quarters Ended September 24, 2006

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

Our consolidated revenue in the three
quarters of 2007 was $435.0 million, a decrease of $18.6 million, or 4.1%, compared to
$453.6 million in the three quarters of 2006. Our consolidated operating costs and
expenses in the three quarters of 2007 were $238.7 million, a decrease of $4.9 million, or
2.0%, compared to $243.6 million in the three quarters of 2006. Our consolidated selling
and administrative expenses in the three quarters of 2007 were $135.5 million, a decrease
of $6.6 million, or 4.6%, compared to $142.1 million in the three quarters of 2006.

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 2007 and 2006:

|                                               | 2007 | Percent of
Total
Revenue | 2006 | Percent of
Total
Revenue
|---------------------------------------------- | ---- | ------------------------ | ---- | ------------------------
|
|Continuing Operations:                         |      |                          |      |                         
|Revenue:                                       |      |                         
|Publishing                                     |      |                          | $    | 199.2                   
|Broadcasting                                   |      |                          |      | 161.4                   
|Printing services                              |      |                          |      | 51.7                    
|Other                                          |      |                          |      | 22.7                    
|                                               |      |                          |      |                         
|Total revenue                                  |      |                          |      | 435.0                   
|Total operating costs and expenses             |      |                          |      | 238.7                   
|Selling and administrative expenses            |      |                          |      | 135.5                   
|                                               |      |                          |      |                         
|Total operating costs and expenses and selling |      |                         
|and administrative expenses                    |      |                          |      | 374.2                   
|                                               |      |                          |      |                         
|Total operating earnings                       |      |                          | $    | 60.8                    
|                                               |      |                          |      |                         

The decrease in total revenue was due
to a decrease in postage amounts billed to customers and a decrease in mailing services at
our direct marketing services business, a decrease in political and issue advertising, a
decrease in Olympic advertising revenue at our NBC television affiliates and a decrease in
national advertising at our television stations and a decrease in retail and classified
ROP advertising at our publishing businesses. These revenue decreases were partially
offset by a revenue reduction in the three quarters of 2006 related to a litigation
settlement, an increase in Interactive advertising revenue at our daily newspaper and
television and radio stations, an increase in local advertising revenue at our television
stations, an increase in revenue from the printing of publications and manuals at our
printing services business and an increase in commercial printing revenue at our daily
newspaper.

The decrease in total operating costs
and expenses was due to a decrease in postage and freight expense at our direct marketing
services business, a decrease in newsprint and paper costs at our publishing businesses
and a decrease in production costs at our community newspapers and shoppers due to the
consolidation of our Wisconsin printing plants. These cost decreases were partially offset
by an increase in news and programming expenses at our television stations and an increase
in sports rights fees at one of our Milwaukee radio stations for Green Bay Packers and
Milwaukee Brewers games.

The decrease in selling and
administrative expenses is primarily due to litigation-related expenses associated with a
litigation settlement at the daily newspaper in the three quarters of 2006, a gain on the
sale of the Hartland, Wisconsin printing facility, an insurance settlement recorded at our
daily newspaper, a decrease in payroll expenses at our community newspapers and shoppers
and a favorable adjustment from the termination of a sublease agreement at our printing
services business. These decreases were partially offset by an increase in payroll and
payroll-related expenses at our radio and television stations and a pension plan
curtailment credit in the three quarters of 2006.

24

---

Our consolidated operating earnings
in the three quarters of 2007 were $60.8 million, a decrease of $7.1 million, or 10.3%,
compared to $67.9 million in the three quarters of 2006. The following table presents our
operating earnings by segment for the three quarters of 2007 and 2006:

|                         | 2007 | Percent of
Total
Operating
Earnings | 2006 | Percent of
Total
Operating
Earnings
|------------------------ | ---- | ----------------------------------- | ---- | -----------------------------------
|
|Publishing               |      |                                     | $    | 24.6                               
|Broadcasting             |      |                                     |      | 31.0                               
|Printing services        |      |                                     |      | 4.4                                
|Other                    |      |                                     |      | 0.8                                
|                         |      |                                     |      |                                    
|Total operating earnings |      |                                     | $    | 60.8                               
|                         |      |                                     |      |                                    

The decrease in total operating
earnings was primarily due to the operating earnings impact from the decrease in
television advertising revenue, the increase in programming expenses associated with
additional newscasts and an increase in payroll and payroll-related expenses at our
television stations, increases in payroll, payroll-related expenses and sports rights fees
at our radio stations and a decrease in retail and classified ROP advertising revenue at
our publishing businesses. Partially offsetting these operating earnings decreases were a
revenue reduction for a litigation settlement and litigation-related expenses in the three
quarters of 2006, a decrease in newsprint and paper costs at our publishing businesses,
the increase in revenue and production efficiencies at our printing services business and
a decrease in corporate expenses.

Our consolidated EBITDA in the three
quarters of 2007 was $82.8 million, a decrease of $5.9 million, or 6.6%, compared to $88.7
million in the three quarters of 2006. We define EBITDA as net earnings excluding gain
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 and to
value prospective acquisitions. EBITDA is not a measure of performance calculated in
accordance with accounting principles generally accepted in the United States. EBITDA
should not be considered in isolation of, or as a substitute for, net earnings as an
indicator of operating performance or cash flows from operating activities as a measure of
liquidity. EBITDA, as we calculate it, may not be comparable to EBITDA measures reported
by other companies.

The following table presents a
reconciliation of our consolidated net earnings to consolidated EBITDA for the three
quarters of 2007 and 2006:

|                                       | 2007 | 2006
|-------------------------------------- | ---- | ----
|
|Net earnings                           |      |     
|Gain from discontinued operations, net |      |     
|Provision for income taxes             |      |     
|Total other expense, net               |      |     
|Depreciation                           |      |     
|Amortization                           |      |     
|                                       |      |     
|EBITDA                                 |      |     
|                                       |      |     

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

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

Revenue from publishing in the three
quarters of 2007 was $199.2 million, a decrease of $7.8 million, or 3.8%, compared to
$207.0 million in the three quarters of 2006. Operating earnings from publishing were
$24.6 million, an increase of $1.2 million, or 5.1%, compared to $23.4 million in the
three quarters of 2006.

25

---

The following table presents our
publishing revenue by category and operating earnings for the three quarters of 2007 and
2006:

|                            | 2007 | 2006
|--------------------------- | ---- | ----
|
|
|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 2007 accounted for 74.2% of total publishing revenue compared to 75.6% in the
three quarters of 2006.

Retail advertising revenue in the
three quarters of 2007 was $87.0 million, a decrease of $0.9 million, or 0.9%, compared to
$87.9 million in the three quarters of 2006. The $3.2 million increase at our daily
newspaper was primarily due to the $5.1 million revenue reduction from a litigation
settlement in the three quarters of 2006 and an increase in Interactive advertising,
specialty magazine advertising and shared mail advertising, partially offset by a decrease
in ROP advertising, primarily in the small to mid-size retailers, department stores,
health services and business services categories. The $4.1 million decrease at our
community newspapers and shoppers was due primarily to revenue from a mid-week shared mail
product previously reported within the division that is now reported under the daily
newspaper and a decrease in automotive and real estate advertising.

Classified advertising revenue in the
three quarters of 2007 was $50.8 million, a decrease of $5.3 million, or 9.5%, compared to
$56.1 million in the three quarters of 2006. Decreases in ROP classified advertising at
our daily newspaper were partially offset by an increase in Interactive and Marketplace
classified advertising. The $3.9 million decrease in classified advertising revenue at our
daily newspaper was primarily due to decreases in real estate advertising of $2.1 million,
employment advertising of $1.7 million and automotive advertising of $0.6 million,
partially offset by an increase in other advertising of $0.5 million. Employment
advertising accounted for 43.0% of classified advertising revenue at the daily newspaper
in the three quarters of 2007. The $1.4 million decrease in classified advertising revenue
at our community newspapers and shoppers is primarily due to revenue from a mid-week
shared mail product previously reported within the division that is now reported under the
daily newspaper and a decrease in classified advertising in our Milwaukee-area community
newspapers.

The total decrease in retail and
classified automotive advertising at our daily newspaper in the three quarters of 2007 was
$0.3 million, or 2.2%, compared to the three quarters of 2006.

Total retail and classified
Interactive revenue at our daily newspaper was $9.8 million in the three quarters of 2007,
an increase of $2.9 million, or 41.9%, compared to $6.9 million in the three quarters of
2006.

National advertising revenue in the
three quarters of 2007 was $6.8 million, a decrease of $1.0 million, or 13.0%, compared to
$7.8 million in the three quarters of 2006.

26

---

The following table presents our
daily newspapers core newspaper advertising linage by category and core newspaper
and shared mail preprint pieces for the three quarters of 2007 and 2006:

|                               | 2007 | 2006 | Percent
Change
|------------------------------ | ---- | ---- | --------------
|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 2007 decreased 16.2% compared to the three quarters of 2006. Full run
advertising linage in the three quarters of 2007 decreased 12.2% compared to the three
quarters of 2006 primarily due to a reduction in classified and retail advertising linage.
The decrease in classified advertising linage is primarily due to a decrease in the
automotive, real estate and employment categories and the decrease in retail advertising
linage is primarily due to decreases in the small to mid-size retailers, department
stores, health services and business services categories. National advertising linage
decreased primarily due to decreases in the other and movies categories. Part run
advertising linage decreased 65.1% in the three quarters of 2007 due to the elimination of
daily zoned editions. Preprint advertising pieces decreased 2.6% in the three quarters of
2007 primarily due to a decrease in national preprints.

The following table presents total
pages and revenue per page for our community newspapers and shoppers and specialty
products for the three quarters of 2007 and 2006:

|                                | 2007 | 2006 | Percent
Change
|------------------------------- | ---- | ---- | --------------
|Total pages:                    |      |      |               
|Community newspapers            |      |      |               
|Shoppers and specialty products |      |      |               
|                                |      |      |               
|Total pages                     |      |      |               
|                                |      |      |               
|Revenue per page                |      |      | $             
|                                |      |      |               

Total pages for our community
newspapers and shoppers business in the three quarters of 2007 decreased 25.0% compared to
the three quarters of 2006. The decrease was primarily due to reducing 18 weekly community
newspapers to eight and a mid-week shared mail product previously reported as a community
shopper and now reported under the daily newspaper. Revenue per page increased 10.3%
primarily due to the decrease in total full pages of advertising.

Direct marketing revenue, consisting
of revenue from direct mail efforts for our daily newspaper, was $3.0 million in the three
quarters of 2007, a decrease of $1.1 million, or 28.3%, compared to $4.1 million in the
three quarters of 2006. 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 $0.3 million in the three quarters of 2007, a decrease of $0.2 million, or
39.5%, compared to $0.5 million in the three quarters of 2006.

Circulation revenue in the three
quarters of 2007 accounted for 19.7% of total publishing revenue compared to 19.6% in the
three quarters of 2006. Circulation revenue of $39.2 million in the three quarters of 2007
decreased $1.4 million, or 3.2%, compared to $40.6 million in the three quarters of 2006
primarily due to decreases in daily and Sunday average net paid circulation at our daily
newspaper and a change to a free distribution model of the community newspapers in the
Milwaukee area at our community newspapers and shoppers business.

Other revenue, which consists of
revenue from commercial printing at the printing plants for our community newspapers and
shoppers and promotional, distribution and commercial printing revenue at our daily
newspaper, accounted for 6.1% of total publishing revenue in the three quarters of 2007
compared to 4.8% in the three quarters of 2006. Other revenue in the three quarters of
2007 was $12.1 million, an increase of $2.1 million, or 20.6%, compared to $10.0 million
in the three quarters of 2006. The $1.4 million increase at our daily newspaper was
primarily due to an increase in commercial printing revenue from an agreement signed by
our daily newspaper in late 2006 to print the USA Today in northern Illinois and
eastern Wisconsin and an increase in commercial delivery revenue at the daily newspaper.
The $0.7 million increase at our community newspapers and shoppers is due to an increase
in commercial printing revenue from new customers.

27

---

In September 2007, our daily
newspaper signed a three-year agreement to print the Chicago Reader for
distribution in the greater Chicago, Illinois area. Printing commenced in October 2007.

Publishing operating earnings in the
three quarters of 2007 were $24.6 million, an increase of $1.2 million, or 5.1%, compared
to $23.4 million in the three quarters of 2006. Operating earnings increased $4.5 million
in the three quarters of 2007 at the daily newspaper primarily due to the impact of the
revenue reduction related to a $5.1 million litigation settlement in the three quarters of
2006, a $4.9 million decrease in paper costs and a $0.7 million insurance settlement,
partially offset by the impact of the decrease in retail and classified (ROP) advertising,
a $0.8 million pension plan curtailment credit in the three quarters of 2006, a vacation
accrual adjustment and costs associated with reducing the web-width of the Milwaukee
Journal Sentinel from 50 inches to 48 inches. Operating earnings decreased $3.3
million in the three quarters of 2007 at our community newspapers and shoppers primarily
due to the decrease in revenue, costs associated with a lease termination, receipt of $1.1
million insurance proceeds from a business interruption claim from the impact of Hurricane
Katrina and a $0.4 million pension plan curtailment credit, both in the three quarters of
2006, partially offset by a $0.9 million gain on the sale of the Hartland, Wisconsin
printing facility. Total newsprint and paper costs for our publishing businesses in the
three quarters of 2007 were $20.1 million, a decrease of $4.9 million, or 19.6%, compared
to $25.0 million in the three quarters of 2006 primarily due to a 13.0% decrease in
newsprint consumption and a 9.9% decrease in average newsprint pricing per metric ton.
Consumption of metric tonnes of newsprint in the three quarters of 2007 decreased
primarily due to decreases in ROP advertising, average net paid circulation, web-width and
editorial content at our daily newspaper.

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

Revenue from broadcasting in the
three quarters of 2007 was $161.4 million, a decrease of $6.9 million, or 4.1%, compared
to $168.3 million in the three quarters of 2006. Operating earnings from broadcasting in
the three quarters of 2007 were $31.0 million, a decrease of $11.8 million, or 27.5%,
compared to $42.8 million in the three quarters of 2006.

The following table presents our
broadcasting revenue and operating earnings for the three quarters of 2007 and 2006:

|                   | 2007 | 2006 | Percent
|------------------ | ---- | ---- | -------
|
|
|Revenue            |      |      | $      
|                   |      |      |        
|Operating earnings |      |      | $      
|                   |      |      |        

Revenue from our radio stations was
$62.7 million for both the three quarters of 2007 and 2006. A $0.2 million increase in
local advertising revenue primarily from developmental revenue, which refers to
non-transactional revenue that targets non-traditional advertisers, and Interactive
revenue was offset by a $0.2 million decrease in political and issue advertising revenue.

Operating earnings from our radio
stations in the three quarters of 2007 were $15.4 million, a decrease of $2.6 million, or
14.3%, compared to $18.0 million in the three quarters of 2006. The decrease in operating
earnings is due to an increase in payroll and payroll-related expenses, an increase in
sports rights fees for Green Bay Packers and Milwaukee Brewers games that occurred during
the third quarter of 2007, a $0.2 million pension plan curtailment credit in the three
quarters of 2006 and a $0.1 million loss on the sale of KOMJ-AM in Omaha, Nebraska.

Revenue from our television stations
in the three quarters of 2007 was $98.7 million, a decrease of $6.9 million, or 6.6%,
compared to $105.6 million in the three quarters of 2006. The decrease was primarily due
to a $4.7 million decrease in political and issue advertising revenue, a $3.3 million
decrease in Olympic advertising revenue at our NBC affiliates, and a $1.6 million decrease
in national advertising revenue, partially offset by a $2.4 million increase in local
advertising revenue primarily from developmental and Interactive revenue and a $0.3
million increase in other revenue.

Operating earnings from our
television stations in the three quarters of 2007 were $15.6 million, a decrease of $9.2
million, or 37.2%, compared to $24.8 million in the three quarters of 2006. The decrease
in operating earnings was primarily due to impact from the decrease in revenue, an
increase in programming expenses associated with additional newscasts and programming
costs, an increase in payroll and payroll-related expenses, a $0.3 million pension plan
curtailment credit in the three quarters of 2006 and an increase in bad debt expense,
partially offset by a decrease in incentive compensation expense.

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

Revenue from printing services in the
three quarters of 2007 was $51.7 million, an increase of $3.2 million, or 6.8%, compared
to $48.5 million in the three quarters of 2006. Operating earnings from printing services
in the three quarters of 2007 were $4.4 million, an increase of $2.9 million, or 206.4%,
compared to $1.5 million in the three quarters of 2006.

28

---

The increase in printing services
revenue was primarily due to an increase in revenue from the printing of publications and
manuals and a $0.8 million increase in revenue from Dell  and other
computer-related customers. We do not expect the same level of business from
Dell to continue in future periods and we believe our revenue from Dell will decrease in 2008.

The increase in printing services
operating earnings was primarily due to the increase in revenue, production efficiencies
gained from decreases in waste, a favorable adjustment from the termination of a sublease
agreement and a change in business mix.

| | Other
| | -----

Other revenue in the three quarters
of 2007 was $22.7 million, a decrease of $7.1 million, or 23.6%, compared to $29.8 million
in the three quarters of 2006. Other operating earnings in the three quarters of 2007 were
$0.8 million, an increase of $0.6 million, or 294.5%, compared to $0.2 million in the
three quarters of 2006.

The following table presents our
other revenue and operating earnings for the three quarters of 2007 and 2006:

|                          | 2007 | 2006
|------------------------- | ---- | ----
|
|
|Revenue                   |      |     
|                          |      |     
|Operating earnings (loss) |      |     
|                          |      |     

The decrease in other revenue in the
three quarters of 2007 compared to the three quarters of 2006 was primarily due to a
decrease in postage amounts billed to customers and mailing and offset printing services
at our direct marketing services business. Included in revenue and operating costs and
expenses from our direct marketing services business is $12.3 million and $16.8 million of
postage amounts billed to customers in the three quarters of 2007 and 2006, respectively.

The increase in other operating
earnings was primarily due to a decrease in corporate expenses in the three quarters of
2006.

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

Interest income was insignificant in
the three quarters of 2007 and 2006. Interest expense was $6.9 million in the three
quarters of 2007 compared to $11.6 million in the three quarters of 2006. The decrease is
primarily due to a decrease in debt outstanding, which was reduced with the proceeds from
the sales of Norlight, our former telecommunications subsidiary, and the three regional
publishing and printing operations of our community newspapers and shoppers division
partially offset by share repurchases. Amortization of deferred financing costs was $0.3
million in the three quarters of 2007 and 2006.

The effective tax rate for continuing
operations was 37.8% in the three quarters of 2007 and 40.0% in the three quarters of
2006. In the three quarters of 2007, the effective tax rate for continuing operations was
impacted by an $0.8 million decrease in our liability for unrecognized tax benefits and
related interest due to the lapse of certain statute of limitations.

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

Gain from discontinued operations,
net of income taxes, was $67.8 million in the three quarters of 2007 compared to $7.2
million in the three quarters of 2006. Income tax expense related to discontinued
operations was $43.2 million in the three quarters of 2007 compared to $4.9 million in the
three quarters of 2006.

Revenue from discontinued operations
in the three quarters of 2007 was $40.9 million compared to $127.6 million in the three
quarters of 2006. We recorded a $64.2 million net gain on the sale of Norlight and the
three regional publishing and printing operations of our community newspapers and shoppers
division in the three quarters of 2007. We recorded $3.6 million net gain from the
operating results of our discontinued operations in the three quarters of 2007 compared to
$8.2 million net gain from the operating results in the three quarters of 2006.

In the three quarters of 2006, we
recorded a loss from discontinued operations, net of income taxes, of $1.0 million from a
purchase price adjustment related to the January 2005 sale of NorthStar Print Group, Inc.

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

Our net earnings in the three
quarters of 2007 were $101.4 million, an increase of $60.4 million, compared to $41.0
million in the three quarters of 2006. The increase was primarily due to the gain from
discontinued operations of Norlight and the decrease in interest expense in the three
quarters of 2007 for the reasons described above partially offset by the decrease in
operating earnings from continuing operations for the reasons described above.

29

---

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

Basic and diluted earnings per share
from continuing operations were $0.50 and $0.49, respectively, in the three quarters of
2007 compared to $0.48 and $0.47, respectively, in the three quarters of 2006. Basic and
diluted earnings per share from discontinued operations were $1.07 and $1.00,
respectively, in the three quarters of 2007 compared to $0.11 and $0.10, respectively, in
the three quarters of 2006. Basic and diluted net earnings per share were $1.57 and $1.49,
respectively, for the three quarters of 2007 compared to $0.59 and $0.57, respectively, in
the three quarters of 2006.

# 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 30,
2007, we had borrowings of $149.1 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:

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

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

As of September 30, 2007, we are in
compliance with both of these material covenants.

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

On February 13, 2007, our board of
directors increased the quarterly dividend on our class A and class B shares from $0.065
to $0.075 per share.

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

On September 29, 2007, Journal
Broadcast Group, our broadcasting subsidiary, entered into an asset purchase agreement
with Mirage Media LLC (Mirage) to purchase KPSE-LP, Channel 50, in Palm Springs,
California, for $4.7 million, subject to regulatory approval and customary closing conditions. We currently
own KMIR-TV, the NBC affiliate, also in Palm Springs. We began operating KPSE-LP under a
local marketing agreement with Mirage on October 1, 2007.

On October 11, 2007, Journal
Community Publishing Group, our community newspapers and shoppers subsidiary, purchased
the Clintonville Tribune-Gazette in Clintonville, Wisconsin for $0.5 million. The
Clintonville Tribune-Gazette is a weekly publication with a paid circulation of
approximately 2,300.

| | Divestitures
| | ------------

On February 26, 2007, Q-Comm acquired 100%
of the stock of Norlight, our former telecommunications subsidiary. Proceeds, net of
transaction expenses, were $175.9 million. The sale of Norlight improves our financial
flexibility and allows us to focus on our diversified media businesses. To date, we have
used the proceeds from this sale to reduce our obligations under our unsecured revolving
credit facility. We expect to pay quarterly estimated income taxes on the gain related to
the sale throughout 2007.

On March 27, 2007, Journal Broadcast
Group, our broadcast subsidiary, completed the sale of KOMJ-AM in Omaha, Nebraska to
Cochise Broadcasting LLC (Cochise) and recorded a $0.1 million loss on the sale. The
divestiture of KOMJ-AM 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, Nebraska from Emmis Communications Corporation (Emmis). Concurrently with
the sale of KOMJ-AM, we completed the purchase of the KMTV-TV FCC license and remitted to
Emmis a final purchase payment of $10.0 million.

On June 25, 2007, Gannett Co., Inc.
acquired Journal Community Publishing Groups Central Ohio Advertiser Network and its
commercial printing business. On July 6, 2007, an affiliate of Target Media Partners
acquired Journal Community Publishing Groups Louisiana publishing operation. On
August 2, 2007, Hersam Acorn Community Publishing, LLC acquired Journal Community
Publishing Groups New England publishing and printing operations. Total proceeds
from these sales, net of transaction expenses, was $28.7 million. To date, we have used
the proceeds from these sales to reduce our obligations under our unsecured revolving
credit facility. These divestitures will allow us to concentrate on growing our community
newspaper and shopper business in the markets in which we currently operate.

30

---

| | Share
Repurchase Programs
| | -------------------------

In April 2006 and May 2007, our Board of Directors
authorized the repurchase of up to five million shares of our class A and class B common
stock in each authorization over the following 18 months. Under the aurthorization, 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. In the three quarters of 2007, we repurchased 3.7 million of our class A and
class B shares pursuant to the April 2006 authorization. We completed our repurchases
under this program in August 2007.  In the three quarters of 2007, we repurchased
3.3 million of our class A and class B shares pursuant to the May 2007 authorization.  As part of these repurchases, on
August 22, 2007, we repurchased 3.2 million of our class B shares from Matex, Inc. for $32
million, or $10.00 per share.

In October 2007, 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. We have not repurchased any of our class A
shares pursuant to the October 2007 authorization.

# Cash Flow

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

Cash balances were $6.7 million at
September 30, 2007. We believe our expected cash flows from operations and borrowings
available under our credit facility will adequately meet our needs for the foreseeable
future.

Cash provided by operating activities
was $39.7 million in the three quarters of 2007 compared to $55.8 million in the three
quarters of 2006. The decrease was primarily due to a $10.4 million deposit with the
Wisconsin Department of Revenue for an income tax assessment and a decrease in deferred
income taxes related to the accounting for our defined benefit pension and postretirement
liabilities, partially offset by a decrease in accounts receivable due to the decrease in
revenue.

Cash provided by investing activities
was $172.8 million in the three quarters of 2007 compared to cash used by investing
activities of $13.6 million in the three quarters of 2006. Proceeds from the sale of
Norlight, KOMJ-AM and the three regional publishing and printing operations of our
community newspapers and shoppers business were $205.2 million in the three quarters of
2007. We remitted the final purchase payment of $10.0 million to Emmis to acquire the FCC
license of KMTV-TV and our daily newspaper acquired two magazines for $1.6 million in the
three quarters of 2007. Capital expenditures were $23.5 million in the three quarters of
2007 compared to $13.7 million in the three quarters of 2006. Our capital expenditures at
our daily newspaper are primarily targeted towards equipment and building improvements,
including the web-width reduction project and consolidating certain distribution centers,
and our capital expenditures in our broadcasting segment are targeted towards technology
upgrades, including investments in digital radio and tapeless news for our television
stations, and a new building for our television station in Las Vegas, Nevada. We believe
these expenditures will help us to better serve our advertisers and viewers and to
facilitate our control initiatives.

Cash used for financing activities
was $180.1 million in the three quarters of 2007 compared to $52.7 million in the three
quarters of 2006. Borrowings under our credit facility in the three quarters of 2007 were
$265.5 million and we made payments of $351.3 million, reflecting the immediate use of
proceeds received from the sale of Norlight and the three regional publishing and printing
operations of our community newspapers and shoppers division, compared to borrowings of
$164.5 million and payments of $178.8 million in the three quarters of 2006. In the three
quarters of 2007 and 2006, we paid $79.0 million and $24.8 million, respectively, to
purchase our class A and class B common stock. We paid cash dividends of $15.6 million and
$14.6 million in the three quarters of 2007 and 2006, respectively.

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

Cash used for discontinued operations
was $33.6 million in the three quarters compared to cash provided by discontinued
operations of $10.8 million in the three quarters of 2006. The decrease was primarily due
to $36.6 million in estimated tax payments on the gain on the sale of Norlight, and a
decrease in cash provided by the operations of Norlight due to its sale in February 2007,
partially offset by capital expenditures of $0.7 million primarily for Norlight in the
three quarters of 2007 compared to $14.1 million in the three quarters of 2006.

# New Accounting Standard

On February 15, 2007, the FASB issued
Statement No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities  Including an Amendment of FASB Statement No. 115.This
standard permits an entity to choose to measure many financial instruments and certain
other items at fair value that were previously not allowed. Statement No. 159 is effective
for fiscal years beginning after November 15, 2007.  Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that choice in
the first 120 days of that fiscal year and also elects to apply the provisions of FASB
Statement No. 157, Fair Value Measurements. We will adopt Statement No. 159 in
the first quarter of 2008. We do not believe the effect of adopting Statement No. 159 will
have a material impact on our financial statements.

31

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# Critical Accounting
Policies

There are no material changes to the disclosures
regarding critical accounting policies made in our Annual Report on Form 10-K for the year
ended December 31, 2006.

# ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURE OF MARKET RISK

There are no material changes to the
disclosures regarding interest rate risk and foreign currency exchange risk made in our
Annual Report on Form 10-K for the year ended December 31, 2006.

# ITEM 4. CONTROLS AND
PROCEDURES

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

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

# PART II. OTHER
INFORMATION

# ITEM 1. LEGAL PROCEEDINGS

Russ Darrow Group, Inc. and Kings
Way Homes Litigation.On December 27, 2006, a lawsuit was filed by Russ Darrow Group,
Inc. against Journal Sentinel, Inc., a subsidiary of Journal Communications, Inc., in
Milwaukee County Circuit Court.  The plaintiff chose to opt-out of the class action
settlement in Shorewest v. Journal Sentinel Inc. (Shorewest) and filed this
separate lawsuit against Journal Sentinel Inc. repeating in large part the allegations
related to overstated circulation in the Shorewest class action case.  The claims
include: violation of the Wisconsin Deceptive Trade Practices Act; breach of contract and
implied duty of good faith and fair dealing; strict misrepresentation; intentional
misrepresentation; negligent misrepresentation; negligence; unjust enrichment; equitable
recession; and punitive damages.  A hearing on the Motion to Dismiss the
plaintiffs tort claims was held on May 7, 2007. The judge declined to dismiss any of
the claims.  On June 14, 2007, Journal Sentinel filed a petition for leave to appeal
with the Wisconsin Court of Appeals based on the following three issues: (i)  
the plaintiffs tort claims are barred by the economic loss doctrine; (ii) the
plaintiff is barred from bringing its Wisconsin deceptive trade practices claim by its
on-going contractual relationship with Journal Sentinel Inc.; and (iii) the
plaintiffs unjust enrichment claim is precluded by its contract claim. The plaintiff
filed its opposition brief on June 29, 2007. We believe the lawsuit is without merit and
intend to defend the action vigorously.

On June 21, 2007, another opt-out
from the Shorewest class action litigation, Kings Way Homes, filed
suit.  The claims in the case mirror those in the Darrow case, except for an
additional set of claims alleging in effect that Journal Sentinels refusal to enter
into a new commercial advertising contract without a waiver of Shorewest-related
claims is anti-competitive.  A hearing on the Motion to Dismiss the plaintiffs
anti-competitive claims was held on October 23, 2007. The judge dismissed three of the
five claims. We do not believe that these additional claims are meritorious and intend to
defend the action vigorously.

Our insurance carrier has accepted
these claims under a reservation of rights and the amount that will be paid by the
carrier is uncertain at this point in time.

# ITEM 1A. RISK FACTORS

There are no material changes to the
disclosures regarding risk factors made in Item 1A. our Annual Report on Form 10-K for the
year ended December 31, 2006.

32

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

The following table provides
information about our repurchases of our class A and class B common stock in the third
quarter ended September 30, 2007:

# Issuer Purchases of
Equity Securities

|                               
|-------------------------------
|Period                         
|July 2 to July 29, 2007        
|July 30 to August 26, 2007     
|August 27 to September 30, 2007

| | (1) | 1,050,900
shares of class B common stock purchased by us during the period July                30
to August 26, 2007 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. We completed our
repurchases                under this program in August 2007.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | 2,149,100
shares of class class B common stock purchased by us during the period
               July 30 to August 26, 2007, and 1,142,200 shares of class A common stock
               purchased by us during the period August 27 to September 30, 2007, were
               purchased pursuant to a repurchase program publicly announced on May 3,
2007,                and commenced on August 22, 2007, pursuant to which our board of
directors                authorized the repurchase of up to 5,000,000 shares. These
shares will remain                authorized but unissued. This repurchase program will
expire in November 2008.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# ITEM 3. DEFAULTS UPON
SENIOR SECURITIES

None.

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

None

# ITEM 5. OTHER INFORMATION

None.

33

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# ITEM 6. EXHIBITS

(a) Exhibits

|Exhibit No. | Description                                                                                                                              
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------
|(4.1)       | Shareholders Agreement, dated as of May 12, 2003, by and among Journal Communications, Inc. (then known as                               
|            | The Journal Company), The Journal Company (then known as Journal Communications, Inc.), Matex Inc. and the                               
|            | Abert Family Journal Stock Trust, as further executed by two Family Successors, Grant D. Abert and                                     
|            | Barbara Abert Tooman (incorporated by reference to Exhibit 4.3 to Journal Communications, Inc.s                                         
|            | Registration Statement on Form S-1 filed on June 19, 2003 [Reg. No. 333-105210]).                                                        
|(4.2)       | Amendment to Shareholders Agreement, dated as of August 22, 2007, by and among Journal Communications,                                   
|            | Inc., The Journal Company, Matex Inc., the Abert Family Journal Stock Trust, Grant D. Abert and Barbara                                  
|            | Abert Tooman (incorporated by reference to Exhibit 4.2 to Journal Communications, Inc.'s Current Report on                               
|            | Form 8-K dated August 22, 2007 [File No. 1-31805]).                                                                                      
|(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.                                                                                                   

34

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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 7, 2007 | /s/ Steven J. Smith                                                   
|                       | Steven J. Smith, Chairman and Chief Executive Officer                 
|Date: November 7, 2007 | /s/ Paul M. Bonaiuto                                                  
|                       | Paul M. Bonaiuto, Executive Vice President and Chief Financial Officer

35