# 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: April 1, 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 April 27, 2007 (excluding 8,676,705
shares of class B common stock held by our subsidiary, The Journal Company):

|Class                | Outstanding at April 27, 2007
|-------------------- | -----------------------------
|Class A Common Stock | 47,210,278                   
|Class B Common Stock | 16,523,956                   
|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                   
|         |                       | April 1, 2007 (Unaudited) and December 31, 2006               
|         |                       | Unaudited Consolidated Condensed Statements of Earnings       
|         |                       | for the First Quarter Ended April 1, 2007 and March 26, 2006  
|         |                       | Unaudited Consolidated Condensed Statement of                 
|         |                       | Shareholders Equity for the First Quarter Ended April 1, 2007
|         |                       | Unaudited Consolidated Condensed Statements of                
|         |                       | Cash Flows for the First Quarter Ended April 1, 2007          
|         |                       | and March 26, 2006                                            
|         |                       | Notes to Unaudited Consolidated Condensed                     
|         |                       | Financial Statements as of April 1, 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)

|                                                                     | April 1, 2007 | December 31, 2006
|-------------------------------------------------------------------- | ------------- | -----------------
|(unaudited)                                                         
|ASSETS                                                               |               |                  
|Current assets:                                                      |               |                  
|Cash and cash equivalents                                            |               |                  
|Receivables, less allowance for doubtful accounts                    |               |                  
|of $3,879 and $4,075                                                 |               |                  
|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 $225,380 and $218,875                                             |               |                  
|Goodwill                                                             |               |                  
|Broadcast licenses                                                   |               |                  
|Other intangible assets, net                                         |               |                  
|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 April 1, 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 April 1, 2007 and December 31, 2006              |               |                  
|Class B - authorized 120,000,000 shares; issued and outstanding:     |               |                  
|16,750,627 shares at April 1, 2007 and 18,231,716                    |               |                  
|shares at December 31, 2006                                          |               |                  
|Class A - authorized 170,000,000 shares; issued and outstanding:     |               |                  
|47,518,707 shares at April 1, 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)

|                                                                | First Quarter 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                                                |                    
|                                                                |                    
|Total other income and (expense)                                |                    
|                                                                |                    
|Earnings from continuing operations before income taxes         |                    
|Provision for income taxes                                      |                    
|                                                                |                    
|Earnings from continuing operations                             |                    
|Gain from discontinued operations, net of applicable income tax |                    
|expense of $41,573 and $1,988, 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
First Quarter Ended April 1, 2007                  (dollars in thousands, except
per-share amounts)

|                                    | Preferred | Common Stock | Additional | Accumulated
Other
Comprehensive | Retained | Treasury
Stock, |    | Comprehensive
|----------------------------------- | --------- | ------------ | ---------- | ------------------------------- | -------- | --------------- | -- | -------------
|
|Balance at December 31, 2006        |           |              | $          | --                              |          | $               | 33 |              
|Net earnings                        |           |              |            |                                 |          |                 |    |              
|Amortization of prior service cost, |           |             
|net (gain) loss and transition      |           |             
|obligation of pension and           |           |             
|post-retirement liabilities         |           |             
|(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 |              
|                                    |           |              |            |                                 |          |                 |    |              

See accompanying notes
to unaudited consolidated condensed financial statements.

4

---

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

|                                                                  | First Quarter Ended
|----------------------------------------------------------------- | -------------------
|
|Cash flow from operating activities:                              |                    
|Net earnings                                                      |                    
|Less gain from discontinued operations                            |                    
|                                                                  |                    
|Earnings from continuing operations                               |                    
|Adjustments for non-cash items:                                   |                    
|Depreciation                                                      |                    
|Amortization                                                      |                    
|Provision for doubtful accounts                                   |                    
|Deferred income taxes                                             |                    
|Non-cash compensation                                             |                    
|Net gain from disposal of assets                                  |                    
|Net operating activities of discontinued operations               |                    
|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 investing activities of discontinued operations               |                    
|                                                                  |                    
|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                             |                    
|                                                                  |                    
|NET DECREASE IN CASH AND CASH EQUIVALENTS                         |                    
|Cash and cash equivalents:                                        |                    
|Beginning of year                                                 |                    
|                                                                  |                    
|At April 1, 2007 and March 26, 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 operating results for the first quarter ended
April 1, 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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 certain of our
non-statutory stock options, and common shares will be outstanding upon expiration of the
vesting periods for our non-vested restricted stock.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

---

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

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

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

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

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

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

| | Our
2003 Equity Incentive Plan (Plan) rewards key employees for achieving designated
corporate and individual performance goals and allows for issuances to outside directors
as part of their board compensation package. In February 2007, our board of directors
approved and adopted an amendment to our 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 may be 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 may be granted to employees. Subject to
certain adjustments, 6,000,000 shares of our class B common stock are authorized to be
issued under the Plan. Not more than 3,000,000 shares of our class B common stock may be
issued under the Plan in the form of stock grants, performance unit grants or stock unit
grants.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the first quarter of 2007, we recognized $348 in stock-based compensation expense,
including $96 recorded in gain from discontinued operations. Total income tax benefit
recognized related to stock-based compensation for the first quarter of 2007 was
approximately $138. 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 first quarter of 2007. As of April 1, 2007, total unrecognized
compensation cost related to stock-based compensation awards was approximately $2,653,
net of estimated forfeitures, which we expect to recognize over a weighted average period
of approximately 2.7 years. Stock-based compensation expense is included in selling and
administrative expenses in our consolidated condensed statements of earnings.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

---

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

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

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

| | The
compensation committee of our board of directors may grant non-statutory stock options to
employees and directors at a purchase price equal to at least the fair market value of
our class B common stock on the grant date for an exercise term determined by the
committee, not to exceed 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. As of April 1,
2007, there are 5,023,149 shares available for issuance in the form of non-statutory
stock options under the Plan.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | A
summary of stock option activity during the first quarter of 2007 is:
| | -----------------------------------------------------------------------

|                                
|--------------------------------
|Outstanding at December 31, 2006
|Expired                         
|                                
|Outstanding at April 1, 2007    
|                                
|Exercisable at April 1, 2007    
|                                

| | The
aggregate intrinsic value of stock options outstanding and exercisable at the end of the
first quarter is zero because the fair market value of our class B common stock on April
1, 2007 was lower than the weighted average exercise price of the options.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stock
appreciation right
| | ------------------------

| | A
stock appreciation right (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 fixed price and 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 first quarter 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 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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

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

| | A
summary of SAR activity during the first quarter of 2007 is:
| | --------------------------------------------------------------

|                                
|--------------------------------
|Outstanding at December 31, 2006
|Granted                         
|                                
|Outstanding at April 1, 2007    
|                                
|Exercisable at April 1, 2007    
|                                

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

| | Each
stock grant may be accompanied by restrictions, or may be made without any restrictions,
as the compensation committee of our board of directors determines. Such restrictions may
include requirements that the participant remain in our continuous employment for a
specified period of time, or that we or the participant meet designated performance
goals. We value nonvested restricted stock grants at the closing market prices of our
class A common stock on the grant date. As of April 1, 2007, there are 2,695,399 shares
available for issuance in the form of stock grants under the plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
summary of stock grant activity during the first quarter of 2007 is:
| | ----------------------------------------------------------------------

|                                 | 
|-------------------------------- | 
|Outstanding at December 31, 2006 | 
|Granted                          | 
|Vested                           | 
|Forfeited                        | 
|                                 | 
|Outstanding at April 1, 2007     | 
|                                 | 
|Fully vested at April 1, 2007    | 
|                                 | 

| | Our
nonvested restricted stock grants vest either three or five years from the grant date. We
expect our nonvested restricted stock grants to fully vest over the weighted average
remaining service period of 2.0 years. The total fair value of shares vesting during the
first quarter of 2007 was $225. During the first quarter of 2006, 80,212 vested and
nonvested restricted stock grants were issued to our directors and employees at a
weighted-average fair value of $12.68, of which 9,217 shares have since vested with a
total fair value of $117.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | The
2003 Employee Stock Purchase Plan permits eligible employees to purchase our class B
common stock at 90% of the fair market value measured as the closing market price of our
class A common stock on the day of purchase. We recognize compensation expense equal to
the 10% discount of the fair market value. Subject to certain adjustments, 3,000,000
shares of our class B common stock are authorized for sale under this plan. There were no
class B common shares sold to employees under this plan in the first quarter of 2007. As
of April 1, 2007, there are 2,761,630 shares available for sale under the plan.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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

|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 2003 through 2006 tax returns are open for federal
purposes, and our 2002 through 2006 tax returns still remain open for state tax purposes.
Currently, we are under audit in Wisconsin, Michigan, and Kansas.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 $772 of unrecognized tax benefits to
be recognized within the next 12 months due to the expiration of 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 $30 in interest related to unrecognized tax benefits
during the first quarter of 2007. It is possible for approximately $103 of interest
expense to decrease within the next 12 months due to the expiration of statute of
limitations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of April 1, 2007, there have been no material changes to our liability for unrecognized
tax benefits.
| | --------------------------------------------------------------------------------------------------------

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

| | Inventories
are stated at the lower of cost (first in, first out method) or market. Inventories at
April 1, 2007 and December 31, 2006 consisted of the following:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | April 1, 2007 | December 31, 2006
|------------------------- | ------------- | -----------------
|Paper and supplies        |               |                  
|Work in process           |               |                  
|Finished goods            |               |                  
|Less obsolescence reserve |               |                  
|                          |               |                  
|Inventories, net          |               |                  
|                          |               |                  

|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 April 1, 2007, we had borrowings of $105,280 under the facility at a
weighted average rate of 5.89%. Fees in connection with the facility of $1,717 are being
amortized over the term of the facility using the straight-line method which approximates
the effective-interest method.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---

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

|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                                           |                 
|                                                                |                 
|Net periodic benefit cost included in total operating costs and |                 
|expenses and selling and administrative expenses                |                 
|                                                                |                 

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

| | 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 the gain from discontinued operations.
Due to this pension plan curtailment, the measurement of the net periodic benefit cost
for the remainder of 2007 will be based upon a 5.75% discount rate.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 and the non-compete agreements over
the terms of the contracts.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Amortization
expense was $489 for the first quarter ended April 1, 2007 and $488 for the first quarter
ended March 26, 2006. Estimated amortization expense for our next five fiscal years is
$1,948 for 2007, $1,867 for 2008, $1,615 for 2009, $1,562 for 2010 and $1,204 for 2011.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

---

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

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

| | The
gross carrying amount, accumulated amortization and net carrying amount of the major
classes of definite-lived intangible assets as of April 1, 2007 and December 31, 2006 are
as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               | Gross
Carrying
Amount | Accumulated
Amortization | Net
Carrying
Amount
|------------------------------ | --------------------- | ------------------------ | -------------------
|As of April 1, 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | The
change in the carrying amount of goodwill for the first quarter ended April 1, 2007 is as
follows:
| | ------------------------------------------------------------------------------------------------------

|Reporting unit                  | Goodwill at
December 31, 2006 | Adjustment | Goodwill at
April 1, 2007
|------------------------------- | ----------------------------- | ---------- | -------------------------
|Daily newspaper                 |                               |            | $                        
|Community newspapers & shoppers |                               |            |                          
|Broadcasting                    |                               |            |                          
|Direct marketing services       |                               |            |                          
|                                |                               |            |                          
|Total                           |                               |            | $                        
|                                |                               |            |                          

| | The
change to the carrying amount of goodwill in the first quarter ended April 1, 2007
represents the divestiture of KOMJ-AM, Omaha, Nebraska, to Cochise Broadcasting LLC on
March 27, 2007.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | 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
following table summarizes Norlights results of operations which are included in
the gain from discontinued operations in the consolidated statement of earnings for the
first quarters ended April 1, 2007 and March 26, 2006:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             | April 1, 2007 | March 26, 2006
|---------------------------- | ------------- | --------------
|Revenue                      |               |               
|Earnings before income taxes |               |               

12

---

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

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

| | Norlights
current assets and current liabilities reported as discontinued operations in the
consolidated balance sheets at April 1, 2007 and December 31, 2006 consisted of the
following:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         | April 1, 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                |               |                  
|                                         |               |                  

| | 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | NorthStars
current and non-current assets and current liabilities reported as discontinued
operations in the consolidated balance sheets at April 1, 2007 and December 31, 2006
consisted of the following:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            | April 1, 2007 | December 31, 2006
|--------------------------- | ------------- | -----------------
|Receivables                 |               |                  
|                            |               |                  
|Total current assets        |               |                  
|                            |               |                  
|Property and equipment, net |               |                  
|                            |               |                  
|Total non-current assets    |               |                  
|                            |               |                  
|Accounts payable            |               |                  
|                            |               |                  
|Total current liabilities   |               |                  
|                            |               |                  

|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 75 community
newspapers and shoppers in eight states. Our broadcasting segment consists of 35 radio
stations and 10 television stations in 12 states and the operation of one television
station 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

---

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

|12 | SEGMENT
INFORMATION (continued)
|-- | -------------------------------

| | The
following tables summarize revenue, operating earnings, depreciation and amortization and
capital expenditures from continuing operations for the first quarter ended April 1, 2007
and March 26, 2006 and identifiable total assets at April 1, 2007 and December 31, 2006:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | First Quarter 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                         |                    
|                              |                    
|                              |                    
|                              |                    

|                                                      | April 1, 2007 | December 31, 2006
|----------------------------------------------------- | ------------- | -----------------
|
|Identifiable total assets                             |               |                  
|Publishing                                            |               |                  
|Broadcasting                                          |               |                  
|Printing services                                     |               |                  
|Other including corporate and discontinued operations |               |                  
|                                                      |               |                  
|                                                      |               |                  
|                                                      |               |                  

14

---

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

The following discussion of our
financial condition and results of operations should be read together with our unaudited
consolidated condensed financial statements for the first quarter ended April 1, 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 75 community newspapers and
shoppers in eight states. Our broadcasting segment consists of 35 radio stations and 10
television stations in 12 states and the operation of one television station 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.

15

---

In the first quarter of 2007, we were
pleased with the performance of our broadcasting business because we were able to replace
$3.3 million of revenue generated from the 2006 Winter Olympics and reflected in the first
quarter of 2006 comparable, and we also overcame a decrease in automotive advertising. We
also exceeded last years quarterly political advertising of $0.5 million through
increased political and issue advertising in Wisconsin. We continue to face challenges at
our publishing businesses. First quarter advertising revenue at our daily newspaper was
disappointing, with weakness in a number of categories including automotive, business and
financial services, department stores  due largely to consolidation  and real
estate. Even after two years of steep declines, automobile advertising was down 15.7% in
the quarter compared to last year. Interactive revenue growth to $3.0 million at the daily
newspaper continues to be strong with a 47.4% increase in the first quarter of 2007
compared to the first quarter of 2006. At our community newspapers and shoppers business,
revenue decreased 8.3% and the division posted an operating loss of $0.2 million compared
to operating earnings of $1.0 million in the first quarter of 2006. This reflects in large
part the product changes that we have made to Community Newspapers (our Milwaukee area
publications group) as well as the shift of significant commercial printing to our daily
newspapers print plant following the closure of our Hartland, Wisconsin facility.
Revenue and operating earnings increased at our printing services business, reflecting the
successful return to its core printing business.

On February 26, 2007, Q-Comm
Corporation (Q-Comm) acquired 100% of the stock of Norlight Telecommunications, Inc.
(Norlight), our former telecommunications subsidiary. Proceeds, net of transaction
expenses, were $175.9 million. We recorded a gain from discontinued operations of $64.7
million in the first quarter of 2007.

On March 27, 2007, Journal Broadcast
Group, our broadcasting subsidiary, completed the sale of KOMJ-AM in Omaha, Nebraska to
Cochise Broadcasting LLC 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.

# Results of Operations

| | First
Quarter Ended April 1, 2007 compared to First Quarter Ended March 26, 2006
| | --------------------------------------------------------------------------------

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

Our consolidated revenue in the first
quarter of 2007 was $152.8 million, a decrease of $3.6 million, or 2.3%, compared to
$156.4 million in the first quarter of 2006. Our consolidated operating costs and expenses
in the first quarter of 2007 were $86.3 million, an increase of $0.1 million, or 0.2%,
compared to $86.2 million in the first quarter of 2006. Our consolidated selling and
administrative expenses in the first quarter of 2007 were $49.3 million, a decrease of
$1.8 million, or 3.4%, compared to $51.1 million in the first quarter 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 first quarter
of 2007 and 2006:

|                                               | 2007 | Percent of
Total
Revenue | 2006 | Percent of
Total
Revenue
|---------------------------------------------- | ---- | ------------------------ | ---- | ------------------------
|
|Continuing Operations:                         |      |                          |      |                         
|Revenue:                                       |      |                         
|Publishing                                     |      |                          | $    | 76.1                    
|Broadcasting                                   |      |                          |      | 51.7                    
|Printing services                              |      |                          |      | 16.9                    
|Other                                          |      |                          |      | 8.1                     
|                                               |      |                          |      |                         
|Total revenue                                  |      |                          |      | 152.8                   
|Total operating costs and expenses             |      |                          |      | 86.3                    
|Selling and administrative expenses            |      |                          |      | 49.3                    
|                                               |      |                          |      |                         
|Total operating costs and expenses and selling |      |                         
|and administrative expenses                    |      |                          |      | 135.6                   
|                                               |      |                          |      |                         
|Total operating earnings                       |      |                          | $    | 17.2                    
|                                               |      |                          |      |                         

The decrease in total revenue was due
to the a decrease in Olympic advertising revenue at our NBC affiliates, the decrease in
retail and classified ROP (run-of-press) advertising at our publishing business, which was
driven by a decrease in automotive advertising, and a decrease in postage amounts billed
to customers and a decrease in mailing services at our direct marketing services business.
These revenue decreases were partially offset by an increase in local advertising revenue
at our television stations, an increase in interactive advertising revenue and commercial
printing and delivery revenue at our daily newspaper, local advertising revenue at our
radio stations and an increase in revenue from the printing of publications and manuals at
our printing services business.

16

---

The increase in total operating costs
and expenses was due to costs associated with reducing the web-width of the Milwaukee
Journal Sentinelfrom 50 inches to 48 inches, an increase in news and syndicated
programming expenses and depreciation expense at our television stations and an increase
in costs associated with the increase in revenue at our printing services business. These
cost increases were partially offset by a decrease in postage and freight expense at our
direct marketing services business and a decrease in production costs at our community
newspapers and shoppers due to the discontinuation of 10 shoppers in late 2006.

The decrease in selling and
administrative expenses is primarily due to a decrease in corporate expenses, a decrease
in legal, moving and relocation and recruitment expenses at the daily newspaper 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 sales expenses at our
radio and television stations, an increase in promotion expenses at our radio stations and
a loss on the sale of KOMJ-AM in Omaha, Nebraska.

Our consolidated operating earnings
in the first quarter of 2007 were $17.2 million, a decrease of $1.9 million, or 10.2%,
compared to $19.1 million in the first quarter of 2006. The following table presents our
operating earnings by segment for the first quarter of 2007 and 2006:

|                         | 2007 | Percent of
Total
Operating
Earnings | 2006 | Percent of
Total
Operating
Earnings
|------------------------ | ---- | ----------------------------------- | ---- | -----------------------------------
|
|Publishing               |      |                                     | $    | 5.6                                
|Broadcasting             |      |                                     |      | 10.0                               
|Printing services        |      |                                     |      | 1.0                                
|Other                    |      |                                     |      | 0.6                                
|                         |      |                                     |      |                                    
|Total operating earnings |      |                                     | $    | 17.2                               
|                         |      |                                     |      |                                    

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 at our television stations and a decrease in retail and classified
ROP advertising revenue at our publishing businesses. Partially offsetting these operating
earnings decreases was the decrease in corporate expenses and the revenue increase at our
printing services business.

Our consolidated EBITDA in the first
quarter of 2007 was $24.9 million, a decrease of $1.3 million, or 5.0%, compared to $26.2
million in the first 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 first
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 decreases in operating earnings in our publishing and broadcasting segments,
partially offset by an increase in operating earnings at our other and printing services
segments for the reasons described above.

17

---

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

Revenue from publishing in the first
quarter of 2007 was $76.1 million, a decrease of $3.2 million, or 4.0%, compared to $79.3
million in the first quarter of 2006. Operating earnings from publishing were $5.6
million, a decrease of $2.0 million, or 27.1%, compared to $7.6 million in the first
quarter of 2006.

The following table presents our
publishing revenue by category and operating earnings for the first 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 first
quarter of 2007 accounted for 70.0% of total publishing revenue compared to 71.5% in the
first quarter of 2006.

Retail advertising revenue in the
first quarter of 2007 was $31.9 million, a decrease of $1.7 million, or 5.1%, compared to
$33.6 million in the first quarter of 2006. The $1.2 million decrease at our community
newspapers and shoppers was due to a mid-week shared mail product previously reported by
that division and now reported under the daily newspaper following a business combination
of the two divisions shared mail products and a decrease in automotive advertising.
The $0.5 million decrease at our daily newspaper was primarily due to a decrease in ROP
advertising, primarily in the business services, finance/insurance, department stores and
automotive categories, partially offset by increases in Interactive and preprint
advertising.

Classified advertising revenue in the
first quarter of 2007 was $17.6 million, a decrease of $1.2 million, or 6.5%, compared to
$18.8 million in the first quarter of 2006. Decreases in ROP classified advertising at our
daily newspaper were partially offset by an increase in Interactive classified
advertising. The $0.9 million decrease in classified advertising revenue at our daily
newspaper was primarily due to decreases in automotive advertising of $0.5 million, real
estate advertising of $0.4 million and employment advertising of $0.1 million, partially
offset by an increase in other advertising of $0.1 million. Employment advertising
accounted for 46.8% of classified advertising revenue at the daily newspaper in the first
quarter of 2007. The $0.3 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 following
a business combination of the two divisions shared mail products.

The total decrease in retail and
classified automotive advertising at our daily newspaper in the first quarter of 2007 was
$0.6 million, or 15.7%, compared to the first quarter of 2006.

Total retail and classified
Interactive revenue at our daily newspaper was $3.0 million in the first quarter of 2007,
an increase of $0.9 million, or 47.4%, compared to $2.1 million in the first quarter of
2006.

National advertising revenue in the
first quarter of 2007 was $2.4 million, a decrease of $0.1 million, or 2.3%, compared to
$2.5 million in the first quarter of 2006.

18

---

The following table presents our
daily newspapers core newspaper advertising linage by category and core newspaper
and shared mail preprint pieces for the first 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 first
quarter of 2007 decreased 16.9% compared to the first quarter of 2006. Full run
advertising linage in 2006 decreased 12.8% compared to the first 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 automotive category and the
decrease in retail advertising linage is primarily due to decreases in the department
stores, finance/insurance, business services and automotive categories. National
advertising linage decreased primarily due to decreases in the communications and movies
categories. Part run advertising linage decreased 69.5% in the first quarter of 2007 due
to the elimination of daily zoned editions. Preprint advertising pieces increased 1.0% in
the first quarter of 2007 primarily due to a mid-week shared mail product previously
reported by the community newspapers and shoppers division and is now reported under the
daily newspaper following a business combination of the two divisions shared mail
products.

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

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

Total full pages of advertising for
our community newspapers and shoppers business in the first quarter of 2007 decreased
15.9% compared to the first quarter of 2006. The decrease was due to a mid-week shared
mail product previously reported as a community shopper and now reported under the daily
newspaper following a business combination of the two divisions shared mail products
and revamping 18 weekly community newspapers and reducing the number of publications to
eight. Revenue per page increased 7.1% 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 $1.1 million in the first
quarter of 2007, a decrease of $0.3 million, or 21.8%, compared to $1.4 million in the
first quarter 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 first quarter of 2007, a decrease of $0.1 million, or
20.7%, compared to $0.4 million in the first quarter of 2006.

Circulation revenue in the first
quarter of 2007 accounted for 17.4% of total publishing revenue compared to 17.3% in the
first quarter of 2006. Circulation revenue of $13.2 million in the first quarter of 2007
decreased $0.5 million, or 3.8%, compared to $13.7 million in the first quarter of 2006
primarily due to decreases in daily and Sunday average net paid circulation and a decrease
in the Sunday average rate per copy at our daily newspaper and a change in the
distribution model of the community newspapers in the Milwaukee, Wisconsin area.

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 12.6% of total publishing revenue in the first quarter of 2007
compared to 11.2% in the first quarter of 2006. Other revenue in the first quarter of 2007
was $9.6 million, an increase of $0.7 million, or 8.1%, compared to $8.9 million in the
first quarter of 2006. The increase was primarily due to an increase in commercial
printing due to an agreement signed by our daily newspaper in late 2006 to print the
USA Today and an increase in commercial delivery revenue at the daily newspaper.

19

---

Publishing operating earnings in the
first quarter of 2007 were $5.6 million, a decrease of $2.0 million, or 27.1%, compared to
$7.6 million in the first quarter of 2006. Operating earnings decreased $1.2 million in
the first quarter of 2007 at our community newspapers and shoppers primarily due to the
decrease in revenue and costs associated with a lease termination, an increase in legal
expenses and workmens compensation claims. In addition, in the first quarter 2006,
we recorded recoveries of bad debts related to Hurricane Katrina and a litigation reserve
reversal. Operating earnings decreased $0.8 million in the first quarter of 2007 at the
daily newspaper primarily due to the operating earnings impact from the decrease in
revenue, a vacation accrual adjustment and costs associated with reducing the web-width of
the Milwaukee Journal Sentinel from 50 inches to 48 inches, partially offset by
decreases in legal, moving and relocation and recruitment expenses. Total newsprint and
paper costs for our publishing businesses in the first quarter of 2007 were $9.0 million,
a decrease of $1.3 million, or 12.3%, compared to $10.3 million in the first quarter of
2006 primarily due to a 12.5% decrease in newsprint consumption and a 3.3% decrease in
average newsprint pricing per metric ton. Consumption of metric tonnes of newsprint in the
first quarter of 2007 decreased primarily due to decreases in ROP advertising, editorial
content, web-width and average net paid circulation at our daily newspaper.

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

Revenue from broadcasting in the
first quarter of 2007 was $51.7 million, an increase of $0.1 million, or 0.1%, compared to
$51.6 million in the first quarter of 2006. Operating earnings from broadcasting in the
first quarter of 2007 were $10.0 million, a decrease of $1.6 million, or 13.7%, compared
to $11.6 million in the first quarter of 2006.

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

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

Revenue from our radio stations in
the first quarter of 2007 was $18.2 million, an increase of $0.7 million, or 3.4%,
compared to $17.5 million in the first quarter of 2006. The increase was primarily due to
an increase in local advertising revenue primarily from developmental revenue, which
refers to non-transactional revenue that targets non-traditional advertisers, and
interactive revenue.

Operating earnings from our radio
stations were $3.8 million in the first quarter of 2007 and 2006. The increase in
operating earnings due to the increase in revenue was offset by an increase in sales
expenses due to higher commissions and bonuses associated with the higher revenue, an
increase in promotion expenses and a $0.1 million loss on the sale of KOMJ-AM in Omaha,
Nebraska.

Revenue from our television stations
in the first quarter of 2007 was $33.5 million, a decrease of $0.6 million, or 1.6%,
compared to $34.1 million in the first quarter of 2006. The decrease was primarily due to
a $3.3 million decrease in Olympic advertising revenue at our NBC affiliates, partially
offset by a $2.3 million increase in local advertising revenue primarily from
developmental and interactive revenue, a $0.2 million increase in national advertising
revenue, a $0.1 million increase in political and issue advertising revenue and a $0.1
million increase in other revenue.

Operating earnings from our
television stations in the first quarter of 2007 were $6.2 million, a decrease of $1.6
million, or 21.1%, compared to $7.8 million in the first quarter of 2006. The decrease in
operating earnings was primarily due to the decrease in revenue, an increase in
programming expenses associated with additional newscasts and an increase in syndicated
programming costs, an increase in sales expenses and an increase in depreciation expense.

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

Revenue from printing services in the
first quarter of 2007 was $16.9 million, an increase of $0.6 million, or 3.5%, compared to
$16.3 million in the first quarter of 2006. Operating earnings from printing services in
the first quarter of 2007 were $1.0 million, an increase of $0.5 million, or 103.0%,
compared to $0.5 million in the first quarter of 2006.

The increase in printing services
revenue was primarily due to a $1.7 million increase in revenue from the printing of
publications and manuals, reflecting $1.8 million in new printing business gained. This
increase was partially offset by a $1.1 million decrease in revenue from Dell Computer
Corporation and other computer-related customers.

The increase in printing services
operating earnings was primarily due to the increase in revenue as well as efficiencies
gained from new printing equipment and a favorable adjustment from the termination of a
sublease agreement.

20

---

| | Other
| | -----

Other revenue in the first quarter of
2007 was $8.1 million, a decrease of $1.1 million, or 10.7%, compared to $9.2 million in
the first quarter of 2006. Other operating earnings in the first quarter of 2007 were $0.6
million, an increase of $1.2 million compared to a loss of $0.6 million in the first
quarter of 2006.

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

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

The decrease in other revenue in the
first quarter of 2007 compared to the first quarter of 2006 was primarily due to a
decrease in postage amounts billed to customers and mailing services at our direct
marketing services business. Included in revenue and operating costs and expenses from our
direct marketing services business is $4.3 million and $4.9 million of postage amounts
billed to customers in the first quarter of 2007 and 2006, respectively.

The increase in other operating
earnings was primarily due to a decrease in corporate expenses.

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

Interest income was insignificant in
the first quarter of 2007 and 2006. Interest expense was $3.0 million in the first quarter
of 2007 compared to $3.7 million in the first quarter of 2006. The decrease is primarily
due to a decrease in debt outstanding, which was reduced with the proceeds from the sale
of Norlight. Amortization of deferred financing costs was $0.1 million in the first
quarter of 2007 and 2006.

The effective tax rate for continuing
operations was 39.5% in the first quarter of 2007 and 2006.

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

Gain from discontinued operations,
net of income taxes, was $64.7 million in the first quarter of 2007 compared to $2.9
million in the first quarter of 2006. Income tax expense was $41.6 million in the first
quarter of 2007 compared to $2.0 million in the first quarter of 2006.

On February 26, 2007, Q-Comm acquired
100% of the stock of Norlight, our former telecommunications subsidiary. The operations of
Norlight have been reflected as discontinued operations in our consolidated condensed
financial statements for all periods presented.

Revenue from Norlight in the first
quarter of 2007 was $18.5 million compared to $32.8 million in the first quarter of 2006.
We recorded a $62.0 million net gain on the sale of Norlight as well as a $2.7 million net
gain from its operations in the first quarter of 2007 compared to $2.9 million net gain
from its operations in the first quarter of 2006.

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

Our net earnings in the first quarter
of 2007 were $73.3 million, an increase of $61.0 million, compared to $12.3 million in the
first quarter of 2006. The increase was primarily due to the gain from discontinued
operations of Norlight and the decrease in interest expense in the first quarter of 2007
for the reasons described above partially offset by the decrease in operating earnings
from continuing operations.

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

Basic and diluted earnings per share
from continuing operations were $0.13 and $0.12, respectively, for the first quarter of
2007 compared to $0.13 for both in the first quarter of 2006. Basic and diluted earnings
per share from discontinued operations were $0.99 and $0.93, respectively, in the first
quarter of 2007 compared to $0.04 for both in the first quarter of 2006. Basic and diluted
net earnings per share were $1.12 and $1.05, respectively, for the first quarter of 2007
compared to $0.17 for both in the first quarter of 2007.

21

---

# 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 April 1, 2007,
we had borrowings of $105.3 million under the facility at a weighted average rate of
5.89%. Fees in connection with the facility of $1.7 million are being amortized over the
term of the facility using the straight-line method which approximates the
effective-interest method. The material covenants of this agreement include the following:

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

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

As of April 1, 2007, we are in
compliance with both of these material covenants.

Cash balances were $5.8 million at
April 1, 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.

On February 26, 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 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 broadcasting 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 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.

In April 2006, our Board of Directors
authorized the repurchase of up to five million shares of our class A common stock over
the following 18 months. Under the program, share purchases may be made at our discretion,
from time to time, in the open market and/or in private transactions. Our share purchases
will depend on market conditions, share price, trading volume and other factors. In the
first quarter of 2007, we repurchased 2.2 million of our class A shares pursuant to the
April 2006 authorization.

# Cash Flow

Cash provided by operating activities
was $4.6 million in the first quarter of 2007 compared to $25.7 million in the first
quarter of 2006. The decrease was primarily due to a prepaid income tax payment related to
a state income tax audit made in the first quarter of 2007 and a decrease in cash provided
by Norlight in the first quarter of 2007 compared to the first quarter of 2006.

Cash provided by investing activities
was $156.5 million in the first quarter of 2007 compared to cash used by investing
activities of $6.8 million in the first quarter of 2006. Proceeds from the sale of
Norlight and KOMJ-AM were $176.4 million in the first quarter 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 $1.4 million in the first quarter of 2007.
Capital expenditures were $7.9 million in the first quarter of 2007 compared to $5.4
million in the first quarter 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 optimize our results and position us well for the future. The cash used
for investing activities of discontinued operations in the first quarter of 2007 includes
capital expenditures of $0.6 million for Norlight compared to $1.4 million in the first
quarter of 2006.

Cash used for financing activities
was $163.2 million in the first quarter of 2007 compared to $20.0 million in the first
quarter of 2006. Borrowings under our credit facility in the first quarter of 2007 were
$99.3 million and we made payments of $229.1 million, reflecting the immediate use of
proceeds received from the sale of Norlight, compared to borrowings of $48.8 million and
payments of $53.6 million in the first quarter of 2006. In the first quarter of 2007 and
2006, we paid $28.1 million and $10.9 million, respectively, to purchase our class A
common stock. We paid cash dividends of $5.4 million and $4.9 million in the first quarter
of 2007 and 2006, respectively.

# Contractual Obligations

There was no material impact on our
contractual obligations as a result of adopting FIN 48.

22

---

# 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.

# 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.
Litigation.On December 27, 2006, a lawsuit was filed 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.  On February 26, 2007, Journal Sentinel, Inc. filed its answer and a Motion
to Dismiss all of plaintiffs tort claims. A hearing on the Motion to Dismiss is
scheduled for May 7, 2007.We believe the lawsuit is without merit and intend to
defend the action vigorously. Our insurance carrier has accepted this claim under a
reservation of rights and the amount that will be paid by the carrier, if any, is
uncertain at this point in time.

# ITEM 1A.    RISK FACTORS

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

23

---

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

The following table provides
information about our repurchases of our class A common stock in the first quarter ended
April 1, 2007:

# Issuer Purchases of
Equity Securities

|                                | (a)                              | (b)                          | (c)                                                                                  | (d)                                                                           
|------------------------------- | -------------------------------- | ---------------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------
|Period                          | Total Number of
Shares Purchased | Average Price
Paid Per Share | Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
Or Programs (1) | Maximum Number
Of Shares that May
Yet Be Purchased
Under the Plans
or Programs
|January 1 to January 28, 2007   | 625,300                          | $    12.83                   | 1,885,400                                                                            | 3,114,600                                                                     
|January 29 to February 25, 2007 | 410,500                          | $    13.47                   | 2,295,900                                                                            | 2,704,100                                                                     
|February 26 to April 1, 2007    | 1,119,600                        | $    13.01                   | 3,415,500                                                                            | 1,584,500                                                                     

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

# ITEM 3.    DEFAULTS UPON
SENIOR SECURITIES

None.

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

None.

# ITEM 5.    OTHER INFORMATION

None.

# ITEM 6.    EXHIBITS

(a) Exhibits

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

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

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

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

24

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SIGNATURES

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

|                  | JOURNAL COMMUNICATIONS, INC.                                          
|----------------- | ----------------------------------------------------------------------
|                  | Registrant                                                            
|Date: May 4, 2007 | /s/ Steven J. Smith                                                   
|                  | Steven J. Smith, Chairman and Chief Executive Officer                 
|Date: May 4, 2007 | /s/ Paul M. Bonaiuto                                                  
|                  | Paul M. Bonaiuto, Executive Vice President and Chief Financial Officer

25