SECURITIES & EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM 10-K

(X)  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                 Act of 1934 For the fiscal year ended December 31, 2002
                         Commission File Number: 0-7831


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

       Wisconsin                                       39-0382060
       ---------                                       ----------
(State of incorporation)                 (I.R.S. Employer identification number)

333 West State Street, Milwaukee, Wisconsin              53203
-------------------------------------------             --------
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code: (414) 224-2728

Securities registered pursuant to Section 12(b) of the Act:
                                      NONE
                                      ----

Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, Par Value $0.125 Per Share
                    ----------------------------------------
                                (title of class)


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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

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

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second
quarter: Not applicable.

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 2003:

Class
-----                                              Outstanding at March 31, 2003
                                                   -----------------------------
Common Stock, par value $0.125                                        28,800,000

Units of Beneficial Interest                                         25,920,000*

                *2,884,263 of which were held by us in treasury.

                       Documents Incorporated by Reference
                       -----------------------------------

Portions of the Proxy Statement for our June 3, 2003 Annual Meeting of
Shareholders are incorporated by reference into Part III.


                                       1
<PAGE>

Forward-Looking Statements

We make certain statements in this Annual Report on Form 10-K (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 use words such as "may," "will," "intend," "anticipate,"
"believe," or "should" and similar expressions in this Annual Report on Form
10-K 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:

o    changes in advertising demand;

o    changes in newsprint prices and other costs of materials;

o    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);

o    the availability of quality broadcast programming at competitive prices;

o    changes in network affiliation agreements;

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

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

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

o    effects of bankruptcies and government investigations on customers for our
     telecommunications wholesale services;

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

o    changes in interest rates;

o    the outcome of pending or future litigation;

o    energy costs;

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

o    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 Annual Report on Form 10-K.



                                       2
<PAGE>

                                     PART I


ITEM 1. BUSINESS

We are a diversified media and communications company with operations in
publishing, radio and television broadcasting, telecommunications and printing
services. In newspaper publishing, we publish the Milwaukee Journal Sentinel,
which serves as the principal daily and Sunday newspaper for the greater
Milwaukee area, and we publish more than 90 community newspapers and shoppers in
8 states. We own and operate 36 radio stations and 6 television stations in 11
states. We also own and operate a large fiber optic network. Over the last 10
years, we have grown operating revenue from $448 million to $801 million,
representing a compound annual growth rate of 6.7%.

We were founded in 1882 as a newspaper publisher serving Milwaukee, Wisconsin.
Our media capabilities were enhanced when WTMJ radio signed on in 1927 and,
again, in 1947 as we began operation of WTMJ-TV. In 1937, Harry J. Grant founded
our employee ownership plan, which has contributed significantly to our
company's positive culture and growth by creating the Journal Employees' Stock
Trust, which we refer to as "JESTA" or the stock trust. We believe employee
ownership has served as a competitive advantage for our company since JESTA was
established. We have been able to attract and retain motivated people who have a
passion for the business and a level of commitment and sense of accountability
that is heightened due to their participation in ownership. Our culture is
reinforced by our strong commitment to high ethical standards.

Growth in our business has come in a number of our diversified business lines;
community newspapers and shoppers, broadcasting, telecommunications and printing
services. For example, in 1972 we began Midwestern Relay, a microwave network
business in order to move broadcast feeds point to point. When the break-up of
AT&T created opportunities for regional competitors, Midwestern Relay became a
strong regional supplier in the wholesale telecommunications business. The
growth and success of this business led to the acquisition of fiber optic based
competitor Norlight Telecommunications in 1991.

Over the last 10 years, we have purchased more than 40 businesses, most of which
have been acquisitions of publishing and broadcasting properties. Our 1999
purchase of the Great Empire radio group, consisting of 13 radio stations, was
our largest acquisition during this period. As a result of this expansion, we
have significantly expanded our diversified media operations beyond our
Milwaukee base. We plan to continue to search for acquisitions that fit our
growth strategy, focusing on broadcast stations in both existing markets and in
new markets with an economic profile similar to those we presently serve. Our
experience operating daily newspaper, community newspapers and shoppers, radio
and television properties in Milwaukee, one of the "grandfathered"
cross-ownership markets, positions us to better evaluate cross ownership
opportunities created through evolving government regulations.

Our business segments are based on the organizational structure used by
management for making operating and investment decisions and for assessing
performance. We previously reported 8 business segments, which included our
corporate operations and the operations of each one of our wholly-owned
subsidiaries. In order to better reflect our operations as a diversified media
company, and to reflect certain changes in the way our management receives
internal financial information, we determined it appropriate under Statement No.
131, "Disclosures About Segments of an Enterprise and Related Information," to
aggregate previously reported segments and identify new segments by type of
business rather than by names of individual operating entities. As a result, we
changed our reportable business segments in 2002 to the following: (i)
publishing; (ii) broadcasting; (iii) telecommunications; (iv) printing services;
and (v) other. Our publishing segment consists of a daily newspaper, the
Milwaukee Journal Sentinel, and more than 90 community newspapers and shoppers.
Our broadcasting segment consists of 36 radio stations and 6 television stations
in 11 states. Our telecommunications segment consists of wholesale and
business-to-business telecommunications services provided through a high speed
fiber optic telecommunications network that covers more than 4,400 route miles
in 7 states. Our printing services segment reflects the operations of our
printing and assembly and fulfillment business. Our other segment consists of a
label printing business and a direct marketing services business. Additional
information about our segments is presented in "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and financial
information about the segments is presented in Note 12 in our Notes to
Consolidated Financial Statements.


                                       3
<PAGE>

The operating revenue generated by each operating segment, as a percentage of
our consolidated operating revenue, for the last 3 years is shown below.

                                                  2002         2001       2000
                                                 ------       ------     ------

Publishing..................................      38.8%        39.6%      42.1%
Broadcasting................................      19.1         16.7       18.3
Telecommunications..........................      18.6         18.8       15.5
Printing Services...........................      12.2         14.2       13.1
Other.......................................      11.3         10.7       11.0
                                                 ------       ------     ------

Total.......................................     100.0%       100.0%     100.0%
                                                 ======       ======     ======

On October 25, 2002, our board of directors directed management and our
financial adviser to explore potential sources for additional permanent capital
for the company. We indicated at that time that we expected the process could
take from six to nine months. As a result, we suspended the purchase and sale of
units under JESTA while we explore additional permanent capital. We continue to
study different sources of permanent capital for our business. However, we
cannot assure you that we will be able to obtain additional permanent capital,
or if we do, what the terms or structure will be. See "Item 5. Market for
Company's Common Stock and Related Stockholder Matters-Permanent Capital
Study."

More information regarding us is available at our website at www.jc.com. We are
not including the information contained on our Website as a part of, or
incorporating it by reference into, this annual report on Form 10-K. 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.

Publishing

Our publishing business consists of our daily newspaper, the Milwaukee Journal
Sentinel, and our community newspapers and shoppers. Our publishing business
accounted for 38.8% of our operating revenue and 26.6% of our operating earnings
for the year ended December 31, 2002. Within our publishing segment, our daily
newspaper accounted for 68.4% of our publishing operating revenue and 94.7% of
our publishing operating earnings in 2002. Our community newspapers and shoppers
accounted for 31.6% of our publishing operating revenue and 5.3% of our
publishing operating earnings in 2002. See Note 12 to our Consolidated Financial
Statements for additional financial information regarding our publishing
business. No single customer accounted for more than 10% of our publishing
operating revenue in 2002.

Daily Newspaper

The Milwaukee Journal Sentinel has the largest circulation of all newspapers
published in Wisconsin, with a circulation of approximately 445,000 on Sunday
and 250,000 daily. According to an April 2002 readership survey conducted by
Scarborough Research, the Sunday Milwaukee Journal Sentinel ranks number 1 in
readership in the 50 largest geographic markets in the United States, and the
daily newspaper ranks number 7. These rankings are calculated by dividing the
number of adults reading the newspaper in a newspaper's Metropolitan Statistical
Area divided by the number of persons over the age of 18 in the newspaper's MSA
(which, for the Milwaukee Journal Sentinel, consists of Milwaukee, Waukesha,
Washington and Ozaukee counties).

Recent traditional print media awards won by the Milwaukee Journal Sentinel
include:

     o    2003 National Headliner Awards, first place for local interest column;
     o    2002 Inland Press Association, first place for explanatory writing,
          editorial excellence, and news picture contest; second place for front
          page contest;
     o    2002 Annual Society for News Design, 3 awards for excellence,
          illustration and photography; and
     o    2002 Better Newspaper Contest conducted by the Wisconsin Newspaper
          Association, Newspaper of the Year among the state's largest
          newspapers.

                                       4
<PAGE>

In addition to winning numerous awards for journalistic excellence for
traditional print media, we have become an award-winner in the newspaper
industry for our Internet-based operations. We operate a number of websites that
provide editorial and advertising content, including JSOnline.com and
OnWisconsin.com, the combination of which achieved almost 32 million page views
in December 2002. In addition, Packerinsider.com, a website dedicated to
coverage of the Green Bay Packers, to which viewers must pay to subscribe, won
the 2002 NAA Digital Edge Award for Best Vertical Site and was the runner-up in
the 2002 Online News Association Awards for General Excellence in Online
Journalism. We continue to seek ways to best serve the growing population
interested in deriving news from the Internet.

We anticipate that our new production facility will be fully operational in
early 2003. At more than $112 million, the new production facility is the
largest capital investment in our history. The 448,750 square-foot facility is
on a 41-acre site in an industrial area in the village of West Milwaukee. The
facility will house all printing, packaging, inserting, recycling and
transportation processes for the Milwaukee Journal Sentinel. We expect that the
new presses will provide faster press speed and reduce printing waste, and
reduce the high costs of labor in the printing process. We believe the new print
processing will significantly reduce production costs, as well as increase
newspaper advertising and commercial printing opportunities as a result of
manufacturing efficiency, higher quality print reproduction and expanded color
availability.

The Milwaukee Journal Sentinel is distributed primarily by independent contract
carriers throughout southeastern Wisconsin and a small portion of northern
Illinois. Agents deliver the Milwaukee Journal Sentinel to single copy outlets
throughout the rest of Wisconsin.

Our primary goal is to grow readership, circulation and revenue in our 5 county
primary market area (which we refer to as our "PMA"). In order to achieve this
growth, we are concentrating on 4 cornerstones: content, brand, culture and
customer service. The Milwaukee Journal Sentinel is focused on increasing the
appeal of both its editorial and advertising content in order to better meet
readers' interests and to make the paper easier to read and navigate. We have
undertaken concentrated efforts to develop, implement, communicate and track
strategies to grow our well-established brand. The Milwaukee Journal Sentinel is
also committed to continue making on-time delivery its top customer service
priority. We are also developing a constructive, collaborative internal culture
that supports readership growth.

Although the penetration of the Milwaukee Journal Sentinel among southeastern
Wisconsin readers is generally high, the newspaper still has significant growth
potential, especially in targeted ZIP codes in which the newspaper's penetration
level remains low. As part of a targeted readership growth strategy, we have
undertaken a program called the "Milwaukee Initiative," with discounted
subscription and single copy offers and outreach programs at churches,
educational institutions and apartment complexes.

Circulation revenue accounted for 21.3% of our daily newspaper's total operating
revenue in 2002. The Audit Bureau of Circulations audits average net paid
circulation for the 12 months ending March 31. Our results for the last 5 years,
as audited by the Audit Bureau of Circulations, were as follows:
<TABLE>
<CAPTION>
                                                          Average Net Paid Circulation
                                             2002       2001      2000       1999         1998
                                             ----       ----      ----       ----         ----
<S>                                         <C>        <C>        <C>        <C>         <C>
Daily..........................             250,356    270,686    281,067    283,642     286,793
Sunday.........................             445,396    452,396    458,015    458,332     459,374
</TABLE>

The decline in average net paid circulation from 2001 to 2002 was caused
primarily by the elimination of home delivery in all but 12 counties in
southeastern Wisconsin, as part of our cost reduction initiatives. As a result,
average net paid circulation decreased in 2002 by 3.6% for our daily paper and
4.9% for our Sunday paper. Additionally, our average net paid circulation in our
PMA increased .03% for our daily paper and .25% for our Sunday paper over 2001,
representing the first increase in circulation within our PMA in almost 20
years. The Milwaukee Journal Sentinel single copy prices are $0.50 for daily and
$1.75 for Sunday.

Advertising revenue accounted for 77.0% of our daily newspaper's total operating
revenue in 2002. We have set forth in the table below annual advertising volume
as printed on our presses (measured in column inches) and the number of
preprints inserted into the Milwaukee Journal Sentinel's daily and Sunday
editions and its total market coverage (TMC) product, Weekend plus, for the last
5 calendar years. We believe the advertising volume decline during 2002 in full
run was a result of advertisers switching to preprints, the downturn in
employment advertising and several large retailers decreasing their advertising
expenditures. This is believed to be due to the weakened economy during 2002.
(Full run refers to advertisements that are published in all editions of the
newspaper, whereas part run refers to advertisements published in only certain
editions of the newspaper. Preprint pieces are the total number of individual
customer's advertisements that are provided by the customer that were inserted
into the newspapers.)


                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                                     Annual Advertising Volume
                                                                     2002          2001         2000           1999         1998
                                                                     ----          ----         ----           ----         ----
                                                                                       (inches in thousands)
<S>                                                                <C>           <C>           <C>           <C>          <C>
Full run in column inches............................              1,668.3       1,763.0       2,015.2       1,987.0      2,030.6
Part run in column inches............................                 80.3          70.7          24.2          15.4         20.6

Preprint pieces (in millions)........................                773.5         719.5         665.7         659.0        650.0
</TABLE>

Community Newspapers and Shoppers

We own and operate more than 90 community newspapers and shoppers and 7 printing
plants through our subsidiary, Add, Inc. We publish 39 shoppers with a combined
circulation of more than 770,000 each week. Shoppers are free publications,
primarily carrier-delivered to each household in a geographic area, featuring
advertisements primarily from local and regional businesses. A few of our
shoppers also include local interest stories and weekly columns, such as
fishing/hunting reports, obituaries and television listings. These shoppers are
delivered to various communities in Wisconsin, Ohio, Louisiana, Vermont and
Massachusetts.

We publish 47 community newspapers, with a combined circulation of more than
300,000 weekly. Our community newspapers focus on local news and events that are
of interest to the local residents. In some markets, our community newspapers
are the only source of local news. These local newspapers serve communities in
Wisconsin, Connecticut and Florida.

Included in our community newspapers and shoppers operation are 10 niche
publications that are product or interest specific; therefore, they appeal to a
very specific advertiser and reader. A few examples of the niche products are
automotive and boating focused publications. We provide niche publications in
Wisconsin, Louisiana, Florida and New York. In addition to our publishing
operations, we also provide commercial printing services including cold-web
printing, electronic prepress, bindery and inserting mostly for other weekly
niche publications.

Information about our community newspapers, shoppers and niche publications is
presented below:

<TABLE>
<CAPTION>
                                 2002             Average             Number              Number                 Type
                                Revenue           Weekly              of Paid             of Free              Products/
           Group           (in thousands)       Circulation        Publications        Publications              Number
     -----------------     --------------       -----------        ------------        ------------              ------
<S>                           <C>                  <C>                     <C>                  <C>      <C>
     Central Wisconsin        $  10,080            167,000                  -                   8        Newspapers - 2
                                                                                                           Shoppers - 6

     CNI Papers (WI)              8,911             67,000                 23                   -        Newspapers - 23

     Ohio                         7,897            204,000                  -                   9          Shoppers - 9

     Hartland (WI)                7,311            112,000                  5                   5        Newspapers - 6
                                                                                                           Shoppers - 4

     Fox Valley (WI)              7,145            110,000                  2                   6        Newspapers - 2
                                                                                                             Niches - 3
                                                                                                           Shoppers - 3

     New York/Connecticut         6,923            131,000                  3                   8       Newspapers - 10
                                                                                                             Niche - 1

     Louisiana                    6,620            151,000                  2                   3            Niches - 3
                                                                                                           Shoppers - 2

     This Week Papers (WI)        4,833            194,000                  -                  11         Shoppers - 11

     Florida                      4,224             67,000                  2                   3        Newspapers - 4
                                                                                                              Niche - 1

     Mariner (FL)                 3,850             47,000                  -                   2            Niches - 2

     Vermont                      3,675             69,000                  -                   4          Shoppers - 4
                              ---------          ---------            -------              ------

     Total                    $  71,469          1,319,000                 37                  59
                              =========          =========            =======              ======
</TABLE>

                                       6
<PAGE>

Advertising revenue and circulation revenue accounted for 70% and 3%,
respectively, of our community newspapers' and shoppers' total operating revenue
in 2002; other revenue, primarily commercial printing revenue, accounted for
27%.

Newsprint

The basic raw material of newspapers is newsprint. We have purchase contracts,
which run through 2006, with 2 suppliers that provide for approximately 95% of
our estimated newsprint requirements. We pay market prices for quantities we
determine will meet our requirements. The remaining 5% of our newsprint could
come from these suppliers or from other suppliers in the spot market.

We believe we will continue to receive an adequate supply of newsprint for our
needs. Newsprint prices fluctuate based upon market factors, which include
newsprint production capacity, inventory levels, demand and consumption. Price
fluctuations for newsprint can have a significant effect on our results of
operations. The average net price per ton was $446 in 2002 compared to an
average net price per ton of $573 in 2001. Our total cost of newsprint decreased
$12.3 million during 2002. Our consumption of newsprint declined to 77,161
metric tons from 77,900 metric tons in 2001. The decrease in consumption in 2002
is attributed to fewer advertising pages and a decrease in average net paid
circulation. This decrease in consumption was partially offset by our decision
to print the weekly television guide on our own new presses versus having it
printed by another firm and the use of newsprint for the startup of the new
presses.

Industry and Competition

Newspaper publishing is the oldest segment of the media industry. Metropolitan
and community newspapers often represent the dominant medium for local
advertising due to their importance to the communities they serve. We believe
newspapers continue to be one of the most effective mediums for retail and
classified advertising because they allow advertisers to promote the price and
selection of goods and to maximize household reach. According to Scarborough
Research, readers of newspapers tend to be more highly educated and have higher
incomes than non-newspaper readers. As a result, newspapers continue to be one
of the most cost-effective means for advertisers to reach this demographic
group.

Notwithstanding the advertising advantages newspapers offer, newspapers have
many competitors for advertising dollars and paid circulation. These competitors
include local, regional and national newspapers, shoppers, magazines, broadcast
and cable television, radio, direct mail, yellow pages, the Internet and other
media. Competition for newspaper advertising revenue is based largely upon
advertiser results, advertising rates, readership, demographics and circulation
levels, while competition for circulation is based largely upon the content of
the newspaper, its price, editorial quality, and customer service. On occasion,
our businesses compete with each other for regional advertising, specifically in
the Milwaukee market.

Advertising revenue is the largest component of a newspaper's total operating
revenue. Advertising rates at newspapers, free circulars and publications are
usually based on market size, circulation, penetration, demographics and
alternative advertising media available in the marketplace. Newspaper
advertising revenue is cyclical. Our publishing business tends to see increased
operating revenue due to increased advertising activity during certain holidays,
in time for summer shopping and just prior to students returning to school.
Advertising revenue is also generally affected by changes in national and
regional economic conditions. Classified advertising, which generally comprises
approximately 40% of U.S. newspaper advertising revenue as a whole, is the most
sensitive to economic cycles because it is driven primarily by the demand for
employment, real estate transactions and automotive sales. While circulation
revenue was not as significant as advertising revenue in 2002, circulation
trends can affect the decisions of advertisers and advertising rates.

Although there are several major national newspaper companies, we believe that
the newspaper publishing industry in the United States remains highly
fragmented. Approximately 74% of daily and non-daily newspapers have
circulations of less than 10,000, and most of these smaller publications are
owned and operated by individuals whose newspaper holdings and financial
resources are generally limited. Further, we believe that relatively few daily
newspapers have been established in recent years due to the high cost of
starting a daily newspaper operation and building a franchise identity.
Moreover, most markets cannot sustain more than 1 newspaper.

Broadcasting

Our broadcasting business is conducted through our wholly-owned subsidiary,
Journal Broadcast Corporation (doing business as Journal Broadcast Group), and
its subsidiaries, which together operate 36 radio stations and 6 television
stations in 11 states. Our broadcasting business accounted for 19.1% of our
operating revenue and 29.3% of our operating earnings for the year ended
December 31, 2002. See Note 12 to our Consolidated Financial Statements for
additional financial information regarding this business.

Two of our three broadcast stations in Milwaukee, WTMJ-TV and WTMJ-AM, are
recognized nationally as leading broadcast properties. In the November 2002
Nielsen rating period, WTMJ-TV's "The 10:00 Report" was the 10th highest rated
late night

                                       7
<PAGE>

newscast among all late night newscasts in its Designated Market Area based upon
surveys conducted during the Monday through Friday late night newscasts on all
television stations in the 54 metered markets. WTMJ-AM was the top rated radio
station in the Milwaukee market based on the average number of persons 12 years
and older listening when surveyed during a 15-minute increment occurring
Monday-Friday, 6:00 a.m. to midnight for 26 consecutive Arbitron rating periods.

Our radio and television stations focus on providing targeted and relevant local
programming that is responsive to the interests of the communities in which they
compete. We believe that a local focus allows our stations and clusters to serve
listeners, viewers and advertisers more effectively, strengthens each station's
brand identity and allows our stations to provide effective marketing solutions
for local advertisers by reaching their targeted audiences. No single customer
accounted for more than 10% of our broadcasting operating revenue in 2002.

Radio Broadcasting

In 2002, operating revenue from radio operations accounted for 51.2% percent of
our broadcasting operating revenue. Our radio stations are:

<TABLE>
<CAPTION>
                                                                                          Station         Total          FCC
                                                    Year                                  Audience       Stations       License
  Market and Station         City of License      Acquired             Format             Rank(1)        in Market      Class(2)
 ---------------------    --------------------   ----------   -----------------------   -------------    ----------    -----------
<S>                       <C>                       <C>       <C>                            <C>            <C>            <C>

 Milwaukee, WI
 WTMJ-AM                  Milwaukee, WI             1927      News/Talk/Sports               1              29             B
 WKTI-FM                  Milwaukee, WI             1940      Hot Adult Contemporary         7              29             B

 Omaha, NE KOSR-AM        Omaha, NE                 1995      Sports                         17             22             C
 KHLP-AM                  Omaha, NE                 1998      Talk                           22             22             B
 KEZO-FM                  Omaha, NE                 1995      Rock                           4              22             C
 KKCD-FM                  Omaha, NE                 1995      Classic Hits                   7+             22             C2
 KSRZ-FM                  Omaha, NE                 1998      Hot Adult Contemporary        11+             22             C
 KOMJ-AM                  Omaha, NE                 1999      Adult Standards                5+             22             B
 KQCH-FM                  Omaha, NE                 1999      Contemporary Hits              3              22             C
 KBBX-FM                  Nebraska City, NE         1997      Regional Mexican              11+             22             C1

 Tucson, AZ
 KFFN-AM                  Tucson, AZ                1996      Sports Radio                  17+             27             C
 KMXZ-FM                  Tucson, AZ                1996      Adult Contemporary             1              27             C
 KZPT-FM                  Tucson, AZ                1996      Hot Adult Contemporary         9+             27             A
 KGMG-FM                  Oracle, AZ                1998      Rhythmic Oldies               13+             27             C2

 Knoxville, TN
 WQBB-AM                  Powell, TN                1998      Sports                        21+             24             D
 WMYU-FM                  Karns, TN                 1997      Oldies                         6+             24             A
 WWST-FM                  Sevierville, TN           1997      Contemporary Hits              3              24             C1
 WBON-FM                  Knoxville, TN             1998      Classic Rock                  12+             24             A

 Boise, ID
 KGEM-AM                  Boise, ID                 1998      Adult Standards                9              25             B
 KJOT-FM                  Boise, ID                 1998      Rock                           17             25             C
 KQXR-FM                  Boise, ID                 1998      Alternative Rock               7              25             C1
 KTHI-FM                  Caldwell, ID              1998      Classic Hits                  10+             25             C
 KRVB-FM                  Nampa, ID                 2000      Adult Alternative             13+             25             C
 KCID-AM                  Caldwell, ID              1998      Oldies                         16             25             C
</TABLE>

                                                            8
<PAGE>

<TABLE>
<CAPTION>
                                                                                          Station         Total          FCC
                                                    Year                                  Audience       Stations       License
  Market and Station         City of License      Acquired             Format             Rank(1)        in Market      Class(2)
 ---------------------    --------------------   ----------   -----------------------   -------------    ----------    -----------
<S>                       <C>                       <C>       <C>                            <C>            <C>            <C>

 Wichita, KS
 KFTI-AM                  Wichita, KS               1999      Classic Country                4+             22             B
 KFDI-FM                  Wichita, KS               1999      Country                        1              22             C
 KICT-FM                  Wichita, KS               1999      Rock                           6              22             C1
 KFXJ-FM                  Augusta, KS               1999      Classic Hits                   9+             22             C2
 KYQQ-FM                  Arkansas City, KS         1999      Regional Mexican              15+             22             C
 KMXW-FM                  Newton, KS                2000      Hot Adult Contemporary        15+             22             C1

 Springfield, MO
 KSGF-AM                  Springfield, MO           1999      News/Talk                     15+             20             B
 KTTS-FM                  Springfield, MO           1999      Country                        1              20             C
                                                              Rhythmic Contemporary
 KSPW-FM                  Sparta, MO                1999      Hits                           6              20             C2

 Tulsa, OK
 KFAQ-AM                  Tulsa, OK                 1999      Talk                          15+             26             A
 KVOO-FM                  Tulsa, OK                 1999      Country                        5+             26             C
 KXBL-FM                  Henryetta, OK             1999      Classic Country               18+             26             C1

(1)  Station audience rank equals the ranking of each station, in its market, according to the Fall 2002 Arbitron ratings
     book. The ranking is determined based on the average number of persons 12 years and older listening when surveyed during
     a 15-minute increment occurring Monday-Friday between 6:00 a.m. and midnight. A "+" indicates a tie with another station
     in the market.
(2)  The FCC license class is a designation for the type of license based upon the radio broadcast service area according to
     radio broadcast rules compiled in the Code of Federal Regulations.
</TABLE>

Most of our radio broadcasting operating revenue is generated from the sale of
local advertising, with the balance generated from national, political and issue
advertising. We base our advertising rates primarily on each station's ability
to attract audiences having certain demographic characteristics in the market
area which advertisers want to reach, as well as the number of stations
competing in the market. Advertising rates generally are the highest during
morning and evening drive-time hours. We have predetermined the number of
commercials that are broadcast each hour, depending on the format of a
particular station. We attempt to determine the number of commercials broadcast
hourly that can maximize available revenue dollars without diminishing listening
levels. Although the number of advertisements broadcast during a given time
period may vary, the total number of advertisements broadcast on a particular
station generally does not vary significantly from year to year, unless there
has been a format change.


                                       9
<PAGE>

Television Broadcasting

In 2002, operating revenue from television operations accounted for 48.8% of our
broadcasting operating revenue. Our television stations are:

<TABLE>
<CAPTION>
                                                                          Station           Station             Total
                                        Year             Network         Audience          Audience           Stations
  Station         Market              Acquired          Affiliation      Rating (1)        Share(1)           in Market
  -------         ------              --------          -----------      ----------        --------           ---------
<S>            <C>                      <C>                <C>              <C>              <C>                <C>
WTMJ-TV        Milwaukee, WI            1947               NBC               6                15                 13
KTNV-TV        Las Vegas, NV            1979               ABC               3                 7                 10
WSYM-TV        Lansing, MI              1984               Fox               2                 6                  6
KMIR-TV        Palm Springs, CA         1999               NBC               3                11                  8
KIVI-TV        Boise, ID                2001               ABC               3                12                  6
KSAW-TV(2)     Twin Falls, ID           2001               ABC               2                 6                  4

(1)  Ratings equal the percentage of the total potential audience in the market and shares equal the percentages of the
     audience actually watching television. The station audience rating and the station audience share equals the
     Designated Market Area Household Rating according to the November 2002 Nielsen ratings book. They are based on
     surveys conducted 5:00 a.m. to midnight, 7 days a week.
(2)  Low-power television station.
</TABLE>

The affiliation by a station with one of the 4 major networks (NBC, ABC, CBS and
Fox) has a significant impact on the composition of the station's programming,
revenue, expenses and operations. A typical affiliate of a major network, except
Fox, receives a large portion of each day's programming from the network. This
programming is provided to the affiliate by the network in exchange for a
substantial majority of the advertising time sold during the airing of network
programs. The network then sells this advertising time for its own account. The
affiliate retains the revenue from time sold during the breaks in and between
network programs and during programs produced by the affiliate or purchased from
non-network sources. In acquiring programming to supplement the programming
supplied by the affiliated network, network affiliates compete primarily with
affiliates of other networks and independent stations in their markets. Cable
systems generally do not compete with local stations for programming. We believe
all of our television stations are strong affiliates with good relationships
with the respective networks.

Seasonal operating revenue fluctuations are common in the broadcasting industry
and are primarily due to fluctuations in advertising expenditures by retailers
and automobile manufacturers. Broadcast advertising is typically strongest in
the second and fourth quarters of the year. This coincides with increased
advertising around certain holidays. The second quarter tends to show an
increase in automotive advertising as well as increases in tourism and travel
advertising before the summer months. Because television and radio broadcasters
rely upon advertising revenue, they are subject to cyclical changes in the
economy. The size of advertisers' budgets, which are affected by broad economic
trends, affects the broadcast industry in general and the operating revenue of
individual television and radio stations.

Additionally, television advertising revenue and rates in even-numbered years
benefit from advertising placed by candidates for political offices, issue
advertising and demand for advertising time in Olympic television broadcasts.
NBC has purchased the right to broadcast the Olympics through 2008, and we
expect higher operating revenue in these years because the expected increased
ratings for our 2 NBC affiliates will allow them to sell advertising at premium
rates.

Industry and Competition

We compete with other radio and television stations, newspapers, cable
television, satellite television, direct mail services, billboards, the Internet
and, in the future, may also compete with the emerging satellite radio
technology for advertising dollars. We believe some of the factors an advertiser
considers when choosing an advertising medium include its overall marketing
strategy and reaching its targeted audience in the most cost-effective manner.
In both radio and television broadcasting, operating revenue is derived
primarily from advertising. Ratings, which represent the number of viewers or
listeners tuning in to a given station, highly influence competition in
broadcasting because they affect the advertising rates the broadcaster can
charge - higher ratings generally mean the broadcaster can charge higher rates
for advertising. Advertising rates for both the radio and television broadcast
industries are also based upon a variety of other factors, including a program's
popularity among the advertiser's target audience, the number of advertisers
competing for the available time, the size and demographic makeup of the market
served and the availability of alternative advertising in the market. By having
a "cluster" of several stations within 1 market, we can offer advertisers the
opportunity to purchase air time on more than one of our stations in order to
reach a broader audience.

                                       10
<PAGE>

Radio stations generate the majority of their revenue from the sale of
advertising time to local and national spot advertisers and national network
advertisers, primarily as a medium for local advertising. Changes in market
demographics, the entry of competitive stations to its markets or the adoption
of competitive formats by existing stations could result in lower ratings, which
could in turn reduce advertising revenue. Technology can play an important role
in competition as the ratings each station receives also depend upon the
strength of the station's signal in each market and, therefore, the number of
viewers or listeners who have access to the signal. We continue to invest in the
technology needed to maintain, and where possible, strengthen our signals.

Commercial television stations generally fall into 1 of 3 categories. The first
category of stations includes those affiliated with 1 of the 4 major national
networks (NBC, ABC, CBS and Fox). The second category comprises stations
affiliated with newer national networks, such as UPN, WB and Paxson
Communications Corporation (or PAX TV). The third category includes independent
stations that are not affiliated with any network and rely principally on local
and syndicated programming. Affiliation with a television network can have a
significant influence on the operating revenue of a television station because
the audience ratings generated by a network's programming can affect the rates
at which a station can sell advertising time. Generally, rates for national and
local spot advertising sold by us are determined by each station, which receives
all of the operating revenue, net of agency commissions, for that advertising.
Rates are influenced by the demand for advertising time, the popularity of the
station's programming and market size.

Telecommunications

Our telecommunications business is conducted through our subsidiary Norlight
Telecommunications, Inc., which provides both wholesale telecommunications
services (sometimes referred to as "carrier services") and business-to-business
telecommunications services (sometimes referred to as "enterprise services," or
"commercial services"). Our telecommunications business accounted for 18.6% of
our operating revenue and 35.9% of our operating earnings for the year ended
December 31, 2002. See Note 12 to our Consolidated Financial Statements for
additional financial information regarding this business.

Our wholesale telecommunications business provides network transmission
solutions for other telecommunications carriers, including interexchange
(nationwide long distance) carriers, wireless carriers, Internet service
providers, incumbent local exchange carriers and competitive local exchange
carriers in order to provide voice, video, data and Internet applications for
their customer. Our business-to-business service provides integrated voice and
data communications solutions, specifically dedicated circuits, frame relay
(statistically multiplexed packet data service), ATM (Asynchronous Transfer Mode
- a very high speed transmission technology), Internet access and switched voice
services (pay-by-the-minute long distance including domestic, international and
calling card services) to small and medium sized businesses in the upper
Midwest. Our satellite and video services provide terrestrial and satellite
transmission of broadcast quality video signals to broadcast, entertainment and
sports industries, educational institutions and businesses.

We own and operate 3,794 route miles of fiber optic network connecting
Wisconsin, Michigan, Indiana, Minnesota, Illinois, Iowa and Ohio. We also own an
additional 669 route miles that are available for future network traffic. The
network is designed to carry telecommunications traffic to Tier 2 and 3 cities
(population sizes greater than 50,000) within its footprint. The transport layer
of the network uses SONET (Synchronous Optical NETwork) technology to transport
digital signals. The network is configured in a ring physical topology, with
multiple fibers providing redundancy. Given this configuration, in the event
that an individual fiber strand suffers a catastrophic failure, traffic is
automatically re-routed to avoid service interruption.

WorldCom, Inc. and Global Crossing, our largest telecommunications customers,
together accounted for 20.1% of our total telecommunications operating revenue
in 2002. Global Crossing filed for Chapter 11 bankruptcy protection in January
2002 and WorldCom filed for Chapter 11 bankruptcy protection in July 2002. Both
companies are also currently under investigation by the Securities and Exchange
Commission and the Justice Department. However, we continue to provide services
to both WorldCom and Global Crossing and receive payments for those services in
the ordinary course of business. The loss of the ongoing business from either of
these 2 customers would have a significant adverse effect on our results of
operations.

Industry and Competition

Norlight operates in the Inter-exchange Transport Services segment of the
telecommunications market. Its competitors consist of multiple large national
carriers such as AT&T, WorldCom, Global Crossing and Sprint; regional carriers,
such as McLeodUSA Telecommunications, US Signal, TDS Telecom; and local exchange
carriers, such as SBC Communications, Verizon and Qwest Communications.

We believe the recent financial crisis within the telecommunications industry
will continue with the resulting effect being a limited availability of capital.
Several carriers have ceased their operations or been acquired; however,
overcapacity and too many competitors continues to be a significant issue
leading to price instability. Our telecommunications business has had the
benefit of

                                       11
<PAGE>

adequate and timely access to financial resources from us, which has enabled it
to expand its network to meet service needs or pursue sales opportunities. We
believe our ability to react quickly by executing custom-designed integrated
solutions to meet customer requests is a significant point of positive
differentiation in the current market. We further believe that the responsive,
customer-focused approach of our sales teams and technical staff, coupled with
high quality service offerings, is a significant competitive advantage. With an
increasing focus on financial stability, reliability and responsiveness, we
believe we stand to benefit from increasing share in the markets in which we
compete.

Printing Services

Our printing services business is conducted through our subsidiary IPC
Communication Services, Inc. Our printing services business accounted for 12.2%
of our operating revenue and 1.8% of our operating earnings for the year ended
December 31, 2002. See Note 12 to our Consolidated Financial Statements for
additional financial information regarding this business.

Our printing services business performs a wide variety of services, including
electronic publishing, assembly and fulfillment. The foundation of our printing
business includes printing scientific, medical and technical journals. We
generally utilize conventional and electronic pre-press processes, web and
sheet-fed printing and complete bindery and finishing in our printing processes.
We are also a Microsoft authorized replicator of certificates of authenticity
applied to various software products. All of these markets are served through
our direct sales force.

A large computer hardware OEM (original equipment manufacturer) accounted for
37.6% of our printing services operating revenue in 2002. The loss of this
customer could have a material adverse effect on our results of operations.

Industry and Competition

The printing services industry has continued to experience consolidation over
the last few years. This trend has resulted in fewer private, independent
competitors, creating several competitors that are larger than us in size with
broader product offerings. The major competitive factors that impact our
printing services business are the quality of our customer service and our
finished products, time to market and distribution capabilities, price and
schedule flexibility.

We compete with a large number of companies, some of which have greater
resources and capacity. In recent years, there has been excess capacity in the
printing industry that has increased competition. Rapid technological changes as
well as a more global market place, both in terms of supply and demand, have
also brought new competitors to the market place. To lessen exposure to larger
competitors with greater resources, we focus generally on specialized markets
with small- to medium-sized print run requirements where we can achieve market
differentiation and gain competitive advantages through knowledge of the market
and the ability to offer high quality solutions to customers.

Other

Our other businesses consist of our label printing business conducted through
our subsidiary NorthStar Print Group and our direct marketing services business
conducted through our subsidiary PrimeNet Marketing Services. These businesses
accounted for 11.8% of our operating revenue and 3.1% of our operating earnings
for the year ended December 31, 2002. Our label printing business has 3
production facilities in Wisconsin and Michigan's Upper Peninsula and produces
glue-applied, in-mold, and pressure sensitive labels for the beverage,
automotive products, household chemical and other major industries. Our label
printing business is dedicated to providing all of its customers with superior
performance and flexibility.

SAB/Miller Brewing Company accounted for 50.7% of our label printing business'
revenue in 2002. In 2002, our label printing business was in the second year of
a 5 year contract with SAB/Miller Brewing Company. The loss of SAB/Miller
Brewing Company could have a material adverse effect on our results of
operations.

Our direct marketing business provides nationwide direct marketing support
services to marketers of automotive, retail, publishing, financial and other
services. Our direct marketing business is committed to providing innovative
data, print and mail solutions that are always on time and right.

Compliance with Environmental Laws

As the owner, lessee or operator of various real properties and facilities, we
are subject to various federal, state, and local environmental laws and
regulations. Historically, compliance with these laws and regulations has not
had a material adverse effect on

                                       12
<PAGE>

our business. However, there can be no assurance that compliance with existing
or new environmental laws and regulations will not require us to make future
expenditures.

Regulation

Our businesses are subject to regulation by governmental authorities in the
United States and in the various states in which we operate.

Television and Radio Regulation

Introduction. Our television and radio broadcasting operations are subject to
regulation by the FCC under the Communications Act of 1934, as amended (which we
refer to as the Communications Act). Under authority of the Communications Act,
the FCC, among other things, assigns frequency bands for broadcast and other
uses; grants permits and licenses to construct and operate television and radio
stations for particular frequencies; issues, revokes, modifies and renews radio
and television broadcasting licenses; determines the location and power of
stations and establishes areas to be served; regulates equipment used by
stations; determines whether to approve changes in ownership or control of
station licenses; regulates the content of some forms of programming; adopts and
implements regulations and policies which directly or indirectly affect the
ownership, operations and profitability of broadcasting stations; and has the
power to impose penalties for violations of its rules.

The following is a brief summary of certain provisions of the Communications Act
and specific FCC rules and policies. Failure to observe the provisions of the
Communications Act and the FCC's rules and policies can result in the imposition
of various sanctions, including monetary forfeitures, the grant of "short-term"
(less than the maximum term) license renewal or, for particularly egregious
violations, the denial of a license renewal application, the revocation of a
license or the withholding of approval for acquisition of additional broadcast
properties.

Broadcast Licenses/Renewals. The Communications Act permits the operation of
broadcast stations only in accordance with a license issued by the FCC upon a
finding that the grant of a license would serve the public interest, convenience
and necessity. The FCC grants broadcast licenses for specified periods of time
and, upon application, may renew the licenses for additional terms (ordinarily
for the maximum 8 years). Generally, the FCC renews broadcast licenses upon a
finding that: (i) the broadcast station has served the public interest,
convenience and necessity; (ii) there have been no serious violations by the
licensee of the Communications Act or the FCC's rules; and (iii) there have been
no other violations by the licensee of the Communications Act or other FCC rules
which, taken together, indicate a pattern of abuse. After considering these
factors, the FCC may renew a broadcast station's license, either with
conditions, or without, or it may designate the renewal application for hearing.
Although there can be no assurance that our licenses will be renewed, we have
not to date had a violation of the FCC's regulations that jeopardized the
renewal of our licenses and we are not currently aware of any facts that would
prevent their timely renewal.

Ownership Restrictions. The Communications Act and FCC rules and policies
include a number of limitations regarding the number and reach of broadcasting
properties that any person or entity may own, directly or by attribution. FCC
approval is also required for transfers of control and assignments or licenses.

In September 2002, the FCC issued a notice of proposed rulemaking which
consolidated other proceedings and collectively sought comment on six broadcast
ownership rules: the Broadcast-Newspaper Cross-Ownership Rule; the Local Radio
Ownership Rule; the Television-Radio Cross-Ownership Rule; the Dual Network
Rule; the Local Television Ownership Rule; and the National Television Ownership
Rule. The FCC is required by the Communications Act to review these rules
biennially and to repeal or modify any rule it determines to be no longer in the
public interest; certain of the rules are again being reviewed by the FCC in
this proceeding after remand from a federal court charging the FCC to better
justify their retention.

Under the Broadcast-Newspaper Cross-Ownership Rule, unless grandfathered or
subject to waiver, no party may have an attributable interest in both a
television station and a daily English-language newspaper in the same market if
the television station's Grade B contour encompasses the entire community in
which the newspaper is published. Our media operations in Milwaukee were
grandfathered under this rule.

Under the Local Radio Ownership Rule, the number of radio stations an entity may
own in a given market is dependent upon the size of that radio market.
Specifically, in a radio market with 45 or more commercial radio stations, a
party may own, operate, or control up to 8 commercial radio stations, not more
than 5 of which are in the same service (AM or FM). In a radio market with
between 30 and 44 commercial radio stations, a party may own, operate, or
control up to 7 commercial radio stations, not more than 4 of which are in the
same service. In a radio market with between 15 and 29 (inclusive) commercial
radio stations, a party may own, operate, or control up to 6 commercial radio
stations, not more than 4 of which are in the same service. In a radio market
with 14 or fewer

                                       13
<PAGE>

commercial radio stations, a party may own, operate, or control up to 5
commercial radio stations, not more than 3 of which are in the same service,
except that a party may not own, operate, or control more than 50% of the
stations in such market.

The Television-Radio Cross-Ownership Rule generally allows common ownership of 1
or 2 television stations and up to 6 radio stations in any market where at least
20 independent voices would remain post-combination; 2 television stations and
up to 4 radio stations in a market where at least 10 independent voices would
remain post-combination; and 1 television and 1 radio station notwithstanding
the number of independent voices in the market. A "voice" generally includes
independently owned, same-market, commercial and noncommercial broadcast
television and radio stations, newspapers of certain circulation, and a cable
system of sufficient size. Waivers of the radio/television cross-ownership rule
are available only where the station being acquired is "failed" (i.e., off the
air for at least 4 months or involved in court-supervised involuntary bankruptcy
or insolvency proceedings). A buyer seeking such a waiver must also demonstrate,
in most cases, that it is the only buyer ready, willing, and able to operate the
station, and that sale to an out-of-market buyer would result in an artificially
depressed price.

The Dual Network Rule permits a television broadcast station to affiliate with a
network that maintains more than 1 broadcast network, unless the dual or
multiple networks are created by a combination between ABC, CBS, Fox, or NBC.

Under the Local Television Ownership Rule, absent a waiver, an individual (or
entity) may not have attributable interests in more than 1 television station in
a market, unless the market will have at least 8 independent voices after the
combination and at least one of the stations is not one of the top-four-rated
stations in the television market or unless the stations' Grade B contours do
not overlap.

Under the National Television Ownership Rule, any entity is prohibited from
controlling television stations the combined audience reach of which exceeds 35%
of the television households in the United States (the number of households
served by UHF stations is discounted by 50% for the purposes of this
calculation).

We cannot predict the outcome of the FCC review of ownership rules. Each of our
previous acquisitions of radio or television stations has been reviewed by the
FCC under these rules, and we believe our current ownership of media properties
does not conflict with these rules. For any new acquisitions, the filing of
petitions or complaints against us or any FCC licensee from which we acquire a
station could result in the FCC delaying the grant of, or refusing to grant or
imposing conditions on its consent to the assignment or transfer or control of
licenses.

Digital Television. The FCC has approved technical standards and channel
assignments for digital television ("DTV") service. DTV will permit broadcasters
to transmit video images with higher resolution than existing analog signals and
broadcast in multiple streams with various programs on 1 channel. The U.S.
Congress and the FCC have directed all U.S. television stations and consumer
television sets to transition from analog to digital format, which will (i)
enable stations to transmit high-definition television (or several channels of
standard definition television) and data, and (ii) reduce the amount of spectrum
needed for broadcast television to the spectrum located between what are now
television channels 2 through 51 (called the "core spectrum"). Operators of
full-power television stations have each been assigned a second channel for DTV
while they continue analog broadcasts on the original channel.

During the digital television transition period, all established television
stations have been allocated a separate 6 megahertz channel on which to conduct
digital operations. Beginning in April 2003, every station must simulcast at
least half of its analog programming in a digital format on its digital channel,
with the simulcast percentage increasing to 100% by April 2005.

To the extent a station has "excess" digital capacity (i.e., digital capacity
not used to transmit a single free, over-the-air video program), it may elect to
use that capacity in any manner consistent with FCC technical requirements,
including data transmission, interactive or subscription video services, or
paging and information services. If a station uses its digital capacity for such
"ancillary or supplementary" services, it must pay the FCC 5% of the gross
revenues realized from such "feeable" services.

The transition to DTV is to occur, if not delayed pursuant to the statutes, by
December 31, 2006. The FCC is required to reclaim the non-core spectrum from
broadcasters unless certain conditions are met, including that digital-to-analog
be generally available and that at least 85% of viewers have access to digital
broadcast signals either over-the-air or through cable or satellite. At the end
of the transition period, broadcasters will be required to return one of the two
channels to the FCC and broadcast exclusively in digital format.

The effect digital broadcasting will have on us remains to be seen. Like other
television broadcasters, we have made substantial capital investments for
digital equipment in order to meet the FCC's mandates. The opportunities
provided by digital broadcasting are all in the formation stages. In November
2000, WTMJ-TV became the first commercial television station in Milwaukee to
broadcast digitally on WTMJ-DT. We have completed and paid for the installation
of High Definition transmission facilities at each of our full power television
stations and each station is broadcasting in High Definition in accordance with
standards set forth by the FCC.

                                       14
<PAGE>

Relationship With Cable/Satellite

A number of provisions of the Communications Act and FCC regulations regulate
aspects of the relationship between broadcast television and subscriber services
such as cable and satellite. The rules generally provide certain protections for
broadcast stations, for whom cable and satellite services are both an important
distribution channel and a provider of competing television channels.

To ensure that every local television station can be received in its local
market without requiring a cable subscriber to switch between cable and off-air
signals, the FCC allows every full-power television broadcast station to require
that all local cable systems transmit that station's analog programming to their
subscribers within the station's market (the so-called "must-carry" rule).
Alternatively, a station can elect to forego its must-carry rights and seek a
negotiated agreement to establish the terms of its carriage by a local cable
system -- "retransmission consent." A station electing retransmission consent
assumes the risk that it will not be able to strike a deal with the cable
operator and will not be carried. A station must elect must-carry or
retransmission consent every 3 years. A station that fails to notify a cable
system of its election is presumed to have elected must-carry.

A somewhat similar arrangement governs carriage of local broadcast channels by
satellite television. A satellite provider is not required to transmit the
signal of any television station to its subscribers in that station's market.
However, as of January 1, 2002, if a satellite provider chooses to provide even
1 station to its subscribers in a defined market area, the provider also must
transmit locally every other station in that market that elects must-carry
status. (As with cable, stations may opt to pursue retransmission consent
agreements.) A local television station that fails to make any election is
deemed to have elected retransmission consent and is not guaranteed carriage. A
satellite provider need not carry a station on any particular channel, but all
channels from the same market must be contiguous. The first carriage election
applies until December 31, 2005. After this initial term, all successive periods
will be 3 years long, consistent with cable must-carry periods.

Employees

As of December 31, 2002, we and our subsidiaries had approximately 4,300
full-time and 1,800 part-time employees compared to approximately 4,600
full-time and 2,000 part-time employees at December 31, 2001. The decrease in
the number of employees is a result of workforce reduction programs, business
divestitures, and attrition. Currently, there are 14 bargaining units
representing approximately 1,100 full and part-time employees, or 17% of our
total number of employees.

                                       15
<PAGE>

ITEM 2. PROPERTIES

Our corporate headquarters are located in Milwaukee, Wisconsin. We believe all
of our properties are well maintained, are in good condition, and suitable for
present operations. There are no material encumbrances on any of our properties
or equipment. The following are the principal properties operated by us and our
subsidiaries in which the approximate areas are reported in square feet, as of
December 31, 2002:
<TABLE>
<CAPTION>

                                                                                          Owned            Leased
                                                                                          -----            ------
<S>                                                                                     <C>               <C>
Publishing
Printing plants, newsrooms, offices, warehouses and a garage located in:
     Milwaukee, WI (1).................................................                 596,000           155,000
     West Milwaukee, WI (2)............................................                 449,000                 -
     Cedarburg, WI.....................................................                  16,000                 -
     Waukesha, WI......................................................                       -            35,000
     Wauwatosa, WI.....................................................                  20,000                 -
     Sturtevant, WI....................................................                       -            11,000
     New Berlin, WI....................................................                  15,000             8,000
     Madison, WI.......................................................                       -            10,000
     Waupaca, WI (3)...................................................                  58,000                 -
     Hartland, WI......................................................                  58,000                 -
     Appleton, WI......................................................                       -             5,000
     Mukwonago, WI.....................................................                       -             6,000
     Elkhorn, WI.......................................................                       -             5,000
     Waterford, WI.....................................................                       -             7,000
     Oconomowoc, WI....................................................                       -             8,000
     West Bend, WI.....................................................                   7,000                 -
     Hartford, WI......................................................                   7,000                 -
     New London, WI....................................................                   6,000                 -
     Rhinelander, WI...................................................                   9,000                 -
     Fond du Lac, Sheboygan, Beaver Dam, Johnson Creek, Germantown
         Muskego, Port Washington, Whitewater, Jefferson, Marshfield,
         Merrill, Oshkosh, Seymour, Stevens Point, Menomonee Falls,
         Wausau, and Wisconsin Rapids, WI..............................                  10,000            33,000
     Shelton, CT.......................................................                       -             7,000
     Trumbull, CT......................................................                  86,000                 -
     Venice, Orange Park, Jacksonville, Sarasota and Ponte Vedra, FL...                       -            14,000
     Baton Rouge and Kenner, LA........................................                       -            28,000
     New Orleans, LA...................................................                  10,000            53,000
     Dalton and Lee, MA................................................                       -             3,000
     Carroll, OH.......................................................                  37,000                 -
     Cambridge, Chilicothe, Circleville, Coshocton, Jackson, Logan,
         New Lexington, Newark, Waverly and Zanesville OH .............                       -            17,000
     Bennington and Manchester Village, VT.............................                       -            13,000

Broadcasting
Offices, studios and transmitter and tower sites located in:
     Milwaukee, WI (3).................................................                 109,000                 -
     Las Vegas, NV.....................................................                  22,000                 -
     Lansing, MI.......................................................                   2,000            13,000
     Palm Springs, CA..................................................                  19,000             1,000
     Omaha, NE.........................................................                   3,000            25,000
     Tucson, AZ........................................................                   1,000             9,000
     Knoxville, TN.....................................................                  25,000                 -
     Boise, ID.........................................................                  49,000            14,000
     Wichita, KS (4)...................................................                  23,000             6,000
     Springfield, MO...................................................                   2,000             9,000
     Tulsa, OK.........................................................                  22,000             1,000
</TABLE>

                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                                                          Owned            Leased
                                                                                          -----            ------
<S>                                                                                       <C>               <C>
Telecommunications
Offices and satellite antennae located in:
     Brookfield, WI (3)................................................                       -            51,000
     Green Bay, WI.....................................................                       -             3,000
     Madison, WI.......................................................                       -             2,000
     Afton, WI.........................................................                   4,000                 -
     Skokie, IL........................................................                       -             6,000
     Chicago, IL.......................................................                   6,000                 -
     Buffalo Grove, IL.................................................                   3,000                 -
     Grand Rapids, MI..................................................                   2,000                 -
     Lansing, MI.......................................................                       -             2,000
     Indianapolis, IN..................................................                       -             2,000
     St. Paul, MN......................................................                       -             3,000

Printing services
Offices, printing plants and warehouses located in:
     St. Joseph, MI (3)................................................                       -           333,000
     Lebanon, TN.......................................................                       -            11,000
     Austin, TX........................................................                       -            11,000
     Foothill Ranch, CA (5)............................................                       -           201,000
     San Jose, CA (6)..................................................                       -           368,000
     Fremont, CA (6)...................................................                       -           253,000

Label printing
Offices, printing plants and warehouses located in:
     Norway, MI........................................................                 108,000             4,000
     Watertown, WI (3).................................................                  63,000            22,000
     Green Bay, WI.....................................................                  40,000                 -
     Milwaukee, WI (7).................................................                 128,000                 -

Direct marketing services Offices, plants and warehouses located in:
     St. Paul, MN (3)..................................................                       -            87,000
     Clearwater, FL....................................................                       -            32,000
     Milwaukee, WI.....................................................                       -            23,000

(1)  Includes our corporate headquarters and the Milwaukee Journal Sentinel's business and editorial offices and
     printing operations.
(2)  New production facility housing printing, packaging, inserting, recycling and transportation operations of the
     Milwaukee Journal Sentinel.
(3)  Includes our business operations headquarters office.
(4)  Includes 4,700 square feet not in use.
(5)  138,000 square feet is sublet to third parties [pursuant to subleases expiring June 2005] and 63,000 square
     feet is not in use.
(6)  Property is sublet to third parties [pursuant to subleases that begin to expire December 2003].
(7)  Property is currently not in use and held for sale.

</TABLE>


ITEM 3. LEGAL PROCEEDINGS

See Note 8 in our Notes to Consolidated Financial Statements, which is
incorporated herein by reference.



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

No matters were submitted to a vote of security holders during the fourth
quarter of 2002.

                                       17
<PAGE>

ITEM 4A. EXECUTIVE OFFICERS OF REGISTRANT

Information with respect to our executive officers, as of March 7, 2003, is set
forth below. The descriptions of the business experience of these individuals
include the principal positions held by them since 1998. Each officer listed
below will hold office until the next annual meeting of the board of directors,
which will be held immediately following the Annual Meeting of shareholders on
June 3, 2003.

<TABLE>
<CAPTION>
Name                            Title                                                                         Age
----------------------------    --------------------------------------------------------------------------    --------

<S>                             <C>                                                                           <C>
Steven J. Smith                 Chairman of the Board, Chief Executive Officer and Director                   52
Douglas G. Kiel                 President and Director                                                        54
Paul M. Bonaiuto                Executive Vice President, Chief Financial Officer and Director                52
Anne M. Bauer                   Vice President and Corporate Controller                                       38
James J. Ditter                 Vice President and Director                                                   41
Robert M. Dye                   Vice President of Corporate Affairs                                           55
Carl D. Gardner                 Vice President                                                                46
Richard J. Gasper               Vice President                                                                59
Daniel L. Harmsen               Vice President of Human Resources                                             47
Mark J. Keefe                   Vice President                                                                43
Kenneth J. Kozminski            Vice President                                                                37
Paul E. Kritzer                 Vice President, Secretary and General Counsel-Media                           60
Mary Hill Leahy                 Vice President and General Counsel-Business Services and Director             48
James P. Prather                Vice President                                                                45
Keith K. Spore                  Senior Vice President and Director                                            60
Mary Alice Tierney              Vice President of Corporate Communications                                    52
Karen O. Trickle                Vice President, Treasurer and Director                                        46
</TABLE>

Steven J. Smith is a director and our Chairman of the Board and Chief Executive
Officer. Mr. Smith was elected Chief Executive Officer in March 1998 and
Chairman in December 1998. Mr. Smith was our President from September 1992 to
December 1998.

Douglas G. Kiel is a director and our President. Mr. Kiel was elected President
in December 1998. In addition, Mr. Kiel has been the Chief Executive Officer of
Journal Broadcast Corporation, one of our subsidiaries, since December 2001. He
was our Executive Vice President between June 1997 and December 1998 and
President of Journal Broadcast Group, Inc., one of our subsidiaries, from June
1990 to July 2001.

Paul M. Bonaiuto is a director and our Executive Vice President and Chief
Financial Officer. Mr. Bonaiuto was elected Executive Vice President in June
1997 and Chief Financial Officer in January 1996. Mr. Bonaiuto was our Senior
Vice President between March 1996 and June 1997.

Anne M. Bauer is a Vice President and our Corporate Controller. Ms. Bauer was
elected Vice President and Corporate Controller in June 2000. She was our
Corporate Controller from January 1999 to June 2000 and our Assistant Corporate
Controller from January 1995 to January 1999.

James J. Ditter is a director and a Vice President. Mr. Ditter was elected Vice
President in September 1995. In addition, Mr. Ditter has been President of
Norlight Telecommunications, Inc., one of our subsidiaries, since September
1995.

Robert M. Dye is Vice President of Corporate Affairs. Mr. Dye was elected Vice
President of Corporate Affairs in June 2000. Mr. Dye was our Vice President of
Corporate Communications from March 1990 to June 2000.

Carl D. Gardner is a Vice President. Mr. Gardner was elected Vice President in
June 1999. In addition, Mr. Gardner has been the President-Radio, Journal
Broadcast Group since December 1998.

Richard J. Gasper is a Vice President. Mr. Gasper was elected Vice President in
June 1996. In addition, Mr. Gasper has been the President of NorthStar Print
Group, one of our subsidiaries, since January 1996.

Daniel L. Harmsen is Vice President of Human Resources. Mr. Harmsen was elected
Vice President of Human Resources in March 1996.

                                       18
<PAGE>

Mark J. Keefe is a Vice President. Mr. Keefe was elected Vice President in March
1996. Mr. Keefe has also been President of PrimeNet Marketing Services, one of
our subsidiaries, since October 1995.

Kenneth J. Kozminski is a Vice President. Mr. Kozminski was elected Vice
President in December 1999. In addition, Mr. Kozminski has been President of IPC
Communication Services, one of our subsidiaries, since July 1999. He was Vice
President and General Manager of Eastern Region-IPC Communication Services from
July 1998 to July 1999; Vice President of Operations of IPC Communication
Services from May 1998 to July 1998; and General Manager of IPC Communication
Services Europe, a subsidiary of IPC Communication Services from February 1997
to May 1998.

Paul E. Kritzer is a Vice President, Secretary and our General Counsel-Media.
Mr. Kritzer was elected Vice President and General Counsel-Media in July 2001
and Secretary in September 1992. In addition, Mr. Kritzer was Vice
President-Legal from June 1990 to July 2001.

Mary Hill Leahy is a director and Vice President and our General
Counsel-Business Services. She was elected Vice President and General Counsel -
Business Services in July 2001. Ms. Leahy was General Counsel Americas, GE
Medical Systems, a developer and manufacturer of medical imaging equipment, from
January 1999 to July 2001; Counsel for Products and Distribution, GE Medical
Systems from June 1997 to January 1999; and Consulting Attorney for Miller
Brewing Company from 1995 to 1997.

James P. Prather is a Vice President. Mr. Prather was elected Vice President in
March 1999. In addition, Mr. Prather has been President-Television, Journal
Broadcast Group since December 1998 and General Manager of WTMJ-TV since 1995.
He was Executive Vice President-Television, Journal Broadcast Group from
December 1997 to December 1998.

Keith K. Spore is a director and our Senior Vice President. Mr. Spore was
elected Senior Vice President in September 1995. In addition, Mr. Spore has been
President of Journal Sentinel, Inc., one of our subsidiaries, since September
1995 and Publisher of the Milwaukee Journal Sentinel since June 1996.

Mary Alice Tierney is Vice President of Corporate Communications. Ms. Tierney
was elected Vice President of Corporate Communications in June 2000. Ms. Tierney
was Communications and Corporate Affairs Manager from March 1999 to June 2000;
and Vice President of Communications and Community Affairs for Journal Broadcast
Group Inc. from June 1994 to August 1999.

Karen O. Trickle is a director, a Vice President and our Treasurer. Ms. Trickle
was elected Treasurer in December 1996 and Vice President in March 1999. She has
been a director June 1999.

There are no family relationships between any of the executive officers. All of
the officers are elected annually at the first meeting of the board of directors
held after each Annual Meeting of the shareholders. There is no arrangement or
understanding between any executive officer and any other person pursuant to
which he or she was elected as an officer.

                                       19
<PAGE>

                                     PART II


ITEM 5. MARKET FOR COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The majority of our common stock is owned by JESTA, which is a trust (which we
sometimes refer to as the stock trust) created in 1937 under the Journal
Employees' Stock Trust Agreement (which we sometimes refer to as the trust
agreement) by all of the shareholders of our company. Its creation was due to
the determination of Harry J. Grant, Chairman from 1935 to his death in 1963, to
offer employees the opportunity to obtain a beneficial interest in ownership of
our company. The purpose of the stock trust and the trust agreement is to
promote and facilitate the acquisition and ownership of a beneficial interest in
our stock by our employees and to promote stability and continuity of management
and control of the company in the interest of the company, our shareholders and
employees. Among other consequences of that stability and continuity, we remain
an independent company, and our media businesses can express independent
editorial voices.

Employees own units of beneficial interest (units) representing beneficial
interests in the stock trust. A unit is different than a share of common stock
offered by publicly traded companies. Units cannot be traded on the open market.
In most circumstances, a unit only can be sold to another employee, the Grant
family shareholders or to our company. A unit does not provide a unitholder with
all of the rights typically associated with stock ownership. The trust agreement
governs all aspects of unitholders' rights and obligations. The trust agreement
is filed as an exhibit hereto and is incorporated by reference herein.

In 1937, the shareholders sold 25% of the company's outstanding common stock to
the stock trust. The stock trust then issued units reflecting beneficial
ownership in the 25% of our common stock held by the stock trust. The units were
then sold to employees. Similar sales of our common stock by the Grant family
and other shareholders to the stock trust have increased the number of shares of
our common stock owned by the stock trust to 90% of the outstanding common
stock, or 25,920,000 shares, and an equal number of units have been issued.
There is one share of common stock in the stock trust for every unit issued.
Employees take part in the employee ownership program by buying units in the
stock trust. The Grant family shareholders own the remaining 10% of our common
stock.

On October 25, 2002, our board of directors directed us and our financial
adviser to explore potential sources for additional permanent capital. We
indicated at that time that we expected the process could take from 6 to 9
months. As a result, we suspended the purchase and sale of units under the trust
agreement while we explore additional permanent capital.

Oversight of the Stock Trust

The stock trust is administered by 5 trustees who currently are each an officer
and a director. It engages in no business other than being the holder of record
of our common stock, issuing units in exchange for shares of our common stock,
and in limited instances, voting shares of our common stock held by it.

A trustee holds office until resignation, termination of employment, death,
incapacity or prolonged absence from the United States or until he or she ceases
to be an owner of 1 or more units. Successor trustees are elected by the
trustees remaining in office or, if there are none so remaining or if those
remaining fail to act within 1 month of a vacancy, by majority vote of the units
owned by active employee unitholders and employee benefit trusts. The trustees
receive no remuneration for their service as trustees.

We have paid and intend to continue to pay all administrative costs of the stock
trust, and so long as that continues neither we nor the stock trust will impose
any charges or deductions for these items and liabilities against unitholders or
against trust assets. There are no liens on any trust assets. However,
unitholders may pledge units to secure loans in accordance with the trust
agreement and upon terms offered by lenders.

Purchases and Sales of Units

All purchases and sales of units are transacted at the option price set forth by
the trust agreement. The option price is based upon a formula prescribed within
the trust agreement. The formula uses our book value and the past 5 year's net
income as factors in calculating the option price. An option price is calculated
approximately every 4 weeks.

After a 90-day waiting period, full-time employees are eligible to take part in
the employee-ownership program. Part-time employees are eligible to buy units if
they have 1,000 or more hours of service during each of the 2 then most recent
calendar years. As we add new operations and companies, employees become
eligible for employee-ownership under these rules. We and the Grant family
shareholders are also eligible to purchase and hold units. In addition, employee
benefit trusts established by

                                       20
<PAGE>

us or established by employees to provide retirement benefits and certain other
trusts for the benefit of individual beneficiaries or charities are eligible to
own units.

In recent years, we offered units to eligible employees on a rotation basis. A
rotation schedule determined the time we would make the offering to the group to
which each employee had been assigned for purposes of the employee-ownership
rotation. Most often, we assigned all the employees of a given business unit to
the same group, which only included employees from that business unit. However,
we reserved the right to divide the employees of a business unit into 2 or more
groups for rotation purposes. The frequency of the rotation and the number of
units offered to employees depended on the number of units that we had, or
anticipated having, available to sell and the number of units that we desired to
sell.

In addition to offering units to employees on a rotation basis, from time to
time we allowed participants in some incentive plans to use all or a portion of
a cash incentive award to purchase units. For this purpose, units were valued at
the option price then in effect. Units that participants acquired in this manner
are subject to all terms and conditions of the trust agreement.

All units are subject to mandatory offers to sell upon termination of employment
and to restrictions on their resale. In general, the trust agreement requires
that an employee must offer to sell his or her units when he or she retires or
otherwise terminates employment and that employees sell units only to certain
eligible purchasers. For this purpose, termination occurs when one ceases to be
an employee. Employees who retire, as defined in the trust agreement, must offer
to sell a pro rata share of their units over 10 years after their retirement. In
such circumstances, the cumulative number of units that a retired employee must
offer to sell increases in equal increments of 10% each year for 10 years
beginning on the first anniversary of the employee's retirement. Employees who
are terminated because of downsizing, restructuring, reorganization, job
elimination, divestiture, outsourcing or similar event in each case that results
in the termination of a sufficient number of employees (as determined by the
trustees at their sole discretion) must offer to sell a pro rata portion of
units over a period of up to 5 years after such termination, depending on the
number of years the employee has owned units. Employees who terminate their
employment for reasons other than retirement or for downsizing, restructuring,
etc. are required to offer to sell all of their units immediately.

The trust agreement provides that, when a unitholder offers to sell units,
certain persons have the option to purchase the units at the option price in
accordance with procedures and time periods that the trust agreement prescribes.
Persons who have the option to purchase units include employees and employee
benefit trusts designated by the President or the board of directors, the Grant
family shareholders and us, in the order of priority and during periods set
forth in the trust agreement. Where the trust agreement requires a unitholder to
offer to sell units, our option to purchase the units extends for 5 years after
the date our option to purchase begins. While we are not obligated to do so, we
have elected in recent years to immediately purchase units offered for sale.
However, we suspended the purchase and sale of units on October 25, 2002, while
we explore potential sources of additional permanent capital. There is no
assurance we will elect to buy units offered for sale in the future.

Under the terms of the trust agreement, if units become subject to an option
event and are not purchased by employee-eligibles, employee benefit trusts or
stockholder-eligibles within 12 months of the option event (the "Expiration
Date"), then the unitholder may freely transfer those units (subject to
applicable law) to any person, even though not an "eligible" under the terms of
the trust agreement. However, units that are transferred in this manner are
subject to our continuing right to repurchase those units at the option price
set forth in the trust agreement for a period of 5 years from the Expiration
Date.

Permanent Capital Study

On October 25, 2002, our board of directors determined to indefinitely suspend
our purchase and sale of units and also directed us to explore potential sources
for additional permanent capital. Should we proceed with a permanent capital
transaction various approvals may be required, including amendments to our
articles of association and changes to JESTA.

We have been discussing capital structures with the Grant family shareholders as
a part of our permanent capital process. During our discussions, the Grant
family shareholders asserted that they have certain rights under Sections 21
(voting rights), 24 (sale of stock by trustees) and 38 (amendment or
termination) of JESTA. The discussions have centered on the Grant family
shareholders' desire to either perpetuate certain rights after a permanent
capital transaction or in the alternative to have value provided to them in
exchange for the modification of these rights.

We have reached an agreement in principle with the Grant family shareholders for
modification of their rights under JESTA and their support of the permanent
capital process. That agreement in principle provides that the Grant family
shareholders will receive additional shares of common stock and shares of
preferred stock in exchange for their current common stock as part of the
permanent capital process. The preferred stock will be designed to pay a
dividend that when aggregated with the common stock dividend will

                                       21
<PAGE>

initially be somewhat less than the aggregate dividend paid to the Grant family
shareholders on their shares of common stock in 2002. We would retain rights to
redeem portions of the shares held by the Grant family shareholders.

This agreement in principle is subject to negotiation of a definitive agreement
and its approval by our board of directors. Further, any changes to JESTA and
our capital structure will be subject to the approval of the JESTA trustees and
the unitholders in accordance with the terms of JESTA as part of the approvals
to be sought for adding permanent capital to our business.

Unitholders' Rights and Restrictions

Each unit entitles its holder to the rights set forth in the trust agreement,
which to some extent are similar to rights associated with 1 share of our common
stock.

Unitholders do not have preemptive rights or the right to maintain a
proportionate interest in our common stock or the stock trust. Unitholders also
do not have the right to force anyone to purchase units from them, and units are
not convertible into cash or any other security. However, the Grant family
shareholders may convert their shares into a proportionate number of units, and
any units held by them into shares, at any time.

The stock trust, as holder of our common stock, is entitled to such dividends as
the board of directors may declare in its discretion. The trustees in turn pass
the dividends (other than stock dividends) through to the unitholders as soon as
practicable after receipt (stock dividends are retained by the stock trust). If
we deliver any shares of our common stock to the stock trust through a stock
dividend or stock split, then the stock trust retains those shares. Upon the
receipt of such shares, the trustees distribute additional units to the
unitholders so as to retain the relationship of 1 unit for each share of common
stock. At the direction of the trustees, we have paid all dividends directly to
the unitholders. The stock trust, as such, pays no dividends. The board of
directors determines payment of future dividends and may reduce the dividend
payment rate or terminate the payment of dividends at any time.

The stock trust, as holder of our common stock, is entitled to 1 vote per share
in the election of directors and in all matters requiring a vote of the
shareholders. When the trustees receive notice of any meeting of the
shareholders, the trust agreement requires them to issue to each active employee
unitholder a proxy empowering him or her to vote the number of shares in which
his or her units represents an interest. However, active employee unitholders do
not have the power or authority to vote (i) to sell or lease all or
substantially all of our assets, or (ii) to dissolve us, or (iii) to merge or
consolidate us with any other corporation or corporations in which we and/or our
shareholders upon completion of such consolidation or merger do not control
directly or indirectly a majority of the voting stock, unless the employee
owners of at least two-thirds of the outstanding units owned by
employee-eligibles have authorized the trustees to offer all shares held by the
trustees for sale in accordance with the provisions of Section 24 of the trust
agreement and the purchase options under Section 24 have expired within 3 months
prior to such vote. The trustees have exclusive authority to vote all shares
represented by units owned by ex-employee-eligibles, employee benefit trusts and
employee-eligible-transferees, except that employee benefit trusts may vote on a
proposal to amend or terminate the trust agreement.

From time to time the stock trust holds meetings of its unitholders to vote with
respect to proposed amendments to the trust agreement. In addition, prior to
termination of the trust agreement by consent, there must be a meeting of
unitholders. Each active employee unitholder and employee benefit trust may vote
the number of units the unitholder owns. Unitholders may vote by proxy at these
meetings. The trust agreement may be amended or terminated by consent if all of
the following vote to amend or terminate it: two-thirds of the outstanding units
that active employees and employee benefit trusts hold; all of the trustees; and
80% of the shares of our common stock that the Grant family shareholders hold.
We do not vote at meetings of unitholders, and our approval is not required to
amend or terminate the trust agreement. The trustees may sell or otherwise
permanently dispose of any shares of our common stock that the stock trust
holds, subject to certain procedures contained in the trust agreement. If active
employee unitholders and employee benefit trust owners of at least two-thirds of
the units then outstanding owned by such holders authorize a sale of our stock,
then the stock will be offered, successively, to any employee unitholder and
employee benefit trust owner of units who did not consent to the proposed sale
or other permanent disposition (nonconsenting eligibles) and then to the Grant
family shareholders. If any such offered stock remains unsold, first the
nonconsenting eligibles and then the Grant family shareholders have a second
opportunity to purchase. Finally, if any such offered stock still remains, then
we may purchase it.

If we liquidate or dissolve, then the stock trust, as holder of our common
stock, is entitled to a pro rata share of the assets available for distribution
on our common stock. In addition, if we liquidate or dissolve or if the stock
trust terminates as a result of a sale or other disposition of all or any part
of our common stock that the stock trust holds, then the unitholders will
receive a pro rata distribution of the assets of the stock trust (or of the
proceeds of any partial disposition), less any amounts withheld for taxes,
expenses and other charges.

                                       22
<PAGE>

On March 7, 2003, the holders of beneficially owned shares included the
following:

<TABLE>
<CAPTION>
                                                                                      Shares                  Percent of
                                                                                   Beneficially              Common Stock
                                                                                      Owned                   Outstanding
                                                                                   ------------              ------------
<S>                                                                                 <C>                            <C>
Active employees.......................................................             15,046,648                     52.3%
Former employees.......................................................              7,989,089                     27.7
Treasury (us)..........................................................              2,884,263                     10.0
Matex, Inc. (1)........................................................              2,640,000                      9.2
Abert Family Journal Stock Trust (1)...................................                240,000                      0.8
</TABLE>

(1)      The Grant family shareholders.

Though we are not obligated to do so, we currently anticipate that we will
continue to pay cash dividends. Our option price and dividend history (adjusted
for stock splits) for the years ended December 31 are presented in the following
table:

<TABLE>
<CAPTION>
                                Beginning                  Ending                Total                                  Total
                                  Option                   Option                Price                   Cash           Annual
Year           Quarter            Price                     Price               Inc/(Dec)              Dividend         Return
----           -------          ---------                 --------              ---------              --------         ------
<C>              <C>            <C>                       <C>                   <C>                    <C>               <C>
2002             4th            $  37.81                  $  38.45              $   0.64               $  0.30           4.0%
2002             3rd               37.47                     37.81                  0.34                  0.30
2002             2nd               36.75                     37.47                  0.72                  0.30
2002             1st               38.14                     36.75                 (1.39)                 0.30

2001             4th               37.68                     38.14                  0.46                  0.30          13.7
2001             3rd               36.56                     37.68                  1.12                  0.35
2001             2nd               35.03                     36.56                  1.53                  0.35
2001             1st               34.74                     35.03                  0.29                  0.35

2000                               29.94                     34.74                  4.80                  1.35          20.5
1999                               25.48                     29.94                  4.46                  1.14          22.0
1998                               21.69                     25.48                  3.79                  1.10          22.5
1997                               18.58                     21.69                  3.11                  1.10          22.7
1996                               18.12                     18.58                  0.46                  1.10           8.6
1995                               17.70                     18.12                  0.42                  1.05           8.3
1994                               17.32                     17.70                  0.38                  0.95           7.7
1993                               16.80                     17.32                  0.52                  0.90           8.5
</TABLE>


ITEM 6. SELECTED FINANCIAL DATA

The following table presents our selected historical financial data. The
selected financial data for the years ended December 31, 2000, 2001 and 2002 and
as of December 31, 2001 and 2002 have been derived from our audited consolidated
financial statements, including the notes thereto, appearing elsewhere in this
annual report on Form 10-K. The selected financial data for the years ended
December 31, 1998 and 1999 and as of December 31, 1998, 1999 and 2000 have been
derived from our audited consolidated financial statements, including the notes
thereto, not included in this annual report on Form 10-K. This table should be
read together with our other financial information, including "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements, including the notes thereto, appearing
elsewhere in this annual report on Form 10-K. Fox Cities Newspapers and IPC
Communication Services, S.A. have been reflected as discontinued operations in
all years presented.

                                       23
<PAGE>

<TABLE>
<CAPTION>
                                                                                        Year ended December 31,
                                                                   1998(1)       1999(2)        2000          2001          2002
                                                                   ----          ----           ----          ----          ----
                                                                               (in thousands, except per share amounts)
<S>                                                              <C>           <C>           <C>           <C>          <C>
Statement of Earnings Data
Operating revenue....................................            $ 731,033     $ 753,360     $ 819,232     $ 808,787    $ 801,376
Operating costs and expenses.........................              636,858       642,806       710,041       724,683      687,303
                                                                 ---------     ---------     ---------     ---------    ---------
Operating earnings (3) (4)...........................               94,175       110,554       109,191        84,104      114,073
Non-operating income, net............................                6,237         4,227           884         1,235          339
                                                                 ---------     ---------     ---------     ---------    ---------
Earnings from continuing operations before income
     taxes and accounting change.....................              100,412       114,781       110,075        85,339      114,412
Income taxes.........................................               41,998        44,537        44,162        35,860       49,418
                                                                 ---------     ---------     ---------     ---------    ---------
Earnings from continuing operations before
     accounting change...............................               58,414        70,244        65,913        49,479       64,994
Gain (loss) from discontinued operations, net of taxes               2,294          (795)          471        (1,722)        (565)
Cumulative effect of accounting change, net of taxes.                   --            --            --            --       (6,509)
                                                                 ---------     ---------     ---------     ---------    ---------
Net earnings (3).....................................            $  60,708     $  69,449     $  66,384     $  47,757    $  57,920
                                                                 =========     =========     =========     =========    =========

Weighted average shares outstanding-basic and diluted               28,124        27,393        27,101        28,084       26,430
                                                                 =========     =========     =========     =========    =========

Basic and Diluted Earnings Per Share Amounts
Continuing operations before accounting change.......            $    2.08     $    2.56     $    2.43     $    1.76    $    2.46
Discontinued operations, net of taxes................                 0.08         (0.02)         0.02         (0.06)       (0.02)
Cumulative effect of accounting change, net of taxes.                   --            --            --            --        (0.25)
                                                                 ---------     ---------     ---------     ---------    ---------
Net earnings (3).....................................            $    2.16     $    2.54     $    2.45     $    1.70    $    2.19
                                                                 =========     =========     =========     =========    =========
Cash dividends.......................................            $    1.10     $    1.14     $    1.35     $    1.35    $    1.20
                                                                 =========     =========     =========     =========    =========

Segment Data
Operating revenue:
     Publishing......................................            $ 344,565     $ 347,137     $ 345,321     $ 320,615    $ 311,138
     Broadcasting....................................              115,113       130,857       149,886       134,801      152,749
     Telecommunications..............................               81,875       101,428       126,586       151,992      148,674
     Printing services...............................              107,564        91,663       107,334       114,612       97,841
     Other...........................................               81,916        82,275        90,105        86,767       90,974
                                                                 ---------     ---------     ---------     ---------    ---------
         Total operating revenue.....................            $ 731,033     $ 753,360     $ 819,232     $ 808,787    $ 801,376
                                                                 =========     =========     =========     =========    =========

Operating earnings: (3) (4)
     Publishing......................................            $  48,196     $  48,670     $  39,265     $  24,898    $  30,315
     Broadcasting....................................               34,015        27,817        30,435        15,453       33,384
     Telecommunications..............................               24,092        32,474        40,114        48,007       40,956
     Printing services...............................              (13,450)        2,621         3,336          (756)       2,131
     Other...........................................                1,322       (1,028)       (3,959)        (3,498)       7,287
                                                                 ---------     ---------     ---------     ---------    ---------
         Total operating earnings....................            $  94,175     $ 110,554     $ 109,191     $  84,104    $ 114,073
                                                                 =========     =========     =========     =========    =========

Other Financial Data
Depreciation (4).....................................            $  33,549     $  36,657     $  38,710     $  40,882    $  44,726
Amortization (4).....................................            $   8,618     $   8,940     $  11,408     $  10,814    $   1,909
EBITDA (4)...........................................            $ 136,342     $ 156,151     $ 159,309     $ 135,800    $ 160,708
Capital expenditures.................................            $  44,821     $  68,529     $  96,758     $  90,172    $  53,169
Cash dividends.......................................            $  31,057     $  31,286     $  36,765     $  37,866    $  31,597

Cash Flow Data Net cash provided by (used for):
     Operating activities............................            $ 106,181    $  117,481     $ 133,123     $ 118,411    $  86,060
     Investing activities............................              (63,412)     (199,893)      (94,030)     (108,144)     (51,409)
     Financing activities............................              (25,371)      (38,798)      (33,035)      (11,918)     (31,714)

</TABLE>

                                                                  24
<PAGE>

<TABLE>
<CAPTION>
                                                                                          As of December 31,
                                                                  ---------------------------------------------------------------
                                                                  1998(1)        1999(2)       2000          2001          2002
                                                                  ----           ----          ----          ----          ----
                                                                                          (in thousands)
<S>                                                              <C>           <C>           <C>           <C>          <C>
Balance Sheet Data
Property and equipment, net..........................            $ 175,602     $ 214,615     $ 271,293     $ 320,436    $ 324,405
Intangible assets, net (3)...........................            $ 119,588     $ 258,876     $ 253,239     $ 261,346    $ 249,605
Total assets (3).....................................            $ 583,684     $ 638,506     $ 687,035     $ 730,778    $ 744,752
Total debt...........................................            $      --     $  12,115     $      --     $   4,420    $  90,775
Shareholders' equity.................................            $ 447,884     $ 465,697     $ 508,519     $ 532,880    $ 476,544

(1)  Includes Omaha, Nebraska radio stations KESY-FM (renamed KSRZ-FM) and KBBX-AM (renamed KHLP-AM) from January 1;
     Knoxville, Tennessee radio stations WQBB-FM (renamed WQIX-FM, WBON-FM) and WQBB-AM from April 20; Oracle, Arizona radio
     station KLQB-FM (renamed KIXD-FM, KGMG-FM) from June 9; and Caldwell, Idaho radio stations KCID-AM and KCID-FM (renamed
     KTHI-FM), Payette, Idaho radio station KQXR-FM, Boise, Idaho radio stations KGEM-AM and KJOT-FM and Ontario, Oregon
     radio stations KSRV-AM and KSRV-FM from July 1. We sold KSRV-AM and KSRV-FM in April 2000.

(2)  Includes Wichita, Kansas ratio stations KFDI-AM, KFDI-FM and KICT-FM; Arkansas City, Kansas radio station KYQQ-FM;
     Augusta, Kansas radio station KLLS-FM (renamed KFXJ-FM); Springfield, Missouri radio stations KTTS-FM and KTTS-AM
     (renamed KTTF-AM, KSGF-AM); Sparta, Missouri radio station KLTQ-FM (renamed KMXH-FM, KSPW-FM); Tulsa, Oklahoma radio
     stations KVOO-FM and KVOO-AM (renamed KFAQ-AM); Henryetta, Oklahoma radio station KCKI-FM (renamed KXBL-FM); and Omaha,
     Nebraska radio stations WOW-FM (renamed KMXM-FM, KQCH-FM) and WOW-AM (renamed KOMJ-AM) from June 14; and Palm Springs,
     California television station KMIR-TV from August 1.

(3)  Effective January 1, 2002, we adopted Statement No. 142, "Goodwill and Other Intangible Assets." Under Statement No.
     142, goodwill and intangible assets deemed to have indefinite lives, including broadcast licenses and network
     affiliation agreements, are no longer amortized but are reviewed for impairment and written down and charged to net
     earnings when their carrying amounts exceed their estimated fair values. Adjusted net earnings, earnings per share,
     segment operating earnings, intangible assets, net, total assets and shareholders' equity are presented below, assuming
     this accounting change is applied retroactively as of January 1, 1998. The adjustment represents amortization expense
     for indefinite-lived intangible assets in 1998 through 2001 and the transitional impairment charge recognized in 2002.
</TABLE>

<TABLE>
<CAPTION>
                                                                                        Year ended December 31,
                                                                 ----------------------------------------------------------------
                                                                     1998          1999         2000          2001          2002
                                                                     ----          ----         ----          ----          ----
                                                                             (in thousands, except per share amounts)
<S>                                                              <C>           <C>           <C>           <C>          <C>
     Net earnings....................................            $  60,708     $  69,449     $  66,384     $  47,757    $  57,920
     Adjustment......................................                1,985         3,916         5,523         5,530        6,509
                                                                 ---------     ---------     ---------     ---------    ---------
     Adjusted net earnings...........................            $  62,693     $  73,365     $  71,907     $  53,287    $  64,429
                                                                 =========     =========     =========     =========    =========

     Adjusted basic and diluted earnings per share...            $    2.23     $    2.68     $    2.65     $    1.90    $    2.44
                                                                 =========     =========     =========     =========    =========

     Adjusted operating earnings (loss):
         Publishing..................................            $  49,312     $  49,662     $  40,253     $  25,802    $  30,315
         Broadcasting................................               36,006        32,298        37,075        22,182       33,384
         Telecommunications..........................               24,116        32,489        40,129        48,022       40,956
         Printing services...........................              (13,450)        2,621         3,336         (756)        2,131
         Other.......................................                1,623         (728)       (3,659)       (3,197)        7,287
                                                                 ---------     ---------     ---------     ---------    ---------
     Total adjusted operating earnings...............            $  97,607     $ 116,342     $ 117,134     $  92,053    $ 114,073
                                                                 =========     =========     =========     =========    =========

                                                                                          As of December 31,
                                                                 -----------------------------------------------------------------
                                                                     1998          1999         2000          2001          2002
                                                                     ----          ----         ----          ----          ----
                                                                                          (in thousands)
     Adjusted intangible assets, net.................            $ 123,020     $ 268,096     $ 270,402     $ 286,455    $ 282,384
     Adjusted total assets...........................              587,116       647,726       704,198       755,887      777,531
     Adjusted shareholders' equity...................              449,869       471,598       519,943       549,834      500,007

(4)  EBITDA is defined as operating earnings plus depreciation and amortization. We believe the presentation of EBITDA is
     relevant and useful because it helps improve our investors' ability to understand our operating performance and makes it
     easier to compare our results with other companies that have different financing and capital structures or tax rates.
     Our management uses EBITDA, among other things, to evaluate our operating performance, to value prospective acquisitions
     and as a component of incentive compensation targets for certain management personnel. In addition, our lenders use
     EBITDA to measure our ability to service our debt. EBITDA is not a measure of performance calculated in accordance with
     generally accepted accounting principles in the United States. EBITDA should not be considered in isolation of, or as a
     substitute for, net earnings as an indicator of operating performance or cash flows from operating activities as a
     measure of liquidity. EBITDA, as we calculate it, may not be comparable to EBITDA measures reported by other companies.
     In addition, EBITDA does not represent funds available for discretionary use.
</TABLE>

                                                             25
<PAGE>

     The following table presents a reconciliation of our consolidated operating
     earnings to consolidated EBITDA:

<TABLE>
<CAPTION>
                                                                                       Year ended December 31,
                                                                 -----------------------------------------------------------------
                                                                     1998          1999         2000          2001          2002
                                                                     ----          ----         ----          ----          ----
                                                                                          (in thousands)
<S>                                                              <C>           <C>           <C>           <C>          <C>
     Operating earnings..............................            $  94,175     $ 110,554     $ 109,191     $  84,104    $ 114,073
     Depreciation....................................               33,549        36,657        38,710        40,882       44,726
     Amortization....................................                8,618         8,940        11,408        10,814        1,909
                                                                 ---------     ---------     ---------     ---------    ---------
     EBITDA..........................................            $ 136,342     $ 156,151     $ 159,309     $ 135,800    $ 160,708
                                                                 =========     =========     =========     =========    =========
</TABLE>


ITEM 7. 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 audited consolidated financial statements for
the 3 years ended December 31, 2002, including the notes thereto, appearing
elsewhere in this annual report on Form 10-K. This discussion contains
forward-looking statements. See "Forward-Looking Statements" for a discussion of
uncertainties, risks and assumptions associated with these statements.

Overview

Our business segments are based on the organizational structure used by
management for making operating and investment decisions and for assessing
performance. We previously reported 8 business segments, which included our
corporate operations and the operations of each one of our wholly-owned
subsidiaries. In order to better reflect our operations as a diversified media
company, and to reflect certain changes in the way our management receives
internal financial information, we determined it appropriate under Statement No.
131, "Disclosures About Segments of an Enterprise and Related Information," to
aggregate previously reported segments and identify new segments by type of
business rather than by names of individual operating entities. As a result, we
changed our reportable business segments in 2002 to the following: (i)
publishing; (ii) broadcasting; (iii) telecommunications; (iv) printing services;
and (v) other. Our publishing segment consists of a daily newspaper, the
Milwaukee Journal Sentinel, and more than 90 community newspapers and shoppers.
Our broadcasting segment consists of 36 radio stations and 6 television stations
in 11 states. Our telecommunications segment consists of wholesale and
business-to-business telecommunications services provided through a high speed
fiber optic telecommunications network that covers more than 4,400 route miles
in 7 states. Our printing services segment reflects the operations of our
printing and assembly and fulfillment business. Our other segment consists of a
label printing business and a direct marketing services business. Also included
in other are corporate expenses and eliminations.

Acquisition and Sale

On December 31, 2001, we acquired the business and certain assets of a
television station, KIVI-TV, in Boise, Idaho and a low-power television station,
KSAW-LP, in Twin Falls, Idaho. The cash purchase price for the stations was
approximately $22.1 million.

On March 2, 2001, we sold certain assets of the Milwaukee operation of our label
printing business. The cash sale price was approximately $4.4 million.

Results of Operations

     2002 compared to 2001

     Consolidated

Our consolidated operating revenue in 2002 was $801.4 million, a decrease of
$7.4 million, or 0.9%, compared to $808.8 million in 2001. Our consolidated
operating costs and expenses in 2002 were $447.6 million, a decrease of $16.1
million, or 3.5%, compared to $463.7 million in 2001. Our consolidated selling
and administrative expenses in 2002 were $239.7 million, a decrease of $21.3
million, or 8.2%, compared to $261.0 million in 2001.


                                       26
<PAGE>



The following table presents our total operating revenue by segment, total
operating costs and expenses, selling and administrative expenses and total
operating earnings as a percent of total operating revenue for 2002 and 2001:
<TABLE>
<CAPTION>
                                                                            Percent of                     Percent of
                                                                              Total                           Total
                                                                            Operating                       Operating
                                                              2002           Revenue           2001          Revenue
                                                              ----           -------           ----          -------
                                                                                   (in millions)
<S>                                                        <C>                <C>           <C>                <C>
Operating revenue:
Publishing.......................................          $  311.1           38.8%         $  320.6           39.6%
Broadcasting.....................................             152.8           19.1             134.8           16.7
Telecommunications...............................             148.7           18.6             152.0           18.8
Printing services................................              97.8           12.2             114.6           14.2
Other............................................              91.0           11.3              86.8           10.7
                                                           --------          -----          --------          -----
     Total operating revenue.....................             801.4          100.0             808.8          100.0

Total operating costs and expenses...............             447.6           55.9             463.7           57.3
Selling and administrative expenses..............             239.7           29.9             261.0           32.3
                                                           --------          -----          --------          -----
Total operating costs and expenses and selling
   and administrative expenses...................             687.3           85.8             724.7           89.6
                                                           --------          -----          --------          -----
Total operating earnings.........................          $  114.1           14.2%         $   84.1           10.4%
                                                           ========          =====          ========          =====
</TABLE>

The decrease in total operating revenue was primarily due to the decrease in
classified advertising in our publishing businesses, service disconnections and
price reductions in our telecommunications business and the consolidation of our
U. S. printing services operations and the continued slowdown in our publication
printing services business. These decreases were partially offset by increases
in Olympic, political and issue advertising in our television broadcasting
business. In addition, operating revenue in 2001 was adversely impacted by $1.8
million from preempted advertising due to the uninterrupted news coverage and
certain advertising cancellations on television and radio stations following the
September 11 terrorist attacks.

The decrease in total operating costs and expenses and selling and
administrative expenses was primarily due to the decrease in the total cost of
newsprint, the discontinuation of goodwill, broadcast license and network
affiliation agreement amortization expense and the decrease in operating costs
and expenses resulting from our cost control initiatives.

Our consolidated operating earnings in 2002 were $114.1 million, an increase of
$30.0 million, or 35.6%, compared to $84.1 million in 2001. The following table
presents our operating earnings by segment for 2002 and 2001:

<TABLE>
<CAPTION>
                                                                          Percent of                        Percent of
                                                                            Total                             Total
                                                                          Operating                         Operating
                                                             2002          Earnings           2001          Earnings
                                                          ---------       ----------        --------        ---------
                                                                                   (in millions)
<S>                                                       <C>               <C>             <C>               <C>
Publishing.......................................         $   30.3          26.6%           $   24.9          29.6%
Broadcasting.....................................             33.4          29.3                15.5          18.4
Telecommunications...............................             41.0          35.9                48.0          57.1
Printing services................................              2.1           1.8                (0.8)         (0.9)
Other............................................              7.3           6.4                (3.5)         (4.2)
                                                          --------         ------           --------         ------
Total operating earnings.........................         $  114.1         100.0%           $   84.1         100.0%
                                                          ========         ======           ========         ======
</TABLE>

The increase in total operating earnings was primarily due to the decrease in
the total cost of newsprint, the increase in Olympic, political and issue
advertising, the decrease in operating costs and expenses resulting from cost
control initiatives, workforce reductions and the closure or transition of
certain business units, the discontinuation of goodwill, broadcast license and
network affiliation agreement amortization expense and the adverse impact on
third quarter 2001 earnings following the September 11 terrorist attacks offset
by the decrease in the profit margin on telecommunication services. Effective
January 1, 2002, we adopted Statement No. 142, "Goodwill and Other Intangible
Assets," and, accordingly, we ceased amortizing goodwill, broadcast licenses and
network affiliation agreements. If Statement No. 142 had been adopted effective
January 1, 2001, our total operating earnings would have been $92.1 million.

                                       27
<PAGE>

Our consolidated EBITDA in 2002 was $160.7 million, an increase of $24.9
million, or 18.3%, compared to $135.8 million in 2001. EBITDA is defined as
operating earnings plus depreciation and amortization. We believe the
presentation of EBITDA is relevant and useful because it helps improve our
investors' ability to understand our operating performance and makes it easier
to compare our results with other companies that have different financing and
capital structures or tax rates. Our management uses EBITDA, among other things,
to evaluate our operating performance, to value prospective acquisitions and as
a component of incentive compensation targets for certain management personnel.
In addition, our lenders use EBITDA to measure our ability to service our debt.
EBITDA is not a measure of performance calculated in accordance with generally
accepted accounting principles in the United States. EBITDA should not be
considered in isolation of, or as a substitute for, net earnings as an indicator
of operating performance or cash flows from operating activities as a measure of
liquidity. EBITDA, as we calculate it, may not be comparable to EBITDA measures
reported by other companies. In addition, EBITDA does not represent funds
available for discretionary use.

The following table presents a reconciliation of our operating earnings to
EBITDA by segment for 2002 and 2001:

<TABLE>
<CAPTION>
                                                     2002                                               2001
                               ------------------------------------------------    ------------------------------------------------
                                            Depreciation             Percent of                Depreciation              Percent of
                                 Operating       and                   Total      Operating        and                     Total
                                 Earnings   Amortization    EBITDA     EBITDA      Earnings    Amortization     EBITDA     EBITDA
                                 --------   ------------    ------     ------      --------    ------------     ------     ------
                                                                           (in millions)
<S>                              <C>        <C>             <C>        <C>        <C>          <C>              <C>         <C>
Publishing.................      $   30.3   $     14.2      $ 44.5     27.7%      $   24.9     $     13.9       $  38.8     28.6%
Broadcasting...............          33.4          7.3        40.7     25.3           15.5           13.3          28.8     21.2
Telecommunications.........          41.0         17.1        58.1     36.2           48.0           14.7          62.7     46.2
Printing services..........           2.1          5.2         7.3      4.5           (0.8)           6.2           5.4      4.0
Other......................           7.3          2.8        10.1      6.3           (3.5)           3.6           0.1       --
Total......................      $  114.1   $     46.6      $160.7    100.0%      $   84.1     $     51.7       $ 135.8    100.0%
</TABLE>

The increase in total EBITDA was primarily due to increases in operating
earnings in our publishing, broadcasting, printing services and other reportable
segments offset by a decrease in our telecommunications segment.

Publishing

Operating revenue from publishing in 2002 was $311.1 million, a decrease of $9.5
million, or 3.0%, compared to $320.6 million in 2001. Operating earnings from
publishing were $30.3 million, an increase of $5.4 million, or 21.8%, compared
to $24.9 million in 2001. EBITDA from publishing in 2002 was $44.5 million, an
increase of $5.7 million, or 14.6%, compared to $38.8 million in 2001 (see table
above for a reconciliation of publishing operating earnings to publishing
EBITDA).

The following table presents our publishing operating revenue, operating
earnings and EBITDA by daily newspaper and community newspapers and shoppers for
2002 and 2001:

<TABLE>
<CAPTION>
                                                            2002                                            2001
                                        -----------------------------------------        ----------------------------------------
                                                      Community                                       Community
                                          Daily       Newspapers                        Daily         Newspapers
                                        Newspaper     & Shoppers       Total          Newspaper       & Shoppers       Total
                                        ---------     ----------    ----------        ---------       ----------       -----
                                                                             (in millions)
<S>                                     <C>           <C>           <C>               <C>             <C>             <C>
Operating revenue..............         $  212.9      $    98.2     $    311.1        $   218.8       $    101.8      $ 320.6
                                        ========      =========     ==========        =========       ==========      =======
Operating earnings.............         $   28.7      $     1.6     $     30.3        $    23.3       $      1.6      $  24.9
                                        ========      =========     ==========        =========       ==========      =======
EBITDA.........................         $   38.5      $     6.0     $     44.5        $    31.7       $      7.1      $  38.8
                                        ========      =========     ==========        =========       ==========      =======
</TABLE>

                                       28
<PAGE>

The following table presents our publishing operating revenue by category for
2002 and 2001:
<TABLE>
<CAPTION>
                                                            2002                                            2001
                                        -----------------------------------------        ----------------------------------------
                                                      Community                                       Community
                                          Daily       Newspapers                        Daily         Newspapers
                                        Newspaper     & Shoppers       Total          Newspaper       & Shoppers       Total
                                        ---------     ----------    ----------        ---------       ----------       -----
                                                                             (in millions)
<S>                                     <C>           <C>           <C>               <C>             <C>              <C>
Advertising revenue:
     Retail....................         $   75.5      $    56.9     $   132.4         $    74.6       $    55.7      $ 130.3
     Classified................             62.4            9.8          72.2              67.9            10.9         78.8
     General...................             10.1             --          10.1               9.7              --          9.7
     Other.....................             15.9            1.5          17.4              14.1             1.4         15.5
                                        --------      ---------     ---------         ---------       ---------      -------
     Total advertising revenue.            163.9           68.2         232.1             166.3            68.0        234.3
Circulation revenue............             45.3            3.2          48.5              48.1             3.3         51.4
Other revenue..................              3.7           26.8          30.5               4.4            30.5         34.9
                                        --------      ---------     ---------         ---------       ---------      -------
Total operating revenue........         $  212.9      $    98.2     $   311.1         $   218.8       $   101.8      $ 320.6
                                        ========      =========     =========         =========       =========      =======
</TABLE>

Advertising revenue in 2002 accounted for 74.6% of total publishing revenue
compared to 73.1% in 2001. Retail advertising revenue in 2002 was $132.4
million, an increase of $2.1 million, or 1.6%, compared to $130.3 million in
2001. The increase is comprised of a $3.0 million increase in daily newspaper
retail preprints and a $1.2 million increase in community newspaper retail
advertising and inserts, in part due to rate increases, offset by a $2.1 million
decrease in daily newspaper retail ROP (run-of-press) advertisements. We believe
the shift toward retail preprints in 2002 was due in part to changes in
marketing strategies of certain major national retail advertisers. Additionally,
in 2001, many advertisers reduced or eliminated their newspaper advertisements
following the September 11 terrorist attacks.

Classified advertising revenue in 2002 was $72.2 million, a decrease of $6.6
million, or 8.4%, compared to $78.8 million in 2001. At the daily newspaper,
decreases in employment advertising of $8.6 million and real estate advertising
of $0.1 million were partially offset by increases in automotive advertising of
$2.8 million and general advertising of $0.4 million. The decrease in employment
advertising, which accounted for almost 37.5% of total classified advertising in
2002, represented a 27.0% decrease from 2001. We believe the decrease in
employment advertising resulted primarily from continuing economic uncertainty;
however, with each quarter in 2002 compared to 2001, the decrease in total
classified advertising has reduced. The increase in automotive advertising is
primarily attributed to auto manufacturers promoting 0% financing programs.

General advertising revenue in 2002 was $10.1 million, an increase of $0.4
million, or 4.1%, compared to $9.7 million in 2001. The increase was primarily
attributable to an increase in general ROP advertising mainly from our
telecommunications customers.

The following table presents the advertising linage of our daily newspaper by
category for 2002 and 2001:
<TABLE>
<CAPTION>
                                                           2002                 2001               Change
                                                      --------------       --------------      --------------
                                                               (inches in thousands)
<S>                                                         <C>                  <C>                  <C>
Advertising linage (in inches):
     Retail..........................................       773.6                812.0              - 4.7%
     Classified......................................       922.4                970.6              - 5.0%
     General.........................................        52.7                 51.1              + 3.1%
                                                      --------------       --------------
Total advertising linage (in inches).................     1,748.7              1,833.7               -4.7%
                                                      ==============       ==============

Preprint pieces (in millions)........................       773.5                719.5              + 7.5%
                                                      ==============       ==============
</TABLE>

Total advertising linage in 2002 decreased 4.7% compared to 2001. The decrease
was largely due to a 5.0% decrease in classified advertising and a 4.7% decrease
in retail advertising partially offset by a 3.1% increase in general
advertising. The decrease in classified advertising lineage is consistent with
the decrease in the classified advertising revenue. Retail advertising linage
decreased while preprint advertising pieces rose 7.5% primarily as a result of
the shift to preprint advertising from a major national retail customer.

                                       29
<PAGE>

The following table presents the full pages of advertising and revenue per page
of our community newspapers and shoppers for 2002 and 2001:

<TABLE>
<CAPTION>
                                                           2002                 2001               Change
                                                      --------------       --------------      --------------
<S>                                                    <C>                  <C>                      <C>
Full pages of advertising:
     Community newspapers............................        93,888                94,898          - 1.1%
     Shoppers........................................       105,545               113,846          - 7.3%
                                                      --------------       --------------
Total full pages of advertising......................       199,433               208,744          - 4.5%
                                                      ==============       ==============

Revenue per page.....................................  $     305.86         $      288.61          + 6.0%
                                                      =============        ==============
</TABLE>

Total pages of full page advertising in 2002 decreased 4.5% compared to 2001.
The decrease was largely due to a 7.3% decrease in advertising in the shoppers
and a 1.1% decrease in advertising in the community newspapers. Revenue per page
increased 6.0% due to rate increases.

Other advertising revenue, consisting of revenue from direct marketing efforts,
JSOnline and event marketing, in 2002 was $17.4 million, an increase of $1.9
million, or 12.3%, compared to $15.5 million in 2001. The increase was largely
due to increased direct mail advertising and online classified advertising.

Circulation revenue in 2002 accounted for 15.6% of total publishing revenue
compared to 16.0% in 2001. Circulation revenue in 2002 was $48.5 million, a
decrease of $2.9 million, or 5.6%, compared to $51.4 million in 2001. The
decrease was mainly attributed to the 4.1% decrease in average net paid
circulation for Milwaukee Journal Sentinel's weekday edition and 3.1% decrease
in average net paid circulation for Milwaukee Journal Sentinel's Sunday edition,
a 3.5% decrease in paid circulation for our community newspapers and greater
discounts given to new subscribers. In January 2002, we eliminated home delivery
of the Milwaukee Journal Sentinel in all but 12 counties in southeastern
Wisconsin. As of the end of 2002, this decision contributed to a decrease in net
paid circulation for the daily and Sunday edition of 3.6% and 4.9%,
respectively. On June 30, 2002, in an effort to increase readership in certain
areas of Milwaukee County, we began offering greater discounts on home delivery
and single copy sales. Circulation in those areas has increased since offering
the discounts.

Other revenue, which consists primarily of revenue from commercial printing
opportunities at the print plants for our community newspapers and shoppers, in
2002 accounted for 9.8% of total publishing revenue compared to 10.9% in 2001.
Other revenue in 2002 was $30.5 million, a decrease of $4.4 million, or 12.6%,
compared to $34.9 million in 2001. The decrease was primarily attributed to
reduced press runs and page counts from existing commercial printing customers
and the loss of 3 commercial printing customers.

Publishing operating earnings in 2002 were $30.3 million, an increase of $5.4
million, or 21.8%, compared to $24.9 million in 2001. Contributing to the
increase was a $12.3 million reduction in the cost of newsprint and ink compared
to 2001 and a $6.8 million decrease in direct wages and selling and
administrative expenses, which resulted primarily from workforce reductions at
the daily newspaper. These cost reductions were partially offset by $4.6 million
in start up costs in 2002 related to the new production facility.

We anticipate that our new production facility will be fully operational in
early 2003. We expect that our new presses will provide improved print
reproduction quality and increased productivity, as well as additional
opportunities to pursue commercial printing revenue from third parties.

The pending outbreak of hostilities in Iraq in March 2003 and the war itself has
resulted in our daily newspaper using more newsprint and experiencing a
temporary increase in single copy circulation.

         Broadcasting

Operating revenue from broadcasting in 2002 was $152.7 million, an increase of
$17.9 million, or 13.3%, compared to $134.8 million in 2001. Operating earnings
from broadcasting in 2002 were $33.4 million, an increase of $17.9 million, or
116.0%, compared to $15.5 million in 2001. EBITDA from broadcasting in 2002 was
$40.7 million, an increase of $12.0 million, or 41.8%, compared to $28.7 million
in 2001 (see page28 for a reconciliation of broadcasting operating earnings to
broadcasting EBITDA).

On December 31, 2001, we acquired the business and certain of the assets of a
television station, KIVI-TV, in Boise, Idaho and a low-power television station,
KSAW-LP, in Twin Falls, Idaho, for approximately $22.1 million in cash. We began
operating the stations on January 1, 2002.

                                       30
<PAGE>

The following table presents our broadcasting operating revenue, operating
earnings and EBITDA by radio stations and television stations for 2002 and 2001:

<TABLE>
<CAPTION>

                                                            2002                                            2001
                                        -----------------------------------------        ------------------------------------------
                                        Radio            Television       Total          Radio            Television         Total
                                        -----            ----------       -----          -----            ----------         -----
                                                                               (in millions)
<S>                                     <C>                <C>           <C>             <C>                <C>             <C>
Operating revenue..............         $ 78.2             $ 74.5        $ 152.7         $ 73.9             $ 60.9          $ 134.8
                                        ======             ======        =======         ======             ======          =======
Operating earnings.............         $ 15.2             $ 18.2        $  33.4         $  5.9             $  9.6          $  15.5
                                        ======             ======        =======         ======             ======          =======
EBITDA.........................         $ 18.2             $ 22.5        $  40.7         $ 14.8             $ 13.9          $  28.7
                                        ======             ======        =======         ======             ======          =======
</TABLE>

Operating revenue from our radio stations in 2002 was $78.2 million, an increase
of $4.3 million, or 5.8%, compared to $73.9 million in 2001. The increase was
primarily attributed to a $2.9 million increase in local advertising revenue and
a $0.7 million increase from national advertising revenue across most markets,
and a $0.7 million increase in political and issue advertising revenue. These
increases in advertising revenue from the radio stations reflect a $0.5 million
adverse impact in 2001 from advertising cancellations and the loss of
advertising spots following the September 11 terrorist attacks.

Operating earnings from our radio stations in 2002 were $15.2 million, an
increase of $9.3 million, or 157.6%, compared to $5.9 million in 2001. The
increase was primarily attributed to the discontinuation of $5.7 million of
goodwill and broadcast license amortization expense, the $4.3 million increase
in revenue and the decrease in operating costs and expenses resulting from cost
control initiatives at all of our radio stations.

Operating revenue from our television stations in 2002 was $74.5 million, an
increase of $13.6 million, or 22.3%, compared to $60.9 million in 2001. The
increase was primarily attributed to a $7.8 million increase in Olympic,
political and issue advertising revenue, a $4.6 million increase in local
advertising revenue and a $1.5 million increase in national advertising revenue.
Included in the revenue increase is $5.3 million from the 2 stations in Idaho
that were acquired on December 31, 2001. These increases in advertising revenue
from the television stations reflect in part the $1.3 million adverse impact in
2001 of the loss of advertising spots during the uninterrupted news coverage and
certain advertising cancellations following the September 11 terrorist attacks.

Operating earnings from our television stations in 2002 were $18.2 million, an
increase of $8.6 million, or 89.6%, compared to $9.6 million in 2001. The
increase was primarily attributed to the $13.6 million increase in revenue, the
discontinuation of $1.0 million of goodwill, broadcast license and network
affiliation agreement amortization expense and the effects of cost control
initiatives at all of our television stations.

The pending outbreak of hostilities in Iraq in March 2003 and the war itself has
had a negative impact on our broadcast results due to reduced spending levels by
some advertisers. There was a hesitancy on the part of some advertisers to place
schedules during the period of time leading up to the war, cancellations by some
advertisers for the duration of war coverage and elimination of advertising
inventory available from our television networks during their continuous
coverage of the war.

         Telecommunications

Operating revenue from telecommunications in 2002 was $148.7 million, a decrease
of $3.3 million, or 2.2%, compared to $152.0 million in 2001. Operating earnings
from telecommunications in 2002 were $41.0 million, a decrease of $7.0 million,
or 14.7%, compared to $48.0 million in 2001. EBITDA from telecommunications in
2002 was $58.1 million, a decrease of $4.6 million, or 7.3%, compared to $62.7
million in 2001 (see page 28 for a reconciliation of telecommunications
operating earnings to telecommunications EBITDA).

Wholesale telecommunication services provide network transmission solutions for
other service providers by offering bulk transmission capacity. Operating
revenue from wholesale services in 2002 was $97.3 million, a decrease of $5.3
million, or 5.2%, compared to $102.6 million in 2001. The decrease was primarily
attributed to service disconnections and price reductions. Monthly recurring
revenue from wholesale services at the end of 2002 was $7.5 million compared to
$8.1 million at the beginning of 2002 and $7.8 million at the beginning of 2001.
During 2002, new customers and new circuit connections of $1.3 million in
monthly recurring revenue were more than offset by service disconnections, price
reductions and lost customers.

Commercial telecommunication services provide advanced data communications and
long distance service to small and medium sized businesses in the Upper Midwest,
principally in Wisconsin, Michigan, Indiana, Minnesota and Illinois. Operating
revenue from commercial services in 2002 was $51.4 million, an increase of $2.0
million, or 4.0%, compared to $49.4 million in 2001. The increase was primarily
attributed to an increase in long distance services. Monthly recurring revenue
from commercial advanced data services at the end of 2002 of $3.0 million was
virtually equal to the amount at the beginning of 2002 and $0.2 million higher
than the $2.8

                                       31
<PAGE>

million at the beginning of 2001. During 2002, new customers and new circuit
connections of $0.7 million in monthly recurring revenue were offset by service
disconnections, price reductions and lost customers.

The decrease in operating earnings from telecommunications was primarily
attributed to service disconnections, the decrease in profit margins on services
provided due to price reductions and the increase in depreciation expense of
$2.5 million resulting from the completion of several capital investment
initiatives during 2001. We expect continued service disconnections and price
reductions in our wholesale telecommunications business will cause an increasing
downward trend that could result in a significant decrease in our
telecommunications operating earnings into 2003.

WorldCom and Global Crossing together accounted for 20.1% and 22.5% of our
telecommunications revenue in 2002 and 2001, respectively. Global Crossing filed
for Chapter 11 bankruptcy protection in January 2002 and WorldCom filed for
Chapter 11 bankruptcy protection in July 2002. We have a pre-bankruptcy
receivable, net of applicable "set-off" accounts payable, from WorldCom of $0.5
million. We recorded a reserve in the amount of the net receivable in the third
quarter of 2002. The loss of the ongoing business from either of these 2
customers would have a significant adverse effect on our results of operations.
A renewal service contract with Global Crossing is being negotiated, though
Global Crossing retains the right to accept or reject our current contract with
them as part of its exit from bankruptcy. Global Crossing is currently expected
to exit from bankruptcy in May 2003. WorldCom also has a right to accept or
reject our contract with them as part of its exit from bankruptcy, which is not
currently expected to happen before late 2003 or 2004.

We do not believe we have a material bad debt exposure because we bill all data
services for both wholesale and commercial customers in advance of providing
services. Most customers are required to pay their bill before services are
provided. We continue to provide services to WorldCom and Global Crossing and
receive timely payment for those services.

     Printing Services

Operating revenue from printing services in 2002 was $97.8 million, a decrease
of $16.8 million, or 14.6%, compared to $114.6 million in 2001. Operating
earnings from printing services in 2002 were $2.1 million, an increase of $2.9
million, compared to losses of $0.8 million in 2001. EBITDA from printing
services in 2002 was $7.3 million, an increase of $1.9 million, or 35.2%,
compared to $5.4 million in 2001 (see page 28 for a reconciliation of printing
services operating earnings to printing services EBITDA).

The decrease in printing services operating revenue was primarily attributed to
the consolidation of our U.S. operations to eliminate customers that did not fit
our long-term strategic business plans and continued slowdown in the publication
printing services business. CD-ROM replication continued at essentially the same
level as in the prior year; however, we continue to experience intense price
competition for this product in all markets.

The increase in printing services operating earnings was primarily attributed to
a reduction in operational costs and an increase in the sale of products with
higher margins. These were partially offset by the decrease in revenue and a
$2.5 million loss on impairment of CD-ROM related equipment.

A large computer hardware OEM (original equipment manufacturer) accounted for
37.6% and 29.8% of our printing services revenue in 2002 and 2001, respectively.
The loss of this customer could have a material adverse effect on our results of
operations.

On February 4, 2003, we announced the closure of our CD-ROM mastering and
replications operations. We do not expect the costs to close these operations to
have a material adverse effect on our results of operations.

     Other

Other operating revenue in 2002 was $91.0 million, an increase of $4.2 million,
or 4.8%, compared to $86.8 million in 2001. Other operating earnings in 2002
were $7.3 million, an increase of $10.8 million compared to losses of $3.5
million in 2001. Other EBITDA in 2002 was $10.1 million, an increase of $10.0
million, compared to $0.1 million in 2001 (see page 28 for a reconciliation of
other operating earnings to other EBITDA).

                                       32
<PAGE>

The following table presents our other operating revenue, operating earnings and
EBITDA by business for 2002 and 2001:

<TABLE>
<CAPTION>

                                                            2002                                            2001
                                 ------------------------------------------------    ----------------------------------------------
                                               Direct       Corporate                            Direct         Corporate
                                    Label     Marketing        and                     Label    Marketing          and
                                  Printing    Services    Eliminations     Total     Printing   Services      Eliminations    Total
                                  --------    --------    ------------     -----     --------   --------      ------------    -----
                                                                                (in millions)
<S>                              <C>         <C>          <C>             <C>        <C>        <C>           <C>            <C>
Operating revenue............    $   56.5    $   38.3     $      (3.8)    $  91.0    $  55.7    $   35.9      $     (4.8)    $ 86.8
                                 ========    ========     ===========     =======    =======    ========      ==========     ======
Operating earnings...........    $    2.4    $   (0.1)    $       5.0     $   7.3    $  (0.6)   $   (1.2)     $     (1.7)    $ (3.5)
                                 ========    ========     ===========     =======    =======    ========      ==========     ======
EBITDA.......................    $    4.2    $    0.5     $       5.4     $  10.1    $   1.4    $    0.0      $     (1.3)    $  0.1
                                 ========    ========     ===========     =======    =======    ========      ==========     ======
</TABLE>

The increase in other operating revenue was primarily attributed to an increase
in the gravure label printing operation of new label products for our largest
label printing customer, SAB/Miller Brewing Company, and in print and mail
services and database marketing services in our direct marketing services
business. Included in operating revenue from our direct marketing services is
$21.6 million and $21.3 million of postage amounts billed to customers in 2002
and 2001, respectively. Other operating revenue in 2001 was adversely impacted
by the September 11 terrorist attacks and the anthrax scare, which resulted in
advertisers reducing the amount of direct mail.

The increase in other operating earnings was primarily attributed to the
decrease in the litigation reserve by $4.1 million to reflect the settlement of
the Newspaper Merger Class Action Suit (discussed in Note 8 in our Notes to
Consolidated Financial Statements), the $3.2 million increase in operating
revenue from our label printing and direct marketing services businesses, the
decrease in operating costs and expenses resulting from our cost control
initiatives and the discontinuation of $0.4 million of goodwill amortization
expense partially offset by the $1.3 million loss on impairment of a customer
list at our direct marketing services business.

SAB/Miller Brewing Company accounted for 50.7% and 47.4% of our label printing
business' revenue in 2002 and 2001, respectively. In 2002, our label printing
business was in the second year of a 5 year contract with SAB/Miller Brewing
Company. The loss of SAB/Miller Brewing Company could have a material adverse
effect on our results of operations.

     Non Operating Income and Taxes from Continuing Operations

Interest income and dividends in 2002 were $1.0 million, a decrease of $0.6
million, or 37.5%, compared to $1.6 million in 2001. The decrease was primarily
attributed to the decrease in cash and cash equivalents offset by interest
income received from refunds of state income taxes. Interest expense in 2002 was
$0.6 million compared to $0.4 million in 2001. Gross interest expense from
borrowings under our credit agreement in 2002 was $1.8 million compared to $0.5
million in 2001. Interest expense capitalized as part of our construction of the
Milwaukee Journal Sentinel production facility in 2002 was $1.2 million compared
to $0.1 million in 2001.

The effective tax rate on continuing operations was 43.2% in 2002 compared to
42.0% in 2001. The difference between the statutory federal tax rate and the
effective tax rate was primarily the result of the litigation that was settled
during 2002.

     Discontinued Operations

In January 2002, we announced the closure of the Fox Cities Newspapers, located
in Appleton, Wisconsin, which published 6 community newspapers. These community
newspapers were part of the publishing reportable segment.

On April 29, 2002, the board of directors of our French printing services
subsidiary, IPC Communication Services, S.A., a business in our printing
services segment, approved a resolution to proceed to close IPC Communication
Services, S.A. through a liquidation process. The remaining operations of IPC
Communication Services, S.A., were turned over to a liquidator on December 31,
2002.

The operations of the Fox Cities Newspapers and IPC Communication Services, S.A.
have been reflected as discontinued operations in our consolidated financial
statements and, accordingly, prior periods have been restated to reflect this
treatment.

Net revenue from discontinued operations in 2002 was $3.3 million, a decrease of
$11.9 million, or 78.3%, compared to $15.2 million in 2001. Net assets of
discontinued operations at December 31, 2002 were zero and $3.3 million at
December 31, 2001. Loss from discontinued operations in 2002 was $7.2 million
compared to $2.2 million in 2001. Applicable income tax benefits were $6.6
million and $0.5 million in 2002 and 2001, respectively.

                                       33
<PAGE>

     Cumulative Effect of Accounting Change

Effective January 1, 2002, we adopted Statement No. 142, "Goodwill and Other
Intangible Assets." Under Statement No. 142, goodwill and intangible assets
deemed to have indefinite lives, including broadcast licenses and network
affiliation agreements, are no longer amortized but are reviewed for impairment
and written down and charged to results of operations when their carrying
amounts exceed their estimated fair values. We performed transitional impairment
tests on our goodwill and indefinite-lived intangible assets. The resulting
impairment charges of $7,670 ($6,509 after tax) were recorded during the first
quarter ended March 24, 2002 and are reported as the cumulative effect of
accounting change in our consolidated statements of earnings.

     2001 compared to 2000

     Consolidated

Our consolidated operating revenue in 2001 was $808.8 million, a decrease of
$10.4 million, or 1.3%, compared to $819.2 million in 2000. Our consolidated
operating costs and expenses in 2001 were $463.7 million, an increase of $16.4
million, or 3.7%, compared to $447.3 million in 2000. Our consolidated selling
and administrative expenses in 2001 were $261.0 million, a decrease of $1.7
million, or 0.1%, compared to $262.7 million in 2000.

The following table presents our total operating revenue by segment, total
operating costs and expenses, selling and administrative expenses and total
operating earnings as a percent of total operating revenue for 2001 and 2000:

<TABLE>
<CAPTION>
                                                                            Percent of                      Percent of
                                                                              Total                           Total
                                                                            Operating                       Operating
                                                            2001             Revenue            2000         Revenue
                                                          ---------         ---------         --------       -------
                                                                                       (in millions)
<S>                                                       <C>                <C>             <C>              <C>
Operating revenue:
Publishing.......................................         $  320.6           39.6%           $  345.3         42.1%
Broadcasting.....................................            134.8           16.7               149.9         18.3
Telecommunications...............................            152.0           18.8               126.6         15.5
Printing services................................            114.6           14.2               107.3         13.1
Other............................................             86.8           10.7                90.1         11.0
                                                          --------          ------           --------        ------
     Total operating revenue.....................            808.8          100.0               819.2        100.0

Total operating costs and expenses...............            463.7           57.3               447.3         54.6
Selling and administrative expenses..............            261.0           32.3               262.7         32.1
                                                          --------          ------           --------        ------
Total operating costs and expenses and selling
   and administrative expenses...................            724.7           89.6               710.0         86.7
                                                          --------          ------           --------        ------
Total operating earnings.........................         $   84.1           10.4%           $  109.2         13.3%
                                                          ========          ======           ========        ======
</TABLE>

The decrease in operating revenue was primarily attributed to the decrease in
advertising revenue in our publishing business and the decrease in television
operating revenue due to the decline in political and issue advertising and the
economic downturn offset by the increase in telecommunications operating revenue
attributed to new sales opportunities and network expansion. In addition,
operating revenue in 2001 was adversely impacted by $1.8 million from preempted
advertising due to the uninterrupted television news coverage and certain
advertising cancellations on television and radio stations following the
September 11 terrorist attacks.

The increase in total operating costs and expenses and selling and
administrative expenses was primarily due to the cost of workforce reduction and
business transition charges, the increase in the cost of raw materials other
than newsprint and the increase in the cost of payroll and benefits.

                                       34
<PAGE>

Our operating earnings in 2001 were $84.1 million, a decrease of $25.1 million,
or 23.0%, compared to $109.2 million in 2000. The following table presents our
operating earnings by segment for 2001 and 2000:

<TABLE>
<CAPTION>
                                                                            Percent of                      Percent of
                                                                              Total                           Total
                                                                            Operating                       Operating
                                                            2001             Revenue            2000         Revenue
                                                          ---------         ---------         --------       -------
                                                                                       (in millions)
<S>                                                       <C>                 <C>             <C>            <C>
Publishing.......................................         $   24.9            29.6%           $  39.3          36.0%
Broadcasting.....................................             15.5            18.4               30.4          27.9
Telecommunications...............................             48.0            57.1               40.1          36.7
Printing services................................            ( 0.8)           (0.9)               3.3           3.0
Other............................................             (3.5)           (4.2)              (3.9)         (3.6)
                                                          --------           ------           -------         ------
Total operating earnings.........................         $   84.1           100.0%           $ 109.2         100.0%
                                                          ========           ======           =======         ======
</TABLE>

The decrease in operating earnings was primarily due to the decrease in
operating revenue, the cost of workforce reduction and business transition
charges, the cost of accrued litigation and the adverse impact on third quarter
2001 earnings following the September 11 terrorist attacks.

Our consolidated EBITDA in 2001 was $135.8 million, a decrease of $23.5 million,
or 14.8%, compared to $159.3 million in 2000. The following table presents a
reconciliation of our operating earnings to EBITDA by segment for 2001 and 2000:

<TABLE>
<CAPTION>
                                                     2001                                                 2000
                                 ----------------------------------------------    ------------------------------------------------

                                            Depreciation             Percent of                Depreciation              Percent of
                                 Operating       and                    Total      Operating        and                     Total
                                 Earnings   Amortization    EBITDA     EBITDA      Earnings    Amortization     EBITDA     EBITDA
                                 --------   ------------    ------     ------      --------    ------------     ------     ------
                                                                            (in millions)
<S>                              <C>        <C>                <C>      <C>        <C>          <C>             <C>         <C>
Publishing.................      $   24.9   $     13.9     $   38.8     28.6%      $  39.3      $     14.2      $  53.5     33.6%
Broadcasting...............          15.5         13.3         28.8     21.2          30.4            13.6         44.0     27.6
Telecommunications.........          48.0         14.7         62.7     46.2          40.1            11.4         51.5     32.3
Printing services..........          (0.8)         6.2          5.4      4.0           3.3             6.7         10.0      6.3
Other......................          (3.5)         3.6          0.1       --          (3.9)            4.2          0.3      0.2
                                 --------   ----------     --------    ------      -------      ----------      -------    ------
Total......................      $   84.1   $     51.7     $  135.8    100.0%      $ 109.2      $     50.1      $ 159.3    100.0%
                                 ========   ==========     ========    ======      =======      ==========      =======    ======
</TABLE>

The decrease in total EBITDA was primarily due to decreases in operating
earnings in our publishing, broadcasting, printing services and other reportable
segments partially offset by an increase in our telecommunications segment.

     Publishing

Operating revenue from publishing in 2001 was $320.6 million, a decrease of
$24.7 million, or 7.2%, compared to $345.3 million in 2000. Operating earnings
from publishing were $24.9 million, a decrease of $14.4 million, or 36.6%,
compared to $39.3 million in 2000. EBITDA from publishing in 2001 was $38.8
million, a decrease of $14.7 million, or 27.5%, compared to $53.5 million in
2000 (see table above for a reconciliation of publishing operating earnings to
publishing EBITDA).

The following table presents our publishing operating revenue, operating
earnings and EBITDA by daily newspaper and community newspapers and shoppers for
2001 and 2000:

<TABLE>
<CAPTION>
                                                            2001                                            2000
                                        -----------------------------------------        -------------------------------------------
                                                      Community                                           Community
                                          Daily       Newspapers                           Daily         Newspapers
                                        Newspaper     & Shoppers          Total          Newspaper       & Shoppers        Total
                                        ---------     ----------          -----          ---------       ----------        -----
                                                                               (in millions)
<S>                                     <C>           <C>                <C>             <C>             <C>              <C>
Operating revenue..............         $   218.8     $   101.8          $ 320.6         $   237.0       $    108.3       $ 345.3
                                        =========     =========          =======         =========       ==========       =======
Operating earnings.............         $    23.3     $     1.6          $  24.9         $    38.4       $      0.9       $  39.3
                                        =========     =========          =======         =========       ==========       =======
EBITDA.........................         $    31.7     $     7.1          $  38.8         $    46.5       $      7.0       $  53.5
                                        =========     =========          =======         =========       ==========       =======

</TABLE>

                                       35
<PAGE>


The following table presents our publishing operating revenue by category for
2001 and 2000:

<TABLE>
<CAPTION>
                                                            2001                                            2000
                                        -----------------------------------------        -------------------------------------------
                                                      Community                                           Community
                                          Daily       Newspapers                           Daily         Newspapers
                                        Newspaper     & Shoppers          Total          Newspaper       & Shoppers        Total
                                        ---------     ----------          -----          ---------       ----------        -----
                                                                               (in millions)
<S>                                     <C>           <C>                <C>             <C>             <C>              <C>
Advertising revenue:
     Retail....................         $    74.6     $    55.7          $ 130.3         $    74.2       $     56.8       $ 131.0
     Classified................              67.9          10.9             78.8              85.4             12.1          97.5
     General...................               9.7            --              9.7              10.9               --          10.9
     Other.....................              14.1           1.4             15.5              13.3              1.4          14.7
                                        ---------     ---------          -------         ---------       ----------       -------
     Total advertising revenue.             166.3          68.0            234.3             183.8             70.3         254.1
Circulation revenue............              48.1           3.3             51.4              48.3              3.5          51.8
Other revenue..................               4.4          30.5             34.9               4.9             34.5          39.4
                                        ---------     ---------          -------         ---------       ----------       -------
Total operating revenue........         $   218.8     $   101.8          $ 320.6         $   237.0       $    108.3       $ 345.3
                                        =========     =========          =======         =========       ==========       =======
</TABLE>

Advertising revenue in 2001 accounted for 73.1% of total publishing revenue
compared to 73.6% in 2000. Retail advertising revenue in 2001 was $130.3
million, a decrease of $0.7 million, or 0.5%, compared to $131.0 million in
2000. The decrease is comprised of a $1.1 million decrease in community
newspapers retail advertising and a $0.4 million decrease in daily newspaper
retail ROP advertisements offset by a $0.8 million increase in daily newspaper
retail preprints. We believe certain major national retail advertisers have
changed their marketing strategies and have shifted toward retail preprints.
Additionally, in 2001, many advertisers reduced or eliminated their newspaper
advertisements following the September 11 terrorist attacks.

Classified advertising revenue in 2001 was $78.8 million, a decrease of $18.7
million, or 19.2%, compared to $97.5 million in 2000. At the daily newspaper,
the decrease in employment advertising of $19.4 million was partially offset by
increases in real estate advertising, automotive advertising and general
advertising. The decrease in employment advertising, which accounted for almost
47.7% of total classified advertising in 2001, represented a 37.5% decrease from
2000. We believe the decrease in employment advertising resulted primarily from
continuing economic weakness.

General advertising revenue in 2001 was $9.7 million, a decrease of $1.2
million, or 11.0%, compared to $10.9 million in 2000. The decrease was primarily
attributable to a decrease in general ROP and preprint advertising mainly from
our airline customers.

The following table presents the advertising linage of our daily newspaper by
category for 2001 and 2000:
<TABLE>
<CAPTION>
                                                            2001                    2000                 Change
                                                        -----------             -----------           -----------
                                                                (inches in thousands)
Advertising linage (in inches):
<S>                                                         <C>                     <C>                    <C>
     Retail..........................................       812.0                   811.5                - 0.1%
     Classified......................................       970.6                 1,164.3               - 16.6%
     General.........................................        51.1                    63.6               - 19.7%
                                                        -----------             -----------
Total advertising linage (in inches).................     1,833.7                 2,039.4               - 10.0%
                                                        ===========             ===========
Preprint pieces (in millions)........................       719.5                   665.7                + 8.1%
                                                        ===========             ===========
</TABLE>

Total advertising linage in 2001 decreased 10.0% compared to 2000. The decrease
was largely due to a 16.6% decrease in classified advertising, an 0.1% decrease
in retail advertising and a 19.7% decrease in general advertising. Retail
advertising linage decreased primarily as a result of the shift in major retail
advertising to more preprint advertising. Preprint advertising pieces rose 8.1%
in 2001 primarily due to an increase in preprint advertising from major national
retail customers.

                                       36
<PAGE>

The following table presents the full pages of advertising and revenue per page
of our community newspapers and shoppers for 2001 and 2000:
<TABLE>
<CAPTION>
                                                            2001                    2000                 Change
                                                        -----------             -----------           -----------
<S>                                                         <C>                    <C>                    <C>
Full pages of advertising:
     Community newspapers............................       94,898                 111,440              - 14.8%
     Shoppers........................................      113,846                 134,057              - 15.1%
                                                        -----------             -----------
Total full pages of advertising......................      208,744                 245,497              - 15.0%
                                                        ===========             ===========

Revenue per page.....................................    $  288.61               $  258.94              + 11.5%
                                                        ===========             ===========
</TABLE>

Total pages of full page advertising in 2001 decreased 15.0% compared to 2000.
The decrease was largely due to a 15.1% decrease in advertising in the shoppers
and a 14.8% decrease in advertising in the community newspapers. Revenue per
page increased 11.5% due to rate increases.

Other advertising revenue, consisting of revenue from direct marketing efforts,
JSOnline, event marketing, legal notices and Internet products in 2001 was $15.5
million, an increase of $0.8 million, or 5.4%, compared to $14.7 million in
2000. The increase was largely due to increased direct mail advertising and
online classified advertising.

Circulation revenue in 2001 accounted for 16.0% of total publishing revenue
compared to 15.0% in 2000. Circulation revenue in 2001 was $51.4 million, a
decrease of $0.4 million, or 0.8%, compared to $51.8 million in 2000. The
decrease was mainly attributed to a 7.4% decrease in average net paid
circulation for Journal Sentinel's weekday edition, a 1.6% decrease in average
net paid circulation for Journal Sentinel's Sunday edition and a 4.7% decrease
in paid circulation for our community newspapers.

Other revenue, which consists primarily of revenue from commercial printing at
the print plants for our community newspapers and shoppers, in 2001 accounted
for 10.9% of total publishing revenue compared to 11.4% in 2000. Other revenue
in 2001 was $34.9 million, a decrease of $4.5 million, or 11.4%, compared to
$39.4 million in 2000. The decrease was primarily attributed to reduced press
runs and page counts from existing commercial printing customers.

Publishing operating earnings in 2001 were $24.9 million, a decrease of $14.3
million, or 36.5%, compared to $39.2 million in 2000. Contributing to the
decrease was a $24.7 million decrease in the total publishing operating revenue
and $3.3 million in workforce reductions partially offset by a decrease of $3.4
million in the cost of newsprint and ink and a $8.4 million decrease in direct
wages and selling and administrative expenses, which resulted primarily from
workforce reductions at the daily newspaper.

     Broadcasting

Operating revenue from broadcasting in 2001 was $134.8 million, a decrease of
$15.1 million, or 10.1%, compared to $149.9 million in 2000. Operating earnings
in 2001 were $15.5 million, a decrease of $14.9 million, or 49.0%, compared to
$30.4 million in 2000. EBITDA in 2001 was $28.7 million, a decrease of $15.3
million, or 34.8%, compared to $44.0 million in 2000 (see page 35 for a
reconciliation of broadcasting operating earnings to broadcasting EBITDA).

The following table presents our broadcasting operating revenue, operating
earnings and EBITDA by radio stations and television stations for 2001 and 2000:
<TABLE>
<CAPTION>

                                                            2001                                            2000
                                        -----------------------------------------        ------------------------------------------
                                        Radio            Television       Total          Radio            Television         Total
                                        -----            ----------       -----          -----            ----------         -----
                                                                                (in millions)
<S>                                     <C>              <C>            <C>              <C>               <C>              <C>
Operating revenue..............         $  73.9          $   60.9       $   134.8        $  73.5           $   76.4         $  149.9
                                        =======          ========       =========        =======           ========         ========
Operating earnings.............         $   5.9          $    9.6       $    15.5        $   5.0           $   25.4         $   30.4
                                        =======          ========       =========        =======           ========         ========
EBITDA.........................         $  14.8          $   13.9       $    28.7        $  14.4           $   29.6         $   44.0
                                        =======          ========       =========        =======           ========         ========
</TABLE>

Operating revenue from our radio stations in 2001 was $73.9 million, an increase
of $0.4 million, or 0.5%, compared to $73.5 million in 2000. The increase was
primarily attributed to a $0.7 million increase in local advertising revenue and
a $0.6 million increase in network and other revenue offset by a $0.6 million
decrease in political and issue advertising revenue and a $0.4 million decrease
in national advertising revenue. These changes in advertising revenue from the
radio stations in 2001 reflect the $0.5 million adverse impact from
cancellations and the loss of advertising spots following the September 11
terrorist attacks.

                                       37
<PAGE>

Operating earnings from our radio stations in 2001 were $5.9 million, an
increase of $0.9 million, or 18.0%, compared to $5.0 million in 2000. The
increase was primarily attributed to the $0.4 million increase in revenue and
the $1.0 million decrease in payroll costs and other selling expenses.

Operating revenue from our television stations in 2001 was $60.9 million, a
decrease of $15.5 million, or 20.3%, compared to $76.4 million in 2000. The
decrease was primarily attributed to a $9.1 million decrease in Olympic,
political and issue advertising revenue, a $3.6 million decrease in local
advertising revenue and a $2.5 million decrease from national advertising
revenue across all markets. Of these decreases in advertising revenue from the
television stations in 2001, $1.3 million was due to the uninterrupted news
coverage and certain advertising cancellations following the September 11
terrorist attacks.

Operating earnings from our television stations in 2001 were $9.6 million, a
decrease of $15.8 million, or 62.2%, compared to $25.4 million in 2000. The
decrease was primarily attributed to the $15.5 million decrease in revenue.

     Telecommunications

Operating revenue from telecommunications in 2001 was $152.0 million, an
increase of $25.4 million, or 20.1%, compared to $126.6 million in 2000.
Operating earnings from telecommunications in 2001 were $48.0 million, an
increase of $7.9 million, or 19.7%, compared to $40.1 million in 2000. EBITDA
from telecommunications in 2001 was $62.7 million, an increase of $11.2 million,
or 21.7%, compared to $51.5 million in 2000 (see page 35 for a reconciliation of
telecommunications operating earnings to telecommunications EBITDA).

Operating revenue from wholesale services in 2001 was $102.6 million, an
increase of $18.4 million, or 21.9%, compared to $84.2 million in 2000. The
increase was primarily attributed to strong demand for our services and the
network expansion into Michigan and Indiana. Monthly recurring revenue from
wholesale services at the end of 2001 was $8.1 million compared to $7.8 million
at the beginning of 2001 and $5.5 million at the beginning of 2000. During 2001,
new customers and new circuit connections of $2.9 million in monthly recurring
revenue were partially offset by service disconnections, price reductions and
lost customers.

Operating revenue from commercial services in 2001 was $49.4 million, an
increase of $7.0 million, or 16.5%, compared to $42.4 million in 2000. The
increase was primarily attributed to an increase in data services. Monthly
recurring revenue from commercial data services at the end of 2001 was $3.0
million compared to $2.8 million at the beginning of 2001 and $2.4 million at
the beginning of 2000. During 2001, new customers and new circuit connections of
$0.8 million in monthly recurring revenue were partially offset by service
disconnections, price reductions and lost customers.

The increase in operating earnings from telecommunications was primarily
attributed to the $25.4 million increase in revenue offset by a decrease in
profit margins due to price reductions. We expect continued price reductions and
service disconnections will cause a downward trend in earnings in 2002.

WorldCom and Global Crossing together accounted for 22.5% and 23.7% of our
telecommunications operating revenue in 2001 and 2000, respectively. The loss of
the ongoing business from either of these 2 customers would have a significant
adverse effect on our results of operations.

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

     Printing Services

Operating revenue from printing services in 2001 was $114.6 million, an increase
of $7.3 million, or 6.8%, compared to $107.3 million in 2000. The operating loss
from printing services in 2001 was $0.8 million, a decrease of $4.1 million,
compared to earnings of $3.3 million in 2000. EBITDA from printing services was
$5.4 million in 2001, a decrease of $4.6 million, or 46.0%, compared to $10.0
million in 2000 (see page 35 for a reconciliation of printing services operating
earnings to printing services EBITDA).

The increase in printing services operating revenue was primarily attributed to
an increase in assembly services. The decrease in operating earnings was
primarily attributed to $2.3 million in expense related to the transition of the
Eastern and Western Regions into one operational unit called IPC U.S. Operations
and $0.7 million in costs related to the shutdown of operations in Ireland.

A large computer hardware OEM (original equipment manufacturer) accounted for
29.8% and 24.4% of our printing services revenue in 2001 and 2000, respectively.
The loss of this customer could have a material adverse effect on our results of
operations.

                                       38
<PAGE>

     Other

Other operating revenue in 2001 was $86.8 million, a decrease of $3.3 million,
or 3.7%, compared to $90.1 million in 2000. Other operating losses in 2001 were
$3.5 million, a decrease of $0.5 million, or 11.6%, compared to losses of $4.0
million in 2000. Other EBITDA in 2001 was $0.1 million, a decrease of $0.2
million, compared to $0.3 million in 2000 (see page 35 for a reconciliation of
other operating earnings to other EBITDA).

The following table presents our other operating revenue, operating earnings and
EBITDA by business for 2001 and 2000:

<TABLE>
<CAPTION>
                                                       2001                                                2000
                                  -----------------------------------------------  -----------------------------------------------
                                               Direct       Corporate                           Direct        Corporate
                                    Label     Marketing        and                   Label     Marketing         and
                                  Printing    Services    Eliminations    Total    Printing    Services      Eliminations    Total
                                  --------    --------    ------------    -----    --------    --------      ------------    -----
                                                                              (in millions)
<S>                               <C>         <C>         <C>             <C>       <C>        <C>           <C>            <C>
Operating revenue............     $   55.7    $   35.9    $      (4.8)    $ 86.8    $  59.6    $   34.3      $     (3.8)    $ 90.1
                                  ========    ========    ===========     ======    =======    ========      ==========     ======
Operating earnings...........     $   (0.6)   $   (1.2)   $      (1.7)    $ (3.5)   $  (0.9)   $    0.1      $     (3.2)    $ (4.0)
                                  ========    ========    ===========     ======    =======    ========      ==========     ======
EBITDA.......................     $    1.4    $    0.0    $      (1.3)    $  0.1    $   1.6    $    1.3      $     (2.6)    $  0.3
                                  ========    ========    ===========     ======    =======    ========      ==========     ======
</TABLE>

The decrease in operating revenue was primarily attributed to the March 2001
sale of the Milwaukee label printing business offset by the increase in print
and mail services in our direct marketing services business. Operating revenue
in 2001 was adversely impacted by the terrorist attacks and the anthrax scare,
which resulted in advertisers reducing their use of direct mail. Included in
operating revenue from our direct marketing services was $21.3 million and $19.7
million of postage amounts billed to customers in 2001 and 2000, respectively.

In 2001 and 2000, the operating losses were primarily attributed to an increase
in the litigation reserve.

SAB/Miller Brewing Company accounted for approximately 47.4% and 27.5% of our
label printing operating revenue in 2001 and 2000, respectively. In 2001, our
label printing business was in the first year of a 5 year contract with
SAB/Miller Brewing Company. The loss of SAB/Miller Brewing Company could have a
material adverse effect on our results of operations.

     Non Operating Income and Taxes from Continuing Operations

Interest income and dividends in 2001 were $1.6 million, an increase of $0.3
million, or 23.1%, compared to $1.3 million in 2000. The increase was primarily
attributed to the increase in cash available for commercial paper and money
market investments throughout 2001. Interest expense was $0.4 million in 2001
and 2000. Gross interest expense from borrowings under our credit agreement in
2001 was $0.5 million compared to $1.3 million in 2000. Interest expense
capitalized as part of our construction of the Journal Sentinel production
facility in 2001 was $0.1 million compared to $0.9 million in 2000.

The effective tax rate on continuing operations was 42.0% in 2001 compared to
40.1% in 2000. The difference between the statutory federal tax rate and the
effective tax rate was primarily due to the reduction of deferred tax assets for
state net operating losses.

     Discontinued Operations

Net revenue from discontinued operations in 2001 was $15.2 million, a decrease
of $4.1 million, or 21.2%, compared to $19.3 million in 2000. Net assets of
discontinued operations at December 31, 2001 were $3.3 million. The loss from
discontinued operations in 2001 was $2.2 million compared to $0.1 million in
2000. Applicable income tax benefits in 2001 was $0.5 million and $0.6 million
in 2000.

Liquidity and Capital Resources

Our principal liquidity and capital requirements have been to pay dividends that
have supported employee ownership and to meet our working capital and capital
expenditure needs. Since 2000, we have also required liquidity to purchase units
in JESTA from employees and former employees. Historically, we have relied on
cash flow from operations and, in 2002, supplemented these cash flows with
borrowings under our credit facility, to satisfy our liquidity and capital
requirements. We believe that current cash balances, which were $8.5 million at
December 31, 2002, expected cash flows from operations and borrowings under our
credit facility will be adequate for the foreseeable future to provide our
working capital, debt service, capital expenditures and cash dividends.

                                       39
<PAGE>

     Cash Flow

Cash provided by operating activities was $86.1 million in 2002 compared to
$118.4 million in 2001 and $133.1 million in 2000. The decrease was mainly due
to funding of the pension plan obligations of $44.5 million in 2002.

Cash used for investing activities was $51.4 million in 2002 compared to $108.1
million in 2001 and $94.0 million in 2000. Capital expenditures for property and
equipment were $53.2 million in 2002, $90.2 million in 2001 and $96.8 million in
2000. We continued to invest in the building of our daily newspaper production
facility, digital television equipment and upgrades to the telecommunications
fiber optic network. Cash used for acquisitions was zero in 2002, $22.1 million
in 2001 and $8.0 million in 2000. Cash received from sales of assets was $1.5
million in 2002, $5.2 million in 2001, including $4.4 million from the sale of
certain of the assets of the Milwaukee label printing operation, and $3.2
million in 2000. In 2000, we received $7.1 million from the redemption of the
preferred stock received from the 1995 sale of Perry Printing, a former
subsidiary.

Cash used for financing activities was $31.7 million in 2002 compared to $11.9
million in 2001 and $33.0 million in 2000. We increased our borrowing under our
credit agreement by $86.4 million in 2002. The increased borrowing was primarily
used to purchase units of beneficial interest from employees and former
employees and for funding of pension plan obligations. In 2002, purchases of
units were $125.3 million compared with $84.4 million in 2001 and $77.1 million
in 2000. Sales of units were $38.9 million, $101.8 million and $90.6 million in
2002, 2001 and 2000, respectively. We paid cash dividends of $31.6 million,
$37.9 million and $36.8 million in 2002, 2001 and 2000 respectively.

Cash used for discontinued operations was $3.4 million in 2002 and $3.7 million
in 2000. Cash provided by discontinued operations was $0.5 million in 2001.

We have a $120.0 million bank revolving credit agreement, expiring May 30, 2003,
to support our cash requirements. As of December 31, 2002, we had borrowings of
$90.8 million under this credit agreement, including $2.8 million bearing
interest at the base rate of 4.25% and $88.0 million bearing interest at the
LIBOR based rate of 2.40%, and immediately available credit of $29.2 million. We
presently expect to extend this credit agreement for approximately 1 year.

     Stock Trust

As of December 31, 2002, our treasury, our employees, and former employees owned
units representing beneficial ownership of 90% of our stock. As of the end of
2002, we believe that employees and former employees had outstanding balances
under demand notes secured by pledges of units from various financial
institutions totaling approximately $433.1 million.

Eligible optionees under the stock trust, including certain categories of
designated employees, the Grant family shareholders and us, have the right to
purchase units offered for sale. We are not obligated to purchase units, though
in recent years prior to the suspension of trading on October 25, 2002, we have
elected to do so for the convenience of stock trust unitholders. On October 25,
2002, our board of directors determined to indefinitely suspend our purchase and
sale of units and also directed us to explore potential sources for additional
permanent capital. We cannot assure you that we will be able to obtain
additional permanent capital, or if we do, what the terms or structure will be
or the extent to which new capital will be used to purchase units offered for
sale.

     Contractual Obligations and Commitments

Our contractual obligations are summarized below.

<TABLE>
<CAPTION>
                                                                             Payments Due by Period
Contractual Obligations                               Total         Less than 1 year           1 - 4 years      After 4 years
-----------------------                              -------        ----------------           -----------      -------------
                                                                                   (in millions)
<S>                                                  <C>               <C>                      <C>                <C>
Other long-term liabilities.................         $   3.7           $     1.6                $    1.1           $   1.0
Operating leases............................            69.1                15.7                    33.3              20.1
                                                     -------           ---------                --------           -------
Total contractual obligations...............         $  72.8           $    17.3                $   34.4           $  21.1
                                                     =======           =========                ========           =======
</TABLE>

Other long-term liabilities consist primarily of obligations for non-compete
agreements resulting from acquisitions and deposits received from subleases of
building operating leases. We lease office space, certain broadcasting
facilities, distribution centers, printing plants and equipment under both
short-term and long-term leases accounted for as operating leases. Some of the
lease agreements contain renewal options and rental escalation clauses, as well
as provisions for the payment of utilities, maintenance and taxes by us.

                                       40
<PAGE>
<TABLE>
<CAPTION>

                                                            Amount of Commitment Expiration per Period
Other Commitments                               Total         Less than 1 year           1 - 4 years      After 4 years
-----------------                              -------        ----------------           -----------      -------------
                                                                               (in millions)
<S>                                            <C>               <C>                      <C>               <C>
Other contractual commitments...............   $  122.4          $    39.4                $    82.9         $      0.1
Standby letters of credit...................        1.2                1.2                       --                 --
                                               --------          ---------                ---------         ----------
Total other commitments.....................   $  123.6          $    40.6                $    82.9         $      0.1
                                               ========          =========                =========         ==========
</TABLE>

A purchase commitment for newsprint for our publishing businesses, which runs
through 2006, from a newsprint supplier as of December 31, 2002, was $104.7
million. The commitment is based on market prices for quantities we determine
will meet our newsprint requirements over the term of the contract. In the
unlikely event that newsprint is no longer required in our business, our
commitment would expire without obligation. Purchase commitments related to
capital expenditures for our daily newspaper's new production facility were
approximately $9.4 million as of December 31, 2002. We expect to spend up to
$112.4 million on this project scheduled to be completed in early 2003. As of
December 31, 2002, we have spent $102.7 million on this project. In addition, we
have the right to broadcast certain television programs during the years
2003-2008 under contracts aggregating $8.3 million. We have $1.2 million of
standby letters of credit for business insurance purposes.

Critical Accounting Policies

Our management's discussion and analysis of financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related footnote disclosures. On an on-going basis,
we evaluate our estimates, including those related to doubtful accounts,
property and equipment, intangible assets, income taxes, litigation, pension and
other postretirement benefits. We base our estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

     Allowance for doubtful accounts

We evaluate the collectibility of our accounts receivable based on a combination
of factors. We specifically review historical write-off activity by market,
large customer concentrations, customer creditworthiness and changes in our
customer payment terms when evaluating the adequacy of the allowance for
doubtful accounts. In circumstances where we are aware of a specific customer's
inability to meet its financial obligations to us (such as bankruptcy filings,
credit history, etc.), we record a specific reserve for bad debts against
amounts due to reduce the net recognized receivable to the amount we reasonably
believe will be collected. For all other customers, we recognize reserves for
bad debts based on past loss history, the length of time the receivables are
past due and the current business environment. If our evaluations of the
collectibility of our accounts receivable differ from actual results, increases
or decreases in bad debt expense and allowances may be required.

     Property and equipment

We assign useful lives for our property and equipment based on our estimate of
the amount of time that we will use those assets and we have selected the
straight-line method to depreciate the majority of the property and equipment. A
change in the estimated useful lives or the depreciation method used could have
a material impact upon our results of operations.

We evaluate our property and equipment for impairment whenever indicators of
impairment exist. Accounting standards require that if the sum of the future
cash flows expected to result from a company's assets, undiscounted and without
interest charges, is less than the carrying amount of the asset, an asset
impairment must be recognized in the financial statements. The estimated future
cash flows related to an asset or group of assets is highly susceptible to
change because we must make assumptions about future revenue and the related
cost of sales. Changes in our assumptions could require us to recognize a loss
for asset impairment.

     Impairment of goodwill and indefinite-lived intangibles

Goodwill, broadcast licenses and other indefinite-lived intangible assets
account for 32.9% and 34.6% of total assets in 2002 and 2001, respectively. The
annual impairment tests for goodwill and indefinite-lived intangibles under
Statement No. 142 require us to make certain assumptions in determining fair
value, including assumptions about cash flow growth rates of our businesses.
Additionally, the

                                       41
<PAGE>

fair values are significantly impacted by factors including competitive industry
valuations and long-term interest rates that exist at the time the annual
impairment tests are performed. Accordingly, we may incur additional impairment
charges in future periods under Statement No. 142 to the extent we do not
achieve our expected cash flow growth rates, and to the extent that market
values and long-term interest rates in general decrease and increase,
respectively.

     Accrued Income Taxes

The Internal Revenue Service and various state Departments of Revenue routinely
examine our federal and state tax returns. From time to time, the IRS and the
state Departments of Revenue may challenge certain of our tax positions. We
believe our tax positions comply with applicable tax law and we would vigorously
defend these positions if challenged. The final disposition of any positions
challenged by the IRS or state Departments of Revenue could require us to make
additional tax payments. Nonetheless, we believe that we have adequately
reserved for any foreseeable payments related to such matters and consequently
do not anticipate any material earnings impact from the ultimate resolution of
such matters.

     Accrued Litigation

We are subject to various legal actions, administrative proceedings and claims.
When necessary, we may need to record a liability for an estimate of the
probable costs for the resolution of such claims. The estimate would be
developed in consultation with counsel and would be based upon an analysis of
potential results, assuming a combination of litigation and settlement
strategies. We believe that such unresolved legal actions and claims would not
materially affect our results of operations, financial position or cash flows.

     Employee Benefits

We are self-insured for a majority of our employee related health and disability
benefits and workers compensation claims. A third party administrator is used to
process all claims. Liabilities for unpaid claims are based on our historical
claims experience. Liabilities for workers compensation claims are developed
from actuarial valuations. Actual amounts could vary significantly from such
estimates which would require us to record additional expense in the future.

We rely upon actuarial valuations to determine pension costs and funding. We
provide the actuarial firms with certain assumptions that have a significant
effect on our obligations such as:

o    the discount rate - used to arrive at the net present value of the
     obligations;
o    the return on assets - used to estimate the growth in invested asset value
     available to satisfy certain obligations;
o    the salary increases - used to calculate the impact future pay increases
     will have on postretirement obligations; and
o    the employee turnover statistics - used to estimate the number of employees
     to be paid postretirement benefits.

Moody's Aa Corporate bonds, as of the measurement date, is the benchmark we use
to determine the assumed discount rate, which was reduced from 7.25% in 2001 to
6.75% for 2002. We make other assumptions that affect the accounting for pension
benefits, such as the expected rate of return on plan assets (decreased from
9.5% in 2001 to 8.5% in 2002) and the rate of compensation increase (4.5% in
2002 and 2001). Changes in these assumptions affect the benefit obligations and
the service and interest cost components of the pension plan and the other
postretirement plan and the required funding of the pension plan. We review
these assumptions on an annual basis.

We also rely upon actuarial valuations to determine post retirement benefit
costs other than pension. We provide the actuarial firms with the assumption of
the discount rate and medical cost inflation. These assumptions could have a
significant effect on our obligation. The discount rate is used to arrive at the
net present value of the obligation. The medical cost of inflation is used to
calculate the impact future medical costs would have on postretirement
obligations.

New Accounting Standards

Effective January 1, 2002, we adopted Statement No. 141, "Business
Combinations," and Statement No. 142. Statement No. 141 addresses financial
accounting and reporting for business combinations completed after June 30,
2001. As required by Statement No. 142, we performed transitional impairment
tests on our goodwill and indefinite-lived intangible assets. The resulting
impairment charges of $7.7 million ($6.5 million after tax) were recorded during
the first quarter ended March 24, 2002 and are reported as the cumulative effect
of accounting change in the consolidated statements of earnings.

                                       42
<PAGE>

Effective January 1, 2002, we adopted Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of, as well as broadening the accounting and
reporting of discontinued operations. Accordingly, the closures of Fox Cities
Newspapers and IPC Communication Services, S.A., as discussed in Note 10 to our
Consolidated Financial Statements, have been treated as discontinued operations.

In June 2002, Statement No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities," was issued. Statement No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies the previous guidance on the subject. It requires, among other
things, that a liability for a cost associated with an exit or disposal activity
be recognized, at fair value, when the liability is incurred rather than at the
commitment date to the exit or disposal plan. The provisions for Statement No.
146 are effective for exit or disposal activities that are initiated after
December 31, 2002. Accordingly, Statement No. 146 may affect when future costs
associated with exit or disposal activities are recognized.

Effect of Inflation

Our results of operations and financial condition have not been significantly
affected by general inflation. We have reduced the effects of rising costs
through improvements in productivity, cost containment programs and, where the
competitive environment exists, increased selling prices. However, changes in
newsprint prices could have an impact on costs, which we may not be able to
offset fully in our pricing or cost containment programs.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate risk on our short-term notes payable to banks
and foreign currency exchange rates in the normal course of business. However, a
10% change in the interest rate is not expected to have a material impact on our
earnings before income taxes. In addition, we have shut down our operations
outside the United States and have not entered into any foreign currency
derivative instruments.

Many of our unitholders have borrowed funds to pay for their purchase of units.
Dividends on our common stock passed through to our unitholders have in the past
helped our unitholders make required periodic interest payments on those loans.
Increases in the interest rates on unitholder loans could result in our
unitholders seeking increased dividends from us. Dividends are established by
our board of directors in their sole discretion, and we are under no obligation
to pay dividends on our common stock. A 10% increase in the interest rate on
unitholder loans is not expected to have a material impact on dividends declared
by our board of directors.

                                       43
<PAGE>

<TABLE>
<CAPTION>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                           CONSOLIDATED BALANCE SHEETS
              December 31 (in thousands, except per share amounts)

                                                                                    2002                             2001
                                                                              -----------------                -----------------
ASSETS
------
<S>                                                                           <C>                              <C>
Current assets:
     Cash and cash equivalents.........................................       $           8,455                $           8,911
     Receivables, net..................................................                  89,920                           92,167
     Inventories, net..................................................                  16,200                           19,696
     Prepaid expenses..................................................                  11,786                            9,455
     Deferred income taxes.............................................                   8,164                            5,696
     Current assets of discontinued operations.........................                      --                            4,727
                                                                              -----------------                -----------------
     TOTAL CURRENT ASSETS..............................................                 134,525                          140,652


Property and equipment:
     Land and land improvements........................................                  26,542                           23,604
     Buildings.........................................................                 124,808                           79,357
     Equipment.........................................................                 488,331                          451,003
     Construction in progress..........................................                  30,057                           85,494
                                                                              -----------------                -----------------
                                                                                        669,738                          639,458
     Less accumulated depreciation.....................................                 345,333                          319,022
                                                                              -----------------                -----------------
     Net property and equipment........................................                 324,405                          320,436

Goodwill, net..........................................................                 111,998                          112,289
Broadcast licenses, net................................................                 125,492                          128,842
Other intangible assets, net...........................................                  12,115                           20,215
Prepaid pension costs..................................................                  30,337                               --
Other assets...........................................................                   5,880                            6,311
Non-current assets of discontinued operations..........................                      --                            2,033
                                                                              -----------------                -----------------
     TOTAL ASSETS......................................................       $         744,752                $         730,778
                                                                              =================                =================

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Current liabilities:
     Notes payable to banks............................................       $          90,775                $           4,420
     Accounts payable..................................................                  37,757                           43,148
     Accrued compensation..............................................                  29,712                           23,794
     Deferred revenue..................................................                  20,741                           19,609
     Accrued employee benefits.........................................                   9,576                           23,882
     Other current liabilities.........................................                   9,525                           21,952
     Current liabilities of discontinued operations....................                      --                            3,502
     Current portion of long-term liabilities..........................                   1,645                            1,909
                                                                              -----------------                -----------------
     TOTAL CURRENT LIABILITIES.........................................                 199,731                          142,216

Accrued employee benefits..............................................                  16,945                           19,508
Other long-term liabilities............................................                   9,238                           10,666
Deferred income taxes..................................................                  42,294                           25,508

Shareholders' equity:
     Common stock, authorized and issued 28,800 shares
       ($0.125 par value)..............................................                   3,600                            3,600
     Retained earnings.................................................                 581,361                          556,139
     Units of beneficial interest in treasury, at cost.................                (108,417)                         (23,046)
     Accumulated other comprehensive income (loss).....................                      --                           (3,813)
                                                                              -----------------                -----------------
     TOTAL SHAREHOLDER'S EQUITY........................................                 476,544                          532,880
                                                                              -----------------                -----------------
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................       $         744,752                $         730,778
                                                                              =================                =================

See accompanying notes.
</TABLE>

                                       44
<PAGE>
<TABLE>
<CAPTION>

                                           CONSOLIDATED STATEMENTS OF EARNINGS
                             Years ended December 31 (in thousands, except per share amounts)
                                                                                      2002               2001              2000
                                                                                  ------------       ------------      -----------
<S>                                                                               <C>                <C>               <C>
Continuing operations:
Operating revenue:
     Publishing........................................................           $    311,138       $    320,615      $   345,321
     Broadcasting......................................................                152,749            134,801          149,886
     Telecommunications................................................                148,674            151,992          126,586
     Printing services.................................................                 97,841            114,612          107,334
     Other.............................................................                 90,974             86,767           90,105
                                                                                  ------------       ------------      -----------
Total operating revenue................................................                801,376            808,787          819,232

Operating costs and expenses:
     Publishing........................................................                148,204            155,173          164,128
     Broadcasting......................................................                 59,674             54,804           54,672
     Telecommunications................................................                 81,658             78,554           63,505
     Printing services.................................................                 82,597            101,884           90,096
     Other.............................................................                 75,420             73,266           74,899
                                                                                  ------------       ------------      -----------
     Total operating costs and expenses................................                447,553            463,681          447,300

     Selling and administrative expenses...............................                239,750            261,002          262,741
                                                                                  ------------       ------------      -----------
Total operating costs and expenses and selling and
     administrative expenses...........................................                687,303            724,683          710,041
                                                                                  ------------       ------------      -----------

Operating earnings.....................................................                114,073             84,104          109,191

Other income and expense:
     Interest income and dividends.....................................                    984              1,618            1,314
     Interest expense, net.............................................                   (645)              (383)            (430)
                                                                                  ------------       ------------      -----------
Total other income and expense.........................................                    339              1,235              884
                                                                                  ------------       ------------      -----------

Earnings from continuing operations before
     income taxes and accounting change................................                114,412             85,339          110,075

Provision for income taxes.............................................                 49,418             35,860           44,162
                                                                                  ------------       ------------      -----------

Earnings from continuing operations
     before accounting change..........................................                 64,994             49,479           65,913

Gain (loss) from discontinued operations, net of
     applicable income tax benefit
       of $6,624, $477 and $611, respectively..........................                  (565)            (1,722)              471

Cumulative effect of accounting change, net of
     applicable income taxes of $1,161.................................                (6,509)                 --               --
                                                                                  ------------       ------------      -----------

Net earnings...........................................................           $     57,920       $     47,757      $    66,384
                                                                                  ============       ============      ===========
Weighted average number of
     shares outstanding................................................                 26,430             28,084           27,101

Basic and diluted earnings per share:
     Continuing operations before accounting change....................           $       2.46       $       1.76      $      2.43
     Discontinued operations...........................................                 (0.02)             (0.06)             0.02
     Cumulative effect of accounting change............................                 (0.25)                 --               --
                                                                                  ------------       ------------      -----------
Net earnings per share.................................................           $       2.19       $       1.70      $      2.45
                                                                                  ============       ============      ===========

Cash dividends per share...............................................           $       1.20       $       1.35      $      1.35
                                                                                  ============       ============      ===========

See accompanying notes
</TABLE>

                                       45
<PAGE>

<TABLE>
<CAPTION>
                                        CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                Years ended December 31 (in thousands, except per share amounts)

                                                                     Units of          Accumulated
                                                                    Beneficial            Other
                                         Common       Retained       Interest         Comprehensive                  Comprehensive
                                          Stock       Earnings      in Treasury       Income (Loss)     Total        Income (Loss)
                                          -----       --------      -----------       -------------     -----        -------------
<S>                                     <C>         <C>            <C>               <C>             <C>            <C>
Balance at December 31, 1999            $   3,600   $  504,683     $  (42,018)       $      (568)    $  465,697

Net earnings                                            66,384                                           66,384     $       66,384
Other comprehensive loss:
    Foreign currency translation
      adjustments                                                                           (239)          (239)              (239)
                                                                                                                    --------------

Comprehensive income                                                                                                $       66,145
                                                                                                                    ==============

Cash dividends ($1.35 per share)                       (36,765)                                         (36,765)
Units of beneficial interest purchased                                 (77,145)                         (77,145)
Units of beneficial interest sold                        8,498          82,089                           90,587

                                        ------------------------------------------------------------------------
Balance at December 31, 2000                3,600      542,800        (37,074)              (807)       508,519

Net earnings                                            47,757                                           47,757     $       47,757
Other comprehensive loss:
    Minimum pension liability
      adjustment (net of tax
      of $1,906)                                                                          (2,856)        (2,856)            (2,856)
    Foreign currency translation
      adjustments                                                                           (150)          (150)              (150)
                                                                                                                    --------------
Other comprehensive loss                                                                                                    (3,006)
                                                                                                                    --------------

Comprehensive income                                                                                                $       44,751
                                                                                                                    ==============
Cash dividends ($1.35 per share)                       (37,866)                                         (37,866)
Units of beneficial interest purchased                                (84,351)                          (84,351)
Units of beneficial interest sold                        3,448          98,379                          101,827

                                        ------------------------------------------------------------------------

Balance at December 31, 2001                3,600      556,139        (23,046)            (3,813)       532,880

Net earnings                                            57,920                                           57,920     $       57,920
Other comprehensive income:
    Reversal of prior year minimum
      pension liability adjustment
      (net of tax of $1,906)                                                               2,856          2,856              2,856
    Realization of foreign currency
      translation adjustments                                                                957            957                957
                                                                                                                    --------------
Other comprehensive income                                                                                                   3,813
                                                                                                                    --------------

Comprehensive income                                                                                                $       61,733
                                                                                                                    ==============
Cash dividends ($1.20 per share)                       (31,597)                                        (31,597)
Units of beneficial interest purchased                               (125,347)                        (125,347)
Units of beneficial interest sold                       (1,101)         39,976                           38,875

                                        ------------------------------------------------------------------------
Balance at December 31, 2002            $   3,600   $  581,361     $ (108,417)       $         --    $  476,544
                                        ========================================================================

See accompanying notes.
</TABLE>

                                       46
<PAGE>

<TABLE>
<CAPTION>

                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  Years ended December 31 (in thousands)

                                                                                      2002               2001              2000
                                                                                  ------------       ------------      -----------
<S>                                                                               <C>                <C>               <C>
Cash flow from operating activities:
     Net earnings......................................................           $     57,920       $     47,757      $    66,384
     Less gain (loss) from discontinued operations.....................                   (565)            (1,722)             471
     Less cumulative effect of accounting change.......................                 (6,509)                --               --
                                                                                  ------------       ------------      -----------
     Earnings from continuing operations before accounting change......                 64,994             49,479           65,913
     Adjustments for non-cash items:
          Depreciation.................................................                 44,726             40,882           38,710
          Amortization.................................................                  1,909             10,814           11,408
          Provision for doubtful accounts..............................                  3,480              3,816            2,821
          Deferred income taxes........................................                 12,413              4,533            2,562
          Net loss from disposal of assets.............................                    404              1,486            1,516
          Impairment of long-lived assets..............................                  3,762              1,003               --
          Net changes in operating assets and liabilities, excluding effect
              of sales and acquisitions:
               Receivables.............................................                 (1,172)             3,233           (6,369)
               Inventories.............................................                  3,687             (1,107)            (916)
               Accounts payable........................................                 (4,013)           (10,470)           5,646
               Other assets and liabilities............................                (44,130)            14,742           11,832
                                                                                  ------------       ------------      -----------
                   NET CASH PROVIDED BY OPERATING ACTIVITIES...........                 86,060            118,411          133,123
                                                                                  ------------       ------------      -----------


Cash flow from investing activities:
     Capital expenditures for property and equipment...................                (53,169)           (90,172)         (96,758)
     Proceeds from sales of assets.....................................                  1,548              5,245            3,174
     Acquisition of businesses.........................................                    (49)           (22,148)          (8,018)
     Redemption of investment of preferred stock.......................                     --                 --            7,106
     Other, net........................................................                    261             (1,069)             466
                                                                                  ------------       ------------      -----------
                  NET CASH USED FOR INVESTING ACTIVITIES...............                (51,409)          (108,144)         (94,030)
                                                                                  ------------       ------------      -----------


Cash flow from financing activities:
     Net increase (decrease) in notes payable to bank..................                 86,355              4,420          (12,115)
     Purchases of units of beneficial interest.........................               (125,347)           (84,351)         (77,145)
     Sales of units of beneficial interest.............................                 38,875            101,827           90,587
     Cash dividends....................................................                (31,597)           (37,866)         (36,765)
     Deferred revenue..................................................                     --              4,052            2,403
                                                                                  ------------       ------------      -----------
                   NET CASH USED FOR FINANCING ACTIVITIES..............                (31,714)           (11,918)         (33,035)
                                                                                  ------------       ------------      -----------

NET CASH PROVIDED BY (USED FOR) DISCONTINUED OPERATIONS................                 (3,393)               513           (3,671)
                                                                                  ------------       ------------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...................                   (456)            (1,138)           2,387

Cash and cash equivalents
     Beginning of year.................................................                  8,911             10,049            7,662
                                                                                  ------------       ------------      -----------

     End of year.......................................................           $      8,455       $      8,911      $    10,049
                                                                                  ============       ============      ===========
SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for income taxes.............................................           $     34,404       $     25,788      $    40,859
                                                                                  ============       ============      ===========

Cash paid for interest.................................................           $      2,036       $        554      $     1,261
                                                                                  ============       ============      ===========

See accompanying notes.
</TABLE>

                                                            47
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           December 31, 2002 (in thousands, except per share amounts)

1    SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation - The consolidated financial statements include the
accounts of Journal Communications, Inc. and our wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.

Foreign currency translation - Our foreign subsidiaries use the local currency
as their functional currency. Accordingly, assets and liabilities of the foreign
subsidiaries are translated into U.S. dollars at year-end exchange rates while
revenue and expense items are translated at the weighted average exchange rates
for the year. The resulting translation adjustments are reflected in accumulated
other comprehensive income (loss). As of December 31, 2002, all foreign
operations have been liquidated and all translation adjustments have been
realized.

Revenue recognition - Publishing revenue is generated primarily from the sale of
newspaper advertising space and newspaper subscriptions. Broadcasting revenue is
generated primarily from the sale of television and radio advertising time.
Advertising revenue is recognized in the publishing and broadcasting industries
when the advertisement is published or aired. Circulation revenue is recognized
ratably over the newspaper subscription period. Telecommunication revenue is
generated from toll (voice), data transmission and satellite (video) services.
Toll and video service revenue is recognized at the time the service is
performed and data transmission revenue is recorded on a straight-line basis
over the term of the contract. Printing services revenue is recorded at the time
of shipment when title passes to the customer. Other revenue is generated
primarily from label printing and direct marketing services. Revenue is
recognized at the time of shipment when title passes to the customer and at the
time the service is performed, respectively.

Amounts we receive from customers in advance of revenue recognition are deferred
as liabilities. Deferred revenue to be earned more than 1 year from the balance
sheet date is included in other long-term liabilities in the consolidated
balance sheets.

Shipping and handling costs - Shipping and handling costs, including postage,
billed to customers are included in operating revenue and the related costs are
included in operating costs and expenses.

Advertising expense - We expense our advertising costs as incurred. Advertising
expense for the years ended December 31, 2002, 2001 and 2000 was $9,292, $8,488
and $10,105, respectively.

Interest expense - Interest expense attributable to self-constructed assets has
been capitalized as a component of the cost of the asset. The self-constructed
assets include Journal Sentinel's production facility during 2002, 2001 and 2000
and Norlight's network expansion in 2001 and 2000. Capitalized interest is as
follows:

<TABLE>
<CAPTION>
                                                   2002              2001            2000
                                                 ----------       ----------      ---------
<S>                                              <C>              <C>             <C>
Total interest incurred.....................     $    1,805       $      481      $   1,321
Less amount capitalized.....................         (1,160)             (98)          (891)
                                                 ----------       ----------      ---------
Interest expense............................     $      645       $      383      $     430
                                                 ==========       ==========      =========
</TABLE>

Earnings per share - Basic and diluted earnings per share are the same because
there are no dilutive securities. The term "share" is representative of both
shares and units of beneficial interest outstanding. The denominator for our
earnings per share calculation equals shares outstanding less shares represented
by units of beneficial interest in held in treasury.

Fair values - The carrying amount of cash and cash equivalents, receivables,
accounts payable and long-term liabilities approximates fair value as of
December 31, 2002 and 2001.

Cash equivalents - Cash equivalents are highly liquid investments with
maturities of 3 months or less when purchased. Cash equivalents are stated at
cost, which approximates market value.

Receivables, net - We evaluate the collectibility of our accounts receivable
based on a combination of factors. In circumstances where we are aware of a
specific customer's inability to meet its financial obligations, we record a
specific reserve to reduce the amounts recorded to what we believe will be
collected. For all other customers, we recognize allowances for bad debts based
on historical experience of bad debts as a percent of accounts receivable for
each business unit. We write off uncollectible accounts against the allowance
for doubtful accounts after collection efforts have been exhausted. The
allowance for doubtful accounts at December 31, 2002 and 2001 was $6,453 and
$5,477, respectively.

                                       48
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1    SIGNIFICANT ACCOUNTING POLICIES continued

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

                                                    2002                2001
                                                -----------          ----------

Paper and supplies.........................     $     7,725          $    9,797
Work in process............................           3,456               2,416
Finished goods.............................           5,918               8,647
Less obsolescence reserve..................            (899)             (1,164)
                                                -----------          ----------
Inventories, net...........................     $    16,200          $   19,696
                                                ===========          ==========

Property and equipment - Property and equipment are recorded at cost.
Depreciation of property and equipment is provided, principally using the
straight-line method, over the estimated useful lives, which are as follows:

                                                                       Years
                                                                       -----

          Land improvements...............................           10 - 20
          Buildings.......................................                30
          Newspaper printing presses......................           20 - 25
          Broadcasting equipment..........................            5 - 20
          Telecommunications and network equipment........            5 - 25
          Other printing presses..........................            7 - 10
          Other...........................................            3 - 10

Intangible assets - Upon adoption of Statement No. 142, "Goodwill and Other
Intangible Assets," goodwill and intangible assets deemed to have indefinite
lives, including broadcast licenses and network affiliation agreements, are no
longer amortized but instead are reviewed at least annually for impairment. We
continue to amortize definite-lived intangible assets on a straight-line basis
for periods up to 40 years.

Impairment of long-lived assets - Property and equipment and other
definite-lived intangible assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. If an asset is considered impaired, a loss is recognized for the
difference between the fair value and carrying value of the asset or group of
assets. Such analyses necessarily involve significant judgment. In 2002, we
recorded a $2,502 loss on impairment of certain equipment at our printing
services segment and a $1,260 loss on impairment of a customer list at our
direct marketing services business. Fair value was determined by independent
professional appraisers. These losses are recorded as an operating expense in
the accompanying consolidated statements of earnings.

Concentration of credit risk - Generally, credit is extended based upon an
evaluation of the customer's financial position, and advance payment is not
required. Credit losses are provided for in the financial statements and
consistently have been within management's expectations.

Use of estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

Reclassifications - Certain prior year amounts have been reclassified to conform
to the 2002 presentation.

Recently adopted accounting standards - Effective January 1, 2002, we adopted
Statement No. 141, "Business Combinations," and Statement No. 142. Statement No.
141 addresses financial accounting and reporting for business combinations
completed after June 30, 2001. As required by Statement No. 142, we performed
transitional impairment tests on our goodwill and indefinite-lived intangible
assets. The resulting impairment charges of $7,670 ($6,509 after tax) were
recorded during the first quarter ended March 24, 2002 and are reported as the
cumulative effect of accounting change in the consolidated statements of
earnings.

                                       49
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1    SIGNIFICANT ACCOUNTING POLICIES continued

Effective January 1, 2002, we adopted Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of, as well as broadening the accounting and
reporting of discontinued operations. Accordingly, the closures of Fox Cities
Newspapers and IPC Communication Services, S.A., as discussed in Note 10, have
been treated as discontinued operations.

New accounting standard - In June 2002, Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," was issued. Statement No. 146
addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies the previous guidance on the subject. It
requires, among other things, that a liability for a cost associated with an
exit or disposal activity be recognized, at fair value, when the liability is
incurred rather than at the commitment date to the exit or disposal plan. The
provisions for Statement No. 146 are effective for exit or disposal activities
that are initiated after December 31, 2002. Accordingly, Statement No. 146 may
affect when future costs associated with exit or disposal activities are
recognized.

2    NOTES PAYABLE TO BANKS

On May 31, 2002, we entered into a $120,000 bank revolving credit agreement,
expiring May 30, 2003, to support our cash requirements. Borrowings under this
credit agreement are at the Base Rate (derived from prime or Federal Fund rates)
or at the LIBOR based rate. As of December 31, 2002, we had borrowings of
$90,775 under the credit agreement, including $2,775 bearing interest at the
Base Rate of 4.25% and $88,000 bearing interest at the LIBOR based rate of
2.40%. We are required to pay a commitment fee of 0.20% of the credit agreement.
Upon signing the credit agreement, we paid fees of $255, which we are amortizing
over the life of the credit agreement.

3    EMPLOYEE BENEFIT PLANS

We have a defined benefit pension plan covering the majority of our employees.
The benefits are based on years of service and the average compensation for the
employee's last 5 years of employment. Plan assets consist primarily of listed
stocks and government and other bonds. In addition, we provide health benefits
to certain retirees and their eligible spouses. We have elected to amortize the
related unfunded postretirement health care obligation of $25,324 at January 1,
1993, over a period of 20 years.

We also sponsor an unfunded non-qualified pension plan for employees whose
benefits under the pension plan and the Investment Savings Plan may be
restricted due to limitations imposed by the Internal Revenue Service. The
disclosure for this plan for all years presented is combined with the pension
plan. The accrued net benefit cost related to this plan was $4,701 and $4,403 at
December 31, 2002 and 2001, respectively.

<TABLE>
<CAPTION>
                                                                                                                 Other
                                                                 Pension Benefits                       Postretirement Benefits
                                                          -------------------------------           ------------------------------
Years ended December 31                                       2002               2001                  2002               2001
                                                          ------------       ------------           -----------        -----------
<S>                                                       <C>                <C>                    <C>                <C>
Change in benefit obligations
Benefit obligation at beginning of year..........         $    111,394       $    111,549           $    37,265        $    28,937
Service cost.....................................                3,675              3,361                   379                549
Plan amendments..................................                   --                 31                (6,082)                --
Interest cost....................................                7,808              7,552                 2,261              2,069
Actuarial (gain) loss............................                7,403             (4,039)                1,591              8,682
Special termination benefits.....................                   --                 --                    48                 --
Benefits paid....................................               (7,186)            (7,060)               (3,099)            (2,972)
                                                          ------------       ------------           -----------        -----------
Benefit obligation at end of year................         $    123,094       $    111,394           $    32,363        $    37,265
                                                          ============       ============           ===========        ===========
Change in plan assets
Fair value of plan assets at beginning of year...         $     72,756       $     79,861           $        --        $        --
Actual loss on plan assets.......................               (8,605)            (3,897)                   --                 --
Company contributions............................               44,494              3,852                 3,099              2,972
Benefits paid....................................               (7,186)            (7,060)               (3,099)            (2,972)
                                                          ------------       ------------           -----------        -----------
Fair value of plan assets at end of year.........         $    101,459       $     72,756           $        --        $        --
                                                          ============       ============           ===========        ===========
</TABLE>


                                       50
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3    EMPLOYEE BENEFIT PLANS continued

<TABLE>
<CAPTION>
                                                                                                                 Other
                                                                 Pension Benefits                       Postretirement Benefits
                                                          -------------------------------           ------------------------------
Years ended December 31                                       2002               2001                  2002               2001
                                                          ------------       ------------           -----------        -----------
<S>                                                       <C>                <C>                    <C>                <C>

Funded status of the plan
Underfunded status of the plan...................         $    (21,635)      $    (38,638)           $  (32,363)       $   (37,265)
Unrecognized net actuarial loss..................               46,016             21,740                11,018              9,856
Unrecognized prior service cost..................                1,046              1,303                    --                 --
Unrecognized transition obligation...............                  209                313                 5,487             12,211
                                                          ------------       ------------           -----------        -----------
Prepaid (accrued) net benefit cost...............         $     25,636       $    (15,282)           $  (15,858)       $   (15,198)
                                                          ============       ============           ===========        ===========

                                                                 Pension Benefits                       Postretirement Benefits
                                                          -------------------------------           ------------------------------
Years ended December 31                                       2002               2001                  2002               2001
                                                          ------------       ------------           -----------        -----------

Prepaid (accrued) net benefit cost
Prepaid benefit cost.............................         $     30,337       $         --           $        --        $        --
Accrued benefit cost.............................               (4,701)           (21,612)              (15,858)           (15,198)
Intangible asset.................................                   --              1,568                    --                 --
Deferred tax asset...............................                   --              1,906                    --                 --
Accumulated comprehensive loss...................                   --              2,856                    --                 --
                                                          ------------       ------------           -----------        -----------
Prepaid (accrued) net benefit cost...............         $     25,636       $    (15,282)           $  (15,858)       $   (15,198)
                                                          ============       ============           ===========        ===========

                                                                                                  Pension Benefits
                                                                                  ------------------------------------------------
Years ended December 31                                                               2002               2001              2000
                                                                                  ------------       ------------      -----------

Components of net periodic benefit cost
Service cost...........................................................           $      3,675       $      3,361      $     3,751
Interest cost..........................................................                  7,809              7,552            7,759
Expected return on plan assets.........................................                 (8,262)            (8,189)          (7,721)
Amortization of:
      Unrecognized prior service cost..................................                    257                254              254
      Unrecognized net transition obligation (asset)...................                     (7)               104             (127)
      Unrecognized net (gain) loss.....................................                    104                (30)              --
                                                                                  ------------       ------------      -----------
Net periodic benefit cost..............................................           $      3,576       $      3,052      $     3,916
                                                                                  ============       ============      ===========

                                                                                            Other Postretirement Benefits
                                                                                  ------------------------------------------------
Years ended December 31                                                               2002               2001              2000
                                                                                  ------------       ------------      -----------

Components of net periodic benefit cost
Service cost...........................................................           $        379       $        549      $       523
Interest cost..........................................................                  2,261              2,069            1,822
Special termination benefits...........................................                     48                 --               --
Amortization of:
      Unrecognized net transition obligation...........................                    642              1,110            1,110
      Unrecognized net (gain) loss.....................................                    429                 --              (17)
                                                                                  ------------       ------------      -----------
Net periodic benefit cost..............................................           $      3,759       $      3,728      $     3,438
                                                                                  ============       ============      ===========
</TABLE>

The costs for our pension benefits and other postretirement benefits are
actuarially determined. Key assumptions utilized at December 31 for pension
benefits and September 30 for other postretirement benefits include the
following:


                                       51
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3    EMPLOYEE BENEFIT PLANS continued

<TABLE>
<CAPTION>
                                                                                                                 Other
                                                                 Pension Benefits                       Postretirement Benefits
                                                          -------------------------------           ------------------------------
                                                             2002               2001                  2002                2001
                                                          ------------       ------------           -----------        -----------
<S>                                                         <C>                 <C>                    <C>                <C>

Discount rate....................................           6.75%               7.25%                  6.75%              7.25%
Expected return on plan assets...................           8.50                9.50                     --                 --
Rate of compensation increase....................           4.50                4.50                     --                 --
</TABLE>

The assumed health care cost trend rate used in measuring the postretirement
benefit obligation for retirees for 2003 is 9.0%, grading down to 5.0% in the
year 2007 and thereafter. The assumed health care cost trend rates have a
significant effect on the amounts reported for other postretirement benefits. A
1 % point change in the assumed health care cost trend rate would have the
following effects:

<TABLE>
<CAPTION>
                                                                   1 %                             1%
                                                                   Point                          Point
                                                                 Increase                       Decrease
                                                                -----------                   ------------
<S>                                                             <C>                           <C>
Effect on total of service and interest cost
   components in 2002................................           $       104                   $         92
Effect on postretirement benefit obligation
   as of December 31, 2002................................      $       783                   $        713
</TABLE>

The Investment Savings Plan is a defined contribution benefit plan covering
substantially all employees. The plan allows employees to defer up to 50% of
their eligible wages, up to the IRS limit, on a pre-tax basis. In addition,
employees can contribute up to 50% of their eligible wages after taxes. The
maximum combined total contributed may not exceed 50%. Each employee who elects
to participate is eligible to receive company matching contributions. We may
contribute $0.50 for each dollar contributed by the participant, up to 5% of
eligible wages as defined by the plan. The matching contributions, recorded as
an operating expense, were $2,594, $2,672 and $2,799 in 2002, 2001 and 2000,
respectively. We made additional contributions into the Investment Savings Plan
on behalf of certain employees not covered by the defined benefit pension plan
of $875, $860 and $759 in 2002, 2001 and 2000, respectively.

4    INCOME TAXES

The components of the provision for income taxes consist of the following:

<TABLE>
<CAPTION>
Years ended December 31                                    2002               2001              2000
                                                       ------------       ------------      -----------
<S>                                                    <C>                <C>               <C>
Current:
   Federal.........................................    $     31,440       $     25,214      $    36,016
   State...........................................           5,565              6,113            5,584
                                                       ------------       ------------      -----------
                                                             37,005             31,327           41,600
Deferred...........................................          12,413              4,533            2,562
                                                       ------------       ------------      -----------
Total..............................................    $     49,418       $     35,860      $    44,162
                                                       ============       ============      ===========

The significant differences between the statutory federal tax rates and the
effective tax rates are as follows:

Years ended December 31                                   2002               2001              2000
                                                       ------------       ------------      -----------

Statutory federal income tax rate...................         35.0%             35.0%             35.0%
State income taxes, net of federal tax benefit......          4.6               5.6               4.2
Non-deductible litigation expenses..................          1.8                --                --
Other...............................................          1.8               1.4               0.9
                                                       ------------       ------------      -----------
Actual provision....................................         43.2%             42.0%             40.1%
                                                       ============       ============      ===========

</TABLE>

                                       52
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4    INCOME TAXES continued

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities include:
<TABLE>
<CAPTION>
December 31                                                                        2002                     2001
                                                                                -----------              -----------
<S>                                                                             <C>                      <C>
Current assets
Receivables............................................................         $     2,422              $     1,415
Inventories............................................................                 424                      425
Other assets...........................................................                 539                      306
Accrued compensation...................................................               3,536                    3,559
Accrued employee benefits..............................................               1,243                    1,117
                                                                                -----------              -----------
Total current deferred tax assets......................................               8,164                    6,822
                                                                                -----------              -----------

Current liabilities
Accrued state taxes....................................................                  --                   (1,126)
                                                                                -----------              -----------
   Total current deferred tax liabilities..............................                  --                   (1,126)
                                                                                -----------              -----------

Total net current deferred tax asset...................................         $     8,164              $     5,696
                                                                                ===========              ===========

Non-current assets
Accrued employee benefits..............................................         $     5,527              $     7,945
Litigation reserve.....................................................                  --                    3,643
State net operating loss carryforwards.................................               4,708                    4,262
Other assets...........................................................               1,266                      575
                                                                                -----------              -----------
   Total non-current deferred tax assets...............................              11,501                   16,425
                                                                                -----------              -----------

Non-current liabilities
Property and equipment.................................................             (16,758)                 (14,326)
Intangible assets......................................................             (26,643)                 (24,922)
Accrued employee benefits..............................................              (4,458)                      --
Other liabilities......................................................              (2,327)                      --
                                                                                -----------              -----------
   Total non-current deferred tax liabilities..........................             (50,186)                 (39,248)
                                                                                -----------              -----------

Total net non-current deferred tax liabilities.........................         $   (38,685)             $   (22,823)
                                                                                ===========              ===========

Valuation allowances on state net operating loss carryforwards.........         $    (3,609)             $    (2,685)
                                                                                -----------              -----------

Net deferred tax liability.............................................         $   (34,130)             $   (19,182)
                                                                                ===========              ===========
</TABLE>

At December 31, 2002, we had state net operating loss carryforwards of $47,727
that begin to expire in 2004 and state income tax credit carryforwards of $1,398
that begin to expire in 2004. To the extent we believe there is significant
uncertainty regarding realization of such carryforwards, valuation allowances
have been provided.


                                       53
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5    Other LONG-TERM Liabilities

Other long-term liabilities consist of the following:
<TABLE>
<CAPTION>
December 31                                                                         2002              2001
                                                                                -----------       -----------
<S>                                                                             <C>               <C>

Other obligations, average interest
      rate of 4.5% in 2002 and 8.0% in 2001............................         $     3,335       $     4,539
Television program contracts, due in the
      subsequent years.................................................                 337               250
                                                                                -----------       -----------
                                                                                      3,672             4,789
Less current portion...................................................               1,645             1,909
                                                                                -----------       -----------
                                                                                      2,027             2,880
Deferred revenue.......................................................               7,211             7,786
                                                                                -----------       -----------
Total other long-term liabilities......................................         $     9,238       $    10,666
                                                                                ===========       ===========
</TABLE>

We lease office space, certain broadcasting facilities, distribution centers,
printing plants and equipment under both short-term and long-term leases
accounted for as operating leases. Some of the lease agreements contain renewal
options and rental escalation clauses, as well as provisions for the payment of
utilities, maintenance and taxes. As of December 31, 2002, our future minimum
rental payments due under noncancellable operating lease agreements consist of
the following:

                        2003.................         $    15,714
                        2004.................              12,729
                        2005.................              10,303
                        2006.................               5,533
                        2007.................               4,696
                  Thereafter.................              20,096
                                                      -----------
                                                      $    69,071
                                                      ===========

Rent expense charged to operations for 2002, 2001 and 2000 was $27,827, $30,057
and $26,630, respectively. Rental income from subleases included in operations
for 2002, 2001 and 2000 was $4,565, $4,379, $4,147, respectively. Aggregate
future minimum rentals to be received under noncancellable subleases equal
$12,821 as of December 31, 2002.

A purchase commitment for newsprint for our publishing businesses, which runs
through 2006, from a newsprint supplier as of December 31, 2002, was $104,693.
The commitment is based on market prices for quantities we determine will meet
our newsprint requirements over the term of the contract. In the unlikely event
that newsprint is no longer required in our business, our commitment would
expire without obligation. Purchase commitments related to capital expenditures
for our daily newspaper's new production facility were approximately $9,397 as
of December 31, 2002. We expect to spend up to $112,415 on this project
scheduled to be completed in early 2003. As of December 31, 2002, we have spent
$102,665 on this project. In addition, we have the right to broadcast certain
television programs during the years 2003-2008 under contracts aggregating
$8,299. We have $1,221 of standby letters of credit for business insurance
purposes.

6    SHAREHOLDERS' EQUITY

Units of beneficial interest

Employee-owners of Journal Communications, Inc. do not own shares of stock
directly. Instead, they own "units of beneficial interest" (units), representing
beneficial interests in the Journal Employees' Stock Trust (the Stock Trust)
established under the Journal Employees' Stock Trust Agreement, dated May 15,
1937, as amended (JESTA). The Stock Trust, in turn, owns the shares of stock.
Each unit is represented by 1 share of stock held by the Stock Trust. In the
years covered, we have purchased units under the terms of JESTA and resold them
to active employees. Employees owning units are referred to as unitholders. On
October 25, 2002, the


                                       54
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6    SHAREHOLDERS' EQUITY continued

Board of Directors determined to indefinitely suspend the purchase and sale of
units while we explore potential sources for additional permanent capital. Unit
activity is as follows:

<TABLE>
<CAPTION>
Years ended December 31                                                               2002               2001             2000
                                                                                  ------------       ------------      -----------
<S>                                                                               <C>                <C>               <C>
Beginning balance in treasury..........................................                    613              1,140            1,529
Purchases..............................................................                  3,329              2,333            2,458
Sales..................................................................                 (1,058)            (2,860)          (2,847)
                                                                                  ------------       ------------      -----------
   Ending balance in treasury..........................................                  2,884                613            1,140
                                                                                  ============       ============      ===========
</TABLE>

As of December 31, 2002, our treasury, our employees and former employees owned
units representing beneficial ownership of 90% of our stock. As of the end of
2002, we believe that employees and former employees had outstanding balances
under demand notes secured by pledges of units to various financial institutions
totaling approximately $433,097.

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income (loss) consists of the following as of
December 31:

<TABLE>
<CAPTION>
                                                                                      2002               2001             2000
                                                                                  ------------       -----------       ----------
<S>                                                                               <C>                <C>               <C>
Cumulative foreign currency translation adjustments....................           $         --       $      (957)      $     (807)
Minimum pension liability, net of tax..................................                     --            (2,856)              --
                                                                                  ------------       -----------       ----------
Accumulated other comprehensive income (loss)..........................           $         --       $    (3,813)      $     (807)
                                                                                  ============       ===========       ==========
</TABLE>


7        GOODWILL AND OTHER INTANGIBLE ASSETS

The following table reconciles the reported earnings from continuing operations
before accounting change, net earnings, earnings per share from continuing
operations before accounting change and earnings per share to that which would
have resulted for the years ended December 31, 2001 and 2000, if Statement No.
142 had been effective:

<TABLE>
<CAPTION>
                                                                                      2002               2001             2000
                                                                                  ------------       -----------       ----------
<S>                                                                               <C>                <C>               <C>
Reported earnings from continuing operations
   before accounting change............................................           $     64,994       $     49,479      $    65,913
   Goodwill amortization, net of tax...................................                     --              2,340            2,365
   Broadcast licenses amortization, net of tax.........................                     --              3,113            3,082
   Network affiliation agreements amortization, net of tax.............                     --                 76               76
                                                                                  ------------       ------------      -----------
Adjusted earnings from continuing operations
   before accounting change............................................           $     64,994       $     55,008      $    71,436
                                                                                  ============       ============      ===========

Reported net earnings..................................................           $     57,920       $     47,757      $    66,384
   Goodwill amortization, net of tax...................................                     --              2,340            2,365
   Broadcast licenses amortization, net of tax.........................                     --              3,113            3,082
   Network affiliation agreements amortization, net of tax.............                     --                 76               76
                                                                                  ------------       ------------      -----------
Adjusted net earnings..................................................           $     57,920       $     53,286      $    71,907
                                                                                  ============       ============      ===========
</TABLE>

                                       55
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7    GOODWILL AND OTHER INTANGIBLE ASSETS continued
<TABLE>
<CAPTION>
                                                                                      2002               2001             2000
                                                                                  ------------       -----------       ----------
<S>                                                                               <C>                <C>               <C>

Basic and diluted earnings per share:
   Reported earnings from continuing operations
     before accounting change..........................................           $       2.46       $      1.76       $     2.43
   Goodwill amortization, net of tax...................................                     --              0.09             0.09
   Broadcast licenses amortization, net of tax.........................                     --              0.11             0.11
   Network affiliation agreements amortization, net of tax.............                     --                --               --
                                                                                  ------------       -----------       ----------
Adjusted earnings from continuing operations
   before accounting change............................................           $       2.46       $      1.96       $     2.63
                                                                                  ============       ===========       ==========

Basic and diluted earnings per share:
   Reported net earnings...............................................           $       2.19       $      1.70       $     2.45
   Goodwill amortization, net of tax...................................                     --              0.09             0.09
   Broadcast licenses amortization, net of tax.........................                     --              0.11             0.11
   Network affiliation agreements amortization, net of tax.............                     --                --               --
                                                                                  ------------       -----------       ----------
Adjusted net earnings..................................................           $       2.19       $      1.90       $     2.65
                                                                                  ============       ===========       ==========
</TABLE>

Amortization expense was $1,909 for the year ended December 31, 2002. Estimated
amortization expense for each of the next 5 years is as follows:

                   Year                                               Amount
                   ----                                             -----------

                   2003......................................       $  1,636
                   2004......................................          1,028
                   2005......................................            455
                   2006......................................            445
                   2007......................................            410

Definite-lived Intangibles
--------------------------
Our definite-lived intangible assets consist primarily of customer lists and
non-compete agreements. We amortize the customer lists over the period of time
we expect the assets to contribute to our cash flows and we amortize the
non-compete agreements over the terms of the contracts. As a result of
impairment tests, we wrote off $1,260 ($773 after tax) for a customer list at
our direct marketing services business, which is reported as a component of the
selling and administrative expenses on the consolidated statements of earnings.

The gross carrying amount, accumulated amortization and net carrying amount of
the major classes of definite-lived intangible assets as of December 31, 2002
and 2001 is as follows:

<TABLE>
<CAPTION>

                                                                       Gross           Accumulated          Net
December 31, 2002                                                 Carrying Amount     Amortization    Carrying Amount
                                                                  ---------------     ------------    ---------------
<S>                                                               <C>                 <C>               <C>
Definite-lived intangible assets:
Customer lists...............................................     $     17,771        $   (14,830)      $     2,941
Non-compete agreements.......................................           24,813            (23,169)            1,644
Other........................................................            3,080             (3,045)               35
                                                                  ------------        -----------       -----------
Total........................................................     $     45,664        $   (41,044)      $     4,620
                                                                  ============        ===========       ===========

                                                                       Gross           Accumulated          Net
December 31, 2001                                                 Carrying Amount     Amortization    Carrying Amount
                                                                  ---------------     ------------    ---------------
Definite-lived intangible assets:
Customer lists...............................................     $     23,057        $   (17,935)      $     5,122
Non-compete agreements.......................................           24,712            (21,818)            2,894
Other........................................................            4,193             (3,629)              564
                                                                  ------------        -----------       -----------
Total........................................................     $     51,962        $   (43,382)      $     8,580
                                                                  ============        ===========       ===========

</TABLE>

                                       56
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7    GOODWILL AND OTHER INTANGIBLE ASSETS continued

The decrease in the net carrying amount of definite-lived intangible assets from
December 31, 2001 is due to amortization expense of $1,909, the write off a
customer list in the amount of $1,260, and reclassification to goodwill of $891
of intangible assets that did not meet the new criteria for recognition separate
from goodwill offset by the renewal of a non-compete agreement for $100.

Indefinite-lived Intangibles
----------------------------
Broadcast licenses and network affiliation agreements 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.
Consequently, we expect the cash flows from both our broadcast licenses and our
network affiliation agreements to continue indefinitely. We performed
transitional impairment tests on our broadcast licenses and network affiliation
agreements at the level of separate identifiable assets and recorded a
transitional broadcast license impairment charge of $722 ($458 after tax) at our
broadcasting business, which is reported as a component of the cumulative effect
of accounting change in the consolidated statements of earnings. No impairment
resulted from our 2002 annual impairment test.

The net carrying amount of the major classes of indefinite-lived intangible
assets as of December 31, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>
December 31                                                                         2002              2001
                                                                                -----------       -----------
<S>                                                                             <C>               <C>
Indefinite lived intangible assets:
Broadcast licenses.....................................................         $   125,492       $   128,842
Network affiliation agreements.........................................               7,495            10,067
Other..................................................................                  --             1,568
                                                                                -----------       -----------
Total..................................................................         $   132,987       $   140,477
                                                                                ===========       ===========
</TABLE>

The decrease in the net carrying amount of indefinite-lived intangible assets
from December 31, 2001 is primarily attributed to the adjustment made to the
preliminary purchase price of the Idaho television stations acquired on December
31, 2001.

Goodwill
--------
We performed transitional impairment tests on the goodwill of 6 of our reporting
units with goodwill. As a result, we recorded a transitional goodwill impairment
charge of $6,948 ($6,051 after tax) at our direct marketing services business,
which is reported as a component of the cumulative effect of accounting change
in the consolidated statement of earnings. For goodwill amortization that was
nondeductible for income tax purposes, the transitional goodwill impairment
charge is also nondeductible. No impairment resulted from our 2002 annual
impairment test.

The changes in the net carrying amount of goodwill for the year ended December
31, 2002 are as follows:

<TABLE>
<CAPTION>
                                           Goodwill         Goodwill       Reclassification
   Reporting           Goodwill at        related to       related to        of intangible        Impairment          Goodwill at
     Unit            January 1, 2002     acquisitions     divestitures          assets              losses        December 31 , 2002
     ----            ---------------     ------------     ------------     -----------------      ----------      ------------------
<S>                  <C>                  <C>               <C>              <C>                  <C>              <C>
Daily newspaper      $       2,084        $      --         $     --         $        --          $       --       $           2,084

Community news-
   papers & shoppers        23,713               --              398                 724                  --                  24,835

Broadcasting                76,584            5,368               --                 167                  --                  82,119

Telecommunications             188               --               --                  --                  --                     188

Label printing               2,362               --               --                  --                  --                   2,362

Direct marketing
   services                  7,358               --               --                  --             (6,948)                     410
                     ---------------     ------------     ------------     -----------------      ----------      ------------------

Total                $     112,289        $   5,368         $    398         $       891          $  (6,948)       $         111,998
                     ===============     ============     ============     =================      ==========      ==================
</TABLE>


                                       57
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7    GOODWILL AND OTHER INTANGIBLE ASSETS continued

According to Statement No. 142, when a portion of a reporting unit that
constitutes a business is disposed of, goodwill associated with that business is
included in the carrying amount of the business based on the relative fair
values of the business disposed of and the portion of the reporting unit that is
retained. As discussed in Note 10 below, we announced the closure of Fox Cities
Newspapers, a part of our community newspapers and shoppers reporting unit, in
January 2002. The book value of its goodwill equaled $398 as of December 31,
2001 and was classified as part of non-current assets of discontinued
operations. Based upon the valuations of Fox Cities Newspapers and our community
newspapers and shoppers, the relative value of Fox Cities Newspapers' goodwill
now equals zero. Therefore, upon adoption of Statement No. 142, Fox Cities
Newspapers' goodwill that was classified in non-current assets of discontinued
operations in the December 31, 2001 consolidated balance sheet has been
reclassified to our community newspapers and shoppers reporting unit goodwill in
the December 31, 2002 consolidated balance sheet.

The changes in the net carrying amount of goodwill for the year ended December
31, 2001 are as follows:

<TABLE>
<CAPTION>
                                            Goodwill         Goodwill                      Reclassification
   Reporting             Goodwill at       related to       related to                       of intangible         Goodwill at
     Unit             January 1, 2001     acquisitions     divestitures      Amortization       assets          December 31, 2001
     ----             ---------------     ------------     ------------      ------------  -----------------    -----------------
<S>                   <C>                 <C>               <C>             <C>              <C>               <C>
Daily newspaper       $        2,090      $        --       $      --       $       (6)      $        --       $           2,084

Community news-
   papers and shoppers        24,411               --              --             (698)               --                   23,713

Broadcasting                  76,352            1,601              --           (2,145)              776                   76,584

Telecommunications               202               --              --              (14)               --                      188

Label printing                 2,736               --           (296)              (78)               --                    2,362

Direct marketing
   services                    7,581               --               --            (223)               --                    7,358
                      --------------      ------------     ------------      ------------  -----------------    -----------------

Total                 $      113,372      $     1,601       $   (296)       $   (3,164)      $       776       $          112,289
                      ==============      ============     ============      ============  ==================   =================
</TABLE>

Other
-----
We perform impairment tests each year on goodwill and indefinite-lived
intangible assets, or more frequently in certain circumstances. We cannot be
certain that future impairment tests will not result in a charge to earnings.
With the assistance of independent, professional appraisers, we performed the
2002 annual impairment tests as of the beginning of the fourth quarter and, as
noted above, there was no resulting impairment.

Statement No. 142 does not change the requirements for recognition of deferred
taxes related to differences in the financial reporting and tax basis of
broadcast licenses and tax-deductible goodwill. We will recognize a deferred tax
liability for the difference between financial reporting and tax amortization on
our broadcast licenses and tax-deductible goodwill because we are no longer
amortizing these intangible assets for financial reporting purposes. As the
majority of our deferred tax liability recorded on the balance sheet relates to
the difference between financial reporting and tax basis on broadcast licenses,
the deferred tax liability will not reverse over time unless future impairment
charges are recognized on the broadcast licenses or they are sold.

8    LITIGATION

We are subject to various legal actions, administrative proceedings and claims
arising out of the ordinary course of business. We believe that such unresolved
legal actions and claims will not materially adversely affect our consolidated
results of operations, financial condition or cash flows.

Newspaper Merger Class Action Suit. On May 4, 1999, 5 former employees filed a
lawsuit in connection with the 1995 merger of the Milwaukee Journal and
Milwaukee Sentinel. This lawsuit was granted class action status to include
other unitholders who separated from us as part of the merger. The plaintiffs
alleged that an internal memorandum created a contract permitting members of

                                       58
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8    LITIGATION continued

the plaintiff class to offer to sell units at any time over a period of up to 10
years, depending on their retirement status or years of unit ownership. On May
7, 2002, the parties reached an out-of-court settlement. On July 1, 2002, the
judge approved the settlement. We agreed to pay the plaintiffs $8.9 million in
cash in settlement of all claims. We also agreed to allow certain members of the
plaintiff class to retain certain rights, for a period of time, as to units of
beneficial interest in JESTA. Plaintiffs and their counsel value these rights at
approximately $0.6 million. We reduced our litigation reserve by $4.1 million
that reduced selling and administrative expenses in the second quarter of 2002
to reflect the settlement amount, net of insurance proceeds.

Conley Publishing Group, Ltd. et al. v. Journal Communications, Inc. In August
2000, the publisher of the Waukesha Freeman, West Bend Daily News and several
other publications in southeastern Wisconsin filed an amended antitrust
complaint in state court against us. The plaintiff alleged we attempted to
monopolize by the use of predatory pricing on subscriptions, secret rebates to
advertisers, exclusionary discounts in advertising and contracts in restraint of
trade. The plaintiff alleged damages of $5.4 million, and asked that damages be
trebled. On October 2, 2001, the Waukesha County Circuit Court granted summary
judgment to us and dismissed all of the plaintiff's claims. The court held that
there was no issue of material fact regarding predatory pricing, that the
plaintiff cannot show that our conduct caused the financial losses of the
Waukesha Freeman, and that plaintiff cannot adequately disaggregate or show
which of its losses, if any, were caused by us. The plaintiff appealed on the
issue of predatory pricing, and the Wisconsin Court of Appeals certified the
case for direct appeal to the Wisconsin Supreme Court. The Wisconsin Supreme
Court heard the case on February 11, 2003. A decision is expected in 2003.

9    ACQUISITION AND SALE

On December 31, 2001, we acquired the business and certain assets of a
television station, KIVI-TV, in Boise, Idaho and a low-power television station,
KSAW-LP, in Twin Falls, Idaho. The cash purchase price for the stations was
approximately $22,114. The preliminary purchase price, the adjustments, and the
final purchase price allocation are as follows:

<TABLE>
<CAPTION>
                                                                Preliminary                              Final
                                                               Purchase Price    Purchase Price      Purchase Price
                                                                Allocation        Adjustments          Allocation
                                                                ----------        -----------          ----------
<S>                                                             <C>                <C>                 <C>
Property and equipment....................................      $  4,485           $     35            $  4,520
Goodwill..................................................         1,601              5,368               6,969
Broadcast licenses........................................        10,000             (2,628)              7,372
Network affiliation agreement.............................         5,979             (2,571)              3,408
Accrued liabilities.......................................            --               (155)               (155)
                                                                --------           --------            --------
Total purchase price......................................      $ 22,065           $     49            $ 22,114
                                                                ========           ========            ========
</TABLE>

Goodwill, broadcast licenses and the network affiliation agreement are not
subject to amortization under the provisions of Statement No. 142. These
intangible assets are, however, deductible for income tax purposes.

The above-mentioned completed acquisition was accounted for using the purchase
method. Accordingly, the operating results and cash flows of the acquired
business are included in our consolidated financial statements from the
respective date of acquisition. Had the transaction occurred on January 1 of the
year acquired, the effect of the acquisition on consolidated results of
operations, for each respective year, would not have been material.

On March 2, 2001, we completed the sale of certain assets of the Milwaukee
operation of our label printing business. The cash sale price was approximately
$4.4 million.

10   DISCONTINUED OPERATIONS

In January 2002, we announced the closure of Fox Cities Newspapers, which
consisted of 6 weekly newspapers from the publishing segment located in
Appleton, Wisconsin.

On April 29, 2002, we decided to liquidate IPC Communications Services, S.A., a
business in our printing services segment located in Roncq, France.

                                       59
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10   DISCONTINUED OPERATIONS continued

The following table summarizes the results of operations of Fox Cities
Newspapers and IPC Communication Services, S.A., which are included in the gain
(loss) from discontinued operations in the consolidated condensed statements of
earnings:

<TABLE>
<CAPTION>
                                                                                    2002            2001           2000
                                                                                  ---------       ---------      --------
<S>                                                                               <C>             <C>            <C>
Revenue................................................................           $   3,253       $  15,172      $ 19,348
Income (loss) before income tax expense (benefit)......................              (7,189)         (2,199)         (140)
</TABLE>

At December 31, 2001, the assets and liabilities of Fox Cities Newspapers and
IPC Communication Services, S.A. in the consolidated balance sheets consisted of
the following:

                                                                    2001
                                                                -----------

Cash.....................................................       $     1,176
Receivables..............................................             2,103
Inventories..............................................             1,111
Other current assets.....................................               337
                                                                -----------
Total current assets.....................................       $     4,727
                                                                ===========

Property and equipment...................................       $     1,365
Goodwill and intangible assets...........................               543
Other non-current assets.................................               125
                                                                -----------
Total non-current assets.................................       $     2,033
                                                                ===========

Accounts payable.........................................       $    (2,273)
Other current liabilities................................            (1,229)
                                                                -----------
Total current liabilities................................       $    (3,502)
                                                                ===========

11   WORKFORCE REDUCTION AND BUSINESS TRANSITION CHARGES

During 2002, we recorded a pretax charge of $1,966 for workforce reductions. The
charge consisted primarily of $1,905 in termination benefits for approximately
74 employees. In addition, we recorded $61 for shutdown costs of our printing
services operations in Ireland.

During 2001, we recorded $6,055 for workforce reductions and business transition
costs. The charge consisted primarily of $4,345 in termination benefits for
approximately 300 employees. In addition, we recorded $1,710 for shutdown costs
of our printing services operation in Ireland and in transitioning our printing
services' eastern and western regions into one U. S. operational unit.

The remaining costs associated with these actions are expected to be paid in
2003. Activity associated with the workforce reduction and transition charges
during the year ended December 31, 2002 was as follows:

<TABLE>
<CAPTION>
                                                          Balance at                        Payments/              Balance at
                                                      December 31, 2001     Additions       Reductions          December 31, 2002
                                                      -----------------     ---------       ----------          -----------------
<S>                                                   <C>                   <C>              <C>                <C>
Severance........................................     $           2,531     $   1,905        $ (2,059)          $           2,377
Lease costs......................................                 1,022            --          (1,022)                         --
Other............................................                   126            61            (187)                         --
                                                      -----------------     ---------        ---------          -----------------
                                                      $           3,679     $   1,966        $ (3,268)          $           2,377
                                                      =================     =========        =========          =================
</TABLE>


Related expenses and accruals were recorded in selling and administrative
expenses and other current liabilities in the consolidated statements of
earnings and consolidated balance sheets, respectively.

                                       60
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12   SEGMENT ANALYSIS

We conduct our operations through 4 reportable segments: publishing,
broadcasting, telecommunications and printing services. In addition, our label
printing business, our direct marketing services business and certain
administrative activities are aggregated and reported as "other." All operations
primarily conduct their business in the United States. We publish the Milwaukee
Journal Sentinel and more than 90 weekly shopper and community newspapers in 7
states. We also own and operate 36 radio stations and 6 television stations in
11 states. Our telecommunications business serves the wholesale carrier market
and provides integrated data communications solutions for small and mid size
businesses. Our printing services business serves the publishing, software,
entertainment and government markets by providing printing, assembly and
complete fulfillment.

In the fourth quarter of 2002, we evaluated our segment disclosures and
determined it appropriate under Statement No. 131, "Disclosures About Segments
of an Enterprise and Related Information," to aggregate certain previously
reported operating segments and identify the new segments by type of business
rather than by names of the individual operating entities. The following table
provides the aggregated former operating segments shown parenthetically next to
the new reportable segments:

         Publishing (Journal Sentinel and Add Inc.)
         Broadcasting (Journal Broadcast Group)
         Telecommunications (Norlight Telecommunications)
         Printing services (IPC Communication Services)
         Other (NorthStar Print Group, PrimeNet Marketing Services and Corporate
          and eliminations)

The accounting basis for transactions between reportable segments is the same as
that described in the "Significant Accounting Policies" outlined in Note 1.

During 2002, we changed our method of evaluating segment performance by
excluding segment interest income and interest expense from the segment's profit
performance. The following tables summarize operating revenue, operating
earnings (loss), depreciation and amortization and capital expenditures from
continuing operations for the years ended December 31 and identifiable total
assets of continuing operations at December 31:

<TABLE>
<CAPTION>
                                                                                      2002               2001              2000
                                                                                  ------------       ------------      -----------
<S>                                                                               <C>                <C>               <C>
Operating revenue
Publishing.............................................................           $    311,138       $    320,615      $   345,321
Broadcasting...........................................................                152,749            134,801          149,886
Telecommunications.....................................................                148,674            151,992          126,586
Printing services......................................................                 97,841            114,612          107,334
Other..................................................................                 90,974             86,767           90,105
                                                                                  ------------       ------------      -----------
                                                                                  $    801,376       $    808,787      $   819,232
                                                                                  ============       ============      ===========

Operating earnings (loss)
Publishing.............................................................           $     30,315       $     24,898      $    39,265
Broadcasting...........................................................                 33,384             15,453           30,435
Telecommunications.....................................................                 40,956             48,007           40,114
Printing services......................................................                  2,131               (756)           3,336
Other..................................................................                  7,287             (3,498)          (3,959)
                                                                                  ------------       ------------      -----------
                                                                                  $    114,073       $     84,104      $   109,191
                                                                                  ============       ============      ===========

</TABLE>



                                       61
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12   SEGMENT ANALYSIS continued
<TABLE>
<CAPTION>
                                                                                      2002               2001              2000
                                                                                  ------------       ------------      -----------
<S>                                                                               <C>                <C>               <C>
Depreciation and amortization
Publishing.............................................................           $     14,157       $     13,893      $    14,277
Broadcasting...........................................................                  7,310             13,287           13,584
Telecommunications.....................................................                 17,192             14,735           11,376
Printing services......................................................                  5,218              6,168            6,628
Other..................................................................                  2,758              3,613            4,253
                                                                                  ------------       ------------      -----------
                                                                                  $     46,635       $     51,696      $    50,118
                                                                                  ============       ============      ===========
Capital expenditures
Publishing.............................................................           $     30,291       $     49,701      $    50,530
Broadcasting...........................................................                  8,788             10,260            7,674
Telecommunications.....................................................                 10,132             27,509           28,779
Printing services......................................................                  2,555              1,654            7,946
Other..................................................................                  1,403              1,048            1,829
                                                                                  ------------       ------------      -----------
                                                                                  $     53,169       $     90,172      $    96,758
                                                                                  ============       ============      ===========
Identifiable total assets
Publishing.............................................................           $    224,290       $    208,141      $   180,517
Broadcasting...........................................................                298,426            296,723          279,055
Telecommunications.....................................................                114,545            121,111          109,807
Printing services......................................................                 31,005             50,494           57,611
Other..................................................................                 76,486             54,309           60,045
                                                                                  ------------       ------------      -----------
                                                                                  $    744,752       $    730,778      $   687,035
                                                                                  ============       ============      ===========
</TABLE>

13   QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  2002 Quarters
                                                     -----------------------------------------------------------------------------
                                                        First           Second           Third           Fourth            Total
                                                     -----------      ----------      -----------      -----------      ----------
<S>                                                  <C>              <C>             <C>              <C>              <C>
Operating revenue...........................         $   180,206      $  185,880      $   245,317      $   189,973      $  801,376
Gross profit................................              76,328          84,530          108,814           84,151         353,823
Earnings from continuing
   operations before accounting change......              12,352          18,492           19,588           14,562          64,994
Net earnings................................               7,338          16,658           19,589           14,335          57,920

Basic and diluted earnings per share:
   Earnings from continuing operations
     before accounting change...............                0.46            0.69             0.74             0.57            2.46
   Net earnings.............................                0.27            0.63             0.74             0.55            2.19

                                                                                  2001 Quarters
                                                     -----------------------------------------------------------------------------
                                                        First           Second           Third           Fourth            Total
                                                     -----------      ----------      -----------      -----------      ----------

Operating revenue...........................         $   182,250      $  190,791      $   246,980      $   188,766      $  808,787
Gross profit................................              76,856          85,194          102,989           80,067         345,106
Earnings from continuing
   operations before accounting change......               9,180          13,194           15,484           11,621          49,479
Net earnings................................               8,854          12,571           15,431           10,901          47,757

Basic and diluted earnings per share:
   Earnings from continuing operations
     before accounting change...............                0.34            0.47             0.54             0.41            1.76
   Net earnings.............................                0.32            0.45             0.54             0.39            1.70
</TABLE>


                                       62
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13   QUARTERLY FINANCIAL INFORMATION (UNAUDITED) continued

The reported amounts for the first quarter of 2002 differ from the amounts
previously reported in our Quarterly Report on Form 10-Q. They include the
reclassification of the results of discontinued operations and the
reclassification of the impairment of $1,260 for a customer list at our direct
marketing services business from cumulative effect of accounting change to
operating costs and expenses.

The results for the first quarter of 2002 include $7,670 pre-tax transitional
impairment charges for the write-off of goodwill at our direct marketing
services business and the write down of certain broadcast licenses at our
broadcasting business.

The results for the fourth quarter of 2002 include an $2,502 pre-tax impairment
charge for certain equipment at our printing services business.

The results for the fourth quarter of 2001 include an $1,003 pre-tax impairment
charge for certain property at our broadcast business and certain equipment at
our printing services business.

The results for 2001 include approximately $1,990 pre-tax amortization expense
per quarter for goodwill and indefinite-lived intangible assets that are no
longer amortized under Statement No. 142.

We divide our calendar year into 13 four-week accounting periods, except that
the first and thirteenth periods may be longer or shorter to the extent
necessary to make each accounting year end on December 31. We follow a practice
of reporting our quarterly information at the end of the third accounting period
(our first quarter), at the end of the sixth accounting period (our second
quarter), and at the end of the tenth accounting period (our third quarter).


                                       63
<PAGE>

Report of Independent Auditors

The Board of Directors and Shareholders
Journal Communications, Inc.

We have audited the accompanying consolidated balance sheets of Journal
Communications, Inc. as of December 31, 2002 and 2001, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 2002. Our audits also
included the financial statement schedule listed in the Index at Item 15(a).
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Journal
Communications, Inc. at December 31, 2002 and 2001, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 2002, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

As explained in Note 1 to the consolidated financial statements, effective
January 1, 2002, the Company changed its method of accounting for goodwill and
other intangible assets.




/s/ Ernst & Young LLP

Milwaukee, Wisconsin
January 28, 2003


                                       64
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information contained under the heading "Election of Directors" and "Section
16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement for our
June 3, 2003 Annual Meeting of Shareholders is incorporated by reference herein.

ITEM 11. EXECUTIVE COMPENSATION

The information contained under the heading "Other Board Matters--Compensation
Committee Interlocks and Insider Participation," "Other Board
Matters--Directors' Fees," and "Compensation" in the Proxy Statement for our
June 3, 2003 Annual Meeting of Shareholders is incorporated by reference herein;
provided, however, the information contained under the heading
"Compensation--Compensation Committee Report" shall not be incorporated by
reference herein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

The information contained under the heading "Ownership and Voting" in the Proxy
Statement for our June 3, 2003 Annual Meeting of Shareholders is incorporated by
reference herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information contained under the heading "Certain Transactions" in the Proxy
Statement for our June 3, 2003 Annual Meeting of Shareholders is incorporated by
reference herein.

ITEM 14. CONTROLS AND PROCEDURES

We carried out an evaluation, within 90 days prior to the filing date of this
report, under the supervision and with the participation of our Disclosure
Committee, including our Chief Executive Officer and the 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). Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms,
and that such information is accumulated and communicated to the Chief Executive
Officer and Chief Financial Officer to allow timely decisions regarding required
disclosure.

There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.



                                       65
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  Financial Statements, Financial Statement Schedule and Exhibits
     ---------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                         Form 10-K
                                                                                          Page(s)
                                                                                         ----------
     (1) Financial Statements
<S>                                                                                         <C>
         Consolidated Balance Sheets at December 31, 2002 and 2001                          44

         Consolidated Statements of Earnings for each of the three years
             in the period ended December 31, 2002                                          45

         Consolidated Statements of Shareholders' Equity for each of the
              three years in the period ended December 31, 2002                             46

         Consolidated Statements of Cash Flows for each of the three years in
              the period ended December 31, 2002                                            47

         Notes to Consolidated Financial Statements December 31, 2002                    48 - 63

         Independent Auditors' Report                                                       64

     (2) Financial Statement Schedule for the years ended December 31, 2002,
         2001 and 2000

         II - Valuation and qualifying accounts                                             67
</TABLE>

All other schedules are omitted since the required information is not present,
or is not present in amounts sufficient to require submission of the schedule,
or because the information required is included in the consolidated financial
statements and notes thereto.

     (3)  Exhibits

          The exhibits listed on page 72 are filed as part of this annual
          report.

(b)  Reports on Form 8-K
     -------------------

During the fourth quarter of 2002, we reported the following on Form 8-K:

<TABLE>
<CAPTION>
     Filing     Date                  Items Reported                          Financial Statements Reported
     ------     ----                  --------------                          -----------------------------
<S>  <C>        <C>                   <C>                                     <C>
     8-K        October 28, 2002      Item 9 Regulation FD Disclosure         None
     8-K        October 30, 2002      Item 9 Regulation FD Disclosure         None

</TABLE>

                                       66
<PAGE>

<TABLE>
<CAPTION>
                                             JOURNAL COMMUNICATIONS, INC.

                              SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

                                      Years ended December 31, 2002, 2001, and 2000
                                                   (in thousands)

                          Balance at      Additions                                              Balance at
                           Beginning     Charged to       Acquisitions                               End
Description                 of Year       Earnings       Divestitures(1)     Deductions(2)         of Year
-------------             ----------     ----------      ---------------     -------------       ----------
<C>                       <C>             <C>                <C>               <C>                <C>

Allowance for doubtful accounts:

2002                      $  5,477        $  3,944           $    -            $  2,968           $  6,453

2001                      $  3,993        $  5,206           $  (59)           $  3,663           $  5,477

2000                      $  4,008        $  3,185           $    -            $  3,200           $  3,993


Reserve for litigation:

2002                      $ 10,000        $ (4,100)          $    -            $  5,900           $      -

2001                      $  4,350        $  5,650           $    -            $      -           $ 10,000

2000                      $  2,834        $  4,445           $    -            $  2,929           $  4,350



(1)  During 2001, $59,000 was deducted from the allowance for doubtful accounts due to the sale of the
     Milwaukee operation of our label printing business.
(2)  Deductions from the allowance for doubtful accounts equal accounts receivable written off, less
     recoveries, against the allowance. The deduction from the reserve for litigation in 2000 represents a
     settlement payment and the deduction in 2002 represents the final settlement. Please see Note 8 of our
     Notes to Consolidated Financial Statements.

</TABLE>

                                       67
<PAGE>

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, hereunto duly authorized.

                                          JOURNAL COMMUNICATIONS, INC.


                                    By:   /s/ Steven J. Smith
                                          --------------------------------------
                                          Steven J. Smith
                                          Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>

<S>  <C>                                                                       <C>
     /s/ Steven J. Smith                                                       March 31, 2003
     -----------------------------
     Steven J. Smith, Chairman of the Board & Chief Executive Officer
     (Principal Executive Officer)


     /s/ Douglas G. Kiel                                                       March 31, 2003
     -----------------------------
     Douglas G. Kiel, Director & President


     /s/ Paul M. Bonaiuto                                                      March 31, 2003
     -----------------------------
     Paul M. Bonaiuto, Director, Executive Vice President
      & Chief Financial Officer
     (Principal Financial Officer)


     /s/ Anne M. Bauer                                                         March 31, 2003
     -----------------------------
     Anne M. Bauer, Vice President & Controller
     (Principal Accounting Officer)


     /s/ James J. Ditter                                                       March 31, 2003
     -----------------------------
     James J. Ditter, Director


     /s/ David J. Drury                                                        March 31, 2003
     -----------------------------
     David J. Drury, Director


     /s/ James L. Forbes                                                       March 31, 2003
     -----------------------------
     James L. Forbes, Director


     /s/ Cynthia L. Gault                                                      March 31, 2003
     -----------------------------
     Cynthia L. Gault, Director


     /s/ Mary Hill Leahy                                                       March 31, 2003
     -----------------------------
     Mary Hill Leahy, Director


     /s/ Ulice Payne, Jr.                                                      March 31, 2003
     -----------------------------
     Ulice Payne, Jr., Director


     /s/ Roger D. Peirce                                                       March 31, 2003
     -----------------------------
     Roger D. Peirce, Director

</TABLE>

                                       68
<PAGE>

<TABLE>
<CAPTION>
<S>  <C>                                                                       <C>
     /s/ David D. Reszel                                                       March 31, 2003
     -----------------------------
     David D. Reszel, Director


     /s/ Keith K. Spore                                                        March 31, 2003
     -----------------------------
     Keith K. Spore, Director


     /s/ Mary Ellen Stanek                                                     March 31, 2003
     -----------------------------
     Mary Ellen Stanek, Director


     /s/ Karen O. Trickle                                                      March 31, 2003
     -----------------------------
     Karen O. Trickle, Director

</TABLE>

                                       69
<PAGE>

CERTIFICATIONS
--------------

I, Steven J. Smith, certify that:

1.   I have reviewed this Annual Report on Form 10-K of Journal Communications,
     Inc.;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.



Date  March 31, 2003                              /s/ Steven J. Smith
      ----------------------------                ------------------------------

                                                      Steven J. Smith
                                                      Chairman of the Board and
                                                      Chief Executive Officer

                                       70
<PAGE>

I, Paul M. Bonaiuto, certify that:

1.   I have reviewed this Annual Report on Form 10-K of Journal Communications,
     Inc.;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.



Date  March 31, 2003                         /s/ Paul M. Bonaiuto
      ----------------------------           -----------------------------------
                                                 Paul M. Bonaiuto
                                                 Executive Vice President and
                                                 Chief Financial Officer

                                       71
<PAGE>

                          JOURNAL COMMUNICATIONS, INC.
                                INDEX TO EXHIBITS
                                  (Item 15(a))

Exhibit
Number                                   Description
------                                   -----------


(3.1)     Articles of Association of Journal Communications, Inc., as amended
          (incorporated by reference to Exhibit 3.1 to Journal Communications,
          Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
          June 16, 2002 [Commission File No. 0-7831]).

(3.2)     By-Laws of Journal Communications, Inc., as amended (incorporated by
          reference to Exhibit 3.1 to Journal Communications, Inc.'s Quarterly
          Report on Form 10Q for the quarterly period ended June 16, 2002
          [Commission File No. 0-7831]).

(4.1)     The Journal Employees' Stock Trust Agreement, dated May 15, 1937, as
          amended (incorporated by reference to Exhibit 4.1 of the Quarterly
          Report on Form 10-Q of Journal Employees' Stock Trust for the quarter
          ended June 30, 2001 [Commission File No. 0-7832]).

(10.1)    Credit Agreement, dated May 31, 2002, among the Company and certain of
          its subsidiaries parties thereto, several lenders parties thereto and
          U. S. Bank National Association, as lead arranger and administrative
          agent (incorporated by reference to Exhibit 10 to Journal
          Communications, Inc.'s Quarterly Report on Form 10Q for quarterly
          period ended June 16, 2002 [Commission File No. 0-7831]).

(10.2)    Journal Communications, Inc. Management Long Term Incentive Plan.

(10.3)    Journal Communications, Inc. Management Annual Incentive Plan.

(10.4)    Journal Communications, Inc. Non-Qualified Deferred Compensation Plan.

(10.5)    Journal Communications, Inc. Supplemental Benefit Plan.

(21)      Subsidiaries of the Registrant.

(23)      Consent of Independent Auditors.

(99.1)    Proxy Statement for the June 3, 2003 Annual Meeting of Shareholders of
          Journal Communications, Inc. (The Proxy Statement for the June 3, 2003
          Annual Meeting of Shareholders will be filed with the Securities and
          Exchange Commission under Regulation 14A within 120 days after the end
          of the fiscal year of Journal Communications, Inc. Except to the
          extent specifically incorporated by reference, the Proxy Statement for
          the June 3, 2003 Annual Meeting of Shareholders shall not be deemed to
          be filed with the Securities and Exchange Commission as part of this
          Annual Report of Form 10-K.)

(99.2)    Certification of Steven J. Smith, Chairman and Chief Executive Office
          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.

(99.3)    Certification of 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.


                                       72