Exhibit 13


(Pages 6 - 16 of the Registrant's Annual Report)


<TABLE>
<CAPTION>


TEN YEARS IN REVIEW
(Dollars in thousands, except per share amounts)

                                                                                                                                    
                                               1998          1997             1996           1995           1994           1993 
                                          --------------------------------------------------------------------------------------

Earnings and Dividends
<S>                                          <C>            <C>            <C>            <C>            <C>            <C>    
    Earnings before income taxes (5)         $102,662        $95,939        $70,691        $46,231 (4)    $67,831        $67,498
    Net earnings                               60,708         56,211         41,043         44,213         43,867         44,204
    Earnings for option price                  65,432         51,464         41,043         43,149         43,867         44,204
    Dividends                                  31,057         30,243         28,563         29,156         26,699         25,156
    Earnings retained                          29,651         25,968         12,480         15,057         17,168         19,048

Per Share (After Two-For-One Stock Split)
    Net earnings                                $2.16          $2.05          $1.57          $1.59          $1.57          $1.58
    Earnings for option price                    2.33           1.88           1.57           1.55           1.57           1.58
    Dividends                                    1.10           1.10           1.10           1.05           0.95           0.90
    Book value                                  15.98          14.88          13.70          13.43          13.02          12.38
    Unit option price                           25.48          21.69          18.58          18.12          17.70          17.32

Per Share (Before Two-For-One Stock Split)
    Net earnings                                $4.32          $4.10          $3.13          $3.18          $3.13          $3.16
    Earnings for option price                    4.66           3.76           3.13           3.10           3.13           3.16
    Dividends                                    2.20           2.20           2.20           2.10           1.90           1.80
    Book value                                  31.97          29.76          27.41          26.85          26.04          24.76
    Unit option price                           50.95          43.38          37.15          36.24          35.40          34.64

Net Sales (5)
    Publications                             $291,756       $286,080       $264,883       $267,148       $261,303       $244,529
    Broadcast                                 115,113        101,889         95,690         74,623         63,445         54,851
    Printing                                  233,650        215,581        203,477        202,556        151,853        126,401
    Telecommunications                         81,875         60,751         45,351         39,977         35,974         32,411
    Direct Marketing                           12,901         12,103         14,890         11,578          7,799              -
    Eliminations                               (2,875)        (1,867)        (2,057)        (4,050)        (2,793)        (3,501)
                                            ------------------------------------------------------------------------------------
                Total net sales              $732,420       $674,537       $622,234       $591,832       $517,581       $454,691

Operating Expenses (5)
    Payroll                                  $215,578       $192,060       $181,123       $169,198       $158,450       $137,580
    Materials and component services          189,066        178,527        171,958        172,381        117,320         99,170
    Depreciation and amortization              41,614         40,350         37,635         34,413         29,779         28,335
    Other services                            187,419        183,964        164,501        174,461        145,756        123,675
                                            ------------------------------------------------------------------------------------
                Total operating expenses     $633,677 (9)   $594,901 (8)   $555,217 (7)   $550,453 (6)   $451,305 (3)   $388,760 (2)

Invested Capital
    Property and equipment (5)               $178,338       $173,312       $163,693       $160,433       $149,687       $135,716
    Net working capital                       136,017        113,045         89,980        111,116        107,675        100,780
    Long-term obligations                       1,643          1,808          1,524          2,762          2,947          3,609
    Stockholders' equity                      447,884        412,739        361,030        366,330        367,429        347,447
    Total assets                              584,148        550,133        473,564        474,738        461,416        437,429
    Percent return on stockholders' equity       14.7%          15.6%          11.2%          12.0%          12.6%          13.5%
    Percent return on beginning total assets     11.0%          11.9%           8.6%           9.6%          10.0%          10.8%
                                                                                                                                 
                                                                                                                                
<CAPTION>
                                                                                                                 average annual    
                                                         1992          1991           1990          1989        compound % increase
                                            -----------------------------------------------------------------------------------
Earnings and Dividends                                                                                                             
                                                                                                                                   
<S>                                                    <C>           <C>            <C>           <C>                 <C>          
    Earnings before income taxes (5)                   $62,670       $55,458        $48,992       $69,668             4.40%        
    Net earnings                                        41,631        40,035         41,113        54,988             1.11%        
    Earnings for option price                           41,631        40,626         49,443        54,988             1.95%        
    Dividends                                           25,244        25,358         24,192        24,374             2.73%        
    Earnings retained                                   16,387        14,677         16,921        30,614            -0.35%        
                                                                                                                                   
Per Share (After Two-For-One Stock Split)                                                                                          
    Net earnings                                         $1.49         $1.42          $1.45         $1.92             1.35%        
    Earnings for option price                             1.49          1.44           1.74          1.92             2.20%        
    Dividends                                             0.90          0.90           0.85          0.85             2.91%        
    Book value                                           11.70         11.06          10.77         10.04             5.30%        
    Unit option price                                    16.80         16.30          15.74         14.83             6.20%        
                                                                                                                                   
Per Share (Before Two-For-One Stock Split)                                                                                         
    Net earnings                                         $2.97         $2.84          $2.89         $3.83             1.35%        
    Earnings for option price                             2.97          2.88           3.47          3.83             2.20%        
    Dividends                                             1.80          1.80           1.70          1.70             2.91%        
    Book value                                           23.40         22.11          21.54         20.08             5.30%        
    Unit option price                                    33.60         32.60          31.48         29.66             6.20%        
                                                                                                                                   
Net Sales (5)                                                                                                                      
    Publications                                      $238,386      $232,756       $235,853      $232,371             2.56%        
    Broadcast                                           52,891        52,088         56,456        54,087             8.75%        
    Printing                                            68,372        60,161         57,852        55,301            17.36%        
    Telecommunications                                  31,256        15,398         12,414        11,429            24.46%        
    Direct Marketing                                         -             -              -             -            13.41%        
    Eliminations                                        (1,814)       (1,631)        (1,462)       (1,608)         N.A.            
                                            -----------------------------------------------------------------------------------
                Total net sales                       $389,091      $358,772       $361,113      $351,580             8.50%        
                                                                                                                                   
Operating Expenses (5)                                                                                                             
    Payroll                                           $117,815      $105,151       $102,463       $98,161             9.13%        
    Materials and component services                    75,685        77,576         80,318        81,008             9.87%        
    Depreciation and amortization                       25,585        24,301         20,442        19,536             8.77%        
    Other services                                     109,721       101,884        103,084        90,756             8.39%        
                                            -----------------------------------------------------------------------------------
                Total operating expenses              $328,806 (1)  $308,912       $306,307      $289,461             9.10%        
                                                                                                                                   
Invested Capital                                                                                                                   
    Property and equipment (5)                        $124,107      $121,665        $83,154       $76,746             9.82%        
    Net working capital                                 95,774        93,847        128,859       125,841             0.87%        
    Long-term obligations                                2,251         1,369            608         1,808               N/A        
    Stockholders' equity                               328,230       311,772        306,793       288,036             5.03%        
    Total assets                                       409,863       389,958        401,371       364,860             5.37%        
    Percent return on stockholders' equity                13.4%         13.1%          14.3%         21.1%                         
    Percent return on beginning total assets              10.7%         10.0%          11.3%         16.4%                         
                                                                                                                                  
                                                                                                                                  
                                                                                                                                   
                                                      
1)   Includes full year of Norlight and IPC since Oct. 6.
2)   Includes full year of IPC and IPC-Europe since Feb 28.
3)   Includes full year of PrimeNet Marketing Services.
4)   Does not include gain on sale of Perry  Printing  Corp. of $14,941 or $1.07
     per share (before split) in 1995.
5)   Figures  prior to 1996 have  been  restated  to  exclude  the  discontinued
     operations of Perry Printing Corp.
6)   Includes Omaha, Neb., radio stations KEZO-AM (renamed KOSR-AM), KEZO-FM and
     KKCD-FM since Jan. 24 and PrimeNet-Clearwater since June 22.
7)   Includes Tucson,  Ariz., radio stations KMXZ-FM,  KKHG-FM (renamed KZPT-FM)
     and KKND-AM (renamed KFFN-AM) since Jan. 29.
8)   Includes  Knoxville,  Tenn.,  radio stations WWST-FM and WMYU-FM since June
     30, CNI since Oct. 1 and Kansas City, Mo., radio station KQRC-FM until June
     30.
9)   Includes Omaha,  Neb., radio stations KESY-FM (renamed KSRZ-FM) and KBBX-AM
     from January 1; Knoxville,  Tenn., radio stations WQBB-FM (renamed WQIX-FM)
     and WQBB-AM from April 20; Oracle,  Ariz.,  radio station KLQB-FM  (renamed
     KIXD-FM) from June 9; and Caldwell,  Idaho (KCID-AM and KCID-FM),  Payette,
     Idaho  (KQXR-FM),  Boise,  Idaho  (KGEM-AM and  KJOT-FM) and Ontario,  Ore.
     (KSRV-AM and KSRV-FM) radio stations from July 1.


</TABLE>

                                       28
<PAGE>

<TABLE>
<CAPTION>


                           JOURNAL COMMUNICATIONS INC.
                           CONSOLIDATED BALANCE SHEETS
           (Dollars in thousands, except share and per share amounts)

                                                                   December 31 
                                                                   -----------
                                                          1998                  1997 
                                                          ----                 -----
<S>                                                     <C>                  <C>     
ASSETS
Current assets:
  Cash and cash equivalents                             $131,051             $111,002
  Receivables, net                                        94,823               98,366
  Inventories, net                                        19,882               23,665
  Prepaid expenses                                        16,211               10,355

  Deferred income taxes                                    6,701                5,111
                                                        --------              -------
        Total current assets                             268,668              248,499

Property and equipment, at cost:
  Land and land improvements                              13,792               12,406
  Buildings                                               61,312               57,025
  Equipment                                              352,513              349,674 
                                                        --------              -------
                                                         427,617              419,105
  Less accumulated depreciation                          249,279              245,793 
                                                        --------              -------
  Net property and equipment                             178,338              173,312

Goodwill                                                  60,339               51,680
Other intangible assets, net                              59,303               44,367
Corporate life insurance investment pool                     ---               19,630
Other assets                                             17,500                12,645 
                                                        --------             --------
        Total assets                                    $584,148             $550,133 
                                                        ========             ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                      $ 47,850             $ 54,765
  Accrued compensation                                    24,137               23,850
  Deferred revenue                                        16,092               17,418
  Accrued employee benefits                               25,557               25,249
  Other current liabilities                               17,217               11,953
  Current portion of long-term obligations                 1,798                2,219 
                                                        --------             --------
        Total current liabilities                        132,651              135,454

Long-term obligations                                      1,643                1,808
Deferred income taxes                                      1,970                  132

Stockholders' equity:
  Common stock, $0.125 par value; authorized
    and issued 28,800,000 shares                           3,600                3,600
  Retained earnings                                      463,110              430,553
  Treasury stock, at cost                               (18,826)              (21,414)
                                                        --------             --------
        Total stockholders' equity                       447,884              412,739 
                                                        --------             --------
        Total liabilities and stockholders' equity      $584,148             $550,133 
                                                        ========             ========

                             See accompanying notes.
</TABLE>

                                       29
<PAGE>




                           JOURNAL COMMUNICATIONS INC.
                       CONSOLIDATED STATEMENTS OF EARNINGS
                (Dollars in thousands, except per share amounts)

                                                     Years ended December 31
                                                      ----------------------
                                              1998         1997         1996 
                                              ----         ----         ----


Revenue                                     $732,420     $674,537      $622,234

Costs and expenses:
  Cost of sales                              399,105      376,341       358,588
  Selling and administrative expenses        234,572      218,560       196,629
                                            --------      -------      --------

           Total costs and expenses          633,677      594,901       555,217
                                            --------      -------      --------

Operating earnings                            98,743       79,636        67,017

Other income:
  Net interest and dividends                   6,305        6,246         3,366
  Gain (loss) on sale of assets, net          (2,386)      10,057           308 
                                            --------      -------      --------

           Total other income                  3,919       16,303         3,674 
                                            --------      -------      --------

Earnings before income taxes                 102,662       95,939        70,691

Provision for income taxes                    41,954       39,728        29,648 
                                            --------      -------      --------

Net earnings                                $ 60,708     $ 56,211      $ 41,043 
                                            ========      =======      ========

Basic and diluted earnings per share        $   2.16     $   2.05   $     1.57 
                                            ========      =======   ===========



                             See accompanying notes.

                                       30
<PAGE>




                           JOURNAL COMMUNICATIONS INC.
                  CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>



                                                          Years ended December 31 
                                                          -----------------------
                                                    1998         1997            1996
                                                    ----         ----            ----

<S>                                               <C>          <C>              <C>     
Balance at beginning of year                      $430,553     $402,301         $390,279

  Net earnings                                      60,708       56,211           41,043
  Currency translation adjustment                      233         (529)            (568) 
                                                  --------     --------         --------
        Comprehensive income                        60,941       55,682           40,475
                                                  --------     --------         --------

  Cash dividends ($1.10 per share in 1998,
        1997 and 1996)                            (31,057)      (30,243)         (28,563)

  Treasury stock transactions                        2,673        2,813              110 
                                                  --------     --------         --------

Balance at end of year                            $463,110     $430,553         $402,301
                                                  ========     ========         ========





                             See accompanying notes.
</TABLE>

                                       31
<PAGE>

<TABLE>
<CAPTION>



                           JOURNAL COMMUNICATIONS INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)

                                                                        Years ended December 31
                                                                        -----------------------
                                                                  1998          1997          1996 
                                                                  ----          ----          ----
Cash flow from operating activities:
<S>                                                              <C>           <C>           <C>    
  Net earnings                                                   $60,708       $56,211       $41,043
  Adjustments to reconcile net earnings to
        net cash provided by operating activities
    Depreciation and amortization                                 41,614        40,350        37,635
    Deferred income taxes                                            248           590        (2,052)
    Net (gain) loss from sales of assets                           2,386       (10,057)         (308)
    Net changes in current assets and current liabilities
        Receivables                                                3,719        (5,307)        1,250
        Inventories                                                3,930         4,268         3,610
        Accounts payable                                          (5,621)       16,887         5,018
        Other current assets and liabilities                       2,389         6,259         8,638 
                                                                --------      --------       --------

           Net cash provided by operating activities             109,373       109,201        94,834
                                                                --------      --------       --------

Cash flow from investing activities:
  Proceeds from sales of assets                                    5,784         3,676         5,937
  Property and equipment expenditures                            (45,222)      (39,401)      (33,772)
  Net decrease in short-term investments                             ---           ---         47,885
   Proceeds from liquidation of corporate life insurance
    investment pool                                               21,005           ---           ---
  Assets of businesses acquired                                  (42,453)      (21,063)      (17,000)
  Other - net                                                     (3,005)       (2,215)       (3,421)
                                                                --------      --------       --------

           Net cash used for investing activities                (63,891)      (59,003)         (371)
                                                                --------      --------       --------

Cash flow from financing activities:
  Net increase (decrease) in long-term obligations                  362          (506)       (7,015)
  Net (purchases) sales of treasury stock                         5,262        26,270       (17,212)
  Cash dividends                                                (31,057)       (30,243)      (28,563)
                                                                --------      --------       --------

           Net cash used for financing activities                (25,433)       (4,479)      (52,790)
                                                                --------      --------       --------

Net increase in cash and cash equivalents                         20,049        45,719        41,673


Cash and cash equivalents

        Beginning of year                                        111,002        65,283        23,610 
                                                                --------      --------       --------

        End of year                                             $131,051      $111,002       $65,283 
                                                                ========      ========       ========


Cash paid for income taxes                                      $ 39,782      $ 38,930       $23,753 
                                                                ========      ========       ========


                             See accompanying notes.
</TABLE>


                                       32
<PAGE>




                           JOURNAL COMMUNICATIONS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997 and 1996
           (Dollars in thousands, except share and per share amounts)


1.  Principal accounting policies

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

    Foreign  currency  translation - The Company's  foreign  subsidiary uses the
    local  currency  as  its  functional  currency.   Accordingly,   assets  and
    liabilities of the foreign  subsidiary are translated  into U.S.  dollars at
    year-end exchange rates while income and expense items are translated at the
    average exchange rates for the year. Resulting  translation  adjustments are
    reflected in retained earnings.

    Earnings per share - The numerator for the calculation of earnings per share
    is net earnings, and the denominator for earnings per share is based on each
    period's weighted average shares outstanding, which were 28,076,274 in 1998,
    27,403,718  in 1997 and  26,205,368  in 1996.  Because there are no dilutive
    securities, basic and diluted earnings per share are the same.

    Cash  equivalents  - Cash  equivalents  are highly liquid  investments  with
    original  maturities of three months or less. Cash equivalents are stated at
    cost, which  approximates  market value, and at December 31 consisted of the
    following:

                                                1998                1997    
                                            ------------         -----------
           Commercial Paper                   $108,160          $  99,074
           Bank Certificates of Deposit         12,600              5,175
           Money Market Fund                       470                ---
                                              --------           --------
                                              $121,230           $104,249
                                              ========           ========

    Receivables - Allowance for doubtful  accounts at December 31, 1998 and 1997
    was $4,345 and $3,444, respectively.

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

                                             1998              1997     
                                          -----------       -----------
           Paper and Supplies             $ 10,910           $ 13,453
           Work in Process                   2,339              4,242
           Finished Goods                    6,633              5,970
                                          --------           --------
                                          $ 19,882           $ 23,665
                                          ========           ========

    Property  and  equipment  - Property  and  equipment  are  recorded at cost.
    Depreciation of property and equipment is provided over the estimated useful
    lives  (3-35  years)  of  the  respective   assets   principally  using  the
    straight-line method.

    Goodwill - Goodwill  resulting from  acquisitions  subsequent to November 1,
    1970, is amortized on a straight-line basis over 40 years. Goodwill prior to
    November 1, 1970, is amortized  when it is determined  that such  intangible
    assets have a limited useful life. At December 31, 1998,  $2,280 of goodwill
    was not being amortized.  Accumulated  amortization at December 31, 1998 and
    1997, was $8,926 and $10,527, respectively.

    Other  intangible  assets - Identifiable  intangible  assets  resulting from
    acquisitions  are  amortized on a  straight-line  basis for periods up to 30
    years.  Accumulated  amortization  relating  to other  intangible  assets at
    December  31, 1998 and 1997,  was $29,596 and $29,917,  respectively.  Other
    intangible assets include FCC licenses,  which were $45,700 and $25,844, net
    of  amortization,  at  December  31,  1998  and  1997,  respectively.  Other
    intangible  assets also include the costs of television  program  contracts,
    recorded  under the gross method,  which are deferred and amortized over the
    estimated number of runs of the related programs.

    Use of estimates - The  preparation  of financial  statements  in conformity
    with generally accepted  accounting  principles  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.

                                       33

<PAGE>

1.  Principal accounting policies (continued)

    Reclassifications  - Certain  prior year amounts have been  reclassified  to
    conform to the 1998 presentation.

    New accounting  standards - During 1998, the Financial  Accounting Standards
    Board  issued SFAS No.  133,  "Accounting  for  Derivative  Instruments  and
    Hedging  Activities"  (the  Statement),  which is required to be adopted for
    years  beginning after June 15, 1998. The Statement will require the Company
    to recognize all derivatives in the balance sheet at fair value. The Company
    will adopt the Statement  effective  January 1, 2000, and estimates that the
    effect will not be material to its results of operations, financial position
    or cash flows.

    During 1998, the Accounting  Standards  Executive  Committee of the American
    Institute of Certified Public  Accountants issued two Statements of Position
    (SOP) that are applicable to the Company SOP 98-1, "Accounting for the Costs
    of Computer Software  Developed or Obtained for Internal Use," and SOP 98-5,
    "Reporting  on the Costs of Start-up  Activities."  SOP 98-1  requires  that
    certain computer software costs be capitalized,  and SOP 98-5 requires costs
    of  start-up  activities  to be  expensed  as  incurred.  Since the  Company
    currently  complies with the  requirements  of SOP 98-1 and SOP 98-5,  these
    pronouncements  will have no impact on its results of operations,  financial
    position or cash flows.

2.  Employee benefit plans

    In February 1998, the Financial  Accounting  Standards Board issued SFAS No.
    132,  "Employers'   Disclosures  about  Pensions  and  Other  Postretirement
    Benefits."  Statement  132  addresses  disclosure  issues  only and does not
    change  the  measurement  or  recognition  provisions  specified  in earlier
    Statements.  The Company has adopted SFAS No. 132,  which is  effective  for
    fiscal years beginning after December 15, 1997.

    The Company has a defined  benefit pension plan covering the majority of its
    employees. Plan assets consist primarily of listed stocks and government and
    other bonds.  In addition,  the Company  provides health benefits to certain
    retirees and their eligible spouses. The Company has elected to amortize the
    related unfunded  obligation of $25,324 at January 1, 1993, over a period of
    20 years.
<TABLE>
<CAPTION>

                                                                               Other
                                               Pension Benefits       Postretirement Benefits
                                               ----------------       -----------------------
                                             1998          1997         1998          1997
                                             ----          ----         ----          ----
Change in benefit obligations
<S>                                         <C>           <C>          <C>           <C>    
  Benefit obligation at beginning of year   $91,390       $83,389      $29,277       $27,657
  Service cost                                3,066         2,647          562           476
  Interest cost                               6,560         6,391        2,035         2,055
  Actuarial (gain)/loss                       8,290         4,277       (1,358)          454
  Benefits paid                              (6,235)       (6,918)      (2,877)       (1,365)
  Special termination benefits                  157         1,604            -             -
                                              -----       -------     --------    ----------
  Benefit obligation at end of year        $103,228       $91,390      $27,639       $29,277
                                           --------      --------     --------    ----------

Change in plan assets
  Fair value of plan assets at beginning
  of year                                   $75,560       $68,589
  Actual return on plan assets                9,813        11,268
  Company contributions                       3,824         2,621
  Benefits paid                              (6,235)       (6,918)                         
                                           --------      --------           
  Fair value of plan assets at end of        82,962        75,560            
                                           --------      --------
  year

  Funded status of the plan (underfunded)   (20,266)      (15,830)    $(27,639)     $(29,277)
  Unrecognized net actuarial (gain)/loss      8,103         3,170         (564)          794
  Unrecognized prior service cost             2,035         2,290            -             -
  Unrecognized transition obligation           (469)         (706)      15,541        16,651
                                             -------      -------     --------        ------
  (asset)
  Accrued net benefit cost                 $(10,597)     $(11,076)    $(12,662)     $(11,832)
                                           =========     =========    ========     =========
</TABLE>

                                       34
<PAGE>



2.  Employee benefit plans (continued)
<TABLE>
<CAPTION>

                                                                               Other
                                               Pension Benefits       Postretirement Benefits
                                               ----------------       -----------------------

Components of net periodic benefit cost       1998      1997       1996    1998     1997    1996
                                              ----      ----       ----    ----     ----    ----
<S>                                          <C>        <C>       <C>       <C>   <C>      <C>   
  Service cost                               $3,066     $2,647    $2,412    $562  $  476   $  496
  Interest cost                               6,560      6,391     6,023   2,035   2,055    2,051
  Expected return on plan assets             (6,538)    (6,183)   (5,912)                     
                                                                               -       -        -
  Amortization of prior service cost            254        254       254       -       -        -  
  Amortization of transition obligation        (237)      (237)     (237)  1,110   1,110    1,110
  Recognized net actuarial loss                  82          -         -       -       -        -
                                            -------     ------   -------  ------  ------   ------
  Benefit cost                                3,187      2,872     2,540   3,707   3,641    3,657
                                            -------     ------   -------  ------  ------   ------

  Recognized special termination benefits       157      1,604       188       -       -        -
                                            -------     ------   -------  ------  ------   ------
  Total cost                                 $3,344     $4,476   $2,728   $3,707  $3,641   $3,657       
                                            =======     ======   =======  ======  ======   ======  
                                                                          
                                                                          
<CAPTION>

                                                                               Other
                                               Pension Benefits       Postretirement Benefits
                                               ----------------       -----------------------

  Weighted-average assumptions as of           1998         1997          1998         1997
  -----------------------------------          ----         ----          ----         ----
  December 31
  -----------
<S>                                            <C>          <C>           <C>          <C>   
  Discount rate                                6.75%        7.25%         6.75%        7.25% 
                                                                                               
  Expected return on plan assets               9.50         9.50                               
                                                                                               
  Rate of compensation increase                4.50         4.50                               
                                               
</TABLE>

The assumed  health care cost trend rates used in measuring  the  postretirement
benefit  obligation for retirees for 1998 are 6% in 1998, 5.5% in 2000 and 5% in
2001 and  thereafter,  and for 1998  were  6.5%  grading  down to 5% in 2001 and
thereafter.  The assumed health care cost trend rate has a significant effect on
the amounts reported for other  postretirement  benefits. A one percentage point
change in the  assumed  health  care cost trend  rate  would have the  following
effects:
                                              One Percentage    One Percentage
                                                   Point             Point
                                                 Increase          Decrease
                                            -----------------  ---------------

Effect on total of service and interest
cost                                         
    components in 1998                            $168              $ (149) 
Effect on postretirement benefit                                            
obligation                                                                  
  As of 12/31/98                                $1,302              $(1,221)
                                             
The  Journal   Communications   Inc.   Investment  Savings  Plan  is  a  defined
contribution benefit plan covering substantially all employees.  The plan allows
employees to defer up to 19% of their eligible  wages, up to the IRS limit, on a
pre-tax basis. In addition, employees can contribute up to 10% of their eligible
wages after taxes.  The maximum  combined total  contributed may not exceed 19%.
Each employee who elects to participate is eligible to receive company  matching
contributions.  The Company will contribute $0.50 for each dollar contributed by
the  participant,  up to 5% of  eligible  wages as defined by the plan.  Company
matching  contributions  were $2,333,  $2,271 and $2,071 in 1998, 1997 and 1996,
respectively.  The Company made  additional  contributions  into the  Investment
Savings Plan on behalf of certain employees not covered by the Company's defined
benefit   pension  plan  of  $602,  $673  and  $731  in  1998,  1997  and  1996,
respectively.

                                       35
<PAGE>




3.  Income taxes

    Income tax expense (benefit) consists of the following:

                                         1998        1997        1996
                                         ----        ----        ----
        Current:
          Federal                       $34,814    $31,127      $25,157
          State                           6,892      8,011        6,543 
                                       --------    -------      -------
                                         41,706     39,138       31,700
        Deferred                            248        590       (2,052)
                                       --------    -------      --------

                                        $41,954    $39,728      $29,648 
                                       ========    =======      =======

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

                                                 1998          1997       1996
                                                 ----          ----       ----

        Statutory federal income tax rate        35.0%         35.0%      35.0%
        State income taxes,
          net of federal tax benefit              5.4           5.0        5.1
        Foreign net operating losses             ----           0.9        1.7
        Other                                     0.5           0.5        0.1
                                                 ----          ----       -----

               Actual provision                  40.9%         41.4%      41.9%
                                                 ====          ====       =====


    The tax  effects  of  temporary  differences  that give rise to  significant
    portions of the deferred tax assets and liabilities include:

                                                          1998           1997
                                                          ----           ----
    Deferred tax assets:
      Accrued compensation and employee benefits        $11,844        $10,450
      Inventories                                           895            865
      Receivables                                         1,261            997
      Domestic loss carryforwards                         3,324          4,590
      Foreign loss carryforwards                          3,948          4,088
      Other                                               2,257          2,105
                                                        -------        -------
               Total deferred tax assets                 23,529         23,095

    Deferred tax liabilities:
      Property and equipment                             12,060         12,180
      Intangible assets                                   2,304          1,374
      Other                                               1,180          1,468
                                                        -------         ------
               Total deferred tax liabilities            15,544         15,022

    Valuation allowances:
        Domestic loss carryforwards                         917            551
        Foreign loss carryforwards                        2,337          2,543
                                                        -------         ------
               Total valuation allowances                 3,254          3,094
                                                        -------         ------
   Net deferred tax asset
       included in balance sheet                        $ 4,731        $ 4,979
                                                        =======        =======


                                       36

<PAGE>

4.  Long-term obligations and lease commitments
                                                            December 31 
                                                       1998             1997 

    Capital lease & other obligations,
     average interest 8% in 1998                      $2,341          $2,859
    Television program contracts, due thru 1998        1,100           1,168
                                                      ------          ------
                                                       3,441           4,027
    Less current portion                               1,798           2,219
                                                      ------          ------

                                                      $1,643          $1,808
                                                      ======          ======

    On January 22, 1998, the Company  executed an unsecured  short-term  line of
    credit in an aggregate amount not to exceed $35 million.

    In  addition,  the Company has the rights to  broadcast  certain  television
    programs during the years 1998-2002 under contracts aggregating $6,966.

    Rental expense for office facilities and equipment including  noncancellable
    operating  leases was $17,806,  $18,926 and $15,382 in 1998,  1997 and 1996,
    respectively.  Future  minimum  annual rental  payments due under  operating
    leases total $48,371 and are due as follows:  1998 - $9,282;  2000 - $7,778;
    2001 - $7,103; 2002 - $5,886; 2003 - $5,447; thereafter $12,875.

5.  Stockholders' equity

    On December 1, 1998, the Board of Directors  approved an increase  effective
    January 5, 1998,  in authorized  common stock from  14,400,000 to 28,800,000
    shares,  reduced  the par value from $.25 to $.125 per share and  approved a
    two-for-one common stock split. Except where noted, all references to shares
    and  per-share  amounts  elsewhere  in the  financial  statements  have been
    restated to reflect this stock split.

    The Company purchases units of beneficial interest in the Journal Employees'
    Stock  Trust for resale to its  employees.  Treasury  stock  activity  is as
    follows:
<TABLE>
<CAPTION>

                                                   1998                        1997                          1996
                                                   ----                        ----                          ----
                                          Units          Amount        Units         Amount          Units         Amount 
<S>                                     <C>             <C>          <C>            <C>            <C>           <C>     
    Beginning balance                   1,061,994       $ 21,414     2,453,634      $ 44,871       1,517,164     $ 27,549
    Purchases                           3,019,620         68,627     2,440,002        47,496       2,760,880       50,504
    Sales                              (3,301,286)       (71,215)   (3,831,642)      (70,953)     (1,824,410)     (33,182)
                                       -----------     ---------     ---------       --------    ------------    --------

       Ending balance                     780,328       $ 18,826     1,061,994      $ 21,414       2,453,634     $ 44,871 
                                       ===========     =========     =========       ========    ===========     ========

Gain on sales of treasury stock                        $   2,673                    $  2,813                     $    110 
                                                       =========                     ========                    ========
</TABLE>

6.  Sales and acquisitions

    In August  1998,  Journal  Broadcast  Corporation  announced an agreement to
    acquire  the stock of Great  Empire  Broadcasting,  Inc.,  a radio  group of
    thirteen stations headquartered in Wichita, Kan. The markets served by Great
    Empire are Tulsa, Okla., Wichita,  Kan.,  Springfield,  Mo., and Omaha, Neb.
    Pending approval of the FCC, the Company expects to complete the acquisition
    in early 1998. The cash purchase price will be approximately $100 million.

    On July 1, 1998, the Company acquired the business and  substantially all of
    the assets of KCID-AM and KCID-FM in  Caldwell,  Idaho;  KQXR-FM in Payette,
    Idaho;  KGEM-AM  and  KJOT-FM in Boise,  Idaho,  and  KSRV-AM and KSRV-FM in
    Ontario,  Ore. The combined  cash  purchase  price was  approximately  $15.1
    million.

    On June 9, 1998, the Company acquired the business and  substantially all of
    the assets of KLQB-FM (renamed  KIXD-FM) in Oracle,  Ariz. The cash purchase
    price was approximately $5.8 million.

    On April 20,  1998,  the  Company  acquired  the stock of  WQBB-FM  (renamed
    WQIX-FM) and WQBB-AM in Knoxville,  Tenn.  The combined cash purchase  price
    was approximately $7.1 million.

                                       37
<PAGE>

    On January 1, 1998, the Company acquired the business and  substantially all
    of the assets of KESY-FM  (renamed  KSRZ-FM) and KBBX-AM in Omaha,  Neb. The
    combined cash purchase price was approximately $5.5 million.

    On October 1, 1997, the Company  acquired the stock of Community  Newspapers
    Inc. (CNI), a group of weekly newspapers and free-distribution  publications
    in metropolitan  Milwaukee,  Wis. The cash purchase price was  approximately
    $13.3 million.

    On June 30, 1997, the Company acquired the business and substantially all of
    the assets of WWST-FM and WMYU-FM in Knoxville,  Tenn.,  in exchange for the
    business and  substantially all of the assets of KQRC-FM in Kansas City, Mo.
    The Company reported a pretax gain on the sale of KQRC of approximately $7.8
    million.

    On January 29, 1996, the Company acquired the business and substantially all
    of the assets of KMXZ-FM,  KKHG-FM  (renamed  KZPT-FM) and KKND-AM  (renamed
    KFFN-AM) in Tucson, Ariz. The combined cash purchase price was approximately
    $16.2 million.

    The  above-mentioned  completed  acquisitions  were  accounted for using the
    purchase method.  Accordingly,  the operating  results and cash flows of the
    acquired  businesses  are included in the Company's  consolidated  financial
    statements from the respective  dates of acquisition.  Had the  transactions
    occurred on January 1 of the year acquired,  the effect of the  acquisitions
    on the Company's  consolidated  results of operations,  for each  respective
    year, would not have been material.

7.  Litigation and contingent liabilities

    The Company is subject to various legal actions,  administrative proceedings
    and  claims  arising  out of the  ordinary  course of  business.  Management
    believes that such  unresolved  legal actions and claims will not materially
    affect the  consolidated  financial  position  of the  Company.  The Company
    periodically  re-evaluates its exposure on such claims and makes adjustments
    to its reserves as appropriate.

8.  Segment analysis 

    In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an
    Enterprise  and  Related   Information,"   which  supercedes  SFAS  No.  14,
    "Financial  Reporting  for  Segments  of  a  Business  Enterprise."  Journal
    Communications Inc. is an employee-owned, diversified communications company
    with  operations  in eighteen  states and  France.  Revenues  from  external
    customers are generated, and long-lived assets are located, primarily in the
    United States.  The Company's  principal  lines of business are  publishing,
    broadcasting,   printing,   telecommunications  and  direct  marketing.  The
    Milwaukee  Journal Sentinel and 108 paid and free periodicals are published.
    The  broadcasting  business  consists  of  23  radio  and  three  television
    stations.  The printing of  short-run  publications,  periodicals,  computer
    software   documentation   manuals,   quality  labels,   and  packaging  and
    promotional   materials   are  provided  by  the  printing   business.   The
    telecommunications  business  provides a full range of services  with one of
    the largest digital networks in the Midwest.  Personalized  direct marketing
    services are provided to merchandisers and manufacturers.
<TABLE>
<CAPTION>

                                            Revenue                        Earnings (losses) 
                               ---------------------------------     -------------------------------
                                 1998        1997         1996         1998       1997        1996 
                                 ----        ----         ----         ----       ----        ----
<S>                            <C>         <C>          <C>           <C>       <C>         <C>    
Publications                   $291,756    $286,080     $264,883      $43,532   $40,711     $31,718
Broadcast                       115,113     101,889       95,690       34,015    38,174      29,323
Printing                        233,650     215,581      203,477       (5,297)      386      (6,895)
Telecommunications               81,875      60,751       45,351       24,092    12,320       8,955
Direct marketing                 12,901      12,103       14,890         (365)   (1,315)      1,327
Corporate & eliminations         (2,875)     (1,867)      (2,057)         381      (583)      2,897
                               --------    --------     --------

                               $732,420    $674,537     $622,234
                               ========    ========     ========

Net interest and dividends                                              6,304     6,246       3,366
                                                                     --------   -------     -------

Earnings before income taxes                                         $102,662   $95,939     $70,691 
                                                                     ========   =======     =======
</TABLE>


                                       38




<PAGE>

<TABLE>
<CAPTION>



                        December 31
                  Identifiable total assets       Depreciation & amortization          Capital Expenditures    
               -----------------------------     ----------------------------      --------------------------- 
                 1998       1997       1996        1998      1997      1996          1998     1997       1996
                 ----       ----       ----        ----      ----      ----          ----     ----       ----
<S>            <C>       <C>        <C>          <C>      <C>       <C>            <C>      <C>        <C>    
Publications   $120,949  $103,475   $ 92,297     $ 10,479 $ 9,027   $  8,049       $14,698  $ 12,590   $ 8,264
Broadcast       127,598    90,727     77,763        6,825   6,974      6,738         3,988     4,739     2,837
Printing        108,900   116,441    125,264       13,954  12,946     12,600        14,749     8,103     9,341
Telecom-                                                                          
 munications     61,849    66,420     58,943        9,022   8,829      8,390        10,159    12,928    12,341
Direct                                                                            
 marketing       15,292    14,616     16,127        1,389   1,788      2,115         1,299       764       594
Corporate and                                                                     
 eliminations   149,560   158,454    103,170          (55)    786       (257)          329       277       395
                -------  --------   --------    --------- -------   --------       -------   --------   ------
                                                                                  
               $584,148  $550,133   $473,564     $ 41,614 $40,350   $ 37,635       $45,222   $ 39,401  $33,772
               ========  ========   ========     ======== =======   ========       =======   ========  =======
                                                                              

</TABLE>









                                       39


<PAGE>





Report of Ernst & Young LLP, Independent Auditors


The Board of Directors
and Stockholders
Journal Communications Inc.

       We have audited the accompanying  consolidated  balance sheets of Journal
Communications  Inc.  as  of  December  31,  1998  and  1997,  and  the  related
consolidated statements of earnings,  retained earnings, and cash flows for each
of the three  years in the period  ended  December  31,  1998.  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 generally  accepted  auditing
standards.  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, 1998 and 1997, and the consolidated  results
of its  operations  and its cash flows for each of the three years in the period
ended  December 31, 1998,  in  conformity  with  generally  accepted  accounting
principles.



ERNST & YOUNG LLP



Milwaukee, Wisconsin
January 29, 1999



                                       40