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SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549



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FORM 10-K



Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the fiscal year ended December 25, 2005

Commission File Number: 1-31805



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JOURNAL COMMUNICATIONS, INC.

(Exact name of Registrant as specified in its charter)



|                                            |  |                                        
|------------------------------------------- |  | ---------------------------------------
|Wisconsin                                   |  | 20-0020198                             
|(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) 224-2616



Securities registered
pursuant to Section 12(b) of the Act:



|                                                |  |                                          
|----------------------------------------------- |  | -----------------------------------------
|Title of Class                                  |  | Name of Each Exchange on Which Registered
|Class A Common Stock, $0.01 par value per share |  | The New York Stock Exchange              



Securities registered pursuant to
Section 12(g) of the Act:



Class B Common Stock, $0.01
par value per share



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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 the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.  Yes ̈No  x



Indicate by check mark whether the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes ̈No  x



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 a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer ̈Accelerated Filer  x            Non-accelerated Filer ̈



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ̈No  x



The aggregate market value of the class A common stock held by non-affiliates of the registrant as of June 30, 2005 was approximately $588,294,353
(based on the closing price of such stock on the New York Stock Exchange, Inc. as of such date). Neither of the registrants class B common stock or class C common stock is listed on a national securities exchange or traded in an organized
over-the-counter market, but each share of the registrants class B common stock is convertible into one share of the registrants class A common stock and each share of the registrants class C common stock is convertible into
1.363970 shares of the registrants class A common stock.



Number of shares outstanding of each of the issuers classes of common stock as of February 21, 2006 (excluding 8,676,705 shares of class B common stock, held by our subsidiary, The Journal Company):



|                     |  |                                 
|-------------------- |  | --------------------------------
|Class                |  | Outstanding at February 21, 2006
|Class A Common Stock |  | 43,602,102                      
|Class B Common Stock |  | 24,633,186                      
|Class C Common Stock |  | 3,264,000                       



Documents
Incorporated by Reference



Portions of the Proxy Statement
for our April 27, 2006 Annual Meeting of Shareholders are incorporated by reference into Part III.



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##### Table of Contents

JOURNAL COMMUNICATIONS, INC.



INDEX TO
FORM 10-K



|                           |  |                                                                                                              |  |         
|-------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | --------
|                           |  |                                                                                                              |  | Page No.
|Forward-Looking Statements |  | 1                                                                                                           
|                           |  |                                                                                                             
|Part I                     |  |                                                                                                              |  |         
|                           |  |                                                                                                             
|Item 1.                    |  | Business                                                                                                     |  | 2       
|Item 1A.                   |  | Risk Factors                                                                                                 |  | 21      
|Item 1B.                   |  | Unresolved Staff Comments                                                                                    |  | 32      
|Item 2.                    |  | Properties                                                                                                   |  | 32      
|Item 3.                    |  | Legal Proceedings                                                                                            |  | 34      
|Item 4.                    |  | Submission of Matters to a Vote of Security Holders                                                          |  | 34      
|                           |  |                                                                                                             
|Part II                    |  |                                                                                                              |  |         
|                           |  |                                                                                                             
|Item 5.                    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 36      
|Item 6.                    |  | Selected Financial Data                                                                                      |  | 38      
|Item 7.                    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 40      
|Item 7A.                   |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 63      
|Item 8.                    |  | Financial Statements and Supplementary Data                                                                  |  | 64      
|Item 9.                    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 93      
|Item 9A.                   |  | Controls and Procedures                                                                                      |  | 93      
|Item 9B.                   |  | Other Information                                                                                            |  | 93      
|                           |  |                                                                                                             
|Part III                   |  |                                                                                                              |  |         
|                           |  |                                                                                                             
|Item 10.                   |  | Directors and Executive Officers of the Registrant                                                           |  | 94      
|Item 11.                   |  | Executive Compensation                                                                                       |  | 94      
|Item 12.                   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 94      
|Item 13.                   |  | Certain Relationships and Related Transactions                                                               |  | 95      
|Item 14.                   |  | Principal Accountant Fees and Services                                                                       |  | 95      
|                           |  |                                                                                                             
|Part IV                    |  |                                                                                                              |  |         
|                           |  |                                                                                                             
|Item 15.                   |  | Exhibits, Financial Statement Schedules                                                                      |  | 96      
|                           | 
|Signatures                 |  | 98                                                                                                          
|                           | 
|Index to Exhibits          |  | 99                                                                                                          



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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 often 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:



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



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



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



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



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



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



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



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



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



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



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



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



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



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



| |  |  | energy costs;
| | - |  | -------------



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



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



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



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PART I



|ITEM 1. | BUSINESS
|------- | --------



Overview



Our business
segments are based on the organizational structure used by management for making operating and investment decisions and for assessing performance. Our reportable business segments are: (i) publishing; (ii) broadcasting;
(iii) telecommunications; (iv) printing services; and (v) other. Our publishing segment consists of a daily newspaper, the Milwaukee Journal Sentinel, and about 90 community newspapers and shoppers in eight states. Our
broadcasting segment consists of 37 radio stations and nine television stations in 12 states, as well as the operation of two additional television stations under local marketing agreements. Our telecommunications segment consists of wholesale and
business-to-business telecommunications services provided through a high speed fiber optic telecommunications network that covers more than 4,400 route miles in seven states, of which we operate about 4,150 route miles. Our printing services segment
reflects the operations of our printing and assembly and fulfillment business. Our other segment consists of a direct marketing services business and corporate expenses and eliminations.



We were founded in 1882 as a newspaper publisher serving Milwaukee, Wisconsin. Our media business mix was expanded in 1927
when we signed on WTMJ radio station, and again in 1947 when we put WTMJ-TV on the air. In 1937, Harry J. Grant founded our employee ownership plan, which contributed significantly to our companys positive culture and growth through its
termination in 2003, in conjunction with our initial public offering. We believe our current capital structure allows us to continue our longstanding tradition of employee ownership. 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.



In 2005, our total revenue was $764.5 million, 66.3% of which was generated
from our publishing and broadcasting operations, 18.5% from telecommunications and 15.2% from printing services and other operations. The revenue generated by each operating segment, as a percentage of our consolidated revenue, for the last three
years is shown below:



|                   |  |       |   |  |       |   |  |       |  
|------------------ |  | ----- | - |  | ----- | - |  | ----- | -
|                   |  | 2005  |   |  | 2004  |   |  | 2003  |  
|Publishing         |  | 44.3  | % |  | 43.8  | % |  | 43.7  | %
|Broadcasting       |  | 22.0  |   |  | 22.3  |   |  | 20.0  |  
|Telecommunications |  | 18.5  |   |  | 18.6  |   |  | 19.9  |  
|Printing Services  |  | 9.5   |   |  | 9.9   |   |  | 11.4  |  
|Other              |  | 5.7   |   |  | 5.4   |   |  | 5.0   |  
|                   |  |       |   |  |       |   |  |       |  
|Total              |  | 100.0 | % |  | 100.0 | % |  | 100.0 | %
|                   |  |       |   |  |       |   |  |       |  



More information
regarding us is available at our website at www.journalcommunications.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 is conducted through our wholly owned subsidiaries, Journal Sentinel, Inc., and Journal Community
Publishing Group, Inc., and consists of our daily newspaper, theMilwaukee Journal



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Sentinel, and our community newspapers and shoppers. Our publishing business accounted for 44.3% of our revenue and 39.6% of our operating earnings
for the year ended December 25, 2005. Within our publishing segment, our daily newspaper accounted for 71.4% of our publishing revenue and 94.7% of our publishing operating earnings in 2005. See Note 13 to our Consolidated Financial Statements
for additional financial information regarding our publishing business.



Daily Newspaper



Published continuously
from 1882, our daily newspaper has the largest circulation among all newspapers published in Wisconsin, with a 6-month average net paid circulation reported to the Audit Bureau of Circulations in our Publishers Statement at September 30,
2005 of 405,009 on Sunday and 236,219 daily. TheMilwaukee Journal Sentinel serves as the only major daily and Sunday newspaper for the Milwaukee metropolitan area. According to a 2005 readership survey conducted by Scarborough Research, the
SundayMilwaukee Journal Sentinel ranks number one in readership among the 50 highest populated markets in the United States with a 71% penetration rate and the daily newspaper ranks number three with a 52% penetration rate. These rankings
are calculated by dividing the number of adults reading the newspaper in a newspapers Metropolitan Statistical Area (MSA) by the number of persons over the age of 18 in the newspapers MSA. The Milwaukee Journal Sentinels
MSA, which ranks among the top 50 in the United States, consists of Milwaukee, Waukesha, Washington and Ozaukee counties.



We have recently won numerous print media editorial awards. The awards include the National Headliner and the Oakes Prize for reporting on the Great Lakes
water supply, Society of American Business writers and the Economic Journalism Award for a series on the economics of Milwaukees African-American community, Society of News Design for a baseball special section, American Association of
Sunday & Feature Editors for the Snapshots column, Pictures of the Year International, Inland Press Association for editorials, photography and for local news writing, and the Wisconsin News Photographers Association, Best of Show.



In addition to our traditional print media, we operate a
number of websites that provide editorial and advertising content, including JSOnline.com and OnWisconsin.com, which we operate under the name of Journal Interactive. Also, we have developed a subscription-based website, PackerInsider.com, dedicated
to coverage of the Green Bay Packers. In 2005, advertising revenue for Journal Interactive increased 43.2% over 2004.



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



Although the penetration of theMilwaukee 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.



The following table sets forth our average net paid circulation. The 2004 and 2003 averages reflect revisions to previously reported Audit Bureau of
Circulations Publishers Statements and Annual Audits primarily related to third-party sponsored distributions, newspapers sold at events together with premium items and a distributor incentive program. The numbers for the 12-month period ended
March 31, 2005 are in the process of being audited by the Audit Bureau of Circulations and are subject to change.



|                        |  |                               |  |                          |  |         |  |         |  |         |  |        
|----------------------- |  | ----------------------------- |  | ------------------------ |  | ------- |  | ------- |  | ------- |  | -------
|                        |  | Six-Months Ended September 30 |  | 12-Months Ended March 31
|                        |  | 2005                          |  | 2004                     |  | 2003    |  | 2005    |  | 2004    |  | 2003   
|Daily (Six day average) |  | 236,219                       |  | 236,692                  |  | 240,522 |  | 239,978 |  | 240,106 |  | 245,864
|Sunday                  |  | 405,009                       |  | 424,208                  |  | 423,138 |  | 423,677 |  | 422,069 |  | 423,019



Circulation revenue
accounted for 21.9% of our daily newspapers total revenue in 2005. TheMilwaukee Journal Sentinel single copy prices are $0.50 for daily and $1.75 for Sunday in our PMA.



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Advertising revenue accounted for 75.0% of our daily newspapers total revenue in 2005. We have set
forth in the table below annual advertising volume for theMilwaukee Journal Sentinel (measured in column inches) and the number of preprints (which are individual customers advertisements that are provided by the customer) inserted
into theMilwaukee Journal Sentinels daily and Sunday editions and its total market coverage products, Weekend and WeekDay Plus, for the last three years. We believe the advertising volume decline during 2005 in full run
(which refers to advertisements that are published in all editions of the newspaper, as opposed to part run which refers to advertisements published in only certain editions of the newspaper) was a result of advertisers decreasing their
ROP (run-of-press) spending and switching to preprints. We believe some advertisers utilize preprints because preprints can offer opportunities for targeted advertising, print quality and, possibly, lower cost. Preprint pieces increased in 2005
compared to 2004 due to adding WeekDay Plus in March and an overall increase in business.



|                              |  |                           |  |         |  |        
|----------------------------- |  | ------------------------- |  | ------- |  | -------
|                              |  | Annual Advertising Linage
|                              |  | 2005                      |  | 2004    |  | 2003   
|                              |  | (inches in thousands)    
|Full run in column inches     |  | 1,505.2                   |  | 1,623.4 |  | 1,653.3
|Part run in column inches     |  | 167.0                     |  | 172.1   |  | 124.9  
|Preprint pieces (in millions) |  | 895.6                     |  | 800.7   |  | 834.6  



Community
Newspapers and Shoppers



We own and operate about 90
community newspapers and shoppers and five printing plants through our subsidiary, Journal Community Publishing Group.



We publish 44 community newspapers, with a combined paid and free average weekly circulation of more than 290,000. 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. Our local newspapers serve communities in Wisconsin, Connecticut and Florida.



We publish 37 shoppers with a combined circulation of more than 770,000 each
week. Shoppers are free-distribution 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. Our shoppers are delivered to various communities in Wisconsin, Ohio, Louisiana, Vermont and Massachusetts.



We also publish nine niche publications that appeal to a very specific
advertiser and reader, with a combined paid and unpaid average circulation of more than 135,000. A few examples of the niche products are automotive- and boating- focused publications. We provide niche publications in Wisconsin, Louisiana, Florida
and New York.



Advertising revenue and circulation revenue
accounted for 68.4% and 3.0%, respectively, of our community newspapers and shoppers total revenue in 2005. In addition to our publishing operations, we also provide commercial printing services, including cold-web printing, sheet-fed
printing, electronic prepress, mailing services, bindery and inserting, mostly for other weekly and monthly publications. Revenue from commercial printing accounted for 28.6% of our community newspapers and shoppers total revenue in
2005.



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Our community newspapers, shoppers and niche publication groups are as follows:



|                       |  |                         |            |           |          |    |                   |  
|---------------------- |  | ----------------------- | ---------- | --------- | -------- | -- | ----------------- | -
|                       |  | 2005 AverageCirculation |            | Number of
|                       |  |                         | Newspapers |           | Shoppers |    | NichePublications
|Northern Wisconsin     |  | 329,000                 |            | 4         |          | 11 |                   | 3
|Southeastern Wisconsin |  | 328,000                 |            | 24        |          | 11 |                   | 
|Ohio                   |  | 193,000                 |            |          |          | 9  |                   | 
|New York/Connecticut   |  | 130,000                 |            | 12        |          |   |                   | 1
|Florida                |  | 80,000                  |            | 4         |          |   |                   | 2
|Louisiana              |  | 75,000                  |            |          |          | 2  |                   | 3
|Vermont/Massachusetts  |  | 67,000                  |            |          |          | 4  |                   | 



Newsprint



The basic raw material of newspapers is newsprint. We
currently purchase the majority of our estimated newsprint requirements from two suppliers according to the terms of our purchase contracts. We purchase a majority of our remaining estimated newsprint requirements in the spot market from other
suppliers.



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, currency exchange rates, manufacturers cost drivers, 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 $606 in 2005 compared to an average net price per ton of $528 in 2004. Our consumption of newsprint decreased to 63,511 metric
tons in 2005 from 70,808 metric tons in 2004, and our total cost of newsprint increased $1.1 million in 2005. In the second quarter of 2005, the daily newspaper switched to lighter basis-weight newsprint. The change to lighter basis-weight newsprint
resulted in an increase in the price per ton and a decrease in the tons consumed. Based on the average net price per ton in 2005 and consumption of newsprint in 2005, a $10 per ton increase or decrease in the price of newsprint would increase or
decrease our total cost of newsprint by $0.6 million.



In
addition to the switch to lighter basis-weight newsprint, the decrease in consumption in 2005 is attributed to a decrease in average net paid circulation and ROP advertising at our daily newspaper.



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. 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 and local advertising, specifically in the Milwaukee market.



Advertising revenue is the largest component of a newspapers total 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 seasonal. Our publishing business tends to see increased revenue due to increased
advertising activity during certain holidays, in time for summer shopping and just prior to students returning to school in the fall. Advertising revenue is also generally affected by cyclical changes in national and regional economic conditions.



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Classified advertising is generally the most sensitive to economic cycles because it is driven primarily by the demand for employment, real estate
transactions and automotive sales.



Although there are several
major national newspaper companies, we believe that the newspaper publishing industry in the United States remains highly fragmented. Many 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 one daily newspaper.



Broadcasting



Our broadcasting business is conducted through our wholly owned subsidiary,
Journal Broadcast Corporation, and its subsidiaries, which together operate nine television stations and 37 radio stations in 12 states, as well as the operation of two additional television stations under local marketing agreements. Our
broadcasting business accounted for 22.0% of our revenue and 33.4% of our operating earnings for the year ended December 25, 2005. See Note 13 to our Consolidated Financial Statements for additional financial information regarding our
broadcasting business.



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 promote a local focus that 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.



In an effort to maximize our operating margins, we have implemented a centralized management approach to certain functions
such as engineering, IT, finance and human resources to generate economies of scale and incorporate best practices. We intend to continue to explore cost reduction and efficiency measures across our businesses and pursue market share and
ratings growth which we believe will generate increased operating efficiency and revenue, and continue to drive operating margin improvement.



In three of our marketsMilwaukee, Wisconsin, Boise, Idaho and Tucson, Arizonawe own and operate both television and radio stations. We also
own and operate seven radio stations and operate a television station under a local marketing agreement in our Omaha, Nebraska market.



Radio Broadcasting



Based on the Fall 2005 Arbitron ratings book, we have the number one station in terms of station audience rank in three of the eight markets in which our
radio stations operate, including in Milwaukee where WTMJ-AM has been the top rated radio station for 38 consecutive Arbitron rating periods. We have grown our radio operations primarily through acquisitions of stations in mid-sized growth markets.
We have acquired 17 of our 37 radio stations since 1999. In 2005, revenue from radio operations accounted for 50.1% percent of our broadcasting revenue.



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Our radio stations are:



|                   |  |                   |  |              |  |                            |  |                        |   |  |                          |  |                   
|------------------ |  | ----------------- |  | ------------ |  | -------------------------- |  | ---------------------- | - |  | ------------------------ |  | ------------------
|Market and Station |  | City of License   |  | YearAcquired |  | Format                     |  | StationAudienceRank(1) |   |  | TotalStationsinMarket(2) |  | FCCLicenseClass(3)
|Milwaukee, WI      |  |                   |  |              |  |                            |  |                        |   |  |                          |  |                   
|WTMJ-AM            |  | Milwaukee, WI     |  | 1927         |  | News/Talk/Sports           |  | 1                      |   |  | 31                       |  | B                 
|WKTI-FM            |  | Milwaukee, WI     |  | 1959         |  | Adult Contemporary         |  | 9                      |   |  | 31                       |  | B                 
|                   |  |                   |  |              |  |                           
|Omaha, NE          |  |                   |  |              |  |                            |  |                        |   |  |                          |  |                   
|KOMJ-AM            |  | Omaha, NE         |  | 1995         |  | Adult Standards            |  | 17                     |   |  | 23                       |  | C                 
|KEZO-FM            |  | Omaha, NE         |  | 1995         |  | Rock                       |  | 2                      |   |  | 23                       |  | C                 
|KKCD-FM            |  | Omaha, NE         |  | 1995         |  | Classic Hits               |  | 9                      |   |  | 23                       |  | C2                
|KSRZ-FM            |  | Omaha, NE         |  | 1998         |  | Hot Adult Contemporary     |  | 8                      |   |  | 23                       |  | C                 
|KXSP-AM            |  | Omaha, NE         |  | 1999         |  | Sports                     |  | 19                     |   |  | 23                       |  | B                 
|KQCH-FM            |  | Omaha, NE         |  | 1999         |  | Contemporary Hits          |  | 5                      |   |  | 23                       |  | C                 
|KBBX-FM            |  | Nebraska City, NE |  | 1997         |  | Regional Mexican           |  | 12                     | + |  | 23                       |  | C1                
|                   |  |                   |  |              |  |                           
|Tucson, AZ         |  |                   |  |              |  |                            |  |                        |   |  |                          |  |                   
|KFFN-AM            |  | Tucson, AZ        |  | 1996         |  | Sports                     |  | 25                     |   |  | 27                       |  | C                 
|KMXZ-FM            |  | Tucson, AZ        |  | 1996         |  | Adult Contemporary         |  | 3                      |   |  | 27                       |  | C                 
|KZPT-FM            |  | Tucson, AZ        |  | 1996         |  | Hot Adult Contemporary     |  | 16                     |   |  | 27                       |  | A                 
|KGMG-FM            |  | Oracle, AZ        |  | 1998         |  | Rhythmic Oldies            |  | 12                     |   |  | 27                       |  | C2                
|                   |  |                   |  |              |  |                           
|Knoxville, TN      |  |                   |  |              |  |                            |  |                        |   |  |                          |  |                   
|WQBB-AM            |  | Powell, TN        |  | 1998         |  | Adult Standards            |  | 20                     | + |  | 23                       |  | D                 
|WMYU-FM            |  | Karns, TN         |  | 1997         |  | Hot Adult Contemporary     |  | 9                      |   |  | 23                       |  | A                 
|WWST-FM            |  | Sevierville, TN   |  | 1997         |  | Contemporary Hits          |  | 3                      |   |  | 23                       |  | C1                
|WKHT-FM            |  | Knoxville, TN     |  | 1998         |  | Rhythmic Contemporary Hits |  | 6                      |   |  | 23                       |  | A                 
|                   |  |                   |  |              |  |                           
|Boise, ID          |  |                   |  |              |  |                            |  |                        |   |  |                          |  |                   
|KGEM-AM            |  | Boise, ID         |  | 1998         |  | Adult Standards            |  | 15                     |   |  | 21                       |  | B                 
|KJOT-FM            |  | Boise, ID         |  | 1998         |  | Rock                       |  | 11                     |   |  | 21                       |  | C                 
|KQXR-FM            |  | Boise, ID         |  | 1998         |  | Alternative Rock           |  | 9                      |   |  | 21                       |  | C1                
|KTHI-FM            |  | Caldwell, ID      |  | 1998         |  | Classic Hits               |  | 10                     |   |  | 21                       |  | C                 
|KRVB-FM            |  | Nampa, ID         |  | 2000         |  | Adult Alternative          |  | 14                     |   |  | 21                       |  | C                 
|KCID-AM(4)         |  | Caldwell, ID      |  | 1998         |  | Oldies                     |  | N/A                    |   |  | 21                       |  | C                 
|                   |  |                   |  |              |  |                           
|Wichita, KS        |  |                   |  |              |  |                            |  |                        |   |  |                          |  |                   
|KFTI-AM            |  | Wichita, KS       |  | 1999         |  | Classic Country            |  | 5                      |   |  | 24                       |  | B                 
|KFDI-FM            |  | Wichita, KS       |  | 1999         |  | Country                    |  | 1                      |   |  | 24                       |  | C                 
|KICT-FM            |  | Wichita, KS       |  | 1999         |  | Rock                       |  | 7                      |   |  | 24                       |  | C1                
|KFXJ-FM            |  | Augusta, KS       |  | 1999         |  | Classic Hits               |  | 8                      | + |  | 24                       |  | C2                
|KYQQ-FM            |  | Arkansas City, KS |  | 1999         |  | Regional Mexican           |  | 10                     |   |  | 24                       |  | C                 
|KMXW-FM            |  | Newton, KS        |  | 2000         |  | Hot Adult Contemporary     |  | 13                     |   |  | 24                       |  | C1                
|                   |  |                   |  |              |  |                           
|Springfield, MO    |  |                   |  |              |  |                            |  |                        |   |  |                          |  |                   
|KSGF-AM            |  | Springfield, MO   |  | 1999         |  | News/Talk                  |  | 13                     | + |  | 18                       |  | B                 
|KTTS-FM            |  | Springfield, MO   |  | 1999         |  | Country                    |  | 1                      |   |  | 18                       |  | C                 
|KSPW-FM            |  | Sparta, MO        |  | 1999         |  | Rhythmic Contemporary Hits |  | 2                      |   |  | 18                       |  | C2                
|KZRQ-FM            |  | Mt. Vernon, MO    |  | 2003         |  | Active Rock                |  | 17                     |   |  | 18                       |  | C3                
|KSGF-FM            |  | Ash Grove, MO     |  | 2003         |  | News/Talk                  |  | 15                     |   |  | 18                       |  | C3                
|                   |  |                   |  |              |  |                           
|Tulsa, OK          |  |                   |  |              |  |                            |  |                        |   |  |                          |  |                   
|KFAQ-AM            |  | Tulsa, OK         |  | 1999         |  | Talk                       |  | 9                      |   |  | 25                       |  | A                 
|KVOO-FM            |  | Tulsa, OK         |  | 1999         |  | Country                    |  | 3                      |   |  | 25                       |  | C                 
|KXBL-FM            |  | Henryetta, OK     |  | 1999         |  | Classic Country            |  | 6                      | + |  | 25                       |  | C1                



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---

|(1) | Station audience rank equals the ranking of each station, in its market, according to the Fall 2005 Arbitron ratings book. The ranking is determined based on the estimated share of
persons 12 years and older listening during an average 15-minute increment (also known as average quarterly hour, or AQH, share) occurring Monday-Friday between 6:00 a.m. and midnight. A + indicates a tie with
another station in the market.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Includes stations qualified to be reported in the Fall 2005 Arbitron ratings book. In order to be qualified to be reported, a station must have received five or more minutes of
listening in at least 10 diaries in the market from midnight to midnight, Monday through Sunday, during the survey period.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | KCID-AM did not qualify to be reported in the Fall 2005 Arbitron ratings book.
|--- | ------------------------------------------------------------------------------



We employ a variety of sales-related and programming strategies. Our sales-related strategy includes maximizing our share of the local
advertisers advertising spending. We believe that developing local station clusters allows us to maximize market share because it allows us to offer a variety of format alternatives to appeal to a broader range of local
advertisers. Our programming strategy includes developing and retaining local on-air talent to drive ratings. We have long-term contracts with many of our on-air personalities. In addition, our Milwaukee radio station, WTMJ-AM, currently maintains
exclusive radio broadcast rights for the Green Bay Packers, Milwaukee Bucks and Milwaukee Brewers, and arranges a statewide radio network for these organizations. In 2004, we agreed to a contract extension with the Milwaukee Brewers through the 2008
Major League Baseball season.



Most of our radio broadcasting
revenue is generated from the sale of local advertising, with the balance generated from the sale of national advertising, political and issue advertising and other sources. We base our advertising rates primarily on each stations ability to
attract audiences having certain demographic characteristics in the market areas that 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.



We have
successfully grown our radio group over the past several years by acquiring stations and aligning them in clusters within a market, in many cases building out the cluster around a lead station. We seek to build a unique and differentiated brand
position at each station within a cluster so that we can offer distinct solutions for a variety of advertisers in any given market. This clustering strategy has allowed us to target our stations formats and sales efforts to better serve
advertisers and listeners as well as leverage operating expenses to maximize the performance of each station and the cluster. Assuming radio stations will be available at attractive prices, we currently intend to continue our acquisition program
following our cluster strategy in certain existing and new mid-sized growth markets. We have made capital investments to convert three of our radio stations to digital transmission and plan to convert 14 additional radio stations to digital by the
end of 2007.



Television Broadcasting



Based on the November 2005 Nielsen ratings book, we are ranked among the
top three stations in terms of station audience rating in seven of the ten markets in which our television stations operate. As of November 2005, WTMJ-TV, our Milwaukee television station, had the top-rated late night local newscast in its
Designated Market Area in 58 of the previous 59 ratings periods (based on the percentage of the total potential household audience). In 2005, revenue from television operations accounted for 49.9% of our broadcasting revenue.



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Our television stations are:



|           |  |                       |  |              |  |                    |  |                      |  |                         |  |                           
|---------- |  | --------------------- |  | ------------ |  | ------------------ |  | -------------------- |  | ----------------------- |  | --------------------------
|Station    |  | Market                |  | YearAcquired |  | NetworkAffiliation |  | StationMarketRank(1) |  | StationAudienceShare(1) |  | Total Stationsin Market(2)
|WTMJ-TV    |  | Milwaukee, WI         |  | 1947         |  | NBC                |  | 3                    |  | 11                      |  | 13                        
|KTNV-TV    |  | Las Vegas, NV         |  | 1979         |  | ABC                |  | 3                    |  | 8                       |  | 13                        
|WSYM-TV    |  | Lansing, MI           |  | 1984         |  | FOX                |  | 4                    |  | 6                       |  | 7                         
|KMIR-TV    |  | Palm Springs, CA      |  | 1999         |  | NBC                |  | 3                    |  | 8                       |  | 11                        
|KIVI-TV    |  | Boise, ID             |  | 2001         |  | ABC                |  | 3                    |  | 10                      |  | 8                         
|KSAW-TV(3) |  | Twin Falls, ID        |  | 2001         |  | ABC                |  | 3                    |  | 5                       |  | 7                         
|WGBA-TV    |  | Green Bay, WI(6)      |  | 2004         |  | NBC                |  | 4                    |  | 9                       |  | 7                         
|WACY-TV(4) |  | Appleton, WI(6)       |  | 2004         |  | UPN                |  | N/A                  |  | N/A                     |  | 7                         
|KGUN-TV    |  | Tucson, AZ            |  | 2005         |  | ABC                |  | 3                    |  | 13                      |  | 11                        
|WFTX-TV    |  | Naples/Fort Myers, FL |  | 2005         |  | FOX                |  | 4                    |  | 6                       |  | 8                         
|KMTV-TV(5) |  | Omaha, NE             |  | 2005         |  | CBS                |  | 3                    |  | 13                      |  | 8                         

---

|(1) | Station market rank is based upon station audience ratings, which equal the percentage of the total potential household audience in the Designated Market Area. Station audience
share equals the percentages of the audience in the Designated Market Area actually watching television. The percentages are based on surveys conducted 5:00 a.m. to 2:00 a.m., seven days a week, as published in the November 2005 Nielsen ratings
book.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Includes all television stations whose city of origin is within the Designated Market Area that meet the minimum reporting standards.
|--- | -------------------------------------------------------------------------------------------------------------------------------------



|(3) | Low-power television station.
|--- | -----------------------------



|(4) | We acquired certain assets of WACY-TV and assumed an existing local marketing agreement between WGBA-TV and WACY-TV effective October 2005. WACY-TV did not qualify to be reported in
the November 2005 Nielsen ratings book.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | We acquired certain assets of KMTV-TV and operate this station under a local marketing agreement effective December 5, 2005.
|--- | ----------------------------------------------------------------------------------------------------------------------------



|(6) | Green Bay, WI and Appleton, WI are considered one Designated Market Area.
|--- | -------------------------------------------------------------------------



The affiliation by a station with one of the four major networks (NBC, ABC, CBS and FOX) has a significant impact on the composition of the stations
programming, revenue, expenses and operations. Lower ratings of NBC network programming has continued to have an adverse affect on revenue in our Milwaukee, Green Bay, and Palm Springs markets. However, recent improvement in ratings in several ABC
time periods has given our Las Vegas and Boise television stations new revenue opportunities. We believe all of our television stations are strong affiliates with good relationships with the respective networks. We believe that Las Vegas, Boise,
Palm Springs, Tucson and Fort Myers/Naples are markets with attractive demographic and growth profiles and that as a result, there is significant opportunity for growth and operating improvement at these stations.



In all of our markets and regardless of network affiliation, we focus on
developing leading local news programming and contracting for popular syndicated programming with the objective of maximizing our ratings and in turn our share of advertising spending in a given market. Based on the November 2005 Nielsen ratings
book, we had the number one local late evening news program in two of our ten markets (based on the percentage of the total potential household audience)KMIR-TV in Palm Springs and WTMJ-TV in Milwaukee.



We derive the vast majority of our television broadcasting revenue from
advertising. Our television advertising revenue and rates in even-numbered years benefit from political, issue, and Olympics-related advertising. Absent political and issue advertising, there is less pressure on inventory, which drives rates



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downward. For example, political and issue advertising revenue was $0.6 million in 2005 compared to $12.6 million in 2004. In addition, NBC has purchased the
right to broadcast the Olympics through 2012, and we expect higher revenue in these years because the expected increased ratings during the Olympic time period for our three NBC affiliates will allow them to sell advertising at premium rates.



Assuming television stations will be available at attractive
prices, we will consider pursuing additional acquisitions, particularly of stations in mid-sized growth markets with potential for operating improvement. As an example of our acquisition strategy, on December 5, 2005, we acquired the business
and certain assets of ABC affiliate KGUN-TV in Tucson, Arizona and FOX affiliate WFTX-TV in Naples/Fort Myers, Florida. In addition, we acquired certain assets of CBS affiliate KMTV-TV in Omaha, Nebraska and operate this station under a local
marketing agreement effective December 5, 2005. KMTV-TV and KGUN-TV operate in markets in which we also currently own and operate existing radio stations. We may seek to add second stations in our existing markets and exploit other potential
clustering or cross-ownership opportunities as they arise. We have also made substantial investments in digital transmission conversion equipment at our stations and are fully compliant with FCC mandates on digital transmission. We do not currently
anticipate significant additional future capital investment associated with our digital transmission conversion.



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, revenue is derived primarily from advertising. Ratings, which estimate 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 one 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.



Radio stations generate the
majority of their revenue from the sale of advertising time to local and national spot advertisers. Changes in market demographics, the entry of competitive stations, the adoption of competitive formats by existing stations and the inability to
retain popular on-air talent 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 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 one of three categories.
The first category of stations includes those affiliated with one of the four major national networks (NBC, ABC, CBS and FOX). The second category comprises stations affiliated with more recently developed national networks, such as UPN and WB,
which have recently announced that they will terminate and form a new network called The CW, and the former PAX TV, now called i (owned by Paxson Communications Corporation). 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 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, each station determines rates and receives all of the revenue, net of agency commissions, for national and local spot advertising sold by
us. Rates are influenced by the demand for advertising time, the popularity of the stations programming and market size.



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Seasonal 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, which coincides with increased advertising around certain holidays.
Historically, 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 revenue of individual television and radio stations.



Telecommunications



We conduct our telecommunications business through our wholly owned subsidiary, Norlight Telecommunications, Inc.
(Norlight), 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. We have operated our telecommunications business for more than 30 years, and during this time it has emerged as a premier service provider focused in the Great Lakes region. Our telecommunications business accounted
for 18.5% of our revenue and 22.8% of our operating earnings for the year ended December 25, 2005. See Note 13 to our Consolidated Financial Statements for additional financial information regarding our telecommunications business.



Throughout the history of our telecommunications business, we have applied
a disciplined approach to our cost structure and the investment of capital, consistent with our desire to build and maintain a high quality network while earning a substantial return on our investment.



Our wholesale telecommunications business provides network transmission
solutions for other telecommunications carriers, including inter-exchange (nationwide long distance) carriers, wireless carriers, Internet service providers, incumbent local exchange carriers and competitive local exchange carriers in mid- to
smaller-sized cities in the Great Lakes Region. Additionally, our wholesale services include satellite and video services, which provide terrestrial and satellite transmission of high quality video signals to broadcast programming for entertainment
and sports industries, educational institutions and businesses. In the last few years, we have seen our wholesale customers clarify their telecommunications needs in our region, reduce their spending and negotiate new market rate contracts with us.



Our business-to-business service provides integrated voice and
data communications solutions and managed services to small- and medium-sized businesses in the upper Midwest. Specifically, we provide packet and circuit-based data networking, dedicated Internet access, long distance and managed services. Our
managed services products include hosted IP (Internet Protocol) telephony, premise-based telephone systems, managed security, managed routers, data center services, business continuity programs and integrated web/audio/video conferencing offerings.
In 2006, we intend to purchase and install a soft switch (a next-generation digital device typically comprised of servers and software used to route local and long distance voice calls) to deliver local and long-distance service using Voice over
Internet Protocol (VoIP) and open a new data center within our network footprint. We expect that both of these initiatives should drive growth in the enterprise business. As Norlights enterprise revenue becomes a more significant
component of its revenue than its wholesale business, operating margins will trend lower due to this mix change.



The foundation for our telecommunications success has been our customer-loyalty-focused strategy. Our telecommunications business generally receives high
marks for strong brand recognition and for customer satisfaction, with the results of a 2005 survey conducted by Peregrine Marketing Research showing a 94.6% customer satisfaction rating among our enterprise customers. This strategy reflects the
view that the continued and future success of our telecommunications business is dependent upon our reliability and responsiveness to customers. Each customer has its own dedicated account team to manage and design effective telecommunications
solutions.



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We refer to the employees of our telecommunications business as the Guardians of Data. This
message is meant to be a symbol of our commitment to being the provider of choice in providing innovative solutions within the data product category.



We operate 4,150 route miles of fiber optic network connecting Wisconsin, Michigan, Indiana, Minnesota, Illinois, Iowa and Ohio. We also have
approximately 300 additional route miles that are available for future network traffic. The network is designed to carry telecommunications traffic to second-(population sizes from 50,000 to 500,000) and third-tier markets (population sizes less
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. Our network delivers traffic to many smaller cities such as Green Bay,
Wisconsin, Battle Creek, Michigan and Rochester, Minnesota, as well as first-tier markets. This ability to provide our customers with deeper direct penetration differentiates us from many of our competitors. Pricing to and from these markets has
also experienced somewhat less competitive pressure than in the larger cities.



We have substantial business relationships with a few large customers, including major long distance carriers. Our top 10 customers accounted for 40.1% and 37.0% of our telecommunications revenue in 2005 and 2004,
respectively. In 2005, we reached an agreement with MCI (recently acquired by Verizon Communications) on a contract renewal that both extended the term of their service agreement at a reduced price and provided for higher capacity circuits to
replace existing circuits being disconnected. We expect the effect of this new contract to be fully implemented during the first quarter of 2006. During 2005, MCI agreed to be acquired by Verizon, a transaction which subsequently closed in January
2006. While we believe that MCI/Verizon will remain a significant customer, we cannot predict the impact of this merger on our companys 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 (recently acquired by SBC Communications), MCI (recently acquired by Verizon), Global Crossing and Sprint (who recently acquired Nextel Communications); regional carriers, such as McLeodUSA
Telecommunications, US Signal, TDS Telecom; and local exchange carriers, such as AT&T (formerly SBC), Verizon and Qwest Communications. Section 271 Authority, which permits Regional Bell Operating Companies to provide long-distance service,
has resulted in stiff price competition primarily from AT&T and Qwest. We are vigorously competing with these providers and have been proactively working with the majority of our current customers by focusing on our customer service and new
bundled services as we seek to extend contracts.



We believe
that significantly reduced pricing as a result of aggressive competition continues to be an important issue within the telecommunications industry. In addition, while past carrier consolidations have not had a significant negative impact on our
telecommunications business, there is no assurance that recent, pending and other potential future carrier consolidations would not. However, we do not expect to be impacted significantly by such consolidations in the near term. We have continued to
invest prudently in our telecommunications business, which has enabled us to expand our 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.



Printing Services



Our printing services business is conducted through our wholly owned
subsidiary IPC Print Services, Inc. (IPC). Our printing services business accounted for 9.5% of our revenue and 2.2% of our operating earnings for the year ended December 25, 2005. See Note 13 to our Consolidated Financial Statements for
additional financial information regarding our printing services business.



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IPC, which was founded in 1949 and acquired by us in 1992, provides a wide range of printing services
including complete production of magazines, professional journals and documentation material, as well as electronic publishing, mailing solutions and fulfillment. The foundation of our printing business includes printing scientific, medical and
technical journals and magazines. We generally utilize conventional and electronic pre-press processes, web- and sheet-fed printing and complete bindery and finishing in our production processes. All of these markets are served through our direct
national sales force or by the use of a print broker.



The
printing services industry is highly competitive and generally characterized by lower operating margins. As a result, we maintain control over our costs and ensure we align our cost base to changes in our revenue streams. We consistently seek
opportunities to grow revenue through existing or new business. For example, we believe there are opportunities for growth in providing printing products and services to OEMs (original equipment manufacturers) and to magazine publishers. We believe
our experience in providing these services to the technology marketplace is a competitive advantage, and we intend to leverage that advantage by expanding our services to other OEMs including industrial and consumer products OEMs and to magazine
publishers.



Dell Computer Corporation accounted for 19.0% and
24.4% of our printing services revenue in 2005 and 2004, respectively. In the fourth quarter of 2005, we advised Dell of our intention to cease supplying software-related products to them effective February 2006. This move is consistent with our
articulated strategy to focus on our core publication printing business. We anticipate that we will continue to supply Dell with printed documentation in 2006; however, projected revenue from Dell for the full 2006 fiscal year should represent a
small portion (less than 5%) of IPCs total revenue. We do not expect this reduction in revenue to have an adverse impact 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 price and schedule flexibility, paper prices, USPS rates, customer
service and finished products quality, time to market and distribution capabilities.



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 marketplace, both in terms of supply and demand, have also brought new competitors to the marketplace. 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 business consists of our direct marketing services business conducted through our wholly owned subsidiary,
PrimeNet, and corporate intercompany eliminations and corporate expenses, and accounted for 5.7% of our revenue and 2.0% of our operating earnings for the year ended December 25, 2005. See Note 13 to our Consolidated Financial Statements for
additional financial information regarding our direct marketing services business and corporate expenses and eliminations.



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 on time and right.



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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 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 (Federal Communications Commission) 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.



Licensed broadcast
stations must pay FCC regulatory and application fees and follow various rules promulgated under the Communications Act that regulate, among other things, political advertising, sponsorship identifications, closed captioning of certain television
programming, obscene and indecent broadcasts, and technical operations, including limits on radio frequency radiation. Additionally, the FCCs rules require licensees to create equal employment opportunity outreach programs and maintain records
and make filings with the FCC evidencing such efforts. Television stations are also required to broadcast a minimum of three hours per week of core childrens educational programming, which must be identified as educational and
informational programs over the air at the time they are broadcast, and are required to be identified in the childrens programming reports required to be placed quarterly in the stations public inspection files and filed quarterly with
the FCC.



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 eight 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



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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 renewal. On November 1, 2005, the Milwaukee Public Interest Media Coalition (MPIMC) filed a petition at the FCC asking it to deny the pending license renewal applications of all
eleven commercial television stations in the Milwaukee Designated Market Area, including our station, WTMJ-TV, on the grounds that the stations failed to provide adequate coverage of state and local issues during the 2004 election campaign. We filed
an opposition to the petition at the FCC on December 15, 2005, and MPIMC filed a reply to our opposition on January 18, 2006. The pleading cycle is now closed and the matter is under review by the staff of the FCC. It is impossible to
predict when the FCC will rule on this matter. We believe the petition is without merit and will continue to defend the allegations against us vigorously in any continuing proceedings before the FCC.



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 of licenses.



The FCC is required to review quadrennially the following media ownership
rules and to modify, repeal or retain any rules as it determines to be in the public interest: the Daily Newspaper Cross-Ownership Rule; the Local Radio Ownership Rule; the Radio-Television Cross-Ownership Rule; the Dual Network Rule; and the Local
Television Multiple Ownership Rule. In a decision adopted June 2, 2003, the FCC decided to relax many of these rules. The FCCs new rules were to have become effective on September 4, 2003. However, a number of parties sought
reconsideration of the new rules and others filed judicial appeals. The U.S. Court of Appeals for the Third Circuit, which was selected by lottery to hear the appeals of the new rules, issued a stay of the new rules on September 3, 2003. In an
opinion issued on June 24, 2004, the court remanded the new rules to the FCC with instructions to undertake additional analysis and to justify what the court characterized as several irrational assumptions and inconsistencies in the
FCCs June 2, 2003 decision. Thereafter, in an order issued on September 3, 2004 in response to a request by the FCC, the court lifted its stay insofar as it applied to the modified Local Radio Ownership Rule; as a result, certain
provisions of the FCCs June 2, 2003 order have been allowed to take effect. In all other respects the rules that were in effect prior to June 2, 2003 will remain in effect until the appeals are resolved or the stay is lifted. On
June 13, 2005, the United States Supreme Court declined to review the June 24, 2004 ruling by the Third Circuit Court of Appeals, which has retained jurisdiction over the case pending its future review of the FCCs actions on remand.
We cannot predict the outcome of any subsequent FCC proceeding. While the new rules adopted by the FCC on June 2, 2003 had provided for increasing the cap on aggregate television audience reach to 45% of all households, the 2004 Consolidated
Appropriations Act included a provision instructing the FCC to set the cap at 39%.



Under the currently effective Daily Newspaper Cross-Ownership Rule, unless grandfathered or subject to waiver, no party can have an attributable interest in both a television station or a radio station and a daily
English-language newspaper in the same market if specified signal contours of the television station or the radio station encompass the entire community in which the newspaper is published. Our media operations in Milwaukee were grandfathered under
this rule. Under the new rule that has been stayed, a party may have an attributable interest in a television station, radio stations up to one half of the local radio station limit (see below), and a daily newspaper if the television market has
between four and eight television stations. In markets with nine or more television stations, there are no longer any broadcast-newspaper cross-ownership restrictions under the new rule that has been stayed.



The September 3, 2004 order of the Court of Appeals for the Third
Circuit partially lifting its stay of the FCCs June 2, 2003 decision permitted the new Local Radio Ownership Rule to take effect. Under the rule, the number of radio stations an entity may own in a given market is dependent upon the size
of that radio market.



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Specifically, in a radio market with 45 or more commercial and noncommercial radio stations, a party may own, operate, or control up to eight commercial
radio stations, not more than five of which are in the same service (AM or FM). In a radio market with between 30 and 44 radio stations, a party may own, operate, or control up to seven commercial radio stations, not more than four of which are in
the same service. In a radio market with between 15 and 29 radio stations, a party may own, operate, or control up to six commercial radio stations, not more than four of which are in the same service. In a radio market with 14 or fewer radio
stations, a party may own, operate, or control up to five commercial radio stations, not more than three 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, except for
combinations of one AM and one FM station, which are permitted in any size market. For stations located in a market in which the Arbitron ratings service provides ratings, the definition of radio market is based on the radio market to
which BIA Financial Network assigns the affected radio stations. For stations that are not in an Arbitron market, the market definition is based on technical service areas, pending a further FCC rulemaking. Also under the rule, a radio station that
brokers more than 15% of another in-market stations weekly programming or advertising time will be deemed to have an attributable interest in the brokered station counting toward the applicable local numerical ownership limitation.



The currently effective Radio-Television Cross-Ownership Rule generally
allows common ownership of one or two television stations and up to six radio stations, or, in certain circumstances, one television station and seven radio stations, in any market where at least 20 independent voices would remain post-combination;
two television stations and up to four radio stations in a market where at least 10 independent voices would remain post-combination; and one television and one 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 minimum circulation, and a cable system. Under the new, stayed rule, subject to the
applicable limitations of the Local Radio Ownership Rule and the Local Television Multiple Ownership Rule, cross-ownership of television stations and radio stations is not limited in television markets with four or more television stations so long
as there is no common daily newspaper ownership.



Under the
currently effective Local Television Multiple Ownership Rule, absent a waiver, an individual (or entity) cannot have an attributable interest in more than one television station in a market, unless the market would have at least eight independent
television 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 new, stayed rule, common ownership
of up to three television stations is permitted in markets with 18 or more television stations. Common ownership of up to two television stations is permitted in television markets with between five and 17 television stations. Ownership of one
television station is permitted in television markets with fewer than five television stations. The new rules do not permit combinations of two or more of the top-four-rated television stations in any market. In its June 2, 2003 order, the FCC
also relaxed the standards for obtaining a waiver of the Local Television Multiple Ownership Rule. While under the new rules, the FCC would continue to entertain waiver requests for (i) failed (e.g., bankrupt) stations and for
stations that have not been constructed due to financial difficulties; or (ii) failing stations (i.e., stations with negative cash flow and less than a four-share all-day audience rating), applicants would no longer be required to
demonstrate that an attempt was made to sell the failing station to an out-of-market buyer. Moreover, in its June 2, 2003 order, the FCC stated that it would also consider waivers of the top-four ranked restriction in markets with
11 or fewer television stations based on a consideration of whether the combination will (a) reduce a significant disparity between the combining stations and the dominant station(s) in the market; (b) facilitate the transition to digital
for one or both of the stations; and (c) affect localism and viewpoint disparity.



The Dual Network Rule permits a television broadcast station to affiliate with a network that maintains more than one broadcast network, unless the dual or multiple networks are composed of a combination between any
of ABC, CBS, FOX, or NBC. This rule was retained by the FCC in its June 2, 2003 decision.



While the new rules adopted by the FCC on June 2, 2003 had provided for increasing the National Television Ownership Rule cap on aggregate television audience reach to 45% of all households, the 2004



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Consolidated Appropriations Act included a provision instructing the FCC to set the cap at 39%. Under the rule, any entity is prohibited from having an
attributable interest in television stations in which the combined audience reach exceeds 39% of the television households in the United States. Under the FCCs rules, the number of households served by UHF stations is discounted by 50% for the
purposes of this calculation. The FCC has solicited comments as to the effect, if any, of the 2004 Consolidated Appropriations Act on the FCC decision in June 2003 to retain the 50% UHF discount applicable to the National Television Ownership Rule
and on pending petitions for reconsideration asking the FCC to eliminate the UHF discount.



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 one channel. The U.S. Congress and the FCC have directed all U.S. television stations 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). During the digital television transition period, all established television stations have been allocated a separate 6-megahertz channel on which to conduct digital operations.



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 to provide any such ancillary or supplementary services on a subscription or otherwise feeable basis, it must pay the FCC a fee equal to 5% of the gross
revenues realized from such services.



Under the Deficit
Reduction Act of 2005, which was signed by the President on February 8, 2006, the transition to DTV is to occur by February 17, 2009, after which broadcasters will be required to return one of their two assigned channels to the FCC and
broadcast exclusively in digital format. In an order issued on September 7, 2004, the FCC established DTV construction milestones generally requiring affiliates of the top-four networks in television markets 1-100 to complete construction of
their full, authorized DTV facilities by July 1, 2005, and all other stations to complete DTV construction by July 1, 2006. The FCC also established procedures for stations to elect which of their two currently-assigned 6-megahertz
channels they will retain for their permanent digital operations at the conclusion of the digital television transition period.



The effect digital broadcasting will have on us remains to be seen. Like other television broadcasters, we have made substantial capital investments for
digital transmission 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. In accordance with the FCC-mandated digital broadcasting standards, all of our owned, full power stations will have installed High Definition transmission equipment and will be broadcasting in High Definition by the
FCCs deadline of July 2006.



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



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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referred to as 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 has the opportunity to elect must-carry or retransmission consent every
three years. A station that fails to notify a cable system of its election is presumed to have elected must-carry.



In an order adopted on February 10, 2005, the FCC declined to impose a dual carriage must-carry requirement on cable operators, which
would have required them to simultaneously carry broadcasters analog and digital signals for the balance of the digital transition period. The FCC also declined to modify the must-carry rule to require cable operators to carry more than a
single digital programming stream from any particular television station following the transition to all-digital broadcasting. Consequently, if we elect to divide the digital channel allotted to any of our television stations into several separate,
independent and unrelated programming streams (multicasting), only one of those streams at each station will be entitled to mandatory carriage pursuant to the digital must-carry rule after the end of the digital transition period.
However, because the rule does not affect digital retransmission consent agreements, we would be free to negotiate with cable operators for the carriage of additional programming streams under mutually agreed terms and conditions.



A similar must-carry and retransmission consent 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, if a satellite provider chooses to provide one
local station to its subscribers in a market, 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. Satellite must-carry election periods occur every three years, consistent with cable must-carry periods.



Telecommunications



Federal



The FCC regulates interstate and international telecommunications services.
The FCC imposes extensive regulations on common carriers such as incumbent local exchange carriers (ILECs) that have some degree of market power. The FCC imposes less regulation on common carriers without market power, such as Norlight.
The FCC permits these nondominant carriers to provide domestic interstate services (including long distance and local access services) without prior authorization; but it requires carriers to receive an authorization to provide or resell
international telecommunications services, between the United States and international points. We have obtained FCC authorization to provide international services on a facilities and resale basis.



The FCC has adopted new rules that substantially restrict the extent of
incumbent telephone companies obligations to provide unbundled elements of their local networks to competitors at rates based on total element long run incremental costs (TELRIC). In particular, the FCC eliminated the requirement
that incumbents offer the unbundled network element platform (UNE-P) and high-capacity transmission facilities (in certain geographic areas) at TELRIC-based rates. These rules could have the effect of raising the costs of providing local
service in competition with the incumbents.



The FCC has also
ruled that, like cable television operators, the incumbent local telephone service providers should be treated as unregulated information service providers when they use their networks to provide broadband Internet access services. This
means that they will not be required to provide access to their facilities to broadband Internet access competitors. To the extent that we use incumbent telephone companies services or facilities to provide broadband Internet access service to
our customers, the ruling may have the effect of raising our costs of access for those services and facilities.



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The FCC is continuing its investigation, begun in 2001, into whether and how it should change its
policies and rules governing the payments made by carriers for transmitting interconnected traffic to and from other carriers. In particular, the FCC is considering whether access charges, the fees that long distance carriers like the Company pay to
local service providers for the origination and delivery of calls, as well as reciprocal compensation for local interconnected calls, should be replaced by different arrangements. Among the arrangements under consideration are a
bill-and-keep system, in which intercarrier compensation would be eliminated and all carriers would recover their costs solely from end-user customers; or a unified intercarrier compensation system, in which the same rates would apply to
all forms of intercarrier compensation (access and reciprocal compensation). The FCC asked for additional public comments on these and related matters in February 2005. It is difficult to predict the timing and impact of such matters.



The FCC has to date treated Internet service providers (ISPs) as
information service providers, which are exempt from federal and state regulations governing common carriers, including the obligation to pay access charges and contribute to a universal service fund. Nevertheless, regulations governing disclosure
of confidential communications, copyright, excise tax and other requirements may apply to our provision of Internet access services. We cannot predict the likelihood that state, federal or foreign governments will impose additional regulation on our
Internet business, nor can we predict the impact that future regulation will have on our operations.



With the growing use of VoIP, the FCC is considering the regulatory status of various forms of VoIP. The outcome of these proceedings will determine
whether and how retail VoIP offerings should be regulated, the extent to which VoIP services will be subject to rules relating to consumer protection and other social policy requirements, and whether VoIP providers should pay access charges and
should contribute to the federal universal service fund. To date, the FCC has determined that certain types of VoIP services should be free of state retail rate regulation. However, the FCC also has ordered VoIP providers to enable law enforcement
agencies to access traffic data and to provide E-911 emergency services. The FCC is considering several other proceedings regarding the regulatory status of various categories of VoIP services and the extent to which universal service and
intercarrier compensation payments will be due. In addition, several bills have been introduced in Congress that could address these matters, and a number of state public utility commissions are considering related issues. We cannot predict the
outcome of any of these proceedings that may affect our operations or impose additional requirements, regulations or charges upon our provision of Internet access and IP-based services, including voice telephony and backbone services.



The Communications Act requires that providers of common carrier
telecommunications service contribute, on an equitable and non-discriminatory basis, to federal universal service mechanisms established by the FCC. The FCC also requires providers of non-common carrier telecommunications to contribute to universal
service, subject to some exclusions and limitations. At present, these contributions are calculated based on contributors interstate and international revenues derived from U.S. domestic end users for telecommunications or telecommunications
services, as those terms are defined under FCC regulations. Pursuant to federal regulations, we pay these contributions and recover the cost through a surcharge to our retail customers. The amount of our contributions varies each quarter based upon
the total amount of federal universal service support being provided under the FCCs federal mechanisms and associated administrative expenses, the methodology used by the FCC to calculate each carriers contributions, and the proportion
of our assessable revenues derived from domestic end users for non-common carrier telecommunications or common carrier telecommunications services for all contributors, to the total amount of assessable revenues derived from domestic end users for
telecommunications or telecommunications services. The extent to which our services are viewed as information services or common carrier telecommunications services or as unregulated information services will also affect our contributions. The FCC
is actively considering proposals on how to further reform the manner in which the FCC assesses carrier contributions to the universal service fund, including a proposal to assess contributions based on working telephone numbers rather than based on
revenues. Bills have been introduced in Congress to modify the universal service requirements as well. We are unable to predict the changes, if any, that the FCC and/or Congress will adopt and the effect of any such changes on our total universal
service contribution payments.



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In 2005, the FCC and state regulators authorized the acquisition by SBC Communications (now AT&T) of
AT&T and by Verizon Communications, Inc. of MCI, Inc. These acquisitions may strengthen the position of each of the acquiring companies in providing regional, national and international services to businesses and other telecommunications service
providers, including the types of customers we serve. We currently provide services to all four of these companies. The effect of the mergers on our company is difficult to predict, although we recently signed a five year contract with MCI prior to
the merger. The mergers could result in the loss of some or all of the services we provide to these companies. The mergers could also affect our Companys ability to compete effectively against these very large, vertically-integrated entities.



State



State regulatory agencies have jurisdiction when Company facilities and
services are used to provide intrastate telecommunications services. A portion of our traffic may be classified as intrastate telecommunications and therefore subject to state regulation. To provide intrastate services, we generally must obtain a
certificate of public convenience and necessity from the state regulatory agency and comply with state requirements for telecommunications utilities, including state tariffing requirements. We are currently authorized to provide interexchange
telecommunications services in all states and jurisdictions where our telecommunications business is operating.



We are currently pursuing a strategy intended to provide additional local service alternatives to our customers. Using such means as interconnection
agreements, collocation arrangements, and by securing local exchange authority, we intend to secure improved service levels at a reduced cost for the last mile of service connections.



Local



Our networks are subject to numerous local regulations such as building codes and licensing. Such regulations vary on a
city-by-city, county-by-county and state-by-state basis. To install our own fiber optic transmission facilities, we need to obtain rights-of-way over privately and publicly owned land. Rights-of-way that are not already secured may not be available
to us on economically reasonable or advantageous terms.



Legislation



In virtually every session of
Congress since the adoption of the 1996 changes to the Communications Act, legislation has been proposed to amend it further. Similar legislative efforts have occurred in various states. It is difficult to predict whether new telecom laws will be
adopted or existing telecom laws will be amended and the effect of any such changes on our business.



Employees



As of
December 25, 2005, we and our subsidiaries had approximately 3,800 full-time and 1,700 part-time employees compared to approximately 3,800 full-time and 1,600 part-time employees at December 26, 2004. Currently, there are 11 bargaining
units representing approximately 830 (or approximately 15%) of our total number of employees. We have various collective bargaining agreements with these bargaining units. Eight of our 11 agreements will expire within the next two years. A majority
of the full-time employees covered by a collective bargaining agreement work at the daily newspaper.



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|ITEM 1A. | RISK FACTORS
|-------- | ------------



You should carefully consider the following risk factors and warnings before making an investment decision. If any of the risks below actually occur, our
business, financial condition, results of operations or prospects could be materially adversely affected. In that case, the price of our securities could decline and you could lose all or part of your investment. You should also refer to the other
information set forth or incorporated by reference in this document.



Risks
Relating to Our Diversified Media Business



Decreases in advertising
spending, resulting from economic downturn, war, terrorism or other factors, could adversely affect our financial condition and results of operations.



Approximately 54% of our revenue in 2005 was generated from the sale of local, regional and national advertising appearing in our newspapers and
shoppers and for broadcast on our radio and television stations. Advertisers generally reduce their advertising spending during economic downturns; a recession or economic downturn could have an adverse effect on our financial condition and results
of operations. Also, our advertising revenue tends to decline in times of national or local crisis because our radio and television stations broadcast more news coverage and sell less advertising time. For example, the threatened outbreak of
hostilities in Iraq in March 2003 and the war itself had a negative impact on our broadcast results due to reduced spending levels by some advertisers, 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. As a result, the war in Iraq, additional terrorist attacks or other wars involving the United States could adversely affect our financial condition and
results of operations.



Additionally, some of our printed
publications and our radio and television stations generate a large percentage of their advertising revenue from a limited number of sources, including the automotive industry, political advertising and professional sports contracts. As a result,
even in the absence of a recession or economic downturn, adverse changes specifically affecting these advertising sources could significantly reduce advertising revenue and have a material adverse affect on our financial condition and results of
operations.



In addition, our advertising revenue and
circulation revenue depend upon a variety of other factors specific to the communities that we serve. Changes in those factors could negatively affect those revenues. These factors include, among others, the size and demographic characteristics of
the local population, the concentration of retail stores and local economic conditions in general. If the population demographics, prevailing retail environment or local economic conditions of a community served by us were to change adversely,
revenue could decline and our financial condition and results of operations could be adversely affected. This is especially true with respect to the metropolitan Milwaukee market, which is served by our daily newspaper, theMilwaukee Journal
Sentinel, one of our television stations, two of our radio stations and a number of our community newspapers and shoppers, and from which we derived approximately 41% of our operating revenue in 2005.



Our diversified media businesses operate in highly competitive markets, and during a
time of rapid competitive changes, we may lose market share and advertising revenue to competing newspapers, radio and television stations, as well as to other types of media competitors or through consolidation of media competitors or changes in
advertisers media buying strategies.



Our
diversified media businesses operate in highly competitive markets. Our newspapers, shoppers, radio stations, television stations and Internet sites compete for audiences and advertising revenue with other newspapers, shoppers, radio stations,
television stations and Internet sites as well as with other media such as magazines, cable television, satellite television, satellite radio, outdoor advertising, the Internet and direct mail. Some of our current and potential competitors have
greater financial, marketing, programming and broadcasting resources than we do and may respond faster or more aggressively to changing competitive dynamics.



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In newspapers and shoppers, our revenue primarily consists of advertising and paid circulation.
Competition for advertising expenditures and paid circulation comes from 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 and local advertising, specifically in the Milwaukee market. Our local and regional competitors in community newspapers and shoppers are typically unique
to each market, but we have many competitors for advertising revenue that are larger and have greater financial and distribution resources than us. Circulation revenue and our ability to achieve price increases for our print products are affected by
competition from other publications and other forms of media available in our various markets, declining consumer spending on discretionary items like newspapers, decreasing amounts of free time, and declining frequency of regular newspaper buying
among young people. We may incur increasing costs competing for advertising expenditures and paid circulation. If we are not able to compete effectively for advertising expenditures and paid circulation, our revenue may decline and our financial
condition and results of operations may be adversely affected.



Our radio and television broadcasting businesses compete for audiences and advertising revenue primarily on the basis of programming content and advertising rates. Advertising rates are set based upon a variety of 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 make-up of the market served and the availability of alternative advertising in the market.
Our ability to maintain market share and competitive advertising rates depends in part on audience acceptance of our network, syndicated and local programming. Changes in market demographics, the entry of competitive stations to our markets, the
introduction of competitive local news or other programming by cable, satellite or other news providers, or the adoption of competitive formats by existing stations could result in lower ratings and have a material adverse effect on our financial
condition and results of operations. Changes in ratings technology or metrics used by advertisers or other changes in advertisers media buying strategies also could have a material adverse effect on our financial condition and results of
operations.



Further, our operations may be adversely affected
by consolidation in the broadcast industry, especially if competing stations in our markets are acquired by competitors who have a greater national scope, can offer a greater variety of national and syndicated programming for listeners and viewers
and have enhanced opportunities for advertisers to reach broader markets. On June 2, 2003, the FCC voted to relax rules that currently restrict media ownership; the modified rules, which were to have become effective on September 4, 2003,
would likely result in additional industry consolidation. However, the U.S. Court of Appeals for the Third Circuit issued a stay of the new rules on September 3, 2003 and, in an opinion issued on June 24, 2004, remanded the case to the FCC
for further proceedings. The court retained jurisdiction over the case pending its future review of the FCCs action on remand. In an order issued on September 3, 2004, in response to a request by the FCC, the court lifted its stay insofar
as it applied to the modified Local Radio Ownership rule, which has taken effect. In all other respects, the rules that were in effect prior to June 2, 2003 will remain in effect until proceedings related to the rules are resolved or the stay
is lifted. On June 13, 2005, the United States Supreme Court declined to review the June 24, 2004 ruling by the Third Circuit Court of Appeals. We cannot predict the outcome of any further administrative or judicial proceedings related to
the rules.



Seasonal and cyclical changes in advertising volume affect
our quarterly revenue and results of operations and may cause our stock price to be volatile.



Our quarterly revenue and results of operations are subject to seasonal and cyclical fluctuations that we expect to continue to affect our results of
operations in future periods. Our first fiscal quarter of the year tends to be our weakest quarter because advertising volume is typically at its lowest levels following the holiday season. Our fourth fiscal quarter tends to be our strongest quarter
primarily because of revenue from holiday season advertising. Our quarterly revenue also varies based on the dynamics of the television broadcast industry. In particular, we experience fluctuations, primarily during our third and fourth quarters,
during political voting



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periods as advertising dramatically increases. Also, since NBC has exclusive rights to broadcast the Olympics through 2012, our NBC affiliated stations
experience increased viewership and revenue during Olympic broadcasts. Other factors that affect our quarterly revenue and results of operations may be beyond our control, including changes in the pricing policies of our competitors, the hiring and
retention of key personnel, wage and cost pressures, changes in newsprint prices and general economic factors. These quarterly fluctuations in revenue and results of operations may cause our stock price to be volatile.



We may not be able to acquire radio stations, television stations, newspapers or assets
related to our Internet-based growth strategy, successfully manage acquired properties, or increase our profits from these operations.



Our diversified media business has in the past expanded through acquisitions of radio and television stations and community newspapers and shoppers in
selected markets. We intend to pursue continued growth through selected acquisitions, including acquisitions and investments related to our Internet-based growth strategy, if we are able to identify strategic acquisition candidates, negotiate
definitive agreements on acceptable terms and, as necessary, secure additional financing.



Our acquisition strategy includes certain risks. For example:



| |  |  | we may not be able to identify suitable acquisition candidates or, if identified, negotiate successfully their acquisition;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | we may not be able to secure additional financing necessary to complete acquisitions;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | we may encounter unforeseen expenses, difficulties, complications or delays in connection with the integration of acquired entities and the expansion of operations;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may fail to achieve anticipated financial benefits from acquisitions;
| | - |  | ------------------------------------------------------------------------



| |  |  | we may encounter regulatory delays or other impediments in connection with proposed transactions;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | our acquisition strategy may divert managements attention from the day-to-day operation of our businesses;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | key personnel at acquired companies may leave employment; or
| | - |  | ------------------------------------------------------------



| |  |  | we may be required to focus resources on integration of operations rather than more profitable areas.
| | - |  | -----------------------------------------------------------------------------------------------------



In addition, we may compete for certain acquisition targets with companies having greater financial resources than us. We
cannot assure you that we will be able to successfully make future acquisitions or what effects those acquisitions may have on our financial condition and results of operations.



We have in the past and may in the future cluster multiple radio and television stations in markets that we
believe have demographic characteristics and growth potential suitable to further our business objectives. Multiple stations in the same geographic market area could make our results of operations more vulnerable to adverse local economic or
demographic changes than they would otherwise be if our stations were located in geographically diverse areas.



We anticipate that we would finance potential acquisitions through cash provided by operating activities and/or borrowings, which would reduce our cash
available for other purposes. We cannot assure you, however, that we would be able to obtain needed financing in the event strategic acquisition opportunities are identified. We may also consider financing acquisitions by issuing additional shares
of class A common stock, which would dilute current shareholders ownership. Another potential source of financing for future acquisitions is to incur more debt, which would lead to increased leverage and debt service requirements. Inherent in
any future acquisitions is the risk of transitioning company cultures and facilities, which could have a material adverse effect on our financial condition and results of operations, particularly during the period immediately following any
acquisitions.



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Our publishing business may suffer if there is a significant increase in the cost of newsprint or a reduction in
the availability of newsprint.



The basic raw material
for newspapers and shoppers is newsprint. Our newsprint consumption related to our publications totaled $38.5 million in 2005, which was 11.4% of our total publishing revenue. We currently purchase approximately 86% of our newsprint from two
suppliers. Our inability to obtain an adequate supply of newsprint in the future or significant increases in newsprint costs could have a material adverse effect on our financial condition and results of operations.



Changes relating to information collection and use could adversely affect our ability
to collect and use data, which could harm our business.



Recent public concern over methods of information-gathering has led to the enactment of legislation in certain jurisdictions that restricts the collection and use of information. Our publishing business relies in part on telemarketing
sales, which are affected by recent do not call legislation at both the federal and state levels. We also engage in email marketing in connection with our publishing and broadcasting businesses. Further legislation, industry regulations,
the issuance of judicial interpretations or a change in customs relating to the collection, management, aggregation and use of consumer information could materially increase the cost of collecting that data, or limit our ability to provide that
information to our customers or otherwise utilize telemarketing or email marketing, and could adversely affect our results of operations.



If we are unable to respond to changes in technology and evolving industry standards, our radio stations may not be able to effectively compete.



The broadcast media industry is subject to the emergence of new media
technologies and evolving industry standards. Several new technologies are being developed that may compete with our radio stations, including:



| |  |  | audio programming by cable television systems, direct broadcast satellite systems, personal communications systems, Internet content providers and other digital audio broadcast
formats;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | satellite digital audio radio service, with sound quality comparable to that of compact discs, which has resulted in the introduction of two satellite radio services that provide
numerous niche formats;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in-band on-channel digital radio, which could improve the quality of existing AM and FM stations, including stations owned by us;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | expanded approval of low-power FM radio, which could result in additional FM radio broadcast outlets designed to serve small, localized areas; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | enhanced capabilities of cell phones, MP3 players, and other mobile devices.
| | - |  | ----------------------------------------------------------------------------



These new technologies have the potential to introduce new market competitors or change the means by which radio advertisers can most efficiently and
effectively reach their target audiences. We may not have the resources to acquire new technologies or to introduce new services that could compete with these new technologies.



If we are unable to respond to changes in technology and evolving industry standards, our television stations may not be able to
effectively compete.



New technologies could also
adversely affect our television stations. Programming alternatives such as cable, direct satellite-to-home services, pay-per-view, the Internet and home video and entertainment systems have fractionalized television viewing audiences. Over the past
decade, cable television programming services have captured an increasing market share, while the aggregate viewership of the major television networks has declined. In addition, the expansion of cable television and other technological changes,
including the recent entry by certain of the regional Bell operating companies into the video services delivery market, has increased,



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and may continue to increase, competitive demand for programming. Such increased demand, together with rising production costs may, in the future, increase
our programming costs or impair our ability to acquire programming. The enhanced video and audio capabilities of cell phones, MP3 players and other mobile devices also has the potential to affect television viewership.



In addition, video compression techniques now in use with direct broadcast
satellites and, increasingly, by cable and wireless cable, are expected to permit greater numbers of channels to be carried within existing bandwidth. These compression techniques, as well as other technological developments, are applicable to all
video delivery systems, including over-the-air broadcasting, and have the potential to provide vastly expanded programming to highly targeted audiences. Reduction in the cost of creating additional channel capacity could lower entry barriers for new
channels and encourage the development of increasingly specialized niche programming. This ability to reach very narrowly defined audiences may alter the competitive dynamics for advertising expenditures. We are unable to predict the effect that
these technological changes will have on the television industry or the future results of our television broadcast business.



If the network programming we broadcast pursuant to network affiliation agreements does not maintain satisfactory viewership levels, our advertising revenues,
financial condition and results of operations may be adversely affected.



The television viewership levels, and ultimately advertising revenue, for each station are materially dependent upon network programming, which is provided pursuant to network affiliation agreements. We cannot assure
you that network programming will achieve or maintain satisfactory viewership levels. In particular, because four of our stations (including our low-power station) are parties to affiliation agreements with ABC, three with NBC, two with FOX and one
with CBS, failures of ABC, NBC, FOX or CBS network programming to attract viewers or generate satisfactory ratings may have an adverse effect on our financial condition and results of operations. In addition, we cannot assure you that we will be
able to renew our network affiliation agreements on as favorable terms or at all. The termination or non-renewal, or renewal on less favorable terms, of the affiliation agreements could have an adverse effect on us.



Changes in the relationship of television networks with their affiliates and
other content providers and distribution channels also could affect our success. For example, networks and other content providers recently have begun to sell programming content through new distribution channels and offer viewers the ability to
watch programs on-demand, rather than on an established live television broadcast schedule. In addition, the creation of a new The CW network and the termination of the existing UPN and WB networks was recently announced and
could affect network relationships in certain markets.



The costs of
television programming may increase, which could adversely affect our results of operations.



Television programming is a significant operating cost component in our broadcasting operations. We cannot assure you that we will not be exposed in the
future to increased programming costs. Should such an increase occur, it could have an adverse effect on our results of operations. Television networks have been seeking arrangements from their affiliates to share the networks programming
costs. We cannot predict the nature or scope of any such potential compensation arrangements or the effect, if any, on our operations. In addition, acquisitions of program rights for syndicated programming are usually made two or three years in
advance and may require multi-year commitments, making it difficult to predict accurately how a program will perform. In some instances, programs must be replaced before their costs have been fully amortized, resulting in write-offs that increase
station operating costs and decrease station earnings.



If our key on-air
talent does not remain with us or loses popularity, our advertising revenue and results of operations may be adversely affected.



We employ or independently contract with a number of on-air personalities and hosts of television and radio programs whose ratings success depends in part
on audience loyalty in their respective markets. Although we



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have entered into long-term agreements with some of our key on-air talent and program hosts to protect our interests in those relationships, we cannot assure
you that all or any of these key employees will remain with us over the long term. Furthermore, the popularity and audience loyalty of our key on-air talent and program hosts is highly sensitive to rapidly changing public tastes. A loss of such
popularity or audience loyalty could reduce ratings and may impact our ability to generate advertising revenue.



In addition, our key local management employees are extremely important to our business since we believe that our growth and future success depends on
retaining local management with knowledge of the community, its audience and its advertisers. Our inability to attract or retain these skilled personnel could have a material adverse impact on our financial condition and results of operations.



Changes in the professional sports industry could result in decreased
ratings for our Milwaukee radio station and adversely affect our results of operations and financial condition.



Our Milwaukee radio station, WTMJ-AM, currently maintains exclusive radio broadcast rights for the Green Bay Packers, Milwaukee Bucks and Milwaukee
Brewers, and arranges a statewide radio network for these organizations. Our advertising revenue could be adversely affected by changes in the professional sports industry, such as a relocation of one of the local professional sports teams from the
Wisconsin market or the potential loss of exclusivity due to league or team initiatives such as pay-per-listen, satellite radio or Internet broadcast of games. In addition, we could lose our exclusive broadcast rights during periodic bidding, or
suffer damage to the marketplace value of sports advertising due to factors such as a players strike, negative publicity or downturn in on-field performance of a team.



If cable systems do not carry our new digital channels, our revenue and results of operations may be adversely affected.



Since our television stations are highly dependent on
carriage by cable systems in many of the areas they service, any rules of the FCC that ultimately impose no or limited obligations on cable systems to carry digital television signals in their local markets could result in some of our television
stations or channels not being carried on cable systems, which could adversely affect our revenue and results of operations.



If we cannot renew our FCC broadcast licenses, our business will be impaired.



Our business depends upon maintaining our broadcast licenses, which are issued by the FCC. Our broadcast licenses will
expire between 2006 and 2013 and are renewable. Pursuant to FCC rules, certain of our broadcast licenses that expired in 2005 remain in effect pending processing by the FCC of their timely filed renewal applications. Interested parties may challenge
a renewal application. The FCC has the authority to revoke licenses, not renew them, or renew them only with significant qualifications, including renewals for less than a full term. We cannot assure you that our future renewal applications will be
approved, or that the renewals will not include conditions or qualifications that could adversely affect our operations. If we fail to renew any of our licenses, or renew them with substantial conditions or modifications (including renewing one or
more of our licenses for a term of fewer than eight years), it could prevent us from operating the affected station and generating revenue from it.



The FCC may impose sanctions or penalties for violations of rules or regulations.



If we or any of our officers, directors or significant shareholders materially violate the FCCs rules and regulations
or are convicted of a felony or are found to have engaged in unlawful anticompetitive conduct or fraud upon another government agency, the FCC may, in response to a petition by a third party or on its own initiative, in its discretion, commence a
proceeding to impose sanctions upon us that could involve the imposition of monetary penalties, the denial of a license renewal application, revocation of our broadcast licenses or other sanctions. If the FCC were to issue an order denying a license
renewal application or revoking a license, we



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would be required to cease operating the broadcast station only after we had exhausted all administrative and judicial review without success. In addition,
the FCC has recently emphasized more vigorous enforcement of indecency standards, which could result in increased costs associated with FCC fines and implementation and adoption of more strict indecency standards at our broadcast facilities.



We could experience delays in expanding our business due to antitrust
laws.



The Federal Trade Commission, the United States
Department of Justice and the FCC carefully review our proposed business acquisitions and dispositions under their respective regulatory authority, focusing on the effects on competition, the number of stations owned in a market and the effects on
concentration of market revenue share. Recently, the Department of Justice has challenged a number of radio broadcasting transactions. Some of these challenges ultimately resulted in consent decrees requiring, among other things, divestitures of
certain stations. In general, the Department of Justice has more closely scrutinized radio broadcasting acquisitions that result in local market shares in excess of 40% of radio advertising revenue. Any delay, prohibition or modification required by
regulatory authorities could adversely affect the terms of a proposed transaction or could require us to modify or abandon an otherwise attractive opportunity. 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, refusing to grant or imposing conditions on its consent to the assignment or transfer of control of licenses.



Regulatory changes may result in increased competition in our radio and television broadcasting business.



The radio and television broadcasting industry is subject to extensive and
changing federal regulation. Among other things, the Communications Act of 1934, as amended, and FCC rules and policies require FCC approval for transfers of control and assignments of licenses, and limit the number of broadcasting properties in a
market in which any person or entity may have an attributable interest. Media ownership restrictions include a variety of local limits on ownership, such as a limit of one television station in medium and smaller markets and two stations in larger
markets as long as one station is not a top-four rated station (known as the duopoly rule), prohibitions on ownership of a daily newspaper and broadcast station in the same market and limits of four to eight radio stations and one television station
in the same market. Under rules adopted by the FCC, on June 2, 2003, a party would be permitted to own up to three television stations in the very largest markets, up to two television stations in medium markets and one television station in
smaller markets. The FCCs new rules also would relax restrictions on common ownership of broadcast stations and newspapers within the same area. The new FCC media ownership rules were to have become effective on September 4, 2003.
However, the U.S. Court of Appeals for the Third Circuit issued a stay of the new rules on September 3, 2003, and, in an opinion issued on June 24, 2004, remanded the case to the FCC for further proceedings. The court retained jurisdiction
over the case pending its future review of the FCCs actions on remand. In an order issued on September 3, 2004, in response to a request by the FCC, the court lifted its stay insofar as it applied to the modified Local Radio Ownership
rule, which has taken effect. In all other respects the rules that were in effect prior to June 2, 2003 will remain in effect until proceedings related to the rules are resolved or the stay is lifted. On June 13, 2005, the United States
Supreme Court declined to review the June 24, 2004 ruling by the Third Circuit Court of Appeals. In addition, the 2004 Consolidated Appropriations Act prohibits any person or entity from having an attributable interest in broadcast television
stations with an aggregate audience reach exceeding 39% of television households nationally.



The increase in the national television viewership cap gave the largest television operators the ability to acquire additional stations, which may give them a competitive advantage over us, since they have much
greater financial and other resources than we have. In addition, the networks ability to acquire additional stations could give them leverage over their affiliates on issues such as compensation and program clearance, in part
because of the risk that a network facing an uncooperative affiliate could acquire a station in the market and terminate its agreement with that affiliate. The relaxation of the national and local media ownership restrictions may cause us to face
increasing competition with larger and more diversified entities for circulation and advertising revenue.



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Risks Relating to Our Telecommunications Business



Telecommunications technology changes very rapidly, which could result in price declines or render our telecommunications technology
obsolete.



We expect that new telecommunications
products and technologies will emerge and that existing products and technologies, including high-speed data transmission, voice transmission over the Internet and wireless technologies, will further develop. These new products and technologies may
reduce the prices for our telecommunications services and/or they may be superior to, and render obsolete, the products and services we offer and the technologies we use. As a result, our most significant competitors in the future may be new
entrants to our markets that would not be burdened by an installed base of older equipment. It may be very expensive for us to upgrade our products and technology in order to continue to compete effectively. The future success of our
telecommunications business depends, in part, on our ability to anticipate and adapt in a timely manner to technological changes.



Advances in transmission equipment used with fiber optic technology have resulted in significant price declines. Recent changes in technology have
continued to lower the cost of providing services. If there is a bigger drop in prices than we project, it could adversely affect our operating margins and, accordingly, our results of operations. We cannot be certain, even if our projections with
respect to pricing are realized, that we will be able to implement our strategy or that our strategy will be successful in the rapidly evolving telecommunications market.



Continued overcapacity and intense competition may necessitate further price decreases or lead to service disconnections, which would
have an adverse effect on our results of operations.



While many competitors in the telecommunications industry have been acquired or ceased operations within the recent past, our telecommunications business continues to compete with multiple large national carriers, regional carriers and
local exchange carriers. Many of these competitors have built large fiber optic networks that remain underutilized, resulting in excess capacity that places downward pressure on the prices we and others are able to charge for our telecommunications
services. Specifically, the recent business combinations of Sprint and Nextel, SBC and AT&T, now known as AT&T, and Verizon and MCI, now known as Verizon/MCI, may contribute to further changes in the competitive landscape in that we could
lose existing business as the new entities consolidate traffic on owned facilities or face stiffer competition for other new business. Continued excess capacity and price competition could further decrease the prices we are able to charge our
customers, which could have an adverse effect on our results of operations. In addition, due to the turmoil in the telecommunications industry, we have experienced a significant increase in customers disconnecting or terminating service, which may
continue in the future and could be significant. While we are not always able to determine the specific reason a customer may disconnect service, we believe this is primarily the result of financially weaker customers going out of business, along
with current customers eliminating excess network capacity and thus minimizing their costs. We believe the trend of customers focusing on reducing their network costs will continue, primarily due to consolidating traffic on least cost routes and
economic and other changes occurring within our customers end-user customer base, which could have an adverse effect on our results of operations.



The expenditures necessary to sufficiently develop our telecommunications network to reach customers within the local exchange network
and develop our telecommunications services in order to satisfy our customers demands may surpass our available cash, and we may be unable to obtain additional capital to develop our services on a timely basis and on acceptable terms.



Although we have expended significant resources in
building our telecommunications network and our developing telecommunications customer base, we may require significant additional cash to develop local access capacity and the range of services we can offer throughout our service area in order to
remain competitive in our market. We may have to expand or adapt our telecommunications network components to respond to the following:



| |  |  | a need for new product offerings, specifically local access capacity;
| | - |  | ---------------------------------------------------------------------



| |  |  | an increasing number of customers;
| | - |  | ----------------------------------



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| |  |  | demand for greater transmission capacity;
| | - |  | -----------------------------------------



| |  |  | changes in our customers service requirements; and
| | - |  | ---------------------------------------------------



| |  |  | technological advances.
| | - |  | -----------------------



These expenditures for expansion and for more services, together with associated operating expenses, may reduce our cash flow and profitability. We cannot
guarantee that additional financing will be available to us or, if available, that we can obtain it on a timely basis and on acceptable terms.



Service interruptions on the network could cause immediate loss of revenue, payment of outage credits to our customers and the loss of our customers
confidence and our business reputation.



Our success
in marketing our telecommunications services to our customers requires that we provide high reliability, high bandwidth and a secure network. Our network and the infrastructure upon which it depends requires the coordination and integration of
sophisticated and highly specialized hardware and software technologies and equipment, and are subject to physical damage, power loss, capacity limitations, software defects, breaches of security and other disruptions beyond our control that may
cause interruptions in service or reduced capacity for customers. While we have built-in system redundancies to reduce these risks, a prolonged network failure could jeopardize our ability to continue operations. Our agreements with our customers
typically provide for the payment of outage related credits (a predetermined reduction or offset against our lease rate when a customers leased facility is non-operational or otherwise does not meet certain operating parameters). In the case
of a large-scale disruption of our network or the support infrastructure, these credits could be substantial and could significantly decrease our net revenue. In addition, should a significant service interruption occur, our ongoing customers may
choose a different provider and our reputation may be damaged, reducing our attractiveness to new customers.



To the extent that any disruption or security breach results in a loss or damage to our customers data or applications, or inappropriate disclosure
of confidential information, we may incur liability and suffer from adverse publicity. We may also incur additional costs to remedy the damage caused by these disruptions or security breaches.



Our network utilization is dependent on maintaining our rights-of-way and indefeasible
rights of use.



The construction and operation of
significant portions of our fiber optic network depend upon rights-of-way from railroads, utilities, governmental authorities and third-party landlords, and we also have obtained indefeasible rights of use (called IRUs) from other
telecommunications providers that are critical to our ability to operate our fiber optic network. Our rights-of-way and IRUs are generally subject to expiration at some future date. We cannot guarantee that we will be able to maintain all of our
existing rights-of-way and IRUs, and the loss of a substantial number of existing rights-of-way or IRUs or our inability to renew existing agreements would have a material adverse impact on our business, financial condition and results of
operations.



While IRUs are commonly used in the
telecommunications industry, they remain a relatively new concept in property law. Although they give the holder a number of rights to control the relevant rights-of-way or fiber optic filaments, legal title remains with the grantor of the rights.
Therefore, the legal status of IRUs remains uncertain and could result in, for example, our IRUs becoming voidable in the event of bankruptcy of the grantor. If we were to lose an IRU in a key portion of our network, our ability to service our
customers could become seriously impaired, and we could be required to incur significant expense to resume the operation of our fiber optic network in the affected areas.



We need to obtain additional capacity for the network from other providers in order to serve our customers and keep our costs down.



We lease telecommunications capacity and obtain
rights to use dark fiber from both long distance and local telecommunications carriers in order to extend the scope of our network. Any failure by these companies to



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provide service to us would adversely affect our ability to serve our customers or increase our costs of doing so. Costs of obtaining local services from
other carriers comprise a significant proportion of the operating expenses of our telecommunications business.



We could be harmed by the recent adverse developments affecting other telecommunications companies.



We have substantial business relationships with a few large customers, including major long distance carriers. Our top 10 customers accounted for 40.1%
and 37.0% of our telecommunications revenue in 2005 and 2004, respectively. In 2005, we reached an agreement with MCI/Verizon on a contract renewal that both extended the term of its service agreement at a reduced price and provided for higher
capacity circuits to replace existing circuits being disconnected. We expect the effect of this new contract to be fully implemented during the first quarter of 2006. We expect this contract change to result in a significant decrease in our
telecommunications operating earnings. Though we cannot predict the impact of the MCI/Verizon combination, they remain a significant customer and we believe they will continue to be so. The loss of a significant amount of ongoing business from our
largest customers would have a significant adverse effect on our results of operations. In addition, continued weakness in the telecommunications industry could have future adverse effects on us, including reducing our ability to collect receivables
and to access the capital markets on favorable terms.



Federal regulation
of the telecommunications industry is changing rapidly and we could become subject to unfavorable new rules and requirements which could impose substantial financial and administrative burdens on us and interfere with our ability to successfully
execute our business strategies.



Regulation of the
telecommunications industry is changing rapidly. Since our relationships with the telecommunications companies with whom we deal are affected by our respective positions in the federal, state and local regulatory scheme, existing and future federal,
state, and local governmental regulations will influence our viability. Consequently, undesirable regulatory changes could adversely affect our business, financial condition and results of operations. For example, the FCC in 2005 adopted new
procedures and rules providing the ILECs greater flexibility with respect to the availability and pricing of ILEC services and facilities. Several of these changes may adversely affect our results of operations. The FCC may also increase regulation
over our Internet access services and IP-based services, and subject our business to increased assessments to support universal service or other similar programs and funds.



The role of the states in regulation of companies providing telecommunications services is increasing, although the rules continue to
vary substantially from state to state, and we may become increasingly subject to burdensome and restrictive state regulations.



Heightened legislative activity, state public utility commission involvement and judicial appeals are anticipated, requiring continued vigilance and the
commitment of resources. Depending on factors unique to the local marketplace, the rules can and will vary substantially from state to state. Moreover, if we expand our fiber optic network into a broader geographic area, we may be subject to
additional state regulations. The costs of maintaining compliance with and abiding by state regulatory obligations could have a material adverse effect on our results of operations.



Municipal regulation of our access to public rights-of-way is subject to change and could impose administrative burdens that would
adversely affect our business.



Local governments
affect the timing and costs associated with our use of public rights-of-way because they typically retain the ability to license public rights-of-way, subject to the federal requirement that local governments may not prohibit the provision of
telecommunications services. Change in local government regulation could impose additional costs on our business and limit our operations.



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Risks Relating to Our Printing Services Business and Other Segment



Postal rate increases and disruptions in postal services could lead to reduced volumes
of business.



Our printing services business, as well
as our direct marketing business, have been negatively impacted from time to time during the past years by postal rate increases. In January 2006, first class rates and standard class rates were increased. Rate increases may result in customers
mailing fewer and lighter pieces. Additionally, the amount of mailings could be reduced in response to disruptions in and concerns over the security of the U.S. mail system. These sorts of responses by customers could negatively impact us by
decreasing the amount of printing and direct marketing services or other services that our customers purchase from us, which could result in decreased revenue.



Revenue from our direct marketing business may decline if our data products do not maintain technological competitiveness.



Our direct marketing service business is affected by the complexity and
uncertainty of new technologies. If we are not able to maintain technological competitiveness in our data products, processing functionality or software systems and services, we may not be able to provide effective or efficient service to our
customers, and our revenue may decline.



Other Business Risks



We depend on key personnel, and we may not be able to operate and
grow our business effectively if we lose the services of any of our senior executive officers or are unable to attract qualified personnel in the future.



We are dependent upon the efforts of our senior executive officers. The success of our business is heavily dependent on our
ability to retain our current management and to attract and retain qualified personnel in the future. Competition for senior management personnel is intense, and we may not be able to retain our personnel. We have not entered into employment
agreements with our key personnel, other than with our Chairman and Chief Executive Officer, and these individuals may not continue in their present capacity with us for any particular period of time. We do not have key man insurance for any of our
executive officers or key personnel. The loss of any senior executive officer could require the remaining executive officers to divert immediate and substantial attention to seeking a replacement. Our inability to find a replacement for any
departing executive officer on a timely basis could adversely affect our ability to operate and grow our business.



Our business may be negatively affected by work stoppages, slowdowns or strikes by our employees.



Currently, there are 11 bargaining units representing approximately 830 (or
approximately 15%) of our total number of employees. We have entered into various collective bargaining agreements with these bargaining units. Eight of these agreements will expire within the next two years. A majority of the employees covered by a
collective bargaining agreement work at the daily newspaper. We cannot assure you as to the results of negotiations of future collective bargaining agreements, whether future collective bargaining agreements will be negotiated without interruptions
in our businesses, or the possible impact of future collective bargaining agreements on our financial condition and results of operations. We also cannot assure you that strikes will not occur in the future in connection with labor negotiations or
otherwise. Any prolonged strike or work stoppage could have a material adverse effect on our financial condition and results of operations.



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|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------



None.



|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 owned properties or equipment. The following are the principal properties operated by us and our subsidiaries and the approximate square footage, as of December 25, 2005:



|                                                                                                                                                                                                                                               |  |         |  |       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------- |  | ------
|                                                                                                                                                                                                                                               |  | Owned   |  | Leased
|Publishing                                                                                                                                                                                                                                     |  |         |  |       
|Printing plants, newsrooms, offices, warehouses and a garage located in:                                                                                                                                                                       |  |         |  |       
|Milwaukee, WI(1)                                                                                                                                                                                                                               |  | 597,000 |  | 33,000
|West Milwaukee, WI(2)                                                                                                                                                                                                                          |  | 479,000 |  |      
|Cedarburg, WI                                                                                                                                                                                                                                  |  | 17,000  |  |      
|Waukesha, WI                                                                                                                                                                                                                                   |  |        |  | 23,000
|Wauwatosa, WI                                                                                                                                                                                                                                  |  | 18,000  |  |      
|Sturtevant, WI                                                                                                                                                                                                                                 |  |        |  | 10,000
|New Berlin, WI(3)                                                                                                                                                                                                                              |  | 14,000  |  | 21,000
|Madison, WI                                                                                                                                                                                                                                    |  |        |  | 8,000 
|Menomonee Falls, WI                                                                                                                                                                                                                            |  | 12,000  |  |      
|Waupaca, WI                                                                                                                                                                                                                                    |  | 58,000  |  |      
|Hartland, WI                                                                                                                                                                                                                                   |  | 58,000  |  |      
|Mukwonago, WI                                                                                                                                                                                                                                  |  |        |  | 7,000 
|Elkhorn, WI                                                                                                                                                                                                                                    |  |        |  | 5,000 
|Waterford, WI                                                                                                                                                                                                                                  |  |        |  | 5,000 
|Oconomowoc, WI                                                                                                                                                                                                                                 |  |        |  | 8,000 
|West Bend, WI                                                                                                                                                                                                                                  |  | 7,000   |  |      
|Hartford, WI                                                                                                                                                                                                                                   |  | 7,000   |  |      
|New London, WI                                                                                                                                                                                                                                 |  | 6,000   |  |      
|Rhinelander, WI                                                                                                                                                                                                                                |  | 7,000   |  |      
|Fond du Lac, Sheboygan, Beaver Dam, Johnson Creek, Germantown, Muskego, Port Washington, Whitewater, Jefferson, Marshfield, Menasha,
Merrill, Oshkosh, Ripon, Seymour, Stevens Point, Menomonee Falls, Wausau, Antigo and Wisconsin Rapids, WI |  | 8,000   |  | 62,000
|Shelton, CT                                                                                                                                                                                                                                    |  |        |  | 7,000 
|Trumbull, CT                                                                                                                                                                                                                                   |  | 57,000  |  |      
|Venice, Orange Park, Sarasota and Ponte Vedra, FL                                                                                                                                                                                              |  |        |  | 11,000
|Baton Rouge and Kenner, LA                                                                                                                                                                                                                     |  |        |  | 34,000
|New Orleans, LA                                                                                                                                                                                                                                |  |        |  | 53,000
|Dalton and Lee, MA                                                                                                                                                                                                                             |  |        |  | 3,000 
|Carroll, OH                                                                                                                                                                                                                                    |  | 37,000  |  |      
|Cambridge, Chillicothe, Circleville, Coshocton, Logan, New Lexington, Newark, and Zanesville, OH                                                                                                                                               |  | 7,000   |  | 13,000
|Bennington and Manchester Village, VT                                                                                                                                                                                                          |  |        |  | 13,000
|Pound Ridge, NY                                                                                                                                                                                                                                |  |        |  | 1,000 
|                                                                                                                                                                                                                                               |  |        
|Broadcasting                                                                                                                                                                                                                                   |  |         |  |       
|Offices, studios and transmitter and tower sites located in:                                                                                                                                                                                   |  |         |  |       
|Milwaukee, WI(3)                                                                                                                                                                                                                               |  | 109,000 |  |      
|Green Bay, WI                                                                                                                                                                                                                                  |  | 22,000  |  | 2,000 
|Las Vegas, NV                                                                                                                                                                                                                                  |  | 22,000  |  |      
|Lansing, MI                                                                                                                                                                                                                                    |  | 2,000   |  | 13,000
|Palm Springs, CA                                                                                                                                                                                                                               |  | 19,000  |  | 1,000 



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|                                                    |  |        |  |        
|--------------------------------------------------- |  | ------ |  | -------
|                                                    |  | Owned  |  | Leased 
|Broadcasting, continued                             |  |        |  |        
|Omaha, NE                                           |  | 62,000 |  |       
|Tucson, AZ                                          |  | 29,000 |  | 9,000  
|Knoxville, TN(4)                                    |  | 26,000 |  |       
|Boise, ID                                           |  | 49,000 |  | 13,000 
|Wichita, KS(5)                                      |  | 23,000 |  | 6,000  
|Springfield, MO                                     |  | 2,000  |  | 9,000  
|Tulsa, OK                                           |  | 22,000 |  | 1,000  
|Fort Myers, FL                                      |  | 25,000 |  |       
|Mount Bigelow, AZ                                   |  | 2,000  |  |       
|                                                    |  |       
|Telecommunications                                  |  |        |  |        
|Offices and satellite antennae located in:          |  |        |  |        
|Brookfield, WI(3)                                   |  |       |  | 75,000 
|Green Bay, WI                                       |  |       |  | 3,000  
|Madison, WI                                         |  |       |  | 2,000  
|Afton, WI                                           |  | 4,000  |  |       
|Skokie, IL                                          |  |       |  | 6,000  
|Chicago, IL                                         |  |       |  | 6,000  
|Buffalo Grove, IL                                   |  |       |  | 1,000  
|Grand Rapids, MI                                    |  |       |  | 14,000 
|Lansing, MI                                         |  |       |  | 2,000  
|Plymouth, 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)                                   |  |       |  | 218,000
|San Jose, CA(6)                                     |  |       |  | 368,000
|                                                    |  |       
|Direct marketing services                           |  |        |  |        
|Offices, plants and warehouses located in:          |  |        |  |        
|St. Paul, MN(3)                                     |  |       |  | 87,000 
|Clearwater, FL                                      |  |       |  | 56,000 
|Milwaukee, WI                                       |  |       |  | 23,000 
|                                                    |  |       
|Discontinued operations                             |  |        |  |        
|Printing plant located in:                          |  |        |  |        
|Green Bay, WI(7)                                    |  | 40,000 |  |        

---

|(1) | Includes our corporate headquarters and the Milwaukee Journal Sentinels business and editorial offices.
|--- | --------------------------------------------------------------------------------------------------------

|(2) | Production facility housing printing, packaging, inserting, recycling, distribution, and transportation operations of the Milwaukee Journal Sentinel.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes our business operations headquarters.
|--- | -----------------------------------------------

|(4) | Includes 5,000 square feet leased to third party pursuant to lease expiring in September 2012 and 9,000 square feet not in use.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes 4,700 square feet not in use.
|--- | --------------------------------------

|(6) | Property is sublet to third parties pursuant to subleases that expire in February 2006.
|--- | ---------------------------------------------------------------------------------------

|(7) | Property to be sold to Multi-Color Corporation, in connection with the sale of the assets of NorthStar Print Group, Inc., upon the achievement of certain environmental standards.
The property is currently being leased to Multi-Color.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------



See Note 9 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 2005.



Executive Officers of Registrant



The following table sets forth the names, ages and positions of our executive officers as of February 21, 2006.



|                     |  |                                                                     |  |    
|-------------------- |  | ------------------------------------------------------------------- |  | ---
|Name                 |  | Title                                                               |  | Age
|Steven J. Smith      |  | Chairman of the Board, Chief Executive Officer and Director         |  | 55 
|Douglas G. Kiel      |  | President                                                           |  | 57 
|Paul M. Bonaiuto     |  | Executive Vice President and Chief Financial Officer                |  | 55 
|Mary Hill Leahy      |  | Senior Vice President, General Counsel and Chief Compliance Officer |  | 51 
|Anne M. Bauer        |  | Vice President and Controller                                       |  | 41 
|Elizabeth Brenner    |  | Vice President                                                      |  | 51 
|James J. Ditter      |  | Vice President                                                      |  | 44 
|Robert M. Dye        |  | Vice President of Employee Investor Relations                       |  | 58 
|Carl D. Gardner      |  | Vice President                                                      |  | 49 
|Daniel L. Harmsen    |  | Vice President of Human Resources                                   |  | 50 
|Mark J. Keefe        |  | Vice President                                                      |  | 46 
|Kenneth J. Kozminski |  | Vice President                                                      |  | 40 
|Paul E. Kritzer      |  | Vice President, Secretary and General Counsel-Media                 |  | 63 
|Scott H. McElhaney   |  | Vice President                                                      |  | 49 
|James P. Prather     |  | Vice President                                                      |  | 48 
|Karen O. Trickle     |  | Vice President and Treasurer                                        |  | 49 



Steven J. Smith is
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 President from September 1992 to December 1998. Mr. Smith has been a director
since May 2003. Mr. Smith was a director of our predecessor company since 1987.



Douglas G. Kiel is President. Mr. Kiel was elected President in December 1998. In addition, Mr. Kiel has been the Chief Executive Officer of Journal Broadcast Group since December 2001. He was Executive Vice
President between June 1997 and December 1998 and President of Journal Broadcast Group from June 1992 to December 1998.



Paul M. Bonaiuto is 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 Senior Vice President between March 1996 and June 1997.



Mary Hill Leahy is Senior Vice President, General Counsel and Chief Compliance Officer. She was elected Senior Vice President and General Counsel in May
2003 and Chief Compliance Officer in April 2005. Prior thereto, she served as Vice President and General Counsel-Business Services since July 2001. Ms. Leahy was General Counsel Americas, GE Medical Systems, a developer and manufacturer of
medical diagnostic equipment, from January 1999 to July 2001.



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



34



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##### Table of Contents

Elizabeth Brenner is a Vice President. Ms. Brenner was elected Vice President in December 2004. In
addition, Ms. Brenner has been President of Journal Sentinel and Publisher of the Milwaukee Journal Sentinelsince January 2005. Ms. Brenner was Publisher of The News Tribune, a Tacoma, Washington publication of the McClatchy
Company, from 1998 to December 2004.



James J. Ditter is a Vice
President. Mr. Ditter was elected Vice President in September 1995. In addition, Mr. Ditter has been President of Norlight Telecommunications since September 1995.



Robert M. Dye is Vice President of Employee Investor Relations. Mr. Dye was elected Vice President of Employee Investor
Relations in September 2003. Mr. Dye was Vice President of Corporate Affairs from June 2000 to September 2003 and 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 Executive Vice President, Television and Radio Operations of Journal Broadcast Group since April 2005. He was President-Radio, Journal Broadcast Group from December 1998 to April
2005.



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



Mark J. Keefe is a Vice President. Mr. Keefe was elected Vice President in March 1996. Mr. Keefe has also been President of PrimeNet since October 1995.



Kenneth L. Kozminski is a Vice President. Mr. Kozminski was elected Vice
President in December 1999. In addition, Mr. Kozminski has been President of IPC Print Services since July 1999. He was Vice President and General Manager of Eastern Region-IPC Print Services from July 1998 to July 1999.



Paul E. Kritzer is Vice President, Secretary and 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.



Scott H. McElhaney is a Vice President. He was elected Vice President in
December 2002. In addition, Mr. McElhaney has been President of Journal Community Publishing Group since November 2002. He was General Manager and Publisher of our CNI newspapers group from May 2001 through November 2002. Mr. McElhaney was
Executive Vice President and Chief Operating Officer of Fancy Publications, a national specialty publications company, from January 1998 to February 2001.



James P. Prather is a Vice President. Mr. Prather was elected Vice President in March 1999. In addition, Mr. Prather has been Executive Vice
President, Television and Radio Operations of Journal Broadcast Group since April 2005 and President of News and Vice President and General Manager of KTNV-TV since August 2003. He was Senior Vice President and President of News, Journal Broadcast
Group from August 2003 to April 2005. Mr. Prather was President-Television, Journal Broadcast Group from December 1998 to August 2003 and General Manager of WTMJ-TV from 1995 to August 2003.



Karen O. Trickle is Vice President and Treasurer. Ms. Trickle was
elected Treasurer in December 1996 and Vice President in March 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 Shareholders and hold office until their
successors are elected and qualified. 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.



35



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##### Table of Contents

PART II



|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ------------------------------------------------------------------------------------------------------------



We are authorized to issue 170 million shares of class A common stock;
120 million shares of class B common stock; 10 million shares of class C common stock; and 10 million shares of preferred stock.



Class C shares are held by Matex Inc., the Abert Family Journal Stock Trust, and members of the family of our former chairman Harry J. Grant (which we
collectively refer to as the Grant family shareholders) and are entitled to two votes per share. These shares are convertible into either (i) 1.363970 shares of class A common stock or (ii) a combination of 0.248243 shares of
class A common stock and 1.115727 shares of class B common stock at any time at the option of the holder. There is no public trading market for the class C shares.



Class B shares are primarily held by our current and former employees and are entitled to ten votes per share. Each class B
share is convertible into one class A share at any time, but first must be offered for sale to other eligible purchasers through the offer procedures set forth in our articles of incorporation. As of February 21, 2006, there were 8,676,705
class B shares held by our subsidiary, The Journal Company. There is no public trading market for the class B shares, although shares can be offered for sale to eligible purchasers under our amended and restated articles of incorporation.



Class A shares have been listed for trading on the New York
Stock Exchange under the symbol JRN since September 24, 2003. Class A shareholders are entitled to one vote per share. In February 2005, we announced a stock repurchase program of up to 5 million shares of our class A
common stock over a term to expire in August 2006. Repurchases, by fiscal period, for 2005 were as follows:



|                                        |  |                   |  |              |       |                                  |           |                                  |          
|--------------------------------------- |  | ----------------- |  | ------------ | ----- | -------------------------------- | --------- | -------------------------------- | ---------
|                                        |  | SharesRepurchased |  | AveragePrice |       | Total Number ofSharesRepurchased |           | Shares ThatMay Yet beRepurchased
|Period 1 (4 weeks ended Jan. 23, 2005)  |  |                  |  | $            |      |                                  |          |                                  | 5,000,000
|Period 2 (4 weeks ended Feb. 20, 2005)  |  |                  |  |              |      |                                  |          |                                  | 5,000,000
|Period 3 (5 weeks ended March 27, 2005) |  | 114,200           |  |              | 16.70 |                                  | 114,200   |                                  | 4,885,800
|Period 4 (4 weeks ended April 24, 2005) |  | 219,400           |  |              | 16.81 |                                  | 333,600   |                                  | 4,666,400
|Period 5 (4 weeks ended May 22, 2005)   |  | 544,800           |  |              | 16.37 |                                  | 878,400   |                                  | 4,121,600
|Period 6 (5 weeks ended June 26, 2005)  |  | 605,464           |  |              | 16.65 |                                  | 1,483,864 |                                  | 3,516,136
|Period 7 (4 weeks ended July 24, 2005)  |  | 305,231           |  |              | 16.67 |                                  | 1,789,095 |                                  | 3,210,905
|Period 8 (4 weeks ended Aug. 21, 2005)  |  |                  |  |              |      |                                  | 1,789,095 |                                  | 3,210,905
|Period 9 (5 weeks ended Sept. 25, 2005) |  | 372,200           |  |              | 15.58 |                                  | 2,161,295 |                                  | 2,838,705
|Period 10 (4 weeks ended Oct. 23, 2005) |  | 514,400           |  |              | 14.29 |                                  | 2,675,695 |                                  | 2,324,305
|Period 11 (4 weeks ended Nov. 20, 2005) |  | 182,400           |  |              | 13.96 |                                  | 2,858,095 |                                  | 2,141,905
|Period 12 (5 weeks ended Dec. 25, 2005) |  | 576,900           |  |              | 13.76 |                                  | 3,434,995 |                                  | 1,565,005



As of February 21,
2006, there were 2,439 record holders of class B common stock, 163 record holders of class A common stock and four record holders of class C common stock. We have no outstanding shares of preferred stock.



36



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##### Table of Contents

The high and low sales prices of our class A common shares for the four quarters of 2005 and 2004 as
reported on the New York Stock Exchange and the dividends declared per class A and class B common share for the four quarters of 2005 and 2004 were as follows:



|               |  |      |       |      |   |               |  |      |       |     |   |              |  |   |       |  |   |      
|-------------- |  | ---- | ----- | ---- | - | ------------- |  | ---- | ----- | --- | - | ------------ |  | - | ----- |  | - | -----
|               |  | 2005 |       | 2004
|               |  | High |       | Low  |   | Cash Dividend |  | High |       | Low |   | CashDividend
|First Quarter  |  | $    | 18.22 |      | $ | 15.96         |  | $    | 0.065 |     | $ | 20.35        |  | $ | 17.11 |  | $ | 0.065
|Second Quarter |  |      | 17.14 |      |   | 15.05         |  |      | 0.065 |     |   | 20.20        |  |   | 17.29 |  |   | 0.065
|Third Quarter  |  |      | 16.89 |      |   | 14.41         |  |      | 0.065 |     |   | 18.99        |  |   | 15.71 |  |   | 0.065
|Fourth Quarter |  |      | 15.00 |      |   | 13.02         |  |      | 0.065 |     |   | 18.15        |  |   | 15.48 |  |   | 0.065



Dividends



The declaration of future dividends is subject to the
discretion of our board of directors in light of all relevant factors, including earnings, general business conditions, working capital requirements, capital spending needs and contractual restrictions. Pursuant to our amended and restated articles
of incorporation, each class of common stock has equal rights with respect to cash dividends, except that dividends on class C shares are cumulative and will not be less than approximately $0.57 per year. Our board of directors currently anticipates
declaring annual dividends of $0.26 per class B and class A share and approximately $0.57 per class C share. Of the anticipated annual dividends, the board of directors has already declared the first quarter 2006 dividend of 6.5¢ per class B
and class A share and approximately 14¢ per class C share.



The terms of our credit facility provide that we cannot make distributions or dividends (other than distributions or dividends payable solely in stock) if an event of default under our credit facility then exists or would result therefrom.



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##### Table of Contents

|ITEM 6. | SELECTED FINANCIAL DATA
|------- | -----------------------



The following table presents our selected financial data. The selected financial data for the years ended December 31, 2003, December 26,
2004 and December 25, 2005 and as of December 26, 2004 and December 25, 2005 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, 2001 and 2002 and as of December 31, 2001, 2002 and 2003 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. NorthStar Print Group, Inc., FOX Cities Newspapers and IPC Communication Services, S.A. have been reflected as discontinued operations in all years
presented.



|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|----------------------------------------------------------------------------- |  | ----------------------------------------------------------- | ------- | - | ------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                                              |  | 2005(2)                                                     |         |   | 2004(3) |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                                                              |  | (dollars and shares in thousands, except per share amounts) |        
|Statement of Earnings Data                                                    |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Revenue(1)                                                                    |  | $                                                           | 764,461 |   |         | $ | 773,372 |      |  | $ | 752,245 |   |  | $    | 756,075 |   |  | $ | 765,739 |  
|Operating costs and expenses(1)                                               |  |                                                             | 659,301 |   |         |   | 649,029 |      |  |   | 642,799 |   |  |      | 645,426 |   |  |   | 682,159 |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Operating earnings                                                            |  |                                                             | 105,160 |   |         |   | 124,343 |      |  |   | 109,446 |   |  |      | 110,649 |   |  |   | 83,580  |  
|Total other income and expense                                                |  |                                                             | (3,642  | ) |         |   | (1,945  | )    |  |   | (1,467  | ) |  |      | 339     |   |  |   | 1,238   |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Earnings from continuing operations before income taxes and accounting change |  |                                                             | 101,518 |   |         |   | 122,398 |      |  |   | 107,979 |   |  |      | 110,988 |   |  |   | 84,818  |  
|Provision for income taxes                                                    |  |                                                             | 40,369  |   |         |   | 49,066  |      |  |   | 43,611  |   |  |      | 48,089  |   |  |   | 35,658  |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Earnings from continuing operations before accounting change                  |  |                                                             | 61,149  |   |         |   | 73,332  |      |  |   | 64,368  |   |  |      | 62,899  |   |  |   | 49,160  |  
|Gain (loss) from discontinued operations, net of taxes(5)                     |  |                                                             | 5,094   |   |         |   | 5,148   |      |  |   | 2,425   |   |  |      | 1,530   |   |  |   | (1,403  | )
|Cumulative effect of accounting change, net of taxes(4)(5)                    |  |                                                             |        |   |         |   |        |      |  |   |        |   |  |      | (6,509  | ) |  |   |        |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net earnings(5)                                                               |  | $                                                           | 66,243  |   |         | $ | 78,480  |      |  | $ | 66,793  |   |  | $    | 57,920  |   |  | $ | 47,757  |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Basic weighted average shares outstanding                                     |  |                                                             | 70,945  |   |         |   | 72,931  |      |  |   | 78,645  |   |  |      | 79,291  |   |  |   | 84,252  |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Basic Earnings Per Share Amounts(6)                                           |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Continuing operations before accounting change                                |  | $                                                           | 0.84    |   |         | $ | 0.98    |      |  | $ | 0.81    |   |  | $    | 0.79    |   |  | $ | 0.59    |  
|Discontinued operations                                                       |  |                                                             | 0.07    |   |         |   | 0.07    |      |  |   | 0.03    |   |  |      | 0.02    |   |  |   | (0.02   | )
|Cumulative effect of accounting change                                        |  |                                                             |        |   |         |   |        |      |  |   |        |   |  |      | (0.08   | ) |  |   |        |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net earnings(5)                                                               |  | $                                                           | 0.91    |   |         | $ | 1.05    |      |  | $ | 0.84    |   |  | $    | 0.73    |   |  | $ | 0.57    |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Diluted weighted average shares outstanding                                   |  |                                                             | 75,415  |   |         |   | 77,387  |      |  |   | 83,097  |   |  |      | 79,291  |   |  |   | 84,252  |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Diluted Earnings Per Share Amounts(6)                                         |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Continuing operations before accounting change                                |  | $                                                           | 0.81    |   |         | $ | 0.95    |      |  | $ | 0.77    |   |  | $    | 0.79    |   |  | $ | 0.59    |  
|Discontinued operations                                                       |  |                                                             | 0.07    |   |         |   | 0.06    |      |  |   | 0.03    |   |  |      | 0.02    |   |  |   | (0.02   | )
|Cumulative effect of accounting change                                        |  |                                                             |        |   |         |   |        |      |  |   |        |   |  |      | (0.08   | ) |  |   |        |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net earnings(5)                                                               |  | $                                                           | 0.88    |   |         | $ | 1.01    |      |  | $ | 0.80    |   |  | $    | 0.73    |   |  | $ | 0.57    |  
|                                                                              |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Cash dividends                                                                |  |                                                             |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Common                                                                        |  | $                                                           |        |   |         | $ |        |      |  | $ | 0.500   |   |  | $    | 0.40    |   |  | $ | 0.45    |  
|Class C                                                                       |  | $                                                           | 0.57    |   |         | $ | 0.57    |      |  | $ | 0.142   |   |  | $    |        |   |  | $ |        |  
|Class B                                                                       |  | $                                                           | 0.26    |   |         | $ | 0.26    |      |  | $ | 0.065   |   |  | $    |        |   |  | $ |        |  
|Class A                                                                       |  | $                                                           | 0.26    |   |         | $ | 0.26    |      |  | $ | 0.065   |   |  | $    |        |   |  | $ |        |  



38



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##### Table of Contents

|                                 |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|-------------------------------- |  | ---------------------- | -------- | - | ------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | -------- | -
|                                 |  | 2005(2)                |          |   | 2004(3) |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                 |  | (dollars in thousands) |         
|Segment Data                     |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Revenue:(1)                      |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Publishing                       |  | $                      | 339,002  |   |         | $ | 338,896 |      |  | $ | 328,303 |   |  | $    | 322,364 |   |  | $ | 333,214  |  
|Broadcasting                     |  |                        | 168,316  |   |         |   | 172,073 |      |  |   | 150,744 |   |  |      | 152,749 |   |  |   | 134,801  |  
|Telecommunications               |  |                        | 141,087  |   |         |   | 144,020 |      |  |   | 149,538 |   |  |      | 148,674 |   |  |   | 151,992  |  
|Printing services                |  |                        | 72,463   |   |         |   | 76,308  |      |  |   | 85,958  |   |  |      | 97,841  |   |  |   | 114,612  |  
|Other                            |  |                        | 43,593   |   |         |   | 42,075  |      |  |   | 37,702  |   |  |      | 34,447  |   |  |   | 31,120   |  
|                                 |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Total revenue                    |  | $                      | 764,461  |   |         | $ | 773,372 |      |  | $ | 752,245 |   |  | $    | 756,075 |   |  | $ | 765,739  |  
|                                 |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Operating earnings (loss):       |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Publishing                       |  | $                      | 41,677   |   |         | $ | 43,708  |      |  | $ | 33,199  |   |  | $    | 30,315  |   |  | $ | 24,898   |  
|Broadcasting                     |  |                        | 35,094   |   |         |   | 44,404  |      |  |   | 29,879  |   |  |      | 33,384  |   |  |   | 15,453   |  
|Telecommunications               |  |                        | 23,959   |   |         |   | 34,691  |      |  |   | 38,858  |   |  |      | 40,956  |   |  |   | 48,007   |  
|Printing services                |  |                        | 2,324    |   |         |   | (367    | )    |  |   | 3,760   |   |  |      | 2,131   |   |  |   | (756     | )
|Other                            |  |                        | 2,106    |   |         |   | 1,907   |      |  |   | 3,750   |   |  |      | 3,863   |   |  |   | (4,022   | )
|                                 |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Total operating earnings         |  | $                      | 105,160  |   |         | $ | 124,343 |      |  | $ | 109,446 |   |  | $    | 110,649 |   |  | $ | 83,580   |  
|                                 |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Other Financial Data             |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Depreciation(5)                  |  | $                      | 42,803   |   |         | $ | 43,570  |      |  | $ | 44,595  |   |  | $    | 42,902  |   |  | $ | 38,855   |  
|Amortization(5)                  |  | $                      | 1,363    |   |         | $ | 1,396   |      |  | $ | 2,241   |   |  | $    | 1,909   |   |  | $ | 10,736   |  
|EBITDA(5)                        |  | $                      | 149,326  |   |         | $ | 169,309 |      |  | $ | 156,282 |   |  | $    | 155,460 |   |  | $ | 133,171  |  
|Capital expenditures             |  | $                      | 34,304   |   |         | $ | 28,871  |      |  | $ | 38,868  |   |  | $    | 52,425  |   |  | $ | 89,558   |  
|Cash dividends                   |  | $                      | 20,289   |   |         | $ | 20,792  |      |  | $ | 44,080  |   |  | $    | 31,597  |   |  | $ | 37,866   |  
|Cash Flow Data                   |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Net cash provided by (used for): |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Operating activities             |  | $                      | 106,430  |   |         | $ | 133,966 |      |  | $ | 128,523 |   |  | $    | 82,185  |   |  | $ | 118,036  |  
|Investing activities             |  | $                      | (236,755 | ) |         | $ | (69,269 | )    |  | $ | (40,216 | ) |  | $    | (50,924 | ) |  | $ | (107,253 | )
|Financing activities             |  | $                      | 130,815  |   |         | $ | (66,763 | )    |  | $ | (88,321 | ) |  | $    | (31,714 | ) |  | $ | (11,918  | )
|Balance Sheet Data               |  |                        |          |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |          |  
|Property and equipment, net      |  | $                      | 316,911  |   |         | $ | 297,405 |      |  | $ | 306,693 |   |  | $    | 315,237 |   |  | $ | 310,188  |  
|Intangible assets, net           |  | $                      | 492,837  |   |         | $ | 291,085 |      |  | $ | 251,369 |   |  | $    | 247,243 |   |  | $ | 258,984  |  
|Total assets                     |  | $                      | 984,666  |   |         | $ | 774,519 |      |  | $ | 747,175 |   |  | $    | 744,967 |   |  | $ | 730,778  |  
|Total debt                       |  | $                      | 274,545  |   |         | $ | 70,310  |      |  | $ | 84,000  |   |  | $    | 90,775  |   |  | $ | 4,420    |  
|Shareholders equity             |  | $                      | 484,068  |   |         | $ | 489,495 |      |  | $ | 463,750 |   |  | $    | 476,544 |   |  | $ | 532,880  |  

---

|(1) | Beginning in 2005, we are reporting circulation on a retail (gross), rather than a wholesale (net), basis. Certain newspaper delivery costs, which were previously recorded as
contra-revenue, were reclassified to increase operating costs with a corresponding increase in circulation revenue. Accordingly, all periods presented reflect this reclassification.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Includes Fort Myers, Florida television station WFTX-TV and Tucson, Arizona television station KGUN-TV, and a local marketing agreement for Omaha, Nebraska television station,
KMTV-TV, from December 5, 2005.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Includes Green Bay, Wisconsin television station WGBA-TV and a local marketing agreement between WGBA-TV and WACY-TV from October 6, 2004.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Effective January 1, 2002, we adopted Statement No. 142, Goodwill and Other Intangible Assets. Under Statement No. 142, goodwill and
broadcast licenses are no longer amortized but are reviewed for impairment and written down and charged to net earnings when their carrying amounts exceed their
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | estimated fair values. In connection with the adoption of Statement No. 142, we recorded a transitional goodwill and broadcast license impairment charge
of $6.5 million, which is reported as a cumulative effect of accounting change.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | We define EBITDA as net earnings excluding gain/loss from discontinued operations, net, cumulative effect of accounting change, net, provision for income taxes, total other income
and expense, 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 as one of the measures of our ability to service our debt. EBITDA is not a measure of performance calculated in accordance with U.S. generally accepted accounting
principles. 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 consolidated net earnings to consolidated EBITDA:



|                                              |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|--------------------------------------------- |  | ---------------------- | ------- | - | ------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                              |  | 2005(2)                |         |   | 2004(3) |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                              |  | (dollars in thousands) |        
|Net earnings                                  |  | $                      | 66,243  |   |         | $ | 78,480  |      |  | $ | 66,793  |   |  | $    | 57,920  |   |  | $ | 47,757  |  
|(Gain) loss from discontinued operations, net |  |                        | (5,094  | ) |         |   | (5,148  | )    |  |   | (2,425  | ) |  |      | (1,530  | ) |  |   | 1,403   |  
|Cumulative effect of accounting change, net   |  |                        |        |   |         |   |        |      |  |   |        |   |  |      | 6,509   |   |  |   |        |  
|Provision for income taxes                    |  |                        | 40,369  |   |         |   | 49,066  |      |  |   | 43,611  |   |  |      | 48,089  |   |  |   | 35,658  |  
|Total other (income) and expense              |  |                        | 3,642   |   |         |   | 1,945   |      |  |   | 1,467   |   |  |      | (339    | ) |  |   | (1,238  | )
|Depreciation                                  |  |                        | 42,803  |   |         |   | 43,570  |      |  |   | 44,595  |   |  |      | 42,902  |   |  |   | 38,855  |  
|Amortization                                  |  |                        | 1,363   |   |         |   | 1,396   |      |  |   | 2,241   |   |  |      | 1,909   |   |  |   | 10,736  |  
|                                              |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|EBITDA                                        |  | $                      | 149,326 |   |         | $ | 169,309 |      |  | $ | 156,282 |   |  | $    | 155,460 |   |  | $ | 133,171 |  
|                                              |  |                        |         |   |         |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  

|(6) | Gives effect to the three-for-one share exchange ratio related to our new capital structure as of September 29, 2003.
|--- | ---------------------------------------------------------------------------------------------------------------------



|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 three years ended December 25, 2005, 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. Our reportable business segments are: (i) publishing; (ii) broadcasting;
(iii) telecommunications; (iv) printing services; and (v) other. Our publishing segment consists of a daily newspaper, the Milwaukee Journal Sentinel, and about 90 community newspapers and shoppers in eight states. Our
broadcasting segment consists of 37 radio stations and nine television stations in 12 states, as well as the operation of two additional television stations under local marketing agreements. Our telecommunications segment consists of wholesale and
business-to-business telecommunications services



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provided through a high speed fiber optic telecommunications network that covers more than 4,150 route miles in seven states. Our printing services segment
reflects the operations of our printing and kit assembly and fulfillment business. Our other segment consists of a direct marketing services business and corporate expenses and eliminations.



The year 2005 was a year in which we did not achieve our financial plan. We
had expected a challenging year in 2005 without the $16.5 million in political and issue and Olympics television advertising we sold in 2004. We had also anticipated a reduction in our telecommunications wholesale revenue as our customers clarified
their needs in the services we provide, reduced their spending and negotiated new market rate contracts with us. Our challenge was heightened as the NBC television network ratings fell, negatively affecting three of our stations. Hurricane Katrina
and the printing facility shutdown in New Orleans disrupted ongoing margin improvement at our community newspapers and shoppers business. Advertising revenue softened, especially in the automotive category, during the second half of the year, and
the enterprise business at Norlight faced a very competitive environment.



We continue to see growth at Journal Interactive where revenues increased 43% to over $7.0 million in 2005. In December, we added three television stations to our broadcasting business. We have had a strong start at
the new stations, where a managed integration effort has helped us achieve early results that were beyond our expectations. At our radio operations, we saw improvement in earnings and margin for the fifth consecutive year. And at our printing
services business, we made progress toward our transition back to our core printing business while improving operating results.



Acquisitions



On December 5, 2005, we acquired the business and assets of FOX-affiliate WFTX-TV, in Fort Myers/Naples, Florida and ABC-affiliate, KGUN-TV, in
Tucson, Arizona. We also acquired certain assets of CBS-affiliate KMTV-TV, in Omaha, Nebraska and have begun programming KMTV-TV under a local marketing agreement. The total purchase price for the three stations will be $235.0 million subject to
certain adjustments. We paid $228.8 million, including $3.8 million for expenses associated with the transaction, in 2005.



On December 3, 2004, we acquired the customer base and certain assets of Executone of Western Michigan, Inc. (d/b/a Netcom Group), a provider of
networking, business telephone system and carrier services solutions, in Grand Rapids, Michigan. The cash purchase price was $1.1 million.



On October 6, 2004, we acquired the business and certain assets of NBC-affiliate WGBA-TV, in Green Bay, Wisconsin and certain assets of UPN affiliate
WACY-TV, which is licensed to serve Appleton, Wisconsin. We also assumed an existing local marketing agreement between WGBA-TV and WACY-TV. The cash purchase price for these stations was $43.2 million.



On November 26, 2003, we acquired the business and certain assets of two
radio stations in the Springfield, Missouri market, KZRQ-FM, which is licensed to Mt. Vernon, Missouri, and KSGF-FM, which is licensed to Ash Grove, Missouri. The cash purchase price for the stations was $5.3 million.



On June 3, 2003, our community newspapers and shoppers business acquired
the business and certain assets of the Antigo Area Shoppers Guide. The cash purchase price for the publication was $1.5 million.



Results of Operations



2005 compared to 2004



Consolidated



Our consolidated operating revenue from continuing operations in 2005 was $764.5 million, a decrease of $8.9 million, or 1.2%, compared to $773.4 million
in 2004. Our consolidated operating costs and expenses from



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continuing operations in 2005 were $438.1 million, an increase of $8.8 million, or 2.1%, compared to $429.3 million in 2004. Our consolidated selling and
administrative expenses from continuing operations in 2005 were $221.2 million, an increase of $1.4 million, or 0.7%, compared to $219.8 million in 2004.



The following table presents our total revenue by segment, total operating costs and expenses, selling and administrative expenses and total operating
earnings as a percent of total revenue for 2005 and 2004:



|                                                                           |  |                       |       |                         |       |   |      |   |                         |  |       |  
|-------------------------------------------------------------------------- |  | --------------------- | ----- | ----------------------- | ----- | - | ---- | - | ----------------------- |  | ----- | -
|                                                                           |  | 2005                  |       | Percent ofTotal Revenue |       |   | 2004 |   | Percent ofTotal Revenue | 
|                                                                           |  | (dollars in millions) |      
|Continuing Operations:                                                     |  |                       |       |                         |       |   |      |   |                         |  |       |  
|Revenue:                                                                   |  |                       |       |                         |       |   |      |   |                         |  |       |  
|Publishing                                                                 |  | $                     | 339.0 |                         | 44.3  | % |      | $ | 338.9                   |  | 43.8  | %
|Broadcasting                                                               |  |                       | 168.3 |                         | 22.0  |   |      |   | 172.1                   |  | 22.3  |  
|Telecommunications                                                         |  |                       | 141.1 |                         | 18.5  |   |      |   | 144.0                   |  | 18.6  |  
|Printing services                                                          |  |                       | 72.5  |                         | 9.5   |   |      |   | 76.3                    |  | 9.9   |  
|Other                                                                      |  |                       | 43.6  |                         | 5.7   |   |      |   | 42.1                    |  | 5.4   |  
|                                                                           |  |                       |       |                         |       |   |      |   |                         |  |       |  
|Total revenue                                                              |  |                       | 764.5 |                         | 100.0 |   |      |   | 773.4                   |  | 100.0 |  
|Total operating costs and expenses                                         |  |                       | 438.1 |                         | 57.3  |   |      |   | 429.3                   |  | 55.5  |  
|Selling and administrative expenses                                        |  |                       | 221.2 |                         | 28.9  |   |      |   | 219.8                   |  | 28.4  |  
|                                                                           |  |                       |       |                         |       |   |      |   |                         |  |       |  
|Total operating costs and expenses and selling and administrative expenses |  |                       | 659.3 |                         | 86.2  |   |      |   | 649.1                   |  | 83.9  |  
|                                                                           |  |                       |       |                         |       |   |      |   |                         |  |       |  
|Total operating earnings                                                   |  | $                     | 105.2 |                         | 13.8  | % |      | $ | 124.3                   |  | 16.1  | %
|                                                                           |  |                       |       |                         |       |   |      |   |                         |  |       |  



The decrease in total
revenue from continuing operations was due to a decrease in political and issue and Olympics advertising revenue and the reduction in ratings of NBC at our television stations, a decrease in revenue from several computer-related customers in our
printing services business, a decrease in other and retail revenue at our community newspapers and shoppers due to the impact from Hurricane Katrina and the closure of our Dixie Web printing facility in New Orleans, and a decrease in wholesale
revenue at our telecommunications business due to service disconnections and repricings. These decreases were partially offset by increases in revenue from our 2005 and 2004 television acquisitions, classified advertising revenue at our publishing
businesses, local advertising revenue at our radio stations, other revenue at our daily newspaper and postage amounts billed to customers at our direct marketing business.



The increase in total operating costs and expenses from continuing operations is due to the addition of the Green Bay,
Wisconsin, Omaha, Nebraska, Tucson, Arizona and Naples/Fort Myers, Florida television operations and our 2004 acquired telecommunications business, an increase in newsprint and other paper expense at our publishing businesses, an increase in postage
and freight expense associated with mailing services revenue at our direct marketing business, and higher operating costs associated with a higher mix of lower margin enterprise services revenue at our telecommunications business. These increases
were partially offset by decreases in operating costs and expenses at our printing services business due to improved production efficiencies and in syndicated and network programming costs at our television stations.



The increase in selling and administrative expenses from continuing
operations is primarily due to the addition of the Green Bay, Wisconsin, Omaha, Nebraska, Tucson, Arizona and Naples/Fort Myers, Florida television operations, Hurricane Katrina and printing facility closure costs at our community newspapers and
shoppers business. These increases were partially offset by cost saving initiatives at our printing services business, a decrease in payroll-related termination benefits and incentive compensation expense at our daily newspaper, decrease in
incentive compensation and bonuses, decrease in overall cost reduction initiatives at our publishing businesses, and reductions in a reserve for bad debts at our television operations.



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##### Table of Contents

Our consolidated operating earnings from continuing operations in 2005 were $105.2 million, a decrease of
$19.1 million, or 15.4%, compared to $124.3 million in 2004. The following table presents our operating earnings by segment for 2005 and 2004:



|                         |  |                       |       |                                   |       |   |      |   |       |                                   |  |       |  
|------------------------ |  | --------------------- | ----- | --------------------------------- | ----- | - | ---- | - | ----- | --------------------------------- |  | ----- | -
|                         |  | 2005                  |       | Percent ofTotal OperatingEarnings |       |   | 2004 |   |       | Percent ofTotal OperatingEarnings | 
|                         |  | (dollars in millions) |      
|Publishing               |  | $                     | 41.7  |                                   | 39.6  | % |      | $ | 43.7  |                                   |  | 35.2  | %
|Broadcasting             |  |                       | 35.1  |                                   | 33.4  |   |      |   | 44.4  |                                   |  | 35.7  |  
|Telecommunications       |  |                       | 24.0  |                                   | 22.8  |   |      |   | 34.7  |                                   |  | 27.9  |  
|Printing services        |  |                       | 2.3   |                                   | 2.2   |   |      |   | (0.4  | )                                 |  | (0.3  | )
|Other                    |  |                       | 2.1   |                                   | 2.0   |   |      |   | 1.9   |                                   |  | 1.5   |  
|                         |  |                       |       |                                   |       |   |      |   |       |                                   |  |       |  
|Total operating earnings |  | $                     | 105.2 |                                   | 100.0 | % |      | $ | 124.3 |                                   |  | 100.0 | %
|                         |  |                       |       |                                   |       |   |      |   |       |                                   |  |       |  



The decrease in total
operating earnings from continuing operations was primarily due to the decrease in political and issue and Olympic advertising revenue and the reduction in ratings of NBC at our television stations, the decrease in wholesale services revenue and
decreased margins associated with the higher mix of lower margin enterprise services revenue at our telecommunications business, costs related to the impact of Hurricane Katrina and printing facility closure costs at our community newspapers and
shoppers. These decreases were partially offset by improved production efficiencies at our printing services business, an increase in revenue at our radio stations and a gain on the sale of radio station KHLP-AM in Omaha.



Our consolidated EBITDA in 2005 was $149.3 million, a decrease of $20.0
million, or 11.8%, compared to $169.3 million in 2004. We define EBITDA as net earnings excluding gain/loss from discontinued operations, net, provision for income taxes, total other expense, net, 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 as one of the measures of our ability to service our debt. EBITDA is not a measure of performance calculated in accordance with U.S. generally accepted accounting principles. 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 consolidated net earnings to consolidated EBITDA for 2005 and 2004:



|                                       |  |                       |       |   |      |   |       |  
|-------------------------------------- |  | --------------------- | ----- | - | ---- | - | ----- | -
|                                       |  | 2005                  |       |   | 2004 |  
|                                       |  | (dollars in millions) |      
|Net earnings                           |  | $                     | 66.2  |   |      | $ | 78.5  |  
|Gain from discontinued operations, net |  |                       | (5.1  | ) |      |   | (5.2  | )
|Provision for income taxes             |  |                       | 40.4  |   |      |   | 49.0  |  
|Total other expense, net               |  |                       | 3.6   |   |      |   | 1.9   |  
|Depreciation                           |  |                       | 42.8  |   |      |   | 43.6  |  
|Amortization                           |  |                       | 1.4   |   |      |   | 1.4   |  
|                                       |  |                       |       |   |      |   |       |  
|EBITDA                                 |  | $                     | 149.3 |   |      | $ | 169.3 |  
|                                       |  |                       |       |   |      |   |       |  



The decrease in EBITDA
is consistent with decreases in operating earnings in our telecommunications, broadcasting and publishing segments, partially offset by an increase in operating earnings at our printing services and other segments.



43



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Publishing



Revenue from publishing in 2005 was $339.0 million, an increase of $0.1 million, compared to $338.9 million in 2004.
Operating earnings from publishing were $41.7 million, a decrease of $2.0 million, or 4.6%, compared to $43.7 million in 2004.



The following table presents our publishing revenue and operating earnings for 2005 and 2004:



|                   |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |      |  
|------------------ |  | --------------------- | ----- | ----------------------------- | - | ----- |  | -------------- | ----- | ----------------------------- | - | ----- |  | ------------- | ---- |  | - | ----- |  | ---- | -
|                   |  | 2005                  |       | 2004                          |   |       | 
|                   |  | DailyNewspaper        |       | CommunityNewspapers& Shoppers |   | Total |  | DailyNewspaper |       | CommunityNewspapers& Shoppers |   | Total |  | PercentChange |     
|                   |  | (dollars in millions) |       |                               |  
|Revenue            |  | $                     | 242.0 |                               | $ | 97.0  |  | $              | 339.0 |                               | $ | 240.3 |  | $             | 98.6 |  | $ | 338.9 |  |     |  
|                   |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |      |  
|Operating earnings |  | $                     | 39.5  |                               | $ | 2.2   |  | $              | 41.7  |                               | $ | 38.4  |  | $             | 5.3  |  | $ | 43.7  |  | (4.6 | )
|                   |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |      |  



The daily newspaper
has revised circulation revenue numbers for 2005 and 2004, reflecting a change in the way we are reporting carrier compensation. We are now recording circulation revenue on a retail (gross), rather than a wholesale (net), basisas do many
newspapers. The impact is an increase in revenue offset by a like amount in increased operating expense. This reclassification has no impact on earnings. In 2005 and 2004, the impact to circulation revenue was $11.1 million and $11.2 million,
respectively.



The table below also reflects a reclassification
of revenue categories for the daily newspaper. Previously, the Other Advertising Revenue category had included such items as Online, Shared Mail, Event Marketing, Solo Mail. These items are being reported in the traditional categories of
Classified, Retail and National, with the exception of Solo Mail, which is now reflected in the new classification, Direct Marketing. The advertising classification previously labeled General is now called
National. Further, any advertising that runs in the classified section of our daily newspapers various productsincluding Online, mke and specialty publicationsis now included in the pertinent classified verticals
of Employment, Auto, Real Estate and Other. We believe these changes provide a better understanding of our business and are similar to how other publishers report their revenue.



The following table, which reflects these changes, presents our publishing revenue by category for 2005 and 2004:



|                          |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |       |  
|------------------------- |  | --------------------- | ----- | ----------------------------- | - | ----- |  | -------------- | ----- | ----------------------------- | - | ----- |  | ------------- | ---- |  | - | ----- |  | ----- | -
|                          |  | 2005                  |       | 2004                          |   |       | 
|                          |  | DailyNewspaper        |       | CommunityNewspapers& Shoppers |   | Total |  | DailyNewspaper |       | CommunityNewspapers& Shoppers |   | Total |  | PercentChange |     
|                          |  | (dollars in millions) |       |                               |  
|Advertising revenue:      |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |       |  
|Retail                    |  | $                     | 93.8  |                               | $ | 54.8  |  | $              | 148.6 |                               | $ | 93.6  |  | $             | 55.5 |  | $ | 149.1 |  | (0.4  | )
|Classified                |  |                       | 70.0  |                               |   | 9.8   |  |                | 79.8  |                               |   | 67.3  |  |               | 9.1  |  |   | 76.4  |  | 4.5   |  
|National                  |  |                       | 10.2  |                               |   |      |  |                | 10.2  |                               |   | 11.5  |  |               |     |  |   | 11.5  |  | (11.6 | )
|Direct Marketing          |  |                       | 7.6   |                               |   |      |  |                | 7.6   |                               |   | 7.9   |  |               |     |  |   | 7.9   |  | (3.9  | )
|Other                     |  |                       |      |                               |   | 1.8   |  |                | 1.8   |                               |   |      |  |               | 1.9  |  |   | 1.9   |  | (6.0  | )
|                          |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |       |  
|Total advertising revenue |  |                       | 181.6 |                               |   | 66.4  |  |                | 248.0 |                               |   | 180.3 |  |               | 66.5 |  |   | 246.8 |  | 0.5   |  
|Circulation revenue       |  |                       | 52.9  |                               |   | 2.9   |  |                | 55.8  |                               |   | 54.4  |  |               | 2.9  |  |   | 57.3  |  | (2.5  | )
|Other revenue             |  |                       | 7.5   |                               |   | 27.7  |  |                | 35.2  |                               |   | 5.6   |  |               | 29.2 |  |   | 34.8  |  | 1.1   |  
|                          |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |       |  
|Total revenue             |  | $                     | 242.0 |                               | $ | 97.0  |  | $              | 339.0 |                               | $ | 240.3 |  | $             | 98.6 |  | $ | 338.9 |  |      |  
|                          |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |       |  



Advertising revenue in
2005 accounted for 73.2% of total publishing revenue compared to 72.9% in 2004.



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Retail advertising revenue in 2005 was $148.6 million, a decrease of $0.5 million, or 0.4%, compared to
$149.1 million in 2004. A $0.7 million decrease in community newspapers and shoppers retail advertising was partially offset by the $0.2 million increase in daily newspaper retail advertising. The $0.2 million increase at the daily newspaper was
primarily due to increases in retail preprints, advertising in our weekly tabloid-style publication, mke, shared mail and JSOnline, partially offset by a decrease in retail ROP advertising. The decrease in retail ROP advertising is attributed
to decreases in automotive, telecommunications, and department and furniture stores, partially offset by increases in health services and insurance and financial services. The $0.7 million decrease at our community newspapers and shoppers was
primarily due to the reduction in business at our Louisiana publications from the impact of Hurricane Katrina.



Classified advertising revenue in 2005 was $79.8 million, an increase of $3.4 million, or 4.5%, compared to $76.4 million in 2004. Increases in employment
advertising of $2.7 million, real estate advertising of $1.6 million and other advertising of $0.4 million at our daily newspaper, and an increase in other advertising $0.7 million at our community newspapers and shoppers were partially offset by a
decrease in automotive classified advertising at our daily newspaper of $2.0 million. Employment advertising, which accounted for 39.9% of classified advertising at the daily newspaper in 2005, increased 10.7% compared to 2004. We believe the
increase in employment advertising is due to job growth in the Milwaukee, Wisconsin area. The decrease in automotive classified advertising combined with the decrease in retail advertising was $3.3 million or 13.3%. This decrease is consistent with
the national trend.



National advertising revenue in 2005 was
$10.2 million, a decrease of $1.3 million, or 11.6%, compared to $11.5 million in 2004. The decrease was due to reductions in telecommunications, movies, finance/insurance and transportation advertising, partially offset by an increase in preprints
from national advertisers.



The following table presents our
daily newspapers core newspaper advertising linage by category for 2005 and 2004:



|                               |  |           |  |           |  |               |  
|------------------------------ |  | --------- |  | --------- |  | ------------- | -
|                               |  | 2005      |  | 2004      |  | PercentChange |  
|Advertising linage (inches):   |  |           |  |           |  |               |  
|Full run                       |  |           |  |           |  |               |  
|Retail                         |  | 687,132   |  | 724,220   |  | (5.1          | )
|Classified                     |  | 773,032   |  | 845,014   |  | (8.5          | )
|National                       |  | 45,074    |  | 54,213    |  | (16.9         | )
|                               |  |           |  |           |  |               |  
|Total full run                 |  | 1,505,238 |  | 1,623,447 |  | (7.3          | )
|Part run                       |  | 167,047   |  | 172,125   |  | (3.0          | )
|                               |  |           |  |           |  |               |  
|Total advertising linage       |  | 1,672,285 |  | 1,795,572 |  | (6.9          | )
|                               |  |           |  |           |  |               |  
|Preprint pieces (in thousands) |  | 895,598   |  | 800,700   |  | 11.9          |  
|                               |  |           |  |           |  |               |  



Total advertising
linage in 2005 decreased 6.9% compared to 2004. Full run advertising linage in 2005 decreased 7.3% compared to 2004 due to a reduction in all advertising linage categories. Retail ROP advertising linage decreased in the automotive, communication and
department store categories. In many of these categories, there was also a shift to preprint advertising. The decrease in classified advertising linage is due to a decrease in automotive advertising, partially offset by an increase in employment and
real estate advertising. The decrease in national advertising linage is consistent with the decreases in national ROP advertising revenue. Part run advertising linage decreased in 2005 due to an decrease in automotive zoned classified and overall
reductions in the zoned product. Preprint advertising pieces increased 11.9% due to the continued switch of advertising from ROP to preprints and preprint pieces used in our shared mail products.



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The following table presents the full pages of advertising and revenue per page for our community
newspapers and shoppers business for 2005 and 2004:



|                                |  |      |         |      |   |               |  |      |  
|------------------------------- |  | ---- | ------- | ---- | - | ------------- |  | ---- | -
|                                |  | 2005 |         | 2004 |   | PercentChange | 
|Full pages of advertising:      |  |      |         |      |   |               |  |      |  
|Community newspapers            |  |      | 91,659  |      |   | 100,156       |  | (8.5 | )
|Shoppers and specialty products |  |      | 107,847 |      |   | 108,979       |  | (1.0 | )
|                                |  |      |         |      |   |               |  |      |  
|Total full pages of advertising |  |      | 199,506 |      |   | 209,135       |  | (4.6 | )
|                                |  |      |         |      |   |               |  |      |  
|Revenue per page                |  | $    | 296.41  |      | $ | 282.96        |  | 4.8  |  
|                                |  |      |         |      |   |               |  |      |  



Total full pages of
advertising for our community newspapers and shoppers business in 2005 decreased 4.6% compared to 2004. The decrease was due to the reduction in advertising in our Louisiana publications due to the impact of Hurricane Katrina and reformatting
certain papers to more efficiently use the amount of available space on each page. This was partially offset by an increase in advertising in specialty products. Revenue per page increased 4.8% primarily due to the decrease in total full pages of
advertising while increasing advertising rates.



Direct
marketing revenue, consisting of revenue from direct mail efforts for our daily newspaper was $7.6 million in 2005, a decrease of $0.3 million, or 3.9%, compared to $7.9 million in 2004. The decrease was due to a decrease in our solo mail
initiatives. Other advertising revenue, consisting of revenue from company-sponsored event advertising at our community newspapers and shoppers, in 2005 was $1.8 million, a decrease of $0.1 million, or 6.0%, compared to $1.9 million in 2004.



Circulation revenue in 2005 accounted for 16.5% of total
publishing revenue compared to 16.9% in 2004. Circulation revenue in 2005 was $55.8 million, a decrease of $1.5 million, or 2.5%, compared to $57.3 million in 2004. The decrease is primarily due to lower daily and Sunday average net paid
circulation. Revenue and average paid circulation was essentially flat at our community newspapers and shoppers.



The Audit Bureau of Circulations (ABC) has issued revised audit reports for the 12-month periods ended March 31, 2003 and 2004 to reflect adjustments
to the daily newspapers average net paid circulation primarily related to third-party sponsored distributions, newspapers sold at events together with premium items, and a distributor incentive program.



The revised audit reports for the 12-month periods ended March 31, 2003
and 2004 reflect an average net paid circulation for the Sunday edition of 423,019 and 422,069, respectively, or a decline of approximately 2.6% and 2.8%, respectively, from the previously reported numbers. The average net paid circulation for
the daily edition for the 12-month periods ended March 31, 2003 and 2004 declined by 0.6% and 0.8%, respectively, from the previously reported numbers (or to 245,864 and 240,106, respectively).



ABC is finalizing its regularly scheduled audit of the 12-month period ended
March 31, 2005.



Other revenue, which consists of revenue
from commercial printing at the printing plants for our community newspapers and shoppers and promotional, distribution and commercial printing revenue at our daily newspaper, accounted for 10.3% of total publishing revenue in 2005 compared to 10.2%
in 2004. Other revenue in 2005 was $35.2 million, an increase of $0.4 million, or 1.1%, compared to $34.8 million in 2004. The increase was due to a $2.0 million increase in printing revenue, distribution revenue and commercial printing revenue at
the daily newspaper, partially offset by a $1.5 million decrease at our community newspapers and shoppers primarily due to the closure of our New Orleans printing facility.



Publishing operating earnings in 2005 were $41.7 million, a decrease of $2.0 million, or 4.6%, compared to $43.7 million in
2004. The decrease was primarily due to $3.7 million in costs related to the impact of Hurricane



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Katrina and printing facility closure costs at the community newspapers and shoppers and a $1.3 million increase in the cost of paper at our publishing
companies. These operating earnings decreases were partially offset by $0.9 million in savings from cost reduction initiatives at our community newspapers and shoppers and a $1.3 million reduction in payroll-related termination benefits and
incentive compensation expense at our daily newspaper. Total newsprint and paper cost in 2005 was $44.3 million, an increase of $1.2 million, or 2.9%, compared to $43.1 million in 2004. Average newsprint pricing per metric ton was up 14.6% and
consumption of newsprint tonnage was down by 10.3%. In the second quarter 2005, the daily newspaper switched to lighter basis-weight newsprint.



Broadcasting



Revenue from broadcasting in 2005 was $168.3 million, a decrease of $3.8 million, or 2.2%, compared to $172.1 million in 2004. Operating earnings from
broadcasting in 2005 were $35.1 million, a decrease of $9.3 million, or 21.0%, compared to $44.4 million in 2004.



The following table presents our broadcasting revenue and operating earnings for 2005 and 2004:



|                   |       |                       |            |      |       |                |       |   |            |  |       |      |  |   |      |  |   |       |  |       |  
|------------------ | ----- | --------------------- | ---------- | ---- | ----- | -------------- | ----- | - | ---------- |  | ----- | ---- |  | - | ---- |  | - | ----- |  | ----- | -
|                   |       | 2005                  |            | 2004 |       | Percent Change |      
|                   | Radio |                       | Television |      | Total |                | Radio |   | Television |  | Total |     
|                   |       | (dollars in millions) |            |      |      
|Revenue            |       | $                     | 84.3       |      | $     | 84.0           |       | $ | 168.3      |  | $     | 82.3 |  | $ | 89.8 |  | $ | 172.1 |  | (2.2  | )
|                   |       |                       |            |      |       |                |       |   |            |  |       |      |  |   |      |  |   |       |  |       |  
|Operating earnings |       | $                     | 22.9       |      | $     | 12.2           |       | $ | 35.1       |  | $     | 19.8 |  | $ | 24.6 |  | $ | 44.4  |  | (21.0 | )
|                   |       |                       |            |      |       |                |       |   |            |  |       |      |  |   |      |  |   |       |  |       |  



Revenue from our radio
stations in 2005 was $84.3 million, an increase of $2.0 million, or 2.5%, compared to $82.3 million in 2004. The increase was primarily attributed to a $2.6 million increase in local advertising revenue and a $0.4 million increase in other revenue,
partially offset by a $1.0 million decrease in political and issue advertising.



Operating earnings from our radio stations in 2005 were $22.9 million, an increase of $3.1 million, or 15.7%, compared to $19.8 million in 2004. The increase was primarily attributed to the increase in revenue and
decreases in promotion and amortization expense, partially offset by increases in technology and programming expenses and increased sales commissions.



Revenue from our television stations in 2005 was $84.0 million, a decrease of $5.8 million, or 6.5%, compared to $89.8 million in 2004. The decrease was
primarily attributed to a $12.0 million decrease in political and issue advertising revenue, a $2.5 million decrease in Olympics advertising revenue and a $0.8 million decrease in other revenue, partially offset by a $5.8 million increase in local
advertising and a $3.7 million increase in national advertising revenue. Revenue from our 2005 and 2004 television station acquisitions was $12.0 million in 2005 and $2.7 million in 2004.



Operating earnings from our television stations in 2005 were $12.2 million, a decrease of $12.4 million, or 50.5%, compared
to $24.6 million in 2004. The ratings decline at NBC, coupled with lower advertising demand compared to last year, adversely affected our average unit rates for advertising and the lack of political and issue advertising demand negatively impacted
our results. Overall, operating expenses in our television stations have decreased, excluding the operating expenses from our recent acquisitions. Decreases in syndicated and network programming expense, incentive compensation and bonuses and a
reduction in a reserve for bad debts were partially offset by increases in news and certain payroll and training expenses.



On December 5, 2005, we acquired the business and assets of FOX-affiliate WFTX-TV, in Fort Myers/Naples, Florida, and ABC-affiliate, KGUN-TV, in
Tucson, Arizona. We also acquired certain assets of CBS-affiliate KMTV-TV, in Omaha, Nebraska, and have begun programming KMTV-TV under a local marketing agreement. This acquisition contributed $2.9 million in revenue and $0.8 million in operating
earnings in 2005.



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On October 6, 2004, we acquired the business and certain assets of NBC-affiliate WGBA-TV, in Green
Bay, Wisconsin and certain assets of UPN affiliate WACY-TV, which is licensed to serve Appleton, Wisconsin. We also assumed an existing local marketing agreement between WGBA-TV and WACY-TV. This acquisition contributed $9.0 million and $2.8 million
in revenue and a $0.1 million operating loss and $0.7 million in operating earnings in 2005 and 2004, respectively.



Telecommunications



Revenue from telecommunications in 2005 was $141.1 million, a decrease of $2.9 million, or 2.0%, compared to $144.0 million in 2004. Operating earnings
from telecommunications in 2005 were $24.0 million, a decrease of $10.7 million, or 30.9%, compared to $34.7 million in 2004.



Wholesale telecommunication services provide network transmission solutions for other service providers by offering bulk transmission capacity. Revenue
from wholesale services in 2005 was $76.7 million, a decrease of $5.5 million, or 6.7%, compared to $82.2 million in 2004. The decrease was primarily due to service disconnections and lower pricing on customer contract renewals. Monthly recurring
revenue from wholesale services at the end of 2005 was $5.8 million compared to $6.4 million at the beginning of 2005 and $7.0 million at the beginning of 2004. During 2005, new circuit connections of $1.1 million in monthly recurring revenue were
more than offset by service disconnections and repricings.



We
have substantial business relationships with a few large customers, including major long distance carriers. Our top 10 customers accounted for 40.1% and 37.0% of our telecommunications revenue in 2005 and 2004, respectively. In February 2005, we
signed a new five-year contract extension with MCI whereby they remain a significant customer. The new contract includes reduced prices for current services being provided to MCI and provision for higher capacity circuits to replace specific
existing circuits being disconnected. We expect the effects of the new contract to be fully implemented by the end of the first quarter of 2006.



Enterprise telecommunication services provide advanced data communications and long distance service to small and medium-sized businesses in the Upper
Midwest, principally in Wisconsin, Michigan, Indiana, Minnesota and Illinois. Revenue from enterprise services in 2005 was $64.4 million, an increase of $2.6 million, or 4.2%, compared to $61.8 million in 2004. The increase was primarily attributed
to our newly acquired infrastructure business and was partially offset by a decrease in long distance revenue. Monthly recurring revenue from enterprise advanced data services at the end of 2005 was $3.4 million compared to $3.5 million at the
beginning of 2005 and $3.3 million at the beginning of 2004.



In December 2004, we acquired the customer base and certain assets of Executone of Western Michigan, Inc. (d/b/a Netcom Group), a provider of networking, business telephone system and carrier services solutions in Grand Rapids, Michigan.
The cash purchase price was $1.1 million.



The decrease in
operating earnings from telecommunications was primarily due to the decrease in wholesale revenue, the increasing mix of lower margin enterprise and telephone system business and reduced margins due to competitive pricing in the enterprise business.



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



Printing Services



Revenue from printing services in 2005 was $72.5 million, a decrease of $3.8 million, or 5.0%, compared to $76.3 million in 2004. Operating earnings from
printing services in 2005 were $2.3 million, an increase of $2.7 million, compared to an operating loss of $0.4 million in 2004.



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The decrease in printing services revenue was due primarily to a $4.8 million decrease in revenue from
our largest customer, Dell Computer Corporation, and a $1.1 million decrease in revenue from other computer-related customers. These decreases were partially offset by a $2.1 million increase in revenue from printing of publications. Dell accounted
for 19.0% and 24.4% of our printing services revenue in 2005 and 2004, respectively. As previously discussed, we expect our revenue from Dell to decline by 85% in 2006 compared to 2005 as we cease supplying product and services to Dell early in
2006. We do not expect this reduction in revenue to have an adverse impact on our results of operations.



The increase in printing services operating earnings was primarily attributed to production efficiencies and cost reduction initiatives, partially offset
by reduction in sales volume and prices to computer-related customers.



Other



Other revenue in 2005 was $43.6
million, an increase of $1.5 million, or 3.6%, compared to $42.1 million in 2004. Other operating earnings in 2005 were $2.1 million, an increase of $0.2 million, or 10.4%, compared to $1.9 million in 2004.



The following table presents our other revenue and operating earnings for
2005 and 2004:



|                   |  |                         |      |                          |   |      |       |  |                         |      |                          |   |      |       |   |               |   |  |   |      |  |     
|------------------ |  | ----------------------- | ---- | ------------------------ | - | ---- | ----- |  | ----------------------- | ---- | ------------------------ | - | ---- | ----- | - | ------------- | - |  | - | ---- |  | ----
|                   |  | 2005                    |      | 2004                     |   |     
|                   |  | DirectMarketingServices |      | CorporateandEliminations |   |      | Total |  | DirectMarketingServices |      | CorporateandEliminations |   |      | Total |   | PercentChange
|                   |  | (dollars in millions)   |      |                         
|Revenue            |  | $                       | 48.1 |                          | $ | (4.5 | )     |  | $                       | 43.6 |                          | $ | 46.9 |       | $ | (4.8          | ) |  | $ | 42.1 |  | 3.6 
|                   |  |                         |      |                          |   |      |       |  |                         |      |                          |   |      |       |   |               |   |  |   |      |  |     
|Operating earnings |  | $                       | 0.0  |                          | $ | 2.1  |       |  | $                       | 2.1  |                          | $ | 0.4  |       | $ | 1.5           |   |  | $ | 1.9  |  | 10.4
|                   |  |                         |      |                          |   |      |       |  |                         |      |                          |   |      |       |   |               |   |  |   |      |  |     



The increase in other
revenue in 2005 compared to 2004 was primarily attributed to an increase in postage amounts and mailing services at our direct marketing services business. Included in revenue and operating costs and expenses from our direct marketing services
business is $27.6 million and $26.4 million of postage amounts billed to customers in 2005 and 2004, respectively.



The increase in other operating earnings was primarily from the increase in corporate management fees charged to our businesses, partially offset by an
unfavorable change in the business mix at our direct marketing business.



Non-Operating Income and Taxes



Interest income and dividends were $0.3 million in 2005 and 2004. Interest expense in 2005 was $4.0 million, an increase of $1.7 million, or 73.7%, compared to $2.3 million in 2004. Gross interest expense from
borrowings under our credit agreement was $3.1 million in 2005 and $1.8 million in 2004. Amortization of deferred financing fees was $0.4 million in both 2005 and 2004. In 2005, we expensed $0.4 million in unamortized deferred financing fees
attributed to the original credit facility at the time we amended our revolving credit facility.



The effective tax rate from continuing operations was 39.8% in 2005 and 40.1% in 2004.



Earnings per Share



Our basic and diluted earnings per share in 2005 were $0.91 and $0.88, respectively, a decrease of $0.14 and $0.13 compared to basic and diluted
earnings per share of $1.05 and $1.01, respectively, in 2004. Our basic and diluted earnings per share from continuing operations in 2005 were $0.84 and $0.81, respectively, a decrease of



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$0.14 compared to basic and diluted earnings per share from continuing operations of $0.98 and $0.95, respectively, in 2004. Basic and diluted earnings per
share from discontinued operations were both $0.07 in 2005 and $0.07 and $0.06, respectively, in 2004.



Discontinued Operations



In January 2005, we entered into a definitive asset sale agreement with Multi-Color Corporation pursuant to which Multi-Color Corporation acquired
substantially all of the assets and certain liabilities of NorthStar Print Group, Inc., our label printing business. The sale price, excluding certain real estate holdings that we retained, was $26.1 million in cash. The operations of NorthStar
Print Group have been reflected as discontinued operations in our consolidated financial statements and, accordingly, prior periods have been restated to reflect this treatment.



Revenue from discontinued operations in 2005 was $4.1 million, a decrease of $54.5 million, compared to $58.6 million in
2004. Net assets of discontinued operations at December 25, 2005 were $0.1 million and $13.3 million at December 26, 2004. Real estate holdings in Green Bay, WI are to be sold to Multi-Color Corporation upon the achievement of certain
environmental standards. Gain from discontinued operations was $5.1 million in both 2005 and 2004. Applicable income tax expense was $3.1 million in 2005 and $3.3 million in 2004.



2004 compared to 2003



Consolidated



Our consolidated operating revenue from continuing operations in 2004 was $773.4 million, an increase of $21.2 million, or 2.8%, compared to $752.2
million in 2003. Our consolidated operating costs and expenses from continuing operations in 2004 were $429.3 million, an increase of $4.3 million, or 1.0%, compared to $425.0 million in 2003. Our consolidated selling and administrative expenses
from continuing operations in 2004 were $219.8 million, a decrease of $2.0 million, or 0.9%, compared to $217.8 million in 2003.



The following table presents our total revenue by segment, total operating costs and expenses, selling and administrative expenses and total operating
earnings as a percent of total revenue for 2004 and 2003:



|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  
|-------------------------------------------------------------------------- |  | --------------------- | ----- | ---------------------- | ----- | - | ---- | - | ---------------------- |  | ----- | -
|                                                                           |  | 2004                  |       | Percent ofTotalRevenue |       |   | 2003 |   | Percent ofTotalRevenue | 
|                                                                           |  | (dollars in millions) |      
|Continuing Operations:                                                     |  |                       |       |                        |       |   |      |   |                        |  |       |  
|Revenue:                                                                   |  |                       |       |                        |       |   |      |   |                        |  |       |  
|Publishing                                                                 |  | $                     | 338.9 |                        | 43.8  | % |      | $ | 328.3                  |  | 43.7  | %
|Broadcasting                                                               |  |                       | 172.1 |                        | 22.3  |   |      |   | 150.7                  |  | 20.0  |  
|Telecommunications                                                         |  |                       | 144.0 |                        | 18.6  |   |      |   | 149.5                  |  | 19.9  |  
|Printing services                                                          |  |                       | 76.3  |                        | 9.9   |   |      |   | 86.0                   |  | 11.4  |  
|Other                                                                      |  |                       | 42.1  |                        | 5.4   |   |      |   | 37.7                   |  | 5.0   |  
|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  
|Total revenue                                                              |  |                       | 773.4 |                        | 100.0 |   |      |   | 752.2                  |  | 100.0 |  
|Total operating costs and expenses                                         |  |                       | 429.3 |                        | 55.5  |   |      |   | 425.0                  |  | 56.5  |  
|Selling and administrative expenses                                        |  |                       | 219.8 |                        | 28.4  |   |      |   | 217.8                  |  | 29.0  |  
|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  
|Total operating costs and expenses and selling and administrative expenses |  |                       | 649.1 |                        | 83.9  |   |      |   | 642.8                  |  | 85.5  |  
|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  
|Total operating earnings                                                   |  | $                     | 124.3 |                        | 16.1  | % |      | $ | 109.4                  |  | 14.5  | %
|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  



The increase in total
revenue from continuing operations was due to increases in political and issue, local and Olympics advertising revenue at our television stations, increases in other advertising, classified, and retail



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advertising revenue at our daily newspaper, increases in local advertising revenue at our radio stations, an increase in postage and freight revenue
associated with mailing services at our direct marketing services business, an increase in enterprise services revenue at our telecommunications business, and an increase in printing revenue at our community newspapers and shoppers. These increases
were partially offset by a decrease in revenue from several computer-related customers in our printing services business and a decrease in wholesale telecommunications revenue due to customer disconnections and contract repricings.



The increase in total operating costs and expenses from continuing operations
is due to an increase in postage and freight expense associated with mailing services revenue at our direct marketing business, an increase in newsprint expense at our publishing businesses, an increase in news and technology expenses at our
television stations and a charge for voluntary terminations at our daily newspaper. These increases were offset by the decrease in operating costs due to the revenue decrease at our printing services business, increased operating efficiencies and
productivity benefits at our daily newspapers new production facility, cost reduction initiatives at our community newspapers and shoppers business and the decrease in operating costs due to the revenue decrease at our telecommunications
business.



The decrease in selling and administrative expenses
from continuing operations is primarily due to overall cost reduction initiatives at our publishing businesses and a reduction in postretirement benefit expense in 2004 in our other segment. These expense decreases were partially offset by an
increase in sales, promotion and incentive compensation expense at our television and radio stations and a charge for bad debt at our direct marketing services business.



Our consolidated operating earnings from continuing operations in 2004 were $124.3 million, an increase of $14.9 million, or
13.6%, compared to $109.4 million in 2003. The following table presents our operating earnings by segment for 2004 and 2003:



|                         |  |                       |       |   |                                  |       |   |      |   |                                  |  |       |  
|------------------------ |  | --------------------- | ----- | - | -------------------------------- | ----- | - | ---- | - | -------------------------------- |  | ----- | -
|                         |  | 2004                  |       |   | Percent ofTotalOperatingEarnings |       |   | 2003 |   | Percent ofTotalOperatingEarnings | 
|                         |  | (dollars in millions) |      
|Publishing               |  | $                     | 43.7  |   |                                  | 35.2  | % |      | $ | 33.2                             |  | 30.3  | %
|Broadcasting             |  |                       | 44.4  |   |                                  | 35.7  |   |      |   | 29.9                             |  | 27.3  |  
|Telecommunications       |  |                       | 34.7  |   |                                  | 27.9  |   |      |   | 38.8                             |  | 35.5  |  
|Printing services        |  |                       | (0.4  | ) |                                  | (0.3  | ) |      |   | 3.8                              |  | 3.5   |  
|Other                    |  |                       | 1.9   |   |                                  | 1.5   |   |      |   | 3.7                              |  | 3.4   |  
|                         |  |                       |       |   |                                  |       |   |      |   |                                  |  |       |  
|Total operating earnings |  | $                     | 124.3 |   |                                  | 100.0 | % |      | $ | 109.4                            |  | 100.0 | %
|                         |  |                       |       |   |                                  |       |   |      |   |                                  |  |       |  



The increase in total
operating earnings was primarily due to revenue increases at our television stations, productivity benefits from the daily newspapers new production facility, cost reduction initiatives at our community newspapers and shoppers, the increase in
revenue at our daily newspaper and at our radio stations, and a charge for employment taxes recorded in 2003. These increases were partially offset by a decrease in sales volume and production inefficiencies at our printing services business,
wholesale telecommunications service disconnections and contract repricings, changes in business mix and a charge for bad debt expense at our direct marketing business, and an additional depreciation charge that conformed asset lives across our
businesses.



Our consolidated EBITDA in 2004 was $169.3
million, an increase of $13.0 million, or 8.3%, compared to $156.3 million in 2003. We define EBITDA as net earnings excluding gain/loss from discontinued operations, net, provision for income taxes, total other expense, net, 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



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for certain management personnel. In addition, our lenders use EBITDA as one of the measures of our ability to service our debt. EBITDA is not a measure of
performance calculated in accordance with U.S. generally accepted accounting principles. 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 consolidated net
earnings to consolidated EBITDA for 2004 and 2003:



|                                       |  |                       |       |   |      |   |       |  
|-------------------------------------- |  | --------------------- | ----- | - | ---- | - | ----- | -
|                                       |  | 2004                  |       |   | 2003 |  
|                                       |  | (dollars in millions) |      
|Net earnings                           |  | $                     | 78.5  |   |      | $ | 66.8  |  
|Gain from discontinued operations, net |  |                       | (5.2  | ) |      |   | (2.4  | )
|Provision for income taxes             |  |                       | 49.1  |   |      |   | 43.6  |  
|Total other expense, net               |  |                       | 1.9   |   |      |   | 1.5   |  
|Depreciation                           |  |                       | 43.6  |   |      |   | 44.6  |  
|Amortization                           |  |                       | 1.4   |   |      |   | 2.2   |  
|                                       |  |                       |       |   |      |   |       |  
|EBITDA                                 |  | $                     | 169.3 |   |      | $ | 156.3 |  
|                                       |  |                       |       |   |      |   |       |  



The increase in EBITDA
is consistent with increases in operating earnings in our broadcasting, publishing, and other segments, partially offset by a decrease in operating earnings at our printing services and telecommunications segments.



Publishing



Revenue from publishing in 2004 was $338.9 million, an increase of $10.6
million, or 3.2%, compared to $328.3 million in 2003. Operating earnings from publishing were $43.7 million, an increase of $10.5 million, or 31.6%, compared to $33.2 million in 2003.



The following table presents our publishing revenue and operating earnings for 2004 and 2003:



|                   |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |     
|------------------ |  | --------------------- | ----- | ----------------------------- | - | ------------- |  | -------------- | ----- | ----------------------------- | - | ----- |  | - | ---- |  | - | ----- |  | ----
|                   |  | 2004                  |       | 2003                          |   | PercentChange
|                   |  | DailyNewspaper        |       | CommunityNewspapers& Shoppers |   | Total         |  | DailyNewspaper |       | CommunityNewspapers& Shoppers |   | Total | 
|                   |  | (dollars in millions) |       |                              
|Revenue            |  | $                     | 240.3 |                               | $ | 98.6          |  | $              | 338.9 |                               | $ | 230.9 |  | $ | 97.4 |  | $ | 328.3 |  | 3.2 
|                   |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |     
|Operating earnings |  | $                     | 38.4  |                               | $ | 5.3           |  | $              | 43.7  |                               | $ | 29.0  |  | $ | 4.2  |  | $ | 33.2  |  | 31.6
|                   |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |     



The table below
reflects a reclassification of revenue categories for the daily newspaper. Previously, the Other Advertising Revenue category had included such items as Online, Shared Mail, Event Marketing, Solo Mail. These items are being reported in
the traditional categories of Classified, Retail and National, with the exception of Solo Mail, which is now reflected in the new classification, Direct Marketing. The advertising classification previously labeled General is
now called National. Further, any advertising that runs in the classified section of our daily newspapers various productsincluding Online, mke and specialty publicationsis now included in the pertinent
classified verticals of Employment, Auto, Real Estate and Other.



Also, the daily newspaper has revised circulation revenue numbers for 2004 and 2003, reflecting a change in the way we are reporting carrier compensation. We are now recording circulation revenue on a retail (gross), rather than a wholesale
(net), basis  as do many newspapers. The impact is an increase in revenue offset by a like amount in increased operating expense. This reclassification has no impact on earnings. In the 2004 and 2003, the impact to circulation revenue was
$11.2 million and $11.3 million, respectively.



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The following table, which reflects these changes, presents our publishing revenue by category for 2004
and 2003:



|                          |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  
|------------------------- |  | --------------------- | ----- | ----------------------------- | - | ------------- |  | -------------- | ----- | ----------------------------- | - | ----- |  | - | ---- |  | - | ----- |  | ---- | -
|                          |  | 2004                  |       | 2003                          |   | PercentChange | 
|                          |  | DailyNewspaper        |       | CommunityNewspapers& Shoppers |   | Total         |  | DailyNewspaper |       | CommunityNewspapers& Shoppers |   | Total | 
|                          |  | (dollars in millions) |       |                               |  
|Advertising revenue:      |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  
|Retail                    |  | $                     | 93.6  |                               | $ | 55.5          |  | $              | 149.1 |                               | $ | 89.9  |  | $ | 56.1 |  | $ | 146.0 |  | 2.1  |  
|Classified                |  |                       | 67.3  |                               |   | 9.1           |  |                | 76.4  |                               |   | 62.8  |  |   | 8.7  |  |   | 71.5  |  | 6.9  |  
|National                  |  |                       | 11.5  |                               |   |              |  |                | 11.5  |                               |   | 11.0  |  |   |     |  |   | 11.0  |  | 4.5  |  
|Direct Marketing          |  |                       | 7.9   |                               |   |              |  |                | 7.9   |                               |   | 6.9   |  |   |     |  |   | 6.9   |  | 14.5 |  
|Other                     |  |                       |      |                               |   | 1.9           |  |                | 1.9   |                               |   |      |  |   | 2.0  |  |   | 2.0   |  | (5.0 | )
|                          |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  
|Total advertising revenue |  |                       | 180.3 |                               |   | 66.5          |  |                | 247.0 |                               |   | 170.6 |  |   | 66.8 |  |   | 237.4 |  | 4.0  |  
|Circulation revenue       |  |                       | 54.4  |                               |   | 2.9           |  |                | 57.3  |                               |   | 55.2  |  |   | 2.9  |  |   | 58.1  |  | (1.4 | )
|Other revenue             |  |                       | 5.6   |                               |   | 29.2          |  |                | 34.8  |                               |   | 5.1   |  |   | 27.7 |  |   | 32.8  |  | 6.1  |  
|                          |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  
|Total revenue             |  | $                     | 240.3 |                               | $ | 98.6          |  | $              | 338.9 |                               | $ | 230.9 |  | $ | 97.4 |  | $ | 328.3 |  | 3.2  |  
|                          |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  



Advertising revenue in
2004 accounted for 72.9% of total publishing revenue compared to 72.3% in 2003.



Retail advertising revenue in 2004 was $149.1 million, an increase of $3.1 million, or 2.1.%, compared to $146.0 million in 2003. A $3.7 million increase in daily newspaper retail advertising was partially offset by a
$0.6 million decrease in community newspapers and shoppers retail advertising. The $3.7 million increase at the daily newspaper was primarily due to an increase in automotive advertising caused by certain advertisers switching their ad placement
from the classified section to the retail section of the paper, taking advantage of the enhanced color capabilities of our new presses together with increases in several advertiser categories. Additionally, growth at Journal Interactive increased
revenue $0.9 million and a new weekly tabloid-style publication, mke, which was introduced in the fourth quarter of 2004, contributed $0.2 million. The $0.6 million decrease at our community newspapers and shoppers was primarily due to a
reduction in automotive and preprint insert advertising.



Classified advertising revenue in 2004 was $76.4 million, an increase of $4.9 million, or 6.9%, compared to $71.5 million in 2003. At our daily newspaper, increases in employment advertising of $2.1 million, real estate advertising of $1.3
million, general/other advertising of $0.3 million and an increase of $0.4 million at our community newspapers and shoppers were partially offset by a decrease in automotive advertising at our daily newspaper of $1.0 million. Employment advertising,
which accounted for 36.9% of classified advertising at the daily newspaper in 2004, increased 10.1% compared to 2003. We believe the increase in employment advertising is due to job growth in the Milwaukee, Wisconsin area. The decrease in automotive
advertising is due to certain advertisers switching their ad placement from the classified section to the retail section of the paper. Also contributing to the increase was a $1.4 million increase in Journal Interactives online advertising
revenue.



National advertising revenue in 2004 was $11.5
million, an increase of $0.5 million, or 4.5%, compared to $11.0 million in 2003. The increase was due to an increase in preprints from national advertisers and computer hardware advertisers and an increase in airline/travel industry ROP
advertising.



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The following table presents our daily newspapers core newspaper advertising linage by category for
2004 and 2003:



|                               |  |           |  |           |  |               |  
|------------------------------ |  | --------- |  | --------- |  | ------------- | -
|                               |  | 2004      |  | 2003      |  | PercentChange |  
|Advertising linage (inches):   |  |           |  |           |  |               |  
|Full run                       |  |           |  |           |  |               |  
|Retail                         |  | 724,220   |  | 724,116   |  |              |  
|Classified                     |  | 845,014   |  | 877,715   |  | (3.7          | )
|National                       |  | 54,213    |  | 51,521    |  | 5.2           |  
|                               |  |           |  |           |  |               |  
|Total full run                 |  | 1,623,447 |  | 1,653,352 |  | (1.8          | )
|Part run                       |  | 172,125   |  | 124,937   |  | 37.8          |  
|                               |  |           |  |           |  |               |  
|Total advertising linage       |  | 1,795,572 |  | 1,778,289 |  | 1.0           |  
|                               |  |           |  |           |  |               |  
|Preprint pieces (in thousands) |  | 800,700   |  | 834,587   |  | (4.1          | )
|                               |  |           |  |           |  |               |  



Total advertising
linage in 2004 increased 1.0% compared to 2003. The increase was due to a 37.8% increase in part run advertising linage. Part run advertising linage increased in 2004 due to an increase in zoned classified and retail advertising. Full run
advertising linage in 2004 decreased 1.8% compared to 2003 due to a 3.7% decrease in classified ROP advertising linage partially offset by a 5.2% increase in general ROP advertising linage. Retail ROP advertising linage in 2004 was essentially even
compared to 2003. The decrease in classified advertising linage is due to a decrease in automotive advertising, partially offset by an increase in employment advertising. The increase in general advertising linage is consistent with the increases in
general ROP advertising revenue. Preprint advertising pieces decreased 4.1% due to lower average net paid circulation, the in-house printing of a local advertisers insert which was previously measured as a preprint piece and the elimination of
Kmart preprints in the daily newspaper due to the closing of several area stores.



The following table presents the full pages of advertising and revenue per page for our community newspapers and shoppers business for 2004 and 2003:



|                                |  |      |         |      |   |               |  |      |  
|------------------------------- |  | ---- | ------- | ---- | - | ------------- |  | ---- | -
|                                |  | 2004 |         | 2003 |   | PercentChange | 
|Full pages of advertising:      |  |      |         |      |   |               |  |      |  
|Community newspapers            |  |      | 100,156 |      |   | 109,114       |  | (8.2 | )
|Shoppers and specialty products |  |      | 108,979 |      |   | 114,554       |  | (4.9 | )
|                                |  |      |         |      |   |               |  |      |  
|Total full pages of advertising |  |      | 209,135 |      |   | 223,668       |  | (6.5 | )
|                                |  |      |         |      |   |               |  |      |  
|Revenue per page                |  | $    | 282.96  |      | $ | 264.54        |  | 7.0  |  
|                                |  |      |         |      |   |               |  |      |  



Total full pages of
advertising for our community newspapers and shoppers business in 2004 decreased 6.5% compared to 2003. The decrease was due to reformatting certain papers to more efficiently use the amount of available space on each page and discontinuing certain
papers. This was partially offset by an increase in advertising in specialty products. Revenue per page increased 7.0% primarily due to the decrease in total full pages of advertising while increasing advertising rates.



Direct marketing revenue, consisting of revenue from direct mail marketing
efforts for our daily newspaper, was $7.9 million in 2004, an increase of $1.0 million, or 14.5%, compared to $6.9 million in 2003. The increase was primarily due to a $1.0 million increase in direct mail advertising and printing at our daily
newspaper. Other advertising revenue consisting of revenue from company-sponsored event advertising at our community newspapers and shoppers in 2004 was $1.9 million, a decrease of $0.1 million, or 5.0%, compared to $2.0 million in 2003.



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Circulation revenue in 2004 accounted for 16.9% of total publishing revenue compared to 17.7% in 2003.
Circulation revenue in 2004 was $57.3 million, a decrease of $0.8 million, or 1.4%, compared to $58.1 million in 2003. The decrease is primarily due to lower daily and Sunday average net paid circulation for single copy and home delivery of our
daily newspaper and a lower average rate per copy for the Sunday edition at our daily newspaper. Revenue was essentially flat at our community newspapers and shoppers while average paid circulation decreased 1.8%.



Other revenue, which consists of revenue from commercial printing at the
printing plants for our community newspapers and shoppers and promotional, distribution and commercial printing revenue at our daily newspaper, accounted for 10.3% of total publishing revenue in 2004 compared to 10.0% in 2003. Other revenue in 2004
was $34.8 million, an increase of $2.0 million, or 6.1%, compared to $32.8 million in 2003. The increase was due to a $1.5 million increase in printing revenue at our community newspapers and shoppers primarily due to sales volume increases and a
$0.3 million increase in distribution revenue and commercial printing revenue at the daily newspaper.



Publishing operating earnings in 2004 were $43.7 million, an increase of $10.5 million, or 31.6%, compared to $33.2 million in 2003. The increase was
primarily due to $5.1 million in productivity benefits related to the daily newspapers new production facility, $2.7 million in savings from cost reduction initiatives at our community newspapers and shoppers, and the increase in revenue at
both our daily newspaper and our community newspapers and shoppers. These operating earnings increases were partially offset by an increase in newsprint costs at our daily newspaper and community newspapers and shoppers, a charge for voluntary
terminations at our daily newspaper, an increase in bad debt expense and a loss on fixed asset disposal at our community newspapers and shoppers. Total newsprint cost in 2004 was $43.1 million, an increase of $3.2 million, or 8.0%, compared to $39.8
million in 2003. The increase in the cost of newsprint was primarily attributed to a 9.9% average price increase per metric ton.



As of March 31, 2003, all production and distribution of the daily newspaper was transitioned to the new production facility. Production and
distribution of the newspaper was performed at both the old and new production facilities from October 2002 until March 2003.



Broadcasting



Revenue from broadcasting in 2004 was $172.1 million, an increase of $21.4 million, or 14.1%, compared to $150.7 million in 2003. Operating earnings from
broadcasting in 2004 were $44.4 million, an increase of $14.5 million, or 48.6%, compared to $29.9 million in 2003.



The following table presents our broadcasting revenue and operating earnings for 2004 and 2003:



|                   |  |                       |      |            |   |                |  |       |       |            |   |       |  |   |      |  |   |       |  |     
|------------------ |  | --------------------- | ---- | ---------- | - | -------------- |  | ----- | ----- | ---------- | - | ----- |  | - | ---- |  | - | ----- |  | ----
|                   |  | 2004                  |      | 2003       |   | Percent Change
|                   |  | Radio                 |      | Television |   | Total          |  | Radio |       | Television |   | Total | 
|                   |  | (dollars in millions) |      |           
|Revenue            |  | $                     | 82.3 |            | $ | 89.8           |  | $     | 172.1 |            | $ | 77.9  |  | $ | 72.8 |  | $ | 150.7 |  | 14.1
|                   |  |                       |      |            |   |                |  |       |       |            |   |       |  |   |      |  |   |       |  |     
|Operating earnings |  | $                     | 19.8 |            | $ | 24.6           |  | $     | 44.4  |            | $ | 16.8  |  | $ | 13.1 |  | $ | 29.9  |  | 48.6
|                   |  |                       |      |            |   |                |  |       |       |            |   |       |  |   |      |  |   |       |  |     



Revenue from our radio
stations in 2004 was $82.3 million, an increase of $4.4 million, or 5.6%, compared to $77.9 million in 2003. The increase was primarily attributed to a $4.5 million increase in local advertising revenue and a $1.1 million increase in political and
issue advertising, partially offset by a $1.1 million decrease in national advertising and a $0.1 million decrease in other revenue.



Operating earnings from our radio stations in 2004 were $19.8 million, an increase of $3.0 million, or 18.4%, compared to $16.8 million in 2003. The
increase was primarily attributed to the increase in revenue and reduced national sales commissions, partially offset by an increase in technology expense, incentive compensation, and programming expenses.



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Revenue from our television stations in 2004 was $89.8 million, an increase of $17.0 million, or 23.4%,
compared to $72.8 million in 2003. The increase was primarily attributed to a $11.5 million increase in political and issue advertising, a $3.8 million increase in local advertising, a $2.5 million increase in Olympics advertising revenue, and a
$0.3 million increase in other revenue, partially offset by a $1.1 million decrease in national advertising.



Operating earnings from our television stations in 2004 were $24.6 million, an increase of $11.5 million, or 87.8%, compared to $13.1 million in 2003. The
increase was primarily attributed to the increase in revenue, partially offset by increases in news, promotion, technology, incentive compensation and sales expenses.



On October 6, 2004, we acquired the business and certain assets of NBC-affiliate WGBA-TV, in Green Bay, Wisconsin and
certain assets of UPN affiliate WACY-TV, which is licensed to serve Appleton, Wisconsin. We also assumed an existing local marketing agreement between WGBA-TV and WACY-TV. The aggregate purchase price for these stations was $43.2 million. This
acquisition contributed $2.8 million in revenue and $0.7 million in operating earnings in 2004.



Telecommunications



Revenue from telecommunications in 2004 was $144.0 million, a decrease of $5.5 million, or 3.7%, compared to $149.5 million in 2003. Operating earnings
from telecommunications in 2004 were $34.7 million, a decrease of $4.1 million, or 10.7%, compared to $38.8 million in 2003.



Wholesale telecommunication services provide network transmission solutions for other service providers by offering bulk transmission capacity. Revenue
from wholesale services in 2004 was $82.2 million, a decrease of $9.5 million, or 10.4%, compared to $91.7 million in 2003. The decrease was primarily due to service disconnections and lower pricing on customer contract renewals. While we are not
always able to determine the specific reason a customer may disconnect service, we believe the trend of customers focusing on reducing their network costs by consolidating traffic on least cost routes will continue. Monthly recurring revenue from
wholesale services at the end of 2004 was $6.4 million compared to $6.9 million at the beginning of 2004 and $7.5 million at the beginning of 2003. During 2004, new circuit connections of $0.6 million in monthly recurring revenue were more than
offset by service disconnections and repricings.



We have
substantial business relationships with a few large customers, including major long distance carriers. Our top 10 customers accounted for 37.0% and 38.1% of our telecommunications revenue in 2004 and 2003, respectively. During 2004, we signed a
three-year master capacity agreement with Global Crossing to provide carrier services throughout the Great Lakes Region. This agreement resulted in service disconnections and reduced pricing from those that had previously been in effect and a number
of circuit service orders were renewed and re-priced. In February 2005, we signed a new five-year contract extension with MCI whereby they remain a significant customer. The new contract includes reduced prices for current services being provided to
MCI and provisions for higher capacity circuits to replace specific existing circuits being disconnected. The effect of the pricing provisions will occur at various times throughout 2005. We believe they will remain a significant customer, though we
can not predict the outcome of a potential sale or merger of MCI. When the terms of the agreements with Global Crossing and MCI are in full effect, it is expected that neither customer will individually account for more than 10% of our
telecommunications revenue.



Enterprise telecommunication
services provide advanced data communications and long distance service to small and medium-sized businesses in the Upper Midwest, principally in Wisconsin, Michigan, Indiana, Minnesota and Illinois. Revenue from enterprise services in 2004 was
$61.8 million, an increase of $4.0 million, or 7.0%, compared to $57.8 million in 2003. The increase was primarily attributed to an increase in the services utilized by our existing customers. Monthly recurring revenue from enterprise advanced data
services at the end of 2004 was $3.4 million compared to $3.3 million at the beginning of 2004 and $3.0 million at the beginning of 2003. In 2003, regulators approved SBC Communications Inc.s application to offer long distance service in
Wisconsin, Indiana, Illinois and Michigan. We believe this increased competition for enterprise



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telecommunication services is adversely impacting us through the loss of existing customers or by reducing the success rate of securing new customers. We
have been proactively working with our customers by leveraging our customer service abilities and adding new bundled services as we extend contracts at reduced prices.



In December 2004, we acquired the customer base and certain assets of Executone of Western Michigan, Inc. (d/b/a Netcom
Group), a provider of networking, business telephone system and carrier services solutions in Grand Rapids, MI. The cash purchase price was $1.1 million.



The decrease in operating earnings from telecommunications was primarily due to the decrease in wholesale revenue, higher operating costs and expenses
associated with the higher mix of enterprise revenue, and gains on the sales of towers in 2003. Partially offsetting these earnings decreases were decreases in selling and promotional expenses, bad debt expense, and a lease abandonment charge in
2003.



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



Printing Services



Revenue from printing services in 2004 was $76.3 million, a decrease of $9.7 million, or 11.2%, compared to $86.0 million in 2003. Operating loss from
printing services in 2004 was $0.4 million, a decrease of $4.2 million, compared to operating earnings of $3.8 million in 2003.



The decrease in printing services revenue was primarily attributed to decreases in revenue from our largest customer, Dell Computer Corporation, and from
other computer-related customers. These decreases were partially offset by an increase in publication printing revenue primarily from newly acquired business.



Dell Computer Corporation accounted for 24.4% and 29.1% of our printing services revenue in 2004 and 2003, respectively. In 2004, Dell decided to
eliminate supplying its customers with certain items that we produce and, as a result, our revenue from Dell declined by $6.4 million. We anticipate our revenue from Dell will further decline in 2005. This changing relationship with Dell represents
an important step in our long-term strategy to minimize our reliance on a single customer in our printing services segment and to return to our core printing business.



The decrease in printing services operating earnings was primarily attributed to the decrease in sales volume, production
inefficiencies on print work, charges for workforce reductions, and a charge for some of the costs incurred for a discontinued software system implementation project. These earnings decreases were partially offset by lower production costs due to
the decrease in sales volume and cost reduction initiatives.



Other



Other revenue in 2004 was $42.1
million, an increase of $4.4 million, or 11.7%, compared to $37.7 million in 2003. Other operating earnings in 2004 were $1.9 million, a decrease of $1.8 million, or 48.6%, compared to $3.7 million in 2003.



The following table presents our other revenue and operating earnings for
2004 and 2003:



|                   |  |                         |      |                          |   |      |       |  |                         |      |                          |   |      |       |   |               |   |  |   |      |  |       |  
|------------------ |  | ----------------------- | ---- | ------------------------ | - | ---- | ----- |  | ----------------------- | ---- | ------------------------ | - | ---- | ----- | - | ------------- | - |  | - | ---- |  | ----- | -
|                   |  | 2004                    |      | 2003                     |   |      |      
|                   |  | DirectMarketingServices |      | CorporateandEliminations |   |      | Total |  | DirectMarketingServices |      | CorporateandEliminations |   |      | Total |   | PercentChange |  
|                   |  | (dollars in millions)   |      |                          |  
|Revenue            |  | $                       | 46.9 |                          | $ | (4.8 | )     |  | $                       | 42.1 |                          | $ | 42.0 |       | $ | (4.3          | ) |  | $ | 37.7 |  | 11.7  |  
|                   |  |                         |      |                          |   |      |       |  |                         |      |                          |   |      |       |   |               |   |  |   |      |  |       |  
|Operating earnings |  | $                       | 0.4  |                          | $ | 1.5  |       |  | $                       | 1.9  |                          | $ | 2.4  |       | $ | 1.3           |   |  | $ | 3.7  |  | (48.6 | )
|                   |  |                         |      |                          |   |      |       |  |                         |      |                          |   |      |       |   |               |   |  |   |      |  |       |  



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The increase in other revenue in 2004 compared to 2003 was primarily attributed to an increase in postage
amounts and mailing services partially offset by a decrease in list and printing services at our direct marketing services business due to the loss of a customer. Included in revenue and operating costs and expenses from our direct marketing
services business is $26.4 million and $22.3 million of postage amounts billed to customers in 2004 and 2003, respectively.



The decrease in other operating earnings was primarily attributed to a $3.2 million gain on the sale of property in 2003, an unfavorable change in the
business mix at our direct marketing business and a charge for bad debt expense, which was partially offset by a $1.7 million employment tax charge in 2003.



Non-Operating Income and Taxes



Interest income and dividends in 2004 was $0.3 million compared to $0.4 million in 2003. Interest expense in 2004 was $2.3 million, an increase of $0.4
million, or 21.1%, compared to $1.9 million in 2003. Gross interest expense from borrowings under our credit agreement was $1.8 million in both 2004 and 2003. Amortization of deferred financing costs was $0.4 million in 2004 and $0.1 million in
2003.



The effective tax rate was 40.1% in 2004 and 40.4% in
2003.



Earnings per Share



Our basic and diluted earnings per share in 2004 were $1.05 and $1.01,
respectively, an increase of $0.21 compared to basic and diluted earnings per share of $0.84 and $0.80, respectively, in 2003. Our basic and diluted earnings per share from continuing operations in 2004 were $0.98 and $0.95, respectively, an
increase of $0.17 and $0.18 compared to basic and diluted earnings per share from continuing operations of $0.81 and $0.77, respectively, in 2003. Basic and diluted earnings per share from discontinued operations were $0.07 and $0.06 in 2004 and
both $0.03 in 2003. Earnings per share amounts reflect our new capital structure as of September 29, 2003 and our follow-on equity offering and tender offer completed in June 2004.



Discontinued Operations



Revenue from discontinued operations in 2004 was $58.6 million, an increase of $1.2 million, compared to $57.4 million in
2003. Net assets of discontinued operations at December 26, 2004 were $13.3 million. Gain from discontinued operations in 2004 was $5.1 million compared to $2.4 million in 2003. Applicable income tax expense was $3.3 million in 2004 and $1.5
million in 2003.



Follow-On Public Equity Offering and Tender Offer



In June 2004, we completed a public offering of 6,725,000
shares of our class A common stock at $18.25 per share, including the underwriters over-allotments. The net proceeds from the offering of $115.9 million were used to repay outstanding indebtedness under our unsecured revolving credit facility,
to fund a portion of our subsequent tender offer, to fund the Green Bay (Wisconsin) television acquisition and for general corporate purposes.



On June 15, 2004, we completed a tender offer for our class B common stock at $18.55 per share, in which we purchased 8,005,203 shares for $148.7
million. We used additional borrowings available under our $350 million debt facility and a portion of the net proceeds of the follow-on equity offering to fund the tender offer.



Liquidity and Capital Resources



On December 2, 2005, we amended our $350 million unsecured revolving credit facility. Our amended $475 million unsecured revolving facility expires
on June 2, 2011. The interest rate on borrowings are either LIBOR plus a margin that ranges from 37.5 basis points to 87.5 basis points, depending on our leverage, or the base rate, which equals the higher of the prime rate set by U.S. Bank,
N.A. or the Federal Funds Rate plus 100 basis points.



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As of December 25, 2005 and December 26, 2004, we had borrowings of $274.5 million and $70.3 million, respectively, under the facility at a
weighted average rate of 5.04% and 3.29%, respectively. As a result of the amended agreement, we expensed $0.4 million of unamortized financing fees attributed to the original agreement. Fees in connection with the original and the amended facility
total $1.7 million and are being amortized over the term of the facility using the straight-line method which approximates the effective-interest method. The material covenants of this agreement include the following:



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



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



As of December 25, 2005, we are in compliance with all of our material
covenants.



Cash balances were $6.9 million at
December 25, 2005. We believe our expected cash flows from operations and borrowings available under our credit facility will adequately meet our needs for the foreseeable future.



Cash Flow



Cash provided by operating activities was $106.4 million in 2005 compared to $134.0 million in 2004. The decrease was primarily due to the decrease in net
earnings, the reduced benefit from operating activities of discontinued operations and the reduced benefit from deferred income taxes.



Cash used for investing activities was $236.8 million in 2005 compared to $69.3 million in 2004. Cash used for acquisitions of business was $228.8 million
in 2005 compared to $44.6 million in 2004. Capital expenditures for property and equipment were $34.3 million in 2005 compared to $28.9 million in 2004. Partially offsetting these activities was the benefit from net investing activities of
discontinued operations of $24.7 million in 2005 compared to $3.5 million in 2004.



Cash provided by financing activities was $130.8 million in 2005 compared to cash used for financing activities of $66.8 million in 2004. Borrowings under our credit facility during 2005 were $431.3 million and we
made payments of $227.0 million. In 2004, we received $116.5 million in proceeds from the issuance of our class A common stock, of which we received $115.9 million in net proceeds, and employees purchased $0.6 million worth of our class B common
stock under our Employee Stock Purchase Plan. In 2005, we paid $53.3 million to purchase and retire shares of our class A common stock under a share repurchase plan compared to $148.7 million in 2004 resulting from a successful tender offer for
class B shares. We paid cash dividends of $20.3 million and $20.8 million in 2005 and 2004, respectively.



Contractual Obligations



Our contractual obligations are summarized below.



|                                    |  |                        |       |                 |   |          |  |          |       |                  |   |      |  |   |      
|----------------------------------- |  | ---------------------- | ----- | --------------- | - | -------- |  | -------- | ----- | ---------------- | - | ---- |  | - | -----
|                                    |  | Payments Due by Period
|Contractual obligations             |  | Total                  |       | Less than1 year |   | 1-3years |  | 3-5years |       | More than5 years
|Long-term notes payable to banks(1) |  | $                      | 349.8 |                 | $ | 14.1     |  | $        | 27.7  |                  | $ | 27.7 |  | $ | 280.3
|Operating leases                    |  |                        | 44.9  |                 |   | 10.2     |  |          | 14.9  |                  |   | 10.1 |  |   | 9.7  
|Purchase commitments                |  |                        | 115.1 |                 |   | 51.1     |  |          | 61.8  |                  |   | 2.2  |  |   |     
|Other long-term liabilities         |  |                        | 30.9  |                 |   | 5.5      |  |          | 18.3  |                  |   | 4.9  |  |   | 2.2  
|                                    |  |                        |       |                 |   |          |  |          |       |                  |   |      |  |   |      
|Total                               |  | $                      | 540.7 |                 | $ | 80.9     |  | $        | 122.7 |                  | $ | 44.9 |  | $ | 292.2
|                                    |  |                        |       |                 |   |          |  |          |       |                  |   |      |  |   |      

---

|(1) | Includes the associated interest calculated on our borrowings of $274.5 million outstanding as of December 25, 2005 at a weighted average rate of 5.04%.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------



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On December 2, 2005, we amended our $350 million unsecured revolving credit facility. Our amended
$475 million unsecured revolving facility expires on June 2, 2011. As of December 25, 2005, we had borrowings outstanding of $274.5 million under the facility. 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. Purchase commitments for newsprint for our
publishing businesses from two newsprint suppliers, which run through 2006 and 2008, were $97.2 million as of December 25, 2005. The commitment is based on market prices for quantities we determine will meet our newsprint requirements over the
term of the contract, but we have no obligation to purchase any particular quantities. In the unlikely event that newsprint is no longer required in our business, our commitment would expire without obligation. Purchase commitments related to
broadcasting equipment and systems were approximately $2.5 million as of December 25, 2005. In addition, we have the right to broadcast certain television programs during the years 2005-2010 under contracts aggregating $15.4 million. We have
$1.7 million of standby letters of credit for business insurance purposes.



We do not engage in off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships with unconsolidated entities or other persons that may have a material current
or future effect on our financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses. We do not rely on off-balance sheet arrangements for liquidity, capital
resources, market risk support, credit risk support or other benefits.



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, and 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.



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 us 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.



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Property and equipment and definite-lived intangibles



We assign useful lives for our property and equipment and definite-lived
intangibles 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 our property and equipment and definite-lived intangibles. A change in the estimated useful lives or
the depreciation or amortization method used could have a material impact upon our results of operations.



We evaluate our property and equipment and definite-lived intangibles for impairment whenever indicators of impairment exist. Accounting standards require
that, if the sum of the future cash flows expected to result from an asset or group of assets, undiscounted and without interest charges, is less than the carrying amount of the asset or group of assets, 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 and broadcast licenses account for 45.8% and 35.7% of total assets in 2005 and 2004, respectively. The annual impairment tests for goodwill and broadcast licenses 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 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 (IRS) 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 or have an impact on our effective tax rate. 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. As of December 25, 2005 and December 26, 2004, we recorded liabilities to cover additional tax exposure items of $4.5
million and $4.3 million, respectively.



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. Third party administrators are 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.



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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:



| |  |  | the discount rateused to arrive at the net present value of the obligations and expense;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | the return on assetsused to estimate the growth in invested asset value available to satisfy certain obligations;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | the salary increasesused to calculate the impact future pay increases will have on pension obligations; and
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | the employee turnover statisticsused to estimate the number of employees to be paid pension benefits.
| | - |  | ------------------------------------------------------------------------------------------------------



The assumptions used in accounting for pension benefits and other
postretirement benefits for 2005 and 2004 are:



|                                               |  |                  |   |  |                               |   |  |      |   |  |      |  
|---------------------------------------------- |  | ---------------- | - |  | ----------------------------- | - |  | ---- | - |  | ---- | -
|                                               |  | Pension Benefits |   |  | Other Postretirement Benefits |  
|                                               |  | 2005             |   |  | 2004                          |   |  | 2005 |   |  | 2004 |  
|Discount rate for expense                      |  | 5.75             | % |  | 6.25                          | % |  | 6.00 | % |  | 6.25 | %
|Discount rate for obligations                  |  | 5.95             |   |  | 5.75                          |   |  | 5.50 |   |  | 6.00 |  
|Rate of compensation increases for expense     |  | 4.50             |   |  | 4.50                          |   |  |     |   |  |     |  
|Rate of compensation increases for obligations |  | 4.00             |   |  | 4.50                          |   |  |     |   |  |     |  
|Expected return on plan assets                 |  | 8.50             |   |  | 8.50                          |   |  |     |   |  |     |  



For our pension plans,
a one percent increase or decrease in the discount rate would have lowered by $2.3 million or raised by $2.8 million, respectively, the plans 2005 expense and would have lowered the plans projected benefit obligations by $18.6 million or
raised by $23.2 million, respectively, as of December 25, 2005.



To determine the discount rate assumptions for the pension and the postretirement benefit plans, we studied our plans specific discount rate by matching our projected benefit payments to a yield curve developed from high grade corporate
bonds. The results of those studies were used as the benchmark to determine the discount rate assumptions. In addition, we used the Moodys Aa Corporate bonds, as of the measurement dates, as another reference point to support our decision.



To determine the long-term rate of return assumption for
pension plan assets, we study historical markets and preserve the long-term historical relationships between equities and fixed-income securities consistent with the widely accepted capital market principle that assets with higher volatility
generate a greater return over the long run. We evaluate current market factors such as inflation and interest rates before we determine long-term capital market assumptions. We review peer data and historical returns to check for reasonability and
appropriateness.



We make other assumptions that affect the
accounting for pension benefits, such as the rate of compensation increase. 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 postretirement benefit costs other than pension. We provide our actuarial firm 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 health care cost trend rate is used to calculate the impact future medical costs would have on postretirement
obligations.



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New Accounting Standards



In May 2005, the Financial Accounting Standards Board (FASB) issued Statement No. 154, Accounting Changes and Error CorrectionsA
Replacement of APB Opinion No. 20 and FASB Statement No. 3, which requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the basis of the new
accounting principle, unless it is impracticable to do so. Statement No. 154 also provides that (i) a change in method of depreciating or amortizing a long-lived nonfinancial asset be accounted for as a change in estimate (prospectively)
that was affected by a change in accounting principle, and (ii) correction of errors in previously issued financial statements should be termed a restatement. In accordance with the new rule, we will adopt Statement No. 154 in
the first quarter of 2006. We do not believe the effect of adopting Statement No. 154 will have a material impact on our consolidated financial statements.



In December 2004, the FASB issued Statement No. 123R, Share-Based Payment, which requires a public entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for
the award. In April 2005, the U.S. Securities and Exchange Commission adopted a new rule amending the compliance dates for Statement No. 123R. In accordance with the new rule, we will adopt Statement No. 123R in the first quarter of 2006.
We do not believe the effect of adopting Statement No. 123R will have a material impact on our consolidated financial statements.



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 permits, 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 market risk stemming from changes in interest rates on our long-term notes payable to banks, which are borrowings under our $475 million
unsecured revolving credit facility, and in prices for newsprint. Changes in these factors could cause fluctuations in our net earnings and cash flows.



Interest rates on our long-term notes payable to banks are variable. The interest rate on our current unsecured revolving credit facility is either at
LIBOR plus a margin that ranges from 37.5 basis points to 87.5 basis points, depending on our leverage, or the Base Rate, which equals the higher of the prime rate set by U.S. Bank, N.A. or the Federal Funds Rate plus 100 basis points. Average
interest rates on borrowings under our credit facility were 5.04% in 2005. If interest rates had been 100 basis points higher, our annual interest expense would have increased $0.6 million, assuming comparable borrowing levels. We have not entered
into derivative instruments to manage our exposure to interest rate risk.



We currently purchase approximately 95% of our estimated newsprint requirements from two suppliers. 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. Price fluctuations for newsprint can have a significant effect on our results of operations. The average net price per ton was $606 in 2005. Based on the average net price per ton
in 2005 and consumption of newsprint in 2005, a $10 per ton increase or decrease in the price of newsprint would increase or decrease our total cost of newsprint by $0.6 million. We have not entered into derivative instruments to manage our exposure
to newsprint price risk.



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|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------



CONSOLIDATED BALANCE SHEETS

December 25 and December 26

(in thousands, except per share amounts)



|                                                                                                                                                   |  |      |          |   |      |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                                                                                                   |  | 2005 |          |   | 2004 |  
|ASSETS                                                                                                                                             |  |      |          |   |      |   |          |  
|Current assets:                                                                                                                                    |  |      |          |   |      |   |          |  
|Cash and cash equivalents                                                                                                                          |  | $    | 6,864    |   |      | $ | 6,374    |  
|Receivables, net                                                                                                                                   |  |      | 90,146   |   |      |   | 89,690   |  
|Inventories, net                                                                                                                                   |  |      | 9,647    |   |      |   | 10,450   |  
|Prepaid expenses                                                                                                                                   |  |      | 14,279   |   |      |   | 13,302   |  
|Deferred income taxes                                                                                                                              |  |      | 9,968    |   |      |   | 8,903    |  
|Investment in preferred stock                                                                                                                      |  |      |         |   |      |   | 4,394    |  
|Current assets of discontinued operations                                                                                                          |  |      |         |   |      |   | 11,672   |  
|                                                                                                                                                   |  |      |          |   |      |   |          |  
|Total Current Assets                                                                                                                               |  |      | 130,904  |   |      |   | 144,785  |  
|Property and equipment:                                                                                                                            |  |      |          |   |      |   |          |  
|Land and land improvements                                                                                                                         |  |      | 29,714   |   |      |   | 26,420   |  
|Buildings and building improvements                                                                                                                |  |      | 138,749  |   |      |   | 125,143  |  
|Equipment                                                                                                                                          |  |      | 485,643  |   |      |   | 476,281  |  
|Construction in progress                                                                                                                           |  |      | 8,643    |   |      |   | 8,235    |  
|                                                                                                                                                   |  |      |          |   |      |   |          |  
|                                                                                                                                                   |  |      | 662,749  |   |      |   | 636,079  |  
|Less accumulated depreciation                                                                                                                      |  |      | 345,838  |   |      |   | 338,674  |  
|                                                                                                                                                   |  |      |          |   |      |   |          |  
|Net property and equipment                                                                                                                         |  |      | 316,911  |   |      |   | 297,405  |  
|Goodwill                                                                                                                                           |  |      | 276,339  |   |      |   | 136,286  |  
|Broadcast licenses                                                                                                                                 |  |      | 174,835  |   |      |   | 140,046  |  
|Other intangible assets, net                                                                                                                       |  |      | 41,663   |   |      |   | 14,753   |  
|Prepaid pension costs                                                                                                                              |  |      | 18,603   |   |      |   | 23,787   |  
|Other assets                                                                                                                                       |  |      | 25,104   |   |      |   | 8,565    |  
|Non-current assets of discontinued operations                                                                                                      |  |      | 307      |   |      |   | 8,892    |  
|                                                                                                                                                   |  |      |          |   |      |   |          |  
|Total Assets                                                                                                                                       |  | $    | 984,666  |   |      | $ | 774,519  |  
|                                                                                                                                                   |  |      |          |   |      |   |          |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                               |  |      |          |   |      |   |          |  
|Current liabilities:                                                                                                                               |  |      |          |   |      |   |          |  
|Accounts payable                                                                                                                                   |  | $    | 40,671   |   |      | $ | 39,239   |  
|Accrued compensation                                                                                                                               |  |      | 18,532   |   |      |   | 22,364   |  
|Accrued employee benefits                                                                                                                          |  |      | 9,722    |   |      |   | 10,171   |  
|Deferred revenue                                                                                                                                   |  |      | 18,971   |   |      |   | 20,255   |  
|Other current liabilities                                                                                                                          |  |      | 15,516   |   |      |   | 12,518   |  
|Current liabilities of discontinued operations                                                                                                     |  |      | 205      |   |      |   | 7,273    |  
|Current portion of long-term liabilities                                                                                                           |  |      | 5,053    |   |      |   | 3,600    |  
|                                                                                                                                                   |  |      |          |   |      |   |          |  
|Total Current Liabilities                                                                                                                          |  |      | 108,671  |   |      |   | 115,420  |  
|Accrued employee benefits                                                                                                                          |  |      | 20,280   |   |      |   | 17,839   |  
|Long-term notes payable to banks                                                                                                                   |  |      | 274,545  |   |      |   | 70,310   |  
|Deferred income taxes                                                                                                                              |  |      | 65,630   |   |      |   | 64,491   |  
|Other long-term liabilities                                                                                                                        |  |      | 31,473   |   |      |   | 16,964   |  
|Shareholders equity:                                                                                                                              |  |      |          |   |      |   |          |  
|Preferred stock, $0.01 par  authorized 10,000,000 shares; no shares outstanding at December 25, 2005 and December 26,
2004                        |  |      |         |   |      |   |         |  
|Common stock, $0.01 par:                                                                                                                           |  |      |          |   |      |   |          |  
|Class C  authorized 10,000,000 shares; issued and outstanding: 3,264,000 shares at December 25, 2005 and December 26,
2004                        |  |      | 33       |   |      |   | 33       |  
|Class B  authorized 120,000,000 shares; issued and outstanding: 26,762,782 shares at December 25, 2005 and 44,810,712 shares at
December 26, 2004 |  |      | 354      |   |      |   | 535      |  
|Class A  authorized 170,000,000 shares; issued and outstanding: 42,188,974 shares at December 25, 2005 and 27,417,326 shares
at December 26, 2004 |  |      | 422      |   |      |   | 274      |  
|Additional paid-in capital                                                                                                                         |  |      | 353,567  |   |      |   | 385,219  |  
|Unearned compensation                                                                                                                              |  |      | (679     | ) |      |   | (104     | )
|Retained earnings                                                                                                                                  |  |      | 239,086  |   |      |   | 212,253  |  
|Treasury stock, at cost                                                                                                                            |  |      | (108,715 | ) |      |   | (108,715 | )
|                                                                                                                                                   |  |      |          |   |      |   |          |  
|Total Shareholders Equity                                                                                                                         |  |      | 484,068  |   |      |   | 489,495  |  
|                                                                                                                                                   |  |      |          |   |      |   |          |  
|Total Liabilities And Shareholders Equity                                                                                                         |  | $    | 984,666  |   |      | $ | 774,519  |  
|                                                                                                                                                   |  |      |          |   |      |   |          |  



See accompanying
notes.



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##### Table of Contents

CONSOLIDATED STATEMENTS OF EARNINGS

Years Ended December 25, 2005, December 26, 2004 and
December 31, 2003

(in thousands, except per share amounts)



|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                   |  | 2005 |         |   | 2004 |   |         | 2003 | 
|Continuing operations:                                                                                             |  |      |         |   |      |   |         |      |  |   |         |  
|Revenue:                                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Publishing                                                                                                         |  | $    | 339,002 |   |      | $ | 338,896 |      |  | $ | 328,303 |  
|Broadcasting                                                                                                       |  |      | 168,316 |   |      |   | 172,073 |      |  |   | 150,744 |  
|Telecommunications                                                                                                 |  |      | 141,087 |   |      |   | 144,020 |      |  |   | 149,538 |  
|Printing services                                                                                                  |  |      | 72,463  |   |      |   | 76,308  |      |  |   | 85,958  |  
|Other                                                                                                              |  |      | 43,593  |   |      |   | 42,075  |      |  |   | 37,702  |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Total revenue                                                                                                      |  |      | 764,461 |   |      |   | 773,372 |      |  |   | 752,245 |  
|Operating costs and expenses:                                                                                      |  |      |         |   |      |   |         |      |  |   |         |  
|Publishing                                                                                                         |  |      | 176,316 |   |      |   | 173,155 |      |  |   | 171,399 |  
|Broadcasting                                                                                                       |  |      | 73,722  |   |      |   | 68,832  |      |  |   | 64,698  |  
|Telecommunications                                                                                                 |  |      | 89,486  |   |      |   | 85,870  |      |  |   | 87,734  |  
|Printing services                                                                                                  |  |      | 61,291  |   |      |   | 66,519  |      |  |   | 71,316  |  
|Other                                                                                                              |  |      | 37,316  |   |      |   | 34,925  |      |  |   | 29,860  |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Total operating costs and expenses                                                                                 |  |      | 438,131 |   |      |   | 429,301 |      |  |   | 425,007 |  
|Selling and administrative expenses                                                                                |  |      | 221,170 |   |      |   | 219,728 |      |  |   | 217,792 |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Total operating costs and expenses and selling and administrative expenses                                         |  |      | 659,301 |   |      |   | 649,029 |      |  |   | 642,799 |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Operating earnings                                                                                                 |  |      | 105,160 |   |      |   | 124,343 |      |  |   | 109,446 |  
|Other income and expense:                                                                                          |  |      |         |   |      |   |         |      |  |   |         |  
|Interest income and dividends                                                                                      |  |      | 318     |   |      |   | 335     |      |  |   | 442     |  
|Interest expense, net                                                                                              |  |      | (3,960  | ) |      |   | (2,280  | )    |  |   | (1,909  | )
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Total other income and expense                                                                                     |  |      | (3,642  | ) |      |   | (1,945  | )    |  |   | (1,467  | )
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Earnings from continuing operations before income taxes                                                            |  |      | 101,518 |   |      |   | 122,398 |      |  |   | 107,979 |  
|Provision for income taxes                                                                                         |  |      | 40,369  |   |      |   | 49,066  |      |  |   | 43,611  |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Earnings from continuing operations                                                                                |  |      | 61,149  |   |      |   | 73,332  |      |  |   | 64,368  |  
|Gain from discontinued operations, net of applicable income tax expense of $3,123, $3,269 and $1,538, respectively |  |      | 5,094   |   |      |   | 5,148   |      |  |   | 2,425   |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Net earnings                                                                                                       |  | $    | 66,243  |   |      | $ | 78,480  |      |  | $ | 66,793  |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Earnings available to class A and B common shareholders                                                            |  | $    | 64,387  |   |      | $ | 76,624  |      |  | $ | 66,329  |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Earnings per share:                                                                                                |  |      |         |   |      |   |         |      |  |   |         |  
|Basic:                                                                                                             |  |      |         |   |      |   |         |      |  |   |         |  
|Continuing operations                                                                                              |  | $    | 0.84    |   |      | $ | 0.98    |      |  | $ | 0.81    |  
|Discontinued operations                                                                                            |  |      | 0.07    |   |      |   | 0.07    |      |  |   | 0.03    |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Net earnings                                                                                                       |  | $    | 0.91    |   |      | $ | 1.05    |      |  | $ | 0.84    |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Diluted:                                                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Continuing operations                                                                                              |  | $    | 0.81    |   |      | $ | 0.95    |      |  | $ | 0.77    |  
|Discontinued operations                                                                                            |  |      | 0.07    |   |      |   | 0.06    |      |  |   | 0.03    |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  
|Net earnings                                                                                                       |  | $    | 0.88    |   |      | $ | 1.01    |      |  | $ | 0.80    |  
|                                                                                                                   |  |      |         |   |      |   |         |      |  |   |         |  



See accompanying
notes.



65



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##### Table of Contents

JOURNAL COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

Years Ended December 25, 2005, December 26, 2004 and
December 31, 2003

(in thousands, except per share amounts)



|                                             |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|-------------------------------------------- |  | --------------- | ------ | ------------ | ------ | ------ | ------------ | ------ | - | --------------------------- |  | - | ---- | - |  | - | --- | - |  | - | ------- | -
|                                             |  | Preferred Stock |        | Common Stock |        |        | Common Stock |        |   | Additional Paid-in- Capital | 
|                                             |  |                 | ClassC |              | ClassB |        |              | ClassA |   |                            
|Balance at December 31, 2002                 |  | $               |       |              | $      | 3,600  |              |        | $ |                            |  | $ |     |   |  | $ |    |   |  | $ |        |  
|Net earnings and other comprehensive income  |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|                                             |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|                                             |  |                 |        |              |        |       
|Dividends declared:                          |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Common ($0.50 per share)                     |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Class C ($0.142 per share)                   |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Class B ($0.065 per share)                   |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Class A ($0.065 per share)                   |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Units of beneficial interest purchased       |  |                 |        |              |        | (5     | )            |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Share exchange                               |  |                 |        |              |        | (3,595 | )            |        |   | 33                          |  |   | 827  |   |  |   |     |   |  |   | 2,735   |  
|Issuance of shares:                          |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Initial public offering                      |  |                 |        |              |        |        |              |        |   |                             |  |   | (4   | ) |  |   | 198 |   |  |   | 266,419 |  
|Conversion of class B to class A             |  |                 |        |              |        |        |              |        |   |                             |  |   | (3   | ) |  |   | 3   |   |  |   |         |  
|Nonvested restricted stock                   |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   | 136     |  
|Employee stock purchase plan                 |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   | 251     |  
|Amortization of unearned compensation        |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Shares purchased and retired in tender offer |  |                 |        |              |        |        |              |        |   |                             |  |   | (200 | ) |  |   |     |   |  |   | (634    | )
|                                             |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Balance at December 31, 2003                 |  |                 |       |              |        |       |              |        |   | 33                          |  |   | 620  |   |  |   | 201 |   |  |   | 268,907 |  
|Net earnings and other comprehensive income  |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|                                             |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|                                             |  |                 |        |              |        |       
|Dividends declared:                          |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Class C ($0.57 per share)                    |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Class B ($0.26 per share)                    |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Class A ($0.26 per share)                    |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Issuance of shares:                          |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Follow-on equity offering                    |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   | 67  |   |  |   | 115,876 |  
|Conversion of class B to class A             |  |                 |        |              |        |        |              |        |   |                             |  |   | (6   | ) |  |   | 6   |   |  |   |         |  
|Stock grants                                 |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   | 189     |  
|Restricted stock grants                      |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   | 26      |  
|Employee stock purchase plan                 |  |                 |        |              |        |        |              |        |   |                             |  |   | 1    |   |  |   |     |   |  |   | 524     |  
|Amortization of unearned compensation        |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Shares purchased and retired in tender offer |  |                 |        |              |        |        |              |        |   |                             |  |   | (80  | ) |  |   |     |   |  |   | (303    | )
|                                             |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Balance at December 26, 2004                 |  |                 |       |              |        |       |              |        |   | 33                          |  |   | 535  |   |  |   | 274 |   |  |   | 385,219 |  
|Net earnings and other comprehensive income  |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|                                             |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|                                             |  |                 |        |              |        |       
|Dividends declared:                          |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Class C ($0.57 per share)                    |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Class B ($0.26 per share)                    |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Class A ($0.26 per share)                    |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Issuance of shares:                          |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Conversion of class B to class A             |  |                 |        |              |        |        |              |        |   |                             |  |   | (183 | ) |  |   | 183 |   |  |   |         |  
|Stock grants                                 |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   | 417     |  
|Restricted stock grants                      |  |                 |        |              |        |        |              |        |   |                             |  |   | 1    |   |  |   |     |   |  |   | 990     |  
|Cancellation of restricted stock grants      |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   | (83     | )
|Employee stock purchase plan                 |  |                 |        |              |        |        |              |        |   |                             |  |   | 1    |   |  |   |     |   |  |   | 1,181   |  
|Shares purchased and retired                 |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   | (35 | ) |  |   | (34,157 | )
|Amortization of unearned compensation        |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|                                             |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  
|Balance at December 25, 2005                 |  | $               |       |              | $      |       |              |        | $ | 33                          |  | $ | 354  |   |  | $ | 422 |   |  | $ | 353,567 |  
|                                             |  |                 |        |              |        |        |              |        |   |                             |  |   |      |   |  |   |     |   |  |   |         |  

See accompanying notes.



66



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##### Table of Contents



|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|--------------------- | ---- | - | ----------------- | - | -------- | ----------------------- |  | - | ------------------------------------------------ | - |  | ----- | -------- | - | -------------------- | - | -------- | - |  | - | ------
|Unearned Compensation |      |   | Retained Earnings |   |          | Treasury Stock, at cost |  |   | Units ofBeneficial Interest in treasury, at cost |   |  | Total |          |   | Comprehensive Income
|$                     |     |   |                   | $ | 581,361  |                         |  | $ |                                                 |   |  | $     | (108,417 | ) |                      | $ | 476,544  |   |  |   |       
|                      |      |   |                   |   | 66,793   |                         |  |   |                                                  |   |  |       |          |   |                      |   | 66,793   |   |  | $ | 66,793
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      |      |   |                   |   |         
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      |      |   |                   |   | (38,842  | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (38,842  | ) |  |   |       
|                      |      |   |                   |   | (464     | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (464     | ) |  |   |       
|                      |      |   |                   |   | (3,465   | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (3,465   | ) |  |   |       
|                      |      |   |                   |   | (1,309   | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (1,309   | ) |  |   |       
|                      |      |   |                   |   | (1,770   | )                       |  |   |                                                  |   |  |       | (298     | ) |                      |   | (2,073   | ) |  |   |       
|                      |      |   |                   |   |          |                         |  |   | (108,715                                         | ) |  |       | 108,715  |   |                      |   |         |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 266,613  |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |         |   |  |   |       
|                      | (136 | ) |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |         |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 251      |   |  |   |       
|                      | 7    |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 7        |   |  |   |       
|                      |      |   |                   |   | (299,471 | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (300,305 | ) |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      | (129 | ) |                   |   | 302,833  |                         |  |   | (108,715                                         | ) |  |       |         |   |                      |   | 463,750  |   |  |   |       
|                      |      |   |                   |   | 78,480   |                         |  |   |                                                  |   |  |       |          |   |                      |   | 78,480   |   |  | $ | 78,480
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      |      |   |                   |   |         
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      |      |   |                   |   | (1,856   | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (1,856   | ) |  |   |       
|                      |      |   |                   |   | (12,795  | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (12,795  | ) |  |   |       
|                      |      |   |                   |   | (6,141   | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (6,141   | ) |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 115,943  |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |         |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 189      |   |  |   |       
|                      | (26  | ) |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |         |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 525      |   |  |   |       
|                      | 51   |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 51       |   |  |   |       
|                      |      |   |                   |   | (148,268 | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (148,651 | ) |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      | (104 | ) |                   |   | 212,253  |                         |  |   | (108,715                                         | ) |  |       |         |   |                      |   | 489,495  |   |  |   |       
|                      |      |   |                   |   | 66,243   |                         |  |   |                                                  |   |  |       |          |   |                      |   | 66,243   |   |  | $ | 66,243
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      |      |   |                   |   |         
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      |      |   |                   |   | (1,856   | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (1,856   | ) |  |   |       
|                      |      |   |                   |   | (9,243   | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (9,243   | ) |  |   |       
|                      |      |   |                   |   | (9,190   | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (9,190   | ) |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |         |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 417      |   |  |   |       
|                      | (991 | ) |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |         |   |  |   |       
|                      | 83   |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |         |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 1,182    |   |  |   |       
|                      |      |   |                   |   | (19,121  | )                       |  |   |                                                  |   |  |       |          |   |                      |   | (53,313  | ) |  |   |       
|                      | 333  |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   | 333      |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       
|$                     | (679 | ) |                   | $ | 239,086  |                         |  | $ | (108,715                                         | ) |  | $     |         |   |                      | $ | 484,068  |   |  |   |       
|                      |      |   |                   |   |          |                         |  |   |                                                  |   |  |       |          |   |                      |   |          |   |  |   |       



67



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##### Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 25, 2005, December 26, 2004 and
December 31, 2003

(in thousands)



|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|-------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                                             |  | 2005 |          |   | 2004 |   |          | 2003 | 
|Cash flow from operating activities:                                                         |  |      |          |   |      |   |          |      |  |   |          |  
|Net earnings                                                                                 |  | $    | 66,243   |   |      | $ | 78,480   |      |  | $ | 66,793   |  
|Less gain from discontinued operations                                                       |  |      | 5,094    |   |      |   | 5,148    |      |  |   | 2,425    |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Earnings from continuing operations                                                          |  |      | 61,149   |   |      |   | 73,332   |      |  |   | 64,368   |  
|Adjustments for non-cash items:                                                              |  |      |          |   |      |   |          |      |  |   |          |  
|Depreciation                                                                                 |  |      | 42,803   |   |      |   | 43,570   |      |  |   | 44,595   |  
|Amortization                                                                                 |  |      | 1,363    |   |      |   | 1,396    |      |  |   | 2,241    |  
|Write-off of financing costs                                                                 |  |      | 361      |   |      |   |         |      |  |   |         |  
|Provision for doubtful accounts                                                              |  |      | 2,327    |   |      |   | 3,206    |      |  |   | 2,405    |  
|Deferred income taxes                                                                        |  |      | 74       |   |      |   | 9,246    |      |  |   | 13,612   |  
|Net loss (gain) from disposal of assets                                                      |  |      | 188      |   |      |   | 442      |      |  |   | (2,723   | )
|Net operating activities of discontinued operations                                          |  |      | (6,374   | ) |      |   | 4,216    |      |  |   | 5,177    |  
|Net changes in operating assets and liabilities, excluding effect of sales and acquisitions: |  |      |          |   |      |   |          |      |  |   |          |  
|Receivables                                                                                  |  |      | (2,714   | ) |      |   | (7,135   | )    |  |   | (2,541   | )
|Inventories                                                                                  |  |      | 803      |   |      |   | (1,837   | )    |  |   | 868      |  
|Accounts payable                                                                             |  |      | (671     | ) |      |   | 2,796    |      |  |   | (1,922   | )
|Other assets and liabilities                                                                 |  |      | 7,121    |   |      |   | 4,734    |      |  |   | 2,443    |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net Cash Provided By Operating Activities                                                    |  |      | 106,430  |   |      |   | 133,966  |      |  |   | 128,523  |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Cash flow from investing activities:                                                         |  |      |          |   |      |   |          |      |  |   |          |  
|Capital expenditures for property and equipment                                              |  |      | (34,304  | ) |      |   | (28,871  | )    |  |   | (38,868  | )
|Proceeds from sales of assets                                                                |  |      | 1,630    |   |      |   | 651      |      |  |   | 6,266    |  
|Acquisition of businesses                                                                    |  |      | (228,779 | ) |      |   | (44,553  | )    |  |   | (6,794   | )
|Other                                                                                        |  |      | 41       |   |      |   |         |      |  |   |         |  
|Net investing activities of discontinued operations                                          |  |      | 24,657   |   |      |   | 3,504    |      |  |   | (820     | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net Cash Used For Investing Activities                                                       |  |      | (236,755 | ) |      |   | (69,269  | )    |  |   | (40,216  | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Cash flow from financing activities:                                                         |  |      |          |   |      |   |          |      |  |   |          |  
|Net decrease in notes payable to banks                                                       |  |      |         |   |      |   |         |      |  |   | (90,775  | )
|Financing costs on long-term notes payable to banks                                          |  |      | (1,000   | ) |      |   | (98      | )    |  |   | (1,959   | )
|Proceeds from long-term notes payable to banks                                               |  |      | 431,265  |   |      |   | 276,432  |      |  |   | 111,455  |  
|Payments of long-term notes payable to banks                                                 |  |      | (227,030 | ) |      |   | (290,122 | )    |  |   | (27,455  | )
|Proceeds from issuance of common stock, net                                                  |  |      | 1,182    |   |      |   | 116,468  |      |  |   | 266,871  |  
|Redemption of common stock, net                                                              |  |      | (53,313  | ) |      |   | (148,651 | )    |  |   | (300,305 | )
|Redemption of units of beneficial interest                                                   |  |      |         |   |      |   |         |      |  |   | (1,775   | )
|Purchases of units of beneficial interest                                                    |  |      |         |   |      |   |         |      |  |   | (298     | )
|Cash dividends                                                                               |  |      | (20,289  | ) |      |   | (20,792  | )    |  |   | (44,080  | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net Cash Provided By (Used For) Financing Activities                                         |  |      | 130,815  |   |      |   | (66,763  | )    |  |   | (88,321  | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net Increase (Decrease) in Cash and Cash Equivalents                                         |  |      | 490      |   |      |   | (2,066   | )    |  |   | (14      | )
|Cash and cash equivalents                                                                    |  |      |          |   |      |   |          |      |  |   |          |  
|Beginning of year                                                                            |  |      | 6,374    |   |      |   | 8,440    |      |  |   | 8,454    |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|End of year                                                                                  |  | $    | 6,864    |   |      | $ | 6,374    |      |  | $ | 8,440    |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Supplemental Cash Flow Information                                                           |  |      |          |   |      |   |          |      |  |   |          |  
|Cash paid for income taxes                                                                   |  | $    | 44,464   |   |      | $ | 41,192   |      |  | $ | 27,722   |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Cash paid for interest                                                                       |  | $    | 1,857    |   |      | $ | 1,466    |      |  | $ | 1,526    |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  



See accompanying
notes.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 25, 2005 (in thousands, except per share amounts)



|1 | SIGNIFICANT ACCOUNTING POLICIES
|- | -------------------------------



Basis of presentation and consolidationAs of January 1, 2004, we adopted a 52-53 week fiscal year ending on the last Sunday of December in
each year. In addition, we have four quarterly reporting periods, each consisting of thirteen weeks and ending on a Sunday, provided that once every six years, starting in 2006, the fourth quarterly reporting period will be fourteen weeks.



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



Revenue recognitionPublishing revenue is generated primarily from the sale of newspaper advertising space and newspaper sales. 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, including advertising aired online
on web sites. Circulation revenue is recognized when the newspaper is delivered to the customer. Telecommunication revenue is generated from toll (voice), data transmission and satellite (video) services. Voice 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 that consists of direct marketing services is recognized at the time the service is performed.



Amounts we receive from customers in advance of revenue recognition are deferred as liabilities. Deferred revenue to be earned more than one 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 revenue and the related costs
are included in operating costs and expenses.



Advertising
expenseWe expense our advertising costs as incurred. Advertising expense totaled $7,646, $8,429 and $8,415 in 2005, 2004 and 2003 respectively.



Interest expenseCapitalized interest for the year ended December 31, 2003 totaled $66. All interest incurred during the years ended December
25, 2005 and December 26, 2004 was expensed.



Income
taxesWe account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. In accordance with SFAS No. 109, deferred taxes are provided for the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Valuation allowances are established where management determines that it is more likely than not that some portion or all of a deferred tax
asset will not be realized.



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



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Basic and diluted earnings per share are computed as follows:



|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|Years ended December 25, December 26 and December 31    |  | 2005 |        |   | 2004 |   |        | 2003 | 
|Basic earnings:                                         |  |      |        |   |      |   |        |      |  |   |        |  
|Earnings from continuing operations                     |  | $    | 61,149 |   |      | $ | 73,332 |      |  | $ | 64,368 |  
|Discontinued operations                                 |  |      | 5,094  |   |      |   | 5,148  |      |  |   | 2,425  |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Net earnings                                            |  |      | 66,243 |   |      |   | 78,480 |      |  |   | 66,793 |  
|Less dividends on class C common stock                  |  |      | (1,856 | ) |      |   | (1,856 | )    |  |   | (464   | )
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Earnings available to class A and B common shareholders |  | $    | 64,387 |   |      | $ | 76,624 |      |  | $ | 66,329 |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Weighted average class A and B shares outstanding       |  |      | 70,945 |   |      |   | 72,931 |      |  |   | 78,645 |  
|Basic earnings per share:                               |  |      |        |   |      |   |        |      |  |   |        |  
|Continuing operations                                   |  | $    | 0.84   |   |      | $ | 0.98   |      |  | $ | 0.81   |  
|Discontinued operations                                 |  |      | 0.07   |   |      |   | 0.07   |      |  |   | 0.03   |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Net earnings                                            |  | $    | 0.91   |   |      | $ | 1.05   |      |  | $ | 0.84   |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Diluted earnings:                                       |  |      |        |   |      |   |        |      |  |   |        |  
|Earnings available to class A and B common shareholders |  | $    | 64,387 |   |      | $ | 76,624 |      |  | $ | 66,329 |  
|Plus dividends on class C common stock                  |  |      | 1,856  |   |      |   | 1,856  |      |  |   | 464    |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Net earnings                                            |  | $    | 66,243 |   |      | $ | 78,480 |      |  | $ | 66,793 |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Weighted average class A and B shares outstanding       |  |      | 70,945 |   |      |   | 72,931 |      |  |   | 78,645 |  
|Assumed exercise of stock options                       |  |      |       |   |      |   | 1      |      |  |   |       |  
|Impact of restricted stock                              |  |      | 18     |   |      |   | 3      |      |  |   |       |  
|Conversion of class C shares                            |  |      | 4,452  |   |      |   | 4,452  |      |  |   | 4,452  |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Adjusted weighted average shares outstanding            |  |      | 75,415 |   |      |   | 77,387 |      |  |   | 83,097 |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Diluted earnings per share:                             |  |      |        |   |      |   |        |      |  |   |        |  
|Continuing operations                                   |  | $    | 0.81   |   |      | $ | 0.95   |      |  | $ | 0.77   |  
|Discontinued operations                                 |  |      | 0.07   |   |      |   | 0.06   |      |  |   | 0.03   |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Net earnings                                            |  | $    | 0.88   |   |      | $ | 1.01   |      |  | $ | 0.80   |  
|                                                        |  |      |        |   |      |   |        |      |  |   |        |  



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



Stock-based compensationWe account for stock-based compensation by using the intrinsic value-based method in accordance with Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to
Employees. Under APB No. 25, we do not recognize compensation expense for our stock options because the exercise price equals the market price of the underlying stock on the grant date. We recognize compensation expense related to restricted
stock grants over the vesting period. As permitted, we have elected to adopt the disclosure only provisions of Statement No. 123, Accounting for Stock-Based Compensation and Statement No. 148, Accounting for Stock-Based
CompensationTransition and Disclosurean Amendment of FASB Statement No. 123.



Statement No. 123, as amended by Statement No. 148, establishes a fair value-based method of accounting for employee stock-based compensation plans and encourages companies to adopt that method. However, it also
allows companies to continue to apply the intrinsic value-based method currently prescribed under APB No. 25. We have chosen to continue to report stock-based compensation in accordance with APB No. 25, and provide the following pro forma disclosure
of the effects of applying the fair value method to all applicable awards granted.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table illustrates the effect on net earnings and net earnings per share if we had applied the fair value recognition provisions of Statement
No. 123:



|                                                                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|Years ended December 25, December 26 and December 31                                                                             |  | 2005 |        |   | 2004 |   |        | 2003 | 
|Net earnings as reported                                                                                                         |  | $    | 66,243 |   |      | $ | 78,480 |      |  | $ | 66,793 |  
|Add compensation cost of restricted stock, net of related tax effects, included in the determination of net earnings as
reported |  |      | 201    |   |      |   | 30     |      |  |   | 5      |  
|Deduct stock based compensation determined under fair value-based method, net of related tax effects:                            |  |      |        |   |      |   |        |      |  |   |        |  
|Stock options                                                                                                                    |  |      | (82    | ) |      |   | (111   | )    |  |   | (15    | )
|Employee stock purchase plan                                                                                                     |  |      | (79    | ) |      |   | (35    | )    |  |   | (17    | )
|Restricted stock                                                                                                                 |  |      | (201   | ) |      |   | (30    | )    |  |   | (5     | )
|                                                                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  
|Pro forma net earnings                                                                                                           |  | $    | 66,082 |   |      | $ | 78,334 |      |  | $ | 66,761 |  
|                                                                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  
|Net earnings per share of common stock:                                                                                          |  |      |        |   |      |   |        |      |  |   |        |  
|Basic earnings per share:                                                                                                        |  |      |        |   |      |   |        |      |  |   |        |  
|As reported                                                                                                                      |  | $    | 0.91   |   |      | $ | 1.05   |      |  | $ | 0.84   |  
|                                                                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  
|Pro forma                                                                                                                        |  | $    | 0.91   |   |      | $ | 1.05   |      |  | $ | 0.84   |  
|                                                                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  
|Diluted earnings per share:                                                                                                      |  |      |        |   |      |   |        |      |  |   |        |  
|As reported                                                                                                                      |  | $    | 0.88   |   |      | $ | 1.01   |      |  | $ | 0.80   |  
|                                                                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  
|Pro forma                                                                                                                        |  | $    | 0.88   |   |      | $ | 1.01   |      |  | $ | 0.80   |  
|                                                                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  



Fair value was
calculated using the Black-Scholes option pricing model, with the following weighted-average assumptions for options granted in 2004 and 2003. There were no options granted in 2005.



|                                               |  |      |       |   |      |   |       |  
|---------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                               |  | 2004 |       |   | 2003 |  
|Dividend yield                                 |  |      | 1.43  | % |      |   | 1.45  | %
|Expected volatility                            |  |      | 28.95 | % |      |   | 33.00 | %
|Risk-free rate of return                       |  |      | 3.90  | % |      |   | 3.81  | %
|Expected life of options (in years)            |  |      | 7     |   |      |   | 7     |  
|Weighted average fair value of options granted |  | $    | 5.94  |   |      | $ | 6.54  |  



Fair
valuesThe carrying amount of cash and cash equivalents, receivables, accounts payable and long-term notes payable to banks approximates fair value as of December 25, 2005 and December 26, 2004.



Cash equivalentsCash equivalents are highly liquid
investments with maturities of three 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 25, 2005 and December 26, 2004 was $9,955 and $7,210, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



InventoriesInventories are stated at the lower of cost (first in, first out
method) or market. A summary of inventories follows:



|                            |  |      |       |   |      |   |        |  
|--------------------------- |  | ---- | ----- | - | ---- | - | ------ | -
|December 25 and December 26 |  | 2005 |       |   | 2004 |  
|Paper and supplies          |  | $    | 7,673 |   |      | $ | 7,187  |  
|Work in process             |  |      | 1,053 |   |      |   | 1,607  |  
|Finished goods              |  |      | 1,272 |   |      |   | 2,020  |  
|Less obsolescence reserve   |  |      | (351  | ) |      |   | (364   | )
|                            |  |      |       |   |      |   |        |  
|Inventories, net            |  | $    | 9,647 |   |      | $ | 10,450 |  
|                            |  |      |       |   |      |   |        |  



Television
programmingWe have agreements with distributors for the rights to television programming over contract periods, which generally run for one to five years. Each contract is recorded as an asset and a liability at an amount equal to
its gross contractual commitment when the license period begins and the program is available for its first showing. The portion of program contracts that become payable within one year is reflected as a current liability in the accompanying
Consolidated Balance Sheets. The rights to program materials are carried at the lower of unamortized cost or estimated net realizable value or in the case of programming obtained by an acquisition, estimated fair market value.



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



|                                         |  |      
|---------------------------------------- |  | -----
|                                         |  | Years
|Building and land improvements           |  | 1020
|Buildings                                |  | 30   
|Newspaper printing presses               |  | 25   
|Broadcasting equipment                   |  | 1520
|Telecommunications and network equipment |  | 520 
|Other printing presses                   |  | 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, 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 over periods of five 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.



Concentration of credit riskGenerally, credit is extended based upon an evaluation of the customers financial position, and advance payment is not required. In our telecommunications business, 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. Credit losses are provided for in the financial statements and 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.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



ReclassificationsCertain prior year amounts have been reclassified to conform to the
2005 presentation. Specifically, beginning in 2005, we are reporting circulation revenue on a retail (gross), rather than a wholesale (net), basis. Consistent with the provisions of EITF 99-19, certain newspaper delivery costs, which were previously
recorded as contra-revenue, were reclassified to increase operating costs with a corresponding increase in circulation revenue.



New accounting standardsIn May 2005, the FASB issued Statement No. 154, Accounting Changes and Error CorrectionsA Replacement of
APB Opinion No. 20 and FASB Statement No. 3, which requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the basis of the new accounting principle, unless it
is impracticable to do so. Statement No. 154 also provides that (i) a change in method of depreciating or amortizing a long-lived nonfinancial asset be accounted for as a change in estimate (prospectively) that was affected by a change in accounting
principle, and (ii) correction of errors in previously issued financial statements should be termed a restatement. In accordance with the new rule, we will adopt Statement No. 154 in the first quarter of 2006. We do not believe the
effect of adopting Statement No. 154 will have a material impact on our consolidated financial statements.



In December 2004, the FASB issued Statement No. 123R, Share-Based Payment, which requires a public entity to measure the cost of employee
services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in
exchange for the award. In April 2005, the U.S. Securities and Exchange Commission adopted a new rule amending the compliance dates for Statement No. 123R. In accordance with the new rule, we will adopt Statement No. 123R in the first quarter of
2006. We do not believe the effect of adopting Statement No. 123R will have a material impact on our consolidated financial statements.



|2 | NOTES PAYABLE TO BANKS
|- | ----------------------



On December 2, 2005, we amended our $350 million unsecured revolving credit facility. Our amended $475 million unsecured revolving facility expires on
June 2, 2011. The interest rate on borrowings are either LIBOR plus a margin that ranges from 37.5 basis points to 87.5 basis points, depending on our leverage, or the base rate, which equals the higher of the prime rate set by U.S. Bank, N.A. or
the Federal Funds Rate plus 100 basis points. As of December 25, 2005 and December 26, 2004, we had borrowings of $274,545 and $70,310, respectively, under the facility at a weighted average rate of 5.04% and 3.29%, respectively. As a result of the
amended agreement, we expensed $361 of unamortized financing fees attributed to the original agreement. Fees in connection with the amended facility of $1,717 are being amortized over the term of the facility using the straight-line method which
approximates the effective-interest method.



|3 | EMPLOYEE BENEFIT PLANS
|- | ----------------------



We have a defined benefit pension plan covering the majority of our employees. The plan provides benefits based on years of service and the average
compensation for the employees last five years of employment. Plan assets consist primarily of listed stocks and government and other bonds. The U.S. Congress is considering changes to existing laws governing employer funding of defined
benefit pension plans and insurance premiums payable to the Pension Benefit Guarantee Corporation (PBGC). While the ultimate timing and outcome of such deliberations cannot be determined with any degree of certainty, the Company does not expect that
any changes in such laws, based on pending legislation, will require a significant change in funding to its plans from current assumptions. The Company also expects that its PBGC insurance premiums will increase in future years.



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 at January 1, 1993, over a period of 20 years. FASB Staff Position 106-2, Accounting and Disclosure Requirements Related to the Medicare
Prescription



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Drug, Improvement and Modernization Act of 2003, (the Act) was issued on May 19, 2004 and was effective as of the first interim or annual period
beginning after June 15, 2004. The Act introduced a prescription drug benefit under Medicare (Medicare Part D) and a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent (as
that term is defined in the Act) to Medicare Part D. We concluded that our plan qualifies for the subsidy under the Act since the prescription drug benefits provided under our postretirement health care plan generally require lower premiums from
covered retirees and have lower deductibles than the benefits provided in Medicare Part D and accordingly, are actuarially equivalent to or better than, the benefits provided under the Act.



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 defined benefit pension plan.



|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|---------------------------------------------- |  | ---------------- | ------- | - | ----------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                               |  | Pension Benefits |         |   | Other Postretirement Benefits |  
|Years ended December 25 and December 26        |  | 2005             |         |   | 2004                          |   |         | 2005 |  |   | 2004    |  
|Change in benefit obligations                  |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Benefit obligation at beginning of year        |  | $                | 148,845 |   |                               | $ | 135,895 |      |  | $ | 32,662  |   |  | $ | 34,245  |  
|Service cost                                   |  |                  | 5,445   |   |                               |   | 4,976   |      |  |   | 475     |   |  |   | 371     |  
|Change in plan provisions                      |  |                  |        |   |                               |   | (6,189  | )    |  |   | (995    | ) |  |   |        |  
|Interest cost                                  |  |                  | 8,347   |   |                               |   | 8,297   |      |  |   | 1,998   |   |  |   | 1,697   |  
|Actuarial (gain) loss                          |  |                  | (6,399  | ) |                               |   | 13,301  |      |  |   | 2,075   |   |  |   | 4,804   |  
|Medicare subsidy effect                        |  |                  |        |   |                               |   |        |      |  |   |        |   |  |   | (5,100  | )
|Benefits paid                                  |  |                  | (7,803  | ) |                               |   | (7,435  | )    |  |   | (2,522  | ) |  |   | (3,355  | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Benefit obligation at end of year              |  | $                | 148,435 |   |                               | $ | 148,845 |      |  | $ | 33,693  |   |  | $ | 32,662  |  
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|                                               |  |                  |         |  
|Change in plan assets                          |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Fair value of plan assets at beginning of year |  | $                | 124,330 |   |                               | $ | 118,798 |      |  | $ |        |   |  | $ |        |  
|Actual gain on plan assets                     |  |                  | 12,443  |   |                               |   | 12,764  |      |  |   |        |   |  |   |        |  
|Company contributions                          |  |                  | 256     |   |                               |   | 203     |      |  |   | 2,522   |   |  |   | 3,355   |  
|Benefits paid                                  |  |                  | (7,803  | ) |                               |   | (7,435  | )    |  |   | (2,522  | ) |  |   | (3,355  | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Fair value of plan assets at end of year       |  | $                | 129,226 |   |                               | $ | 124,330 |      |  | $ |        |   |  | $ |        |  
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|                                               |  |                  |         |  
|Funded status of the plan                      |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Underfunded status of the plan                 |  | $                | (19,209 | ) |                               | $ | (24,515 | )    |  | $ | (33,693 | ) |  | $ | (32,662 | )
|Unrecognized net actuarial loss                |  |                  | 36,940  |   |                               |   | 48,498  |      |  |   | 14,991  |   |  |   | 13,571  |  
|Unrecognized prior service cost                |  |                  | (5,183  | ) |                               |   | (5,657  | )    |  |   | (1,228  | ) |  |   |        |  
|Unrecognized transition obligation             |  |                  |        |   |                               |   |        |      |  |   | 3,840   |   |  |   | 4,389   |  
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Prepaid (accrued) net benefit cost             |  | $                | 12,548  |   |                               | $ | 18,326  |      |  | $ | (16,090 | ) |  | $ | (14,702 | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|                                               |  |                  |         |  
|Prepaid (accrued) net benefit cost             |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Prepaid pension cost                           |  | $                | 18,603  |   |                               | $ | 23,787  |      |  | $ |        |   |  | $ |        |  
|Accrued benefit cost                           |  |                  | (6,055  | ) |                               |   | (5,461  | )    |  |   | (16,090 | ) |  |   | (14,702 | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Prepaid (accrued) net benefit cost             |  | $                | 12,548  |   |                               | $ | 18,326  |      |  | $ | (16,090 | ) |  | $ | (14,702 | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The accrued benefit cost is included in accrued employee benefits. The accumulated benefit obligation
for the pension plans was $125,736 and $122,376 at December 25, 2005 and December 26, 2004, respectively.



|                                                                         |  |                  |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------ |  | ---------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                         |  | Pension Benefits |        
|Years ended December 25, December 26 and December 31                     |  | 2005             |         |   | 2004 |   |         | 2003 | 
|Components of net periodic benefit cost                                  |  |                  |         |   |      |   |         |      |  |   |         |  
|Service cost                                                             |  | $                | 5,445   |   |      | $ | 4,976   |      |  | $ | 4,230   |  
|Interest cost                                                            |  |                  | 8,347   |   |      |   | 8,297   |      |  |   | 8,037   |  
|Expected return on plan assets                                           |  |                  | (10,174 | ) |      |   | (10,338 | )    |  |   | (10,511 | )
|Amortization of:                                                         |  |                  |         |   |      |   |         |      |  |   |         |  
|Unrecognized prior service cost                                          |  |                  | (474    | ) |      |   | 257     |      |  |   | 257     |  
|Unrecognized net transition obligation                                   |  |                  |        |   |      |   | 104     |      |  |   | 104     |  
|Unrecognized net loss                                                    |  |                  | 2,890   |   |      |   | 1,666   |      |  |   | 620     |  
|                                                                         |  |                  |         |   |      |   |         |      |  |   |         |  
|Net periodic benefit cost included in selling and administrative expense |  | $                | 6,034   |   |      | $ | 4,962   |      |  | $ | 2,737   |  
|                                                                         |  |                  |         |   |      |   |         |      |  |   |         |  



|                                                                         |  |                               |       |      |   |       |  |   |      
|------------------------------------------------------------------------ |  | ----------------------------- | ----- | ---- | - | ----- |  | - | -----
|                                                                         |  | Other Postretirement Benefits
|Years ended December 25, December 26 and December 31                     |  | 2005                          |       | 2004 |   | 2003 
|Components of net periodic benefit cost                                  |  |                               |       |      |   |       |  |   |      
|Service cost                                                             |  | $                             | 475   |      | $ | 371   |  | $ | 372  
|Interest cost                                                            |  |                               | 1,998 |      |   | 1,697 |  |   | 2,058
|Amortization of:                                                         |  |                               |       |      |   |       |  |   |      
|Unrecognized prior service cost                                          |  |                               | 233   |      |   |      |  |   |     
|Unrecognized net transition obligation                                   |  |                               | 549   |      |   | 549   |  |   | 549  
|Unrecognized net loss                                                    |  |                               | 655   |      |   | 393   |  |   | 449  
|                                                                         |  |                               |       |      |   |       |  |   |      
|Net periodic benefit cost included in selling and administrative expense |  | $                             | 3,910 |      | $ | 3,010 |  | $ | 3,428
|                                                                         |  |                               |       |      |   |       |  |   |      



The costs for our
pension benefits and other postretirement benefits are actuarially determined. Key assumptions utilized at the measurement dates of December 25, 2005 and December 26, 2004 for pension benefits and September 30 for other postretirement benefits
include the following:



Weighted-average assumptions used to determine
benefit obligations



|                               |  |                  |   |  |                              |   |  |      |   |  |      |  
|------------------------------ |  | ---------------- | - |  | ---------------------------- | - |  | ---- | - |  | ---- | -
|                               |  | Pension Benefits |   |  | OtherPostretirement Benefits |  
|                               |  | 2005             |   |  | 2004                         |   |  | 2005 |   |  | 2004 |  
|Discount rate                  |  | 5.95             | % |  | 5.75                         | % |  | 5.50 | % |  | 6.00 | %
|Rate of compensation increases |  | 4.00             |   |  | 4.50                         |   |  |     |   |  |     |  



Weighted-average assumptions used
to determine net periodic benefit cost



|                               |  |      |   |  |      |   |  |      |   |  |      |  
|------------------------------ |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | -
|Discount rate                  |  | 5.75 | % |  | 6.25 | % |  | 6.00 | % |  | 6.25 | %
|Expected return on plan assets |  | 8.50 |   |  | 8.50 |   |  |     |   |  |     |  
|Rate of compensation increases |  | 4.50 |   |  | 4.50 |   |  |     |   |  |     |  



To determine the
discount rate assumptions for the pension and the postretirement benefit plans, we studied our plans specific discount rate by matching our projected benefit payments to a yield curve developed from high grade corporate bonds. The results of those
studies were used as the benchmark to determine the discount rate assumptions. In addition, we used the Moodys Aa Corporate bonds, as of the measurement dates, as another reference point to support our decision.



75



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



To determine the long-term rate of return assumption for plan assets, we study historical markets and
preserve the long-term historical relationships between equities and fixed-income securities consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. We evaluate
current market factors such as inflation and interest rates before we determine long-term capital market assumptions. We review peer data and historical returns to check for reasonability and appropriateness.



The assumed health care cost trend rate used in measuring the postretirement
benefit obligation for retirees for 2006 is 11.0%, grading down to 5.0% in the year 2011 and thereafter. The assumed health care cost trend rates have a significant effect on the amounts reported for other postretirement benefits. A 1% change in the
assumed health care cost trend rate would have the following effects:



|                                                                    |  |            |     |            |   |      |  
|------------------------------------------------------------------- |  | ---------- | --- | ---------- | - | ---- | -
|                                                                    |  | 1%Increase |     | 1%Decrease |  
|Effect on total of service and interest cost components in 2005     |  | $          | 92  |            | $ | (88  | )
|Effect on postretirement benefit obligation as of December 25, 2005 |  | $          | 955 |            | $ | (920 | )



Plan Assets



Our pension plan weighted average asset allocations at December 25, 2005 and
December 26, 2004, by asset category are as follows:



|                        |  |             |   |  |       |  
|----------------------- |  | ----------- | - |  | ----- | -
|                        |  | Plan Assets |  
|                        |  | 2005        |   |  | 2004  |  
|Equity securities       |  | 71.3        | % |  | 74.4  | %
|Fixed-income securities |  | 28.1        |   |  | 25.6  |  
|Other                   |  | 0.6         |   |  |      |  
|                        |  |             |   |  |       |  
|Total                   |  | 100.0       | % |  | 100.0 | %
|                        |  |             |   |  |       |  



We employ a total
return investment approach whereby a mix of equity and fixed-income investment funds are used to maximize the long-term return of plan assets for a prudent level of risk. We establish our risk tolerance through careful consideration of plan
liabilities, plan funded status, and our financial condition. The investment portfolio contains a diversified blend of equity and debt investments. The equity component is diversified across U.S. and non-U. S. stocks, as well as growth, value and
small and large capitalization stocks. The fixed-income component is diversified across the maturity, quality and sector spectrum. The portfolio may also hold cash equivalents. Fund managers may use derivatives only if the vehicle is deemed by the
manager to be more attractive than a similar direct investment in the underlying cash market, or if the vehicle is being used to manage risk of the portfolio. Derivatives, however, may not be used in a speculative manner or to leverage the
portfolio. We measure and monitor investment risk on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset/liability allocation studies. The asset mix guidelines for the plan are as
follows:



|                                 |  |                            |   |  |        |   |  |         |  
|-------------------------------- |  | -------------------------- | - |  | ------ | - |  | ------- | -
|                                 |  | Percent of Total Portfolio |  
|                                 |  | Minimum                    |   |  | Target |   |  | Maximum |  
|Large capitalization U.S. stocks |  | 30.0                       | % |  | 35.0   | % |  | 40.0    | %
|Small capitalization U.S. stocks |  | 15.0                       |   |  | 20.0   |   |  | 25.0    |  
|International stocks             |  | 10.0                       |   |  | 15.0   |   |  | 20.0    |  
|Fixed-income securities          |  | 20.0                       |   |  | 25.0   |   |  | 30.0    |  
|Cash equivalents                 |  |                           |   |  | 5.0    |   |  | 5.0     |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Contributions



We do not expect to contribute to our defined benefit pension plan in 2006. We expect to contribute $256 to our unfunded
non-qualified pension plan.



Benefit Payments



The following benefit payments, which reflect expected
future service, as appropriate, are expected to be paid with future contributions to the plan or directly from plan assets, as follows:



|          |  |                  |        |                               |   |                             |  |             |     |  |   |       
|--------- |  | ---------------- | ------ | ----------------------------- | - | --------------------------- |  | ----------- | --- |  | - | ------
|          |  | Pension Benefits |        | Other Postretirement Benefits
|          |  |                  |        | GrossPayments                 |   | Less MedicarePart D Subsidy |  | NetPayments
|2006      |  | $                | 7,721  |                               | $ | 3,011                       |  | $           | 69  |  | $ | 2,942 
|2007      |  |                  | 7,775  |                               |   | 2,832                       |  |             | 73  |  |   | 2,759 
|2008      |  |                  | 7,788  |                               |   | 2,713                       |  |             | 76  |  |   | 2,637 
|2009      |  |                  | 7,816  |                               |   | 2,563                       |  |             | 79  |  |   | 2,484 
|2010      |  |                  | 8,036  |                               |   | 2,467                       |  |             | 81  |  |   | 2,386 
|20112015 |  |                  | 46,285 |                               |   | 10,763                      |  |             | 398 |  |   | 10,365



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 contribution may not exceed 50% of their eligible wages. 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 $2,390, $2,603 and $2,517 in 2005, 2004 and 2003, respectively. We made additional contributions
into the Investment Savings Plan on behalf of certain employees not covered by the defined benefit pension plan of $633, $927 and $930 in 2005, 2004 and 2003, respectively. We expect to contribute $679 on behalf of these employees in 2006. Included
in the matching and additional contributions in 2004 and 2003 are contributions to the employees of NorthStar Print Group of $401 and $389, which is reported as a discontinued operation.



|4 | INCOME TAXES
|- | ------------



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



|                                                     |  |      |        |      |   |        |  |   |       
|---------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|Years ended December 25, December 26 and December 31 |  | 2005 |        | 2004 |   | 2003  
|Current:                                             |  |      |        |      |   |        |  |   |       
|Federal                                              |  | $    | 34,197 |      | $ | 32,085 |  | $ | 24,183
|State                                                |  |      | 6,098  |      |   | 7,735  |  |   | 5,820 
|                                                     |  |      |        |      |   |        |  |   |       
|                                                     |  |      | 40,295 |      |   | 39,820 |  |   | 30,003
|Deferred                                             |  |      | 74     |      |   | 9,246  |  |   | 13,608
|                                                     |  |      |        |      |   |        |  |   |       
|Total                                                |  | $    | 40,369 |      | $ | 49,066 |  | $ | 43,611
|                                                     |  |      |        |      |   |        |  |   |       



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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



|                                                     |  |      |   |  |      |   |  |      |  
|---------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|Years ended December 25, December 26 and December 31 |  | 2005 |   |  | 2004 |   |  | 2003 |  
|Statutory federal income tax rate                    |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
|State income taxes, net of federal tax benefit       |  | 4.4  |   |  | 4.6  |   |  | 5.0  |  
|Other                                                |  | 0.4  |   |  | 0.5  |   |  | 0.4  |  
|                                                     |  |      |   |  |      |   |  |      |  
|Effective income tax rate                            |  | 39.8 | % |  | 40.1 | % |  | 40.4 | %
|                                                     |  |      |   |  |      |   |  |      |  



Temporary differences
that give rise to the deferred tax assets and liabilities at December 25, 2005 and December 26, 2004 are as follows:



|                                                                              |  |      |         |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|Current assets                                                                |  | 2005 |         |   | 2004 |  
|Receivables                                                                   |  | $    | 3,525   |   |      | $ | 2,494   |  
|Inventories                                                                   |  |      | 158     |   |      |   | 161     |  
|Other assets                                                                  |  |      | 2,270   |   |      |   | 2,359   |  
|Accrued compensation                                                          |  |      | 2,826   |   |      |   | 2,731   |  
|Accrued employee benefits                                                     |  |      | 1,189   |   |      |   | 1,158   |  
|                                                                              |  |      |         |   |      |   |         |  
|Total current deferred tax assets                                             |  | $    | 9,968   |   |      | $ | 8,903   |  
|                                                                              |  |      |         |   |      |   |         |  
|Non-current assets                                                            |  |      |         |   |      |   |         |  
|Accrued employee benefits                                                     |  | $    | 6,379   |   |      | $ | 5,440   |  
|State net operating loss and tax credit carryforwards                         |  |      | 2,659   |   |      |   | 3,340   |  
|Other assets                                                                  |  |      | 220     |   |      |   | 861     |  
|Valuation allowances on state net operating loss and tax credit carryforwards |  |      | (2,051  | ) |      |   | (2,541  | )
|                                                                              |  |      |         |   |      |   |         |  
|Total non-current deferred tax assets                                         |  |      | 7,207   |   |      |   | 7,100   |  
|                                                                              |  |      |         |   |      |   |         |  
|Non-current liabilities                                                       |  |      |         |   |      |   |         |  
|Property and equipment                                                        |  | $    | (24,204 | ) |      | $ | (25,659 | )
|Intangible assets                                                             |  |      | (39,187 | ) |      |   | (34,135 | )
|Accrued employee benefits                                                     |  |      | (4,460  | ) |      |   | (6,455  | )
|Other liabilities                                                             |  |      | (4,986  | ) |      |   | (5,342  | )
|                                                                              |  |      |         |   |      |   |         |  
|Total non-current deferred tax liabilities                                    |  |      | (72,837 | ) |      |   | (71,591 | )
|                                                                              |  |      |         |   |      |   |         |  
|Total net non-current deferred tax liabilities                                |  | $    | (65,630 | ) |      | $ | (64,491 | )
|                                                                              |  |      |         |   |      |   |         |  



We also maintain a
liability to cover the cost of additional tax exposure items on the filing of the federal and state income tax returns. As of December 25, 2005 and December 26, 2004, this liability amounted to $4.5 million and $4.3 million, respectively.



At December 25, 2005, we have $32,289 of state net operating
loss carryforwards available to offset against future taxable income over the next 20 years. The net operating losses begin expiring in 2006. To the extent we believe it is more likely than not that certain of the net operating loss carryforwards
will expire unused, we have recorded valuation allowances.



At
December 25, 2005, we have $437 of state income tax credit carryforwards available to offset against future state income tax liabilities in certain states over the next 12 years. The tax credits begin expiring in 2006. To the extent we believe it is
more likely than not that certain of the state tax credit carryforwards will expire unused, we have recorded valuation allowances.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|5 | COMMITMENTS
|- | -----------



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 25, 2005, our future minimum rental
payments due under noncancellable operating lease agreements consist of the following:



|           |  |   |        
|---------- |  | - | -------
|2006       |  | $ | 10,163 
|2007       |  |   | 8,319  
|2008       |  |   | 6,558  
|2009       |  |   | 5,569  
|2010       |  |   | 4,565  
|Thereafter |  |   | 9,719  
|           |  |   |        
|           |  |   | $44,892
|           |  |   |        



Rent expense charged
to operations for 2005, 2004 and 2003 was $22,632, $24,415 and $26,826, respectively. Rental income from subleases included in operations for 2005, 2004 and 2003 was $3,128, $3,796 and $5,419, respectively. Aggregate future minimum rentals to be
received under noncancellable subleases totaled $477 as of December 25, 2005.



Purchase commitments from two suppliers for newsprint for our publishing businesses run through 2006 and 2008 and total $97,229 as of December 25, 2005. The commitments are 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 commitments would expire without obligation. Purchase commitments related to
broadcasting equipment and systems were approximately $2,468 as of December 25, 2005. We have $1,702 of standby letters of credit for business insurance purposes.



Over the next five years, we are committed to purchase $15,393 of television program rights that currently are not available
for broadcast, including programs not yet produced. If such programs are not produced, our applicable commitment would expire without obligation.



|6 | SHAREHOLDERS EQUITY
|- | --------------------



Common stock



We have three classes of common stock. Class C shares are held by the Grant family shareholders and are entitled to two votes per share. These shares are
convertible into class A shares or a combination of class A and class B shares at any time at the option of the holder. Dividends on class C shares are cumulative and equal to the dividends declared on the class A and class B shares, provided that
the dividend will not be less than $0.57 per year. Cash dividends may be declared and paid with respect to class C common stock without concurrent cash dividends on the class A and class B shares. Class B shares are primarily held by our current and
former employees and are entitled to ten votes per share, and are convertible to class A shares at the option of the holder after first offering to sell them to other eligible purchasers through the offer procedures set forth in our articles of
incorporation. Dividends on Class B shares are equal to those declared on the class A shares. As of December 25, 2005 and December 26, 2004, there are 8,676,705 class B shares included in treasury stock. Class A shares are publicly
traded on the New York Stock Exchange under the symbol JRN.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The changes in the number of shares of our common stock during 2005 and 2004 are as follows (in
thousands):



|                                                                       |  |              |  |         |                |  |         |   |  |      
|---------------------------------------------------------------------- |  | ------------ |  | ------- | -------------- |  | ------- | - |  | -----
|                                                                       |  | Common Stock |  |         | Treasury stock
|                                                                       |  | Class C      |  | Class B |                |  | Class A |   | 
|Balance as December 26, 2003                                           |  | 3,264        |  | 53,273  |                |  | 20,192  |   |  | 8,677
|Shares issued in follow-on equity offering                             |  |             |  |        |                |  | 6,725   |   |  |     
|Conversion of class B shares to class A shares                         |  |             |  | (500    | )              |  | 500     |   |  |     
|Shares purchased and retired in tender offer                           |  |             |  | (8,005  | )              |  |        |   |  |     
|Shares issued under equity incentive and employee stock purchase plans |  |             |  | 43      |                |  |        |   |  |     
|                                                                       |  |              |  |         |                |  |         |   |  |      
|Balance at December 25, 2004                                           |  | 3,264        |  | 44,811  |                |  | 27,417  |   |  | 8,677
|Conversion of class B shares to class A shares                         |  |             |  | (18,207 | )              |  | 18,207  |   |  |     
|Shares repurchased                                                     |  |             |  |        |                |  | (3,435  | ) |  |     
|Shares issued under equity incentive and employee stock purchase plans |  |             |  | 159     |                |  |        |   |  |     
|                                                                       |  |              |  |         |                |  |         |   |  |      
|Balance at December 25, 2005                                           |  | 3,264        |  | 26,763  |                |  | 42,189  |   |  | 8,677
|                                                                       |  |              |  |         |                |  |         |   |  |      



|7 | EQUITY INCENTIVE AND EMPLOYEE STOCK PURCHASE PLANS
|- | --------------------------------------------------



In 2003, our shareholders approved the Journal Communications, Inc. 2003 Equity Incentive Plan and the Journal Communications, Inc. 2003 Employee Stock
Purchase Plan.



The 2003 Equity Incentive Plan rewards outside
directors and key employees for achieving designated corporate and individual performance goals. Awards may be granted in any one or a combination of stock grants, non-statutory stock options, incentive stock options, performance unit grants and
stock unit grants. Subject to certain adjustments, 6,000,000 shares of our class B common stock are authorized to be issued under the plan. Not more than 3,000,000 shares of our class B common stock may be issued under the plan in the form of stock
grants, performance unit grants or stock unit grants.



Stock
grantsEach stock grant may be accompanied by restrictions, or may be made without any restrictions, as the compensation committee of the board of directors determines. Such restrictions may include requirements that the participant remain
in our continuous employment for a specified period of time, or that we, or the participant, meet designated performance goals. As of December 25, 2005, there are 2,896,747 shares available for issuance under the plan.



Unearned compensation was recorded at the date of the restricted stock grant
awards based on the market value of the shares. Unearned compensation, which is shown as a separate component of shareholders equity, is being amortized to expense over the vesting period.



A summary of our stock grant activity and related information follows:



|                                 |  |               |   |      |                           |  |               |   |  |                           |      
|-------------------------------- |  | ------------- | - | ---- | ------------------------- |  | ------------- | - |  | ------------------------- | -----
|                                 |  | 2005          |   | 2004
|                                 |  | Shares(000s) |   |      | WeightedAverageFair Value |  | Shares(000s) |   |  | WeightedAverageFair Value
|Outstanding at beginning of year |  | 9             |   |      | 18.07                     |  | 8             |   |  | $                         | 18.20
|Granted                          |  | 88            |   |      | 15.93                     |  | 12            |   |  |                           | 17.31
|Exercised                        |  | (29           | ) |      | 15.39                     |  | (11           | ) |  |                           | 17.29
|Forfeited                        |  | (5            | ) |      | 16.25                     |  |              |   |  |                           |     
|                                 |  |               |   |      |                           |  |               |   |  |                           |      
|Outstanding at end of year       |  | 63            |   |      | 16.46                     |  | 9             |   |  |                           | 18.07
|                                 |  |               |   |      |                           |  |               |   |  |                           |      



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Non-statutory stock optionsThe compensation committee of our board of directors may
grant non-statutory stock options to employees and directors at a purchase price equal to at least the fair market value of our class B common stock on the grant date for an exercise term determined by the committee, but not more than ten years from
the grant date. As of December 25, 2005, there are 5,830,997 shares available for issuance under the Plan.



|                                 |  |               |   |      |                               |  |               |   |  |                               |      
|-------------------------------- |  | ------------- | - | ---- | ----------------------------- |  | ------------- | - |  | ----------------------------- | -----
|                                 |  | 2005          |   | 2004
|                                 |  | Shares(000s) |   |      | WeightedAverageExercise Price |  | Shares(000s) |   |  | WeightedAverageExercise Price
|Outstanding at beginning of year |  | 68            |   |      | 18.25                         |  | 20            |   |  | $                             | 18.40
|Granted                          |  |              |   |      |                              |  | 49            |   |  |                               | 18.21
|Exercised                        |  |              |   |      |                              |  |              |   |  |                               |     
|Forfeited                        |  | (2            | ) |      | 18.56                         |  | (1            | ) |  |                               | 19.95
|                                 |  |               |   |      |                               |  |               |   |  |                               |      
|Outstanding at end of year       |  | 66            |   |      | 18.24                         |  | 68            |   |  |                               | 18.25
|                                 |  |               |   |      |                               |  |               |   |  |                               |      
|Exercisable at end of year       |  | 50            |   |      | 17.82                         |  | 20            |   |  |                               | 18.40



|                         |  |                          |  |                                       |  |                               |       |                          |    |                               |   |      
|------------------------ |  | ------------------------ |  | ------------------------------------- |  | ----------------------------- | ----- | ------------------------ | -- | ----------------------------- | - | -----
|                         |  | Options Outstanding      |  | Options Exercisable                  
|Range of exercise prices |  | NumberOutstanding(000s) |  | WeightedAverageRemainingContract Life |  | WeightedAverageExercise Price |       | NumberOutstanding(000s) |    | WeightedAverageExercise Price
|$15.85 to $17.64         |  | 32                       |  | 5.4                                   |  | $                             | 17.36 |                          | 30 |                               | $ | 17.44
|$18.40 to $19.95         |  | 34                       |  | 5.0                                   |  | $                             | 19.04 |                          | 20 |                               | $ | 18.40
|                         |  |                          |  |                                       |  |                               |       |                          |    |                               |   |      
|                         |  | 66                       |  |                                       |  |                               |       |                          | 50 |                               |   |      



Incentive stock
optionsThe compensation committee of our board of directors may grant incentive stock options to employees at a purchase price not less than 100% of the fair market value of our class B common stock on the grant date for an exercise term
determined by the committee, but not more than ten years from the grant date. There are no incentive stock options outstanding and no incentive stock options were granted during 2005 or 2004.



Performance unit grants or stock unit grantsEach stock unit
entitles the participant to a cash payment equal to the fair market value of one share of our class B common stock and will have a value established by the compensation committee of our board of directors. Each performance unit grant and stock unit
grant will be accompanied by restrictions as may be determined in the discretion of the committee. Such restrictions may include, without limitation, requirements that the participant remain in our continuous employment for a specified period of
time or meet designated performance goals. There were 21,513 performance units granted in 2005. The number of performance units granted is determined by multiplying the participants base salary by his or her target percentage of salary, which
target ranges by participant from 100% to 50%, then dividing by the initial performance unit value of $100 per unit. A Total Shareholder Return calculation is performed at the end of the performance period to determine the value of each performance
unit. Each participant will receive an amount payable that ranges between $0 and $150 per performance unit. There were no stock units granted during 2005 and no performance units or stock units were granted in 2004. At December 25, 2005, there
are 21,513 performance units outstanding and no stock units outstanding.



Employee stock purchase planThe 2003 Employee Stock Purchase Plan permits eligible employees to purchase our class B common stock at 90% of the fair market value of the stock on the day of purchase. Our
only expense related to this plan is for its administration. Subject to certain adjustments, 3,000,000 shares of our class B



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common stock are authorized for sale under this plan. During fiscal 2005 and 2004, 75,384 and 30,934 class B common shares, respectively, were sold to
employees under this plan at a weighted average fair value of $15.67 in 2005 and $16.95 in 2004. As of December 25, 2005, there are 2,878,639 shares available for sale under the plan.



|8 | GOODWILL, BROADCAST LICENSES AND OTHER INTANGIBLE ASSETS
|- | --------------------------------------------------------



Definite-lived Intangibles



Our definite-lived intangible assets consist primarily of network affiliation agreements, customer lists and non-compete agreements. We amortize the
network affiliation agreements over a period of 25 years, the customer lists over a period of five to 40 years and the non-compete agreements over the terms of the contracts.



Amortization expense was $1,363 for the year ended December 25, 2005. Estimated amortization expense is $2,411 for
2006, $2,372 for 2007, $2,312 for 2008, $2,033 for 2009 and $1,682 for 2010.



The gross carrying amount, accumulated amortization and net carrying amount of the major classes of definite-lived intangible assets as of December 25, 2005 and December 26, 2004 is as follows:



|                                  |  |                     |        |                         |   |         |                   |  |   |       
|--------------------------------- |  | ------------------- | ------ | ----------------------- | - | ------- | ----------------- |  | - | ------
|December 25, 2005                 |  | GrossCarryingAmount |        | AccumulatedAmortization |   |         | NetCarryingAmount
|Definite-lived intangible assets: |  |                     |        |                         |   |         |                   |  |   |       
|Network affiliation agreements    |  | $                   | 40,506 |                         | $ | (1,738  | )                 |  | $ | 38,768
|Customer lists                    |  |                     | 19,698 |                         |   | (16,830 | )                 |  |   | 2,868 
|Non-compete agreements            |  |                     | 22,579 |                         |   | (22,552 | )                 |  |   | 27    
|Other                             |  |                     | 2,773  |                         |   | (2,773  | )                 |  |   |      
|                                  |  |                     |        |                         |   |         |                   |  |   |       
|Total                             |  | $                   | 85,556 |                         | $ | (43,893 | )                 |  | $ | 41,663
|                                  |  |                     |        |                         |   |         |                   |  |   |       
|Definite-lived intangible assets: |  |                     |        |                         |   |         |                   |  |   |       
|Network affiliation agreements    |  | $                   | 12,142 |                         | $ | (1,198  | )                 |  | $ | 10,944
|Customer lists                    |  |                     | 19,849 |                         |   | (16,105 | )                 |  |   | 3,744 
|Non-compete agreements            |  |                     | 23,338 |                         |   | (23,276 | )                 |  |   | 62    
|Other                             |  |                     | 2,781  |                         |   | (2,778  | )                 |  |   | 3     
|                                  |  |                     |        |                         |   |         |                   |  |   |       
|Total                             |  | $                   | 58,110 |                         | $ | (43,357 | )                 |  | $ | 14,753
|                                  |  |                     |        |                         |   |         |                   |  |   |       



Indefinite-lived Intangibles



Broadcast licenses are deemed to have indefinite useful
lives because we have renewed these agreements without issue in the past and we intend to renew them in the future. Accordingly, we expect the cash flows from our broadcast licenses to continue indefinitely. No impairment resulted from our annual
impairment tests in 2005 or 2004.



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Goodwill



The changes in the carrying amount of goodwill for the year ended December 25, 2005 are as follows:



|                                  |  |                             |         |                                |   |                                |  |   |                             |   |  |   |        
|--------------------------------- |  | --------------------------- | ------- | ------------------------------ | - | ------------------------------ |  | - | --------------------------- | - |  | - | -------
|Reporting Unit                    |  | Goodwill atDecember 26,2004 |         | Goodwillrelated toacquisitions |   | Goodwillrelated todivestitures |  |   | Goodwill atDecember 25,2005
|Daily newspaper                   |  | $                           | 2,084   |                                | $ |                               |  | $ |                            |   |  | $ | 2,084  
|Community newspapers and shoppers |  |                             | 26,535  |                                |   |                               |  |   | (440                        | ) |  |   | 26,095 
|Broadcasting                      |  |                             | 107,069 |                                |   | 140,601                        |  |   | (108                        | ) |  |   | 247,562
|Telecommunications                |  |                             | 188     |                                |   |                               |  |   |                            |   |  |   | 188    
|Direct marketing services         |  |                             | 410     |                                |   |                               |  |   |                            |   |  |   | 410    
|                                  |  |                             |         |                                |   |                                |  |   |                             |   |  |   |        
|Total                             |  | $                           | 136,286 |                                | $ | 140,601                        |  | $ | (548                        | ) |  | $ | 276,339
|                                  |  |                             |         |                                |   |                                |  |   |                             |   |  |   |        



The changes in the
carrying amount of goodwill for the year ended December 26, 2004 are as follows:



|                                  |  |                           |         |                                |   |                             |  |   |        
|--------------------------------- |  | ------------------------- | ------- | ------------------------------ | - | --------------------------- |  | - | -------
|Reporting Unit                    |  | Goodwill atJanuary 1,2004 |         | Goodwillrelated toacquisitions |   | Goodwill atDecember 26,2004
|Daily newspaper                   |  | $                         | 2,084   |                                | $ |                            |  | $ | 2,084  
|Community newspapers and shoppers |  |                           | 26,210  |                                |   | 325                         |  |   | 26,535 
|Broadcasting                      |  |                           | 83,029  |                                |   | 24,040                      |  |   | 107,069
|Telecommunications                |  |                           | 188     |                                |   |                            |  |   | 188    
|Direct marketing services         |  |                           | 410     |                                |   |                            |  |   | 410    
|                                  |  |                           |         |                                |   |                             |  |   |        
|Total                             |  | $                         | 111,921 |                                | $ | 24,365                      |  | $ | 136,286
|                                  |  |                           |         |                                |   |                             |  |   |        



We perform impairment
tests each year on goodwill and indefinite-lived intangible assets, or more frequently if indicators of impairment are present. 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 2005 and 2004 annual impairment tests as of the beginning of the fourth quarter. No impairment resulted from our annual impairment tests in 2005 or 2004.



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 recognize a deferred tax liability for the difference between financial reporting and tax amortization on our
broadcast licenses and tax-deductible goodwill. The deferred tax liability that relates to the difference between financial reporting and tax basis on broadcast licenses and goodwill will not reverse over time unless future impairment charges are
recognized on the broadcast licenses or goodwill for financial reporting purposes or they are sold.



|9 | 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.



Milwaukee Public Interest Media Coalition Litigation.    On November 1, 2005, the Milwaukee Public Interest Media
Coalition (MPIMC) filed a petition at the Federal Communications Commission (the FCC) asking it to deny the pending license renewal applications of all eleven commercial television stations in the Milwaukee Designated Market
Area, including our station, WTMJ-TV, on the grounds that the stations failed to provide adequate coverage of state and local issues during the 2004 election campaign. We filed an opposition to



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the petition at the FCC on December 15, 2005, and MPIMC filed a reply to our opposition on January 18, 2006. The pleading cycle is now closed and
the matter is under review by the staff of the FCC. It is impossible to predict when the FCC will rule on this matter. We believe the petition is without merit and will continue to defend the allegations against us vigorously in any continuing
proceedings before the FCC.



Shorewest Realtors
Litigation.    On April 25, 2005, a lawsuit was filed against Journal Sentinel, Inc., a subsidiary of Journal Communications, Inc., in Milwaukee County Circuit Court. The plaintiff, Shorewest Realtors, seeks to
bring a class action lawsuit on behalf ofMilwaukee Journal Sentinel advertisers, alleging that the newspaper improperly inflated its circulation numbers since 1996. Shorewest is seeking disgorgement or restitution by Journal Sentinel of
alleged improperly collected charges (with interest), plus an unspecified amount of damages. Journal Sentinel, Inc. filed a motion to dismiss the plaintiffs claims on July 20, 2005. On October 10, 2005, the court ruled on Journal
Sentinels amended motion to dismiss. The court dismissed the plaintiffs claims based on breach of contract and breach of the duty of good faith and fair dealing and allowed the plaintiffs to proceed with their other claims. We
intend to continue to defend the action vigorously. No litigation reserve has been recorded for this matter.



National Advertising Representative Litigation.In September 2003, we hired a new national television advertising
representative due to our assessment of the performance of the prior representative. On September 11, 2003, the prior representative, TeleRep, Inc. and Harrington, Righter & Parsons, Inc. (which are affiliated entities), filed suits
against our subsidiary, Journal Broadcast Group, Inc., in the Supreme Court of the State of New York, County of New York, demanding a lump sum payment under certain contractual provisions in the aggregate amount of approximately $9.0 million. On
May 12, 2004, the parties reached an out-of-court settlement. Our remaining obligation of $5.6 million at December 25, 2005 is payable to the prior representative over a period of time. A receivable of $5.6 million is due to us from the
new national representative over the same period of time under our contract with the new national representative. The liability to our prior national representative is included in the consolidated balance sheets in current portion of long-term
liabilities and other long-term liabilities and the receivable from the new national representative is included in the consolidated balance sheets in receivables and other assets.



|10 | ACQUISITIONS
|-- | ------------



All acquisitions are accounted for using the purchase method. Accordingly, the results of operations and cash flows since the respective dates of
acquisition are included in the consolidated financial statements.



Acquisition of Three Television Stations



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



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The unaudited pro forma consolidated condensed statement of earnings information for 2005 and 2004,
set forth below, presents the results of operations as if the acquisition of the three television stations had occurred at the beginning of each year and is not necessarily indicative of future results or actual results that would have been achieved
had the acquisition occurred as of the beginning of such year.



|                                                     |  |      |         |      |   |        
|---------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                     |  | 2005 |         | 2004
|Revenue                                              |  | $    | 807,418 |      | $ | 814,816
|Earnings from continuing operations                  |  |      | 60,437  |      |   | 74,428 
|                                                     |  |     
|Earnings per common share from continuing operations |  |      |         |      |   |        
|Basic                                                |  | $    | 0.83    |      | $ | 1.00   
|Diluted                                              |  |      | 0.80    |      |   | 0.96   



Other acquisitions



On December 3, 2004, we acquired the customer base and certain
assets of Executone of Western Michigan, Inc. (d/b/a Netcom Group), a provider of networking, business telephone system, and carrier services solutions, in Grand Rapids, MI. The cash purchase price was $1,132.



On October 6, 2004, we acquired the business and certain assets of
NBC-affiliate WGBA-TV, in Green Bay, Wisconsin and certain assets of UPN affiliate WACY-TV, which is licensed to serve Appleton, Wisconsin. We also assumed an existing local marketing agreement between WGBA-TV and WACY-TV. The cash purchase price
for WGBA-TV was $43,234. In 2005, the allocation was finalized and an adjustment to goodwill and other assets of $185 was recorded due to the cancellation of a syndicated program. The acquisition allows for us to operate two NBC affiliates in
adjacent television markets and to leverage the resources and strengths of our existing television and radio operations. These are some of the factors that contributed to a purchase price that results in recognizing goodwill.



The purchase price allocations for these acquisitions are as follows:



|                               |  |                    |         |   |             |   |        |                            |  |   |        |  
|------------------------------ |  | ------------------ | ------- | - | ----------- | - | ------ | -------------------------- |  | - | ------ | -
|                               |  | 2005               |         |   | 2004        |  
|                               |  | TelevisionStations |         |   | NetcomGroup |   |        | Green BayTelevisionStation | 
|Accounts receivable            |  | $                  | 69      |   |             | $ | 475    |                            |  | $ |       |  
|Inventories                    |  |                    |        |   |             |   | 522    |                            |  |   |       |  
|Prepaid expenses               |  |                    | 3,069   |   |             |   |       |                            |  |   |       |  
|Property and equipment         |  |                    | 29,119  |   |             |   | 112    |                            |  |   | 7,077  |  
|Non-compete agreements         |  |                    |        |   |             |   |       |                            |  |   |       |  
|Other assets                   |  |                    | 13,791  |   |             |   | 80     |                            |  |   | 1,438  |  
|Customer list                  |  |                    |        |   |             |   | 1,838  |                            |  |   |       |  
|Goodwill                       |  |                    | 140,786 |   |             |   |       |                            |  |   | 23,855 |  
|Broadcast licenses             |  |                    | 34,900  |   |             |   |       |                            |  |   | 10,498 |  
|Network affiliation agreements |  |                    | 28,364  |   |             |   |       |                            |  |   | 4,383  |  
|Accounts payable               |  |                    | (2,103  | ) |             |   |       |                            |  |   |       |  
|Other current liabilities      |  |                    | (3,075  | ) |             |   | (1,895 | )                          |  |   | (4,202 | )
|Other long-term liabilities    |  |                    | (6,141  | ) |             |   |       |                            |  |   |       |  
|                               |  |                    |         |   |             |   |        |                            |  |   |        |  
|Total purchase price           |  | $                  | 238,779 |   |             | $ | 1,132  |                            |  | $ | 43,049 |  
|                               |  |                    |         |   |             |   |        |                            |  |   |        |  



The purchase price
allocation for the television stations is based on a preliminary valuation. The final purchase price allocation is expected to be completed in the first quarter of 2006, except the allocation will not reflect the purchase of the broadcast license
for KMTV-TV in Omaha, the sale of which is subject to certain FCC regulations.



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The goodwill and the broadcast licenses, which we acquired, are not subject to amortization for
financial reporting purposes. These intangible assets are, however, deductible for income tax purposes.



During 2004, we acquired two community shoppers for a cash purchase price of $187.



Had each of the 2004 acquisitions occurred on January 1, 2004, the effect of the acquisitions on consolidated results
of operations for 2004 would not have been material.



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



On January 25, 2005, we entered into a definitive asset sale agreement with Multi-Color Corporation pursuant to which Multi-Color Corporation
acquired substantially all of the assets and certain liabilities of NorthStar Print Group, Inc., our label printing business. The sale price, excluding certain real estate holdings that we retained, was $26,144 in cash, and resulted in a gain on
discontinued operations before income taxes of $8,382.



The
following table summarizes the results of operations of NorthStar Print Group, Inc., which are included in the gain from discontinued operations in the consolidated statement of earnings for 2005, 2004 and 2003:



|                                                     |  |      |       |   |      |   |        |  |   |       
|---------------------------------------------------- |  | ---- | ----- | - | ---- | - | ------ |  | - | ------
|Years ended December 25, December 26 and December 31 |  | 2005 |       |   | 2004 |   | 2003  
|Revenue                                              |  | $    | 4,112 |   |      | $ | 58,598 |  | $ | 57,371
|(Loss) income before income taxes                    |  | $    | (165  | ) |      | $ | 8,417  |  | $ | 3,963 



The current and
non-current assets and current liabilities of discontinued operations in the consolidated balance sheets at December 25, 2005 and December 26, 2004 consisted of the following:



|                          |  |                  |     |                  |   |       
|------------------------- |  | ---------------- | --- | ---------------- | - | ------
|                          |  | December 25,2005 |     | December 26,2004
|Cash                      |  | $                |    |                  | $ | 1     
|Receivables               |  |                  |    |                  |   | 5,035 
|Inventories, net          |  |                  |    |                  |   | 6,548 
|Prepaid expenses          |  |                  |    |                  |   | 88    
|                          |  |                  |     |                  |   |       
|Total current assets      |  | $                |    |                  | $ | 11,672
|                          |  |                  |     |                  |   |       
|Property and equipment    |  | $                | 307 |                  | $ | 6,161 
|Goodwill                  |  |                  |    |                  |   | 2,362 
|Prepaid pension costs     |  |                  |    |                  |   | 369   
|                          |  |                  |     |                  |   |       
|Total non-current assets  |  | $                | 307 |                  | $ | 8,892 
|                          |  |                  |     |                  |   |       
|Accounts payable          |  | $                | 114 |                  | $ | 2,766 
|Accrued compensation      |  |                  |    |                  |   | 1,661 
|Accrued employee benefits |  |                  | 15  |                  |   | 450   
|Other current liabilities |  |                  | 76  |                  |   | 2,396 
|                          |  |                  |     |                  |   |       
|Total current liabilities |  | $                | 205 |                  | $ | 7,273 
|                          |  |                  |     |                  |   |       



|12 | WORKFORCE REDUCTION AND BUSINESS IMPROVEMENT INITIATIVES
|-- | --------------------------------------------------------



During 2005, we recorded a pre-tax charge of $3,739 for workforce reductions and business improvement initiatives due to the impact of Hurricane Katrina
and the closure of our printing facility in New Orleans. The charge included $1,095 in operating costs and $2,644 in selling and administrative expenses. The charge



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



consisted of $231 in termination benefits for approximately 72 employees. In addition, $3,508 was recorded for building and equipment damage, equipment
moving costs, printing and publishing operating losses subsequent to the Hurricane, the recording of a reserve for uncollectible accounts receivable, the write off of goodwill associated with the New Orleans printing business and a liability for
contractual lease obligations in excess of estimated sublease income. On-going period costs associated with the New Orleans printing facility primarily include rent, depreciation, insurance, property taxes and utility costs. The lease on the
facility expires in 2012. If the facility can not be sublet, total future on-going costs are estimated to be $2,100.



During 2004, we recorded a pre-tax charge of $522 for workforce reductions. The charge consisted of termination benefits for approximately 66 employees
associated with the closure of a number of our printing service facilities. The closure was due to the decision by Dell Computer Corporation to eliminate supplying its customers with certain items we produce.



During 2003, we recorded a pre-tax charge of $1,361 for workforce reductions
and business improvement initiatives. Included in this charge is $471 in termination benefits for approximately 45 employees from our daily newspaper included in the 2002 workforce reduction and $296 in termination benefits for approximately 33
employees associated with the closure of our CD-ROM mastering and replication facility, a part of our printing services business. In addition, $594 was recorded for shut down costs of the CD-ROM mastering and replication facility.



Activity associated with the workforce reduction and business improvement
initiatives during the years ended December 26, 2004 and December 31, 2003 was as follows:



|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |    
|------------------------------- |  | -------------------------- | ----- | --------- | - | ------------------- |  | - | -------------------------- | - |  | - | ---
|                                |  | Balance atDecember 26,2004 |       | Additions |   | Payments/Reductions |  |   | Balance atDecember 25,2005
|Employee severance and benefits |  | $                          |      |           | $ | 231                 |  | $ | (231                       | ) |  | $ |   
|Facility costs                  |  |                            | 40    |           |   | 3,019               |  |   | (3,059                     | ) |  |   |   
|Other                           |  |                            |      |           |   | 489                 |  |   | (489                       | ) |  |   |   
|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |    
|                                |  | $                          | 40    |           | $ | 3,739               |  | $ | (3,779                     | ) |  | $ |   
|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |    
|                                |  |                            |       |          
|                                |  | Balance atDecember 31,2003 |       | Additions |   | Payments/Reductions |  |   | Balance atDecember 26,2004
|Employee severance and benefits |  | $                          | 347   |           | $ | 522                 |  | $ | (869                       | ) |  | $ |   
|Facility costs                  |  |                            | 131   |           |   |                    |  |   | (91                        | ) |  |   | 40 
|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |    
|                                |  | $                          | 478   |           | $ | 522                 |  | $ | (960                       | ) |  | $ | 40 
|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |    
|                                |  |                            |       |          
|                                |  | Balance atDecember 31,2002 |       | Additions |   | Payments/Reductions |  |   | Balance atDecember 31,2003
|Employee severance and benefits |  | $                          | 2,377 |           | $ | 767                 |  | $ | (2,797                     | ) |  | $ | 347
|Facility costs                  |  |                            |      |           |   | 537                 |  |   | (406                       | ) |  |   | 131
|Other                           |  |                            |      |           |   | 57                  |  |   | (57                        | ) |  |   |   
|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |    
|                                |  | $                          | 2,377 |           | $ | 1,361               |  | $ | (3,260                     | ) |  | $ | 478
|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |    



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



87



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|13 | SEGMENT ANALYSIS
|-- | ----------------



We conduct our operations through four reportable segments: publishing, broadcasting, telecommunications and printing services. In addition, our direct
marketing services business and certain administrative activities are aggregated and reported as other. All operations conduct their business in the United States. We publish a daily newspaper, the Milwaukee Journal Sentinel, and
about 90 community newspapers and shoppers in eight states. Our broadcasting segment consists of 37 radio stations and nine television stations in 12 states, as well as the operation of two additional television stations under local marketing
agreements. Our telecommunications segment consists of wholesale and business-to-business telecommunications services provided through a high speed fiber optic telecommunications network that covers more than 4,400 route miles in seven states, of
which we operate about 4,150 route miles. Our printing services segment includes the operations of our printing and assembly and fulfillment business.



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



The following tables summarize revenue,
operating earnings (loss), depreciation and amortization and capital expenditures from continuing operations for the years ended December 25, 2005, December 26, 2004 and December 31, 2003 and identifiable total assets at December 25, 2005 and
December 26, 2004:



|                              |  |      |         |      |   |         |      |  |   |        
|----------------------------- |  | ---- | ------- | ---- | - | ------- | ---- |  | - | -------
|                              |  | 2005 |         | 2004 |   |         | 2003
|Revenue                       |  |      |         |      |   |         |      |  |   |        
|Publishing                    |  | $    | 339,002 |      | $ | 338,896 |      |  | $ | 328,303
|Broadcasting                  |  |      | 168,316 |      |   | 172,073 |      |  |   | 150,744
|Telecommunications            |  |      | 141,087 |      |   | 144,020 |      |  |   | 149,538
|Printing services             |  |      | 72,463  |      |   | 76,308  |      |  |   | 85,958 
|Other                         |  |      | 43,593  |      |   | 42,075  |      |  |   | 37,702 
|                              |  |      |         |      |   |         |      |  |   |        
|                              |  | $    | 764,461 |      | $ | 773,372 |      |  | $ | 752,245
|                              |  |      |         |      |   |         |      |  |   |        
|Operating earnings (loss)     |  |      |         |      |   |         |      |  |   |        
|Publishing                    |  | $    | 41,677  |      | $ | 43,708  |      |  | $ | 33,199 
|Broadcasting                  |  |      | 35,094  |      |   | 44,404  |      |  |   | 29,879 
|Telecommunications            |  |      | 23,959  |      |   | 34,691  |      |  |   | 38,858 
|Printing services             |  |      | 2,324   |      |   | (367    | )    |  |   | 3,760  
|Other                         |  |      | 2,106   |      |   | 1,907   |      |  |   | 3,750  
|                              |  |      |         |      |   |         |      |  |   |        
|                              |  | $    | 105,160 |      | $ | 124,343 |      |  | $ | 109,446
|                              |  |      |         |      |   |         |      |  |   |        
|Depreciation and amortization |  |      |         |      |   |         |      |  |   |        
|Publishing                    |  | $    | 14,319  |      | $ | 15,855  |      |  | $ | 16,513 
|Broadcasting                  |  |      | 8,910   |      |   | 8,516   |      |  |   | 8,658  
|Telecommunications            |  |      | 18,082  |      |   | 17,465  |      |  |   | 17,676 
|Printing services             |  |      | 2,085   |      |   | 2,381   |      |  |   | 3,162  
|Other                         |  |      | 770     |      |   | 749     |      |  |   | 827    
|                              |  |      |         |      |   |         |      |  |   |        
|                              |  | $    | 44,166  |      | $ | 44,966  |      |  | $ | 46,836 
|                              |  |      |         |      |   |         |      |  |   |        



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                  |  |      |         |      |   |         |  |   |       
|--------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | ------
|                                  |  | 2005 |         | 2004 |   | 2003   
|Capital expenditures              |  |      |         |      |   |         |  |   |       
|Publishing                        |  | $    | 10,765  |      | $ | 9,221   |  | $ | 16,024
|Broadcasting                      |  |      | 7,030   |      |   | 7,711   |  |   | 10,369
|Telecommunications                |  |      | 14,774  |      |   | 6,672   |  |   | 9,738 
|Printing services                 |  |      | 840     |      |   | 3,807   |  |   | 1,998 
|Other                             |  |      | 895     |      |   | 1,460   |  |   | 739   
|                                  |  |      |         |      |   |         |  |   |       
|                                  |  | $    | 34,304  |      | $ | 28,871  |  | $ | 38,868
|                                  |  |      |         |      |   |         |  |   |       
|Identifiable total assets         |  |      |         |      |   |         |  |   |       
|Publishing                        |  | $    | 212,058 |      | $ | 218,806 |  |   |       
|Broadcasting                      |  |      | 611,418 |      |   | 361,872 |  |   |       
|Telecommunications                |  |      | 94,575  |      |   | 96,290  |  |   |       
|Printing services                 |  |      | 24,620  |      |   | 27,011  |  |   |       
|Other and discontinued operations |  |      | 41,995  |      |   | 70,540  |  |   |       
|                                  |  |      |         |      |   |         |  |   |       
|                                  |  | $    | 984,666 |      | $ | 774,519 |  |   |       
|                                  |  |      |         |      |   |         |  |   |       



|14 | QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
|-- | -------------------------------------------



|                    |  |               |         |        |   |         |  |        |         |       |   |         |  |   |        
|------------------- |  | ------------- | ------- | ------ | - | ------- |  | ------ | ------- | ----- | - | ------- |  | - | -------
|                    |  | 2005 Quarters
|                    |  | First         |         | Second |   | Third   |  | Fourth |         | Total
|Revenue             |  | $             | 184,208 |        | $ | 197,548 |  | $      | 187,371 |       | $ | 195,334 |  | $ | 764,461
|Gross profit        |  |               | 75,937  |        |   | 86,849  |  |        | 78,797  |       |   | 84,747  |  |   | 326,330
|Net earnings        |  |               | 17,411  |        |   | 18,135  |  |        | 13,996  |       |   | 16,701  |  |   | 66,243 
|Earnings per share: |  |               |         |        |   |         |  |        |         |       |   |         |  |   |        
|Basic               |  |               | 0.24    |        |   | 0.25    |  |        | 0.19    |       |   | 0.23    |  |   | 0.91   
|Diluted             |  |               | 0.23    |        |   | 0.24    |  |        | 0.19    |       |   | 0.23    |  |   | 0.88   
|                    | 
|                    |  | 2004 Quarters
|                    |  | First         |         | Second |   | Third   |  | Fourth |         | Total
|Revenue             |  | $             | 181,875 |        | $ | 194,856 |  | $      | 192,198 |       | $ | 204,443 |  | $ | 773,372
|Gross profit        |  |               | 77,410  |        |   | 88,221  |  |        | 85,286  |       |   | 93,154  |  |   | 344,071
|Net earnings        |  |               | 15,699  |        |   | 20,831  |  |        | 19,221  |       |   | 22,729  |  |   | 78,480 
|Earnings per share: |  |               |         |        |   |         |  |        |         |       |   |         |  |   |        
|Basic               |  |               | 0.21    |        |   | 0.28    |  |        | 0.26    |       |   | 0.31    |  |   | 1.05   
|Diluted             |  |               | 0.20    |        |   | 0.27    |  |        | 0.25    |       |   | 0.30    |  |   | 1.01   



The results for the
third and fourth quarter of 2005 include $1,562 and $2,177, respectively, in pre-tax expenses and operating losses related to the impact of Hurricane Katrina and the closure of the printing facility in New Orleans. The fourth quarter of 2005
includes revenue of $2,916 and gross profit of $1,667 from the three television stations acquired on December 5, 2005 and a $585 pre-tax gain on the sale of radio station KHLP-AM, Omaha, Nebraska. NorthStar Print Group, Inc. was sold in the
first quarter of 2005 and the operations have been reflected as discontinued operations in our consolidated financial statements and, accordingly, prior periods have been restated to reflect this treatment.



The results for the fourth quarter of 2004 include $3,599 of pre-tax gain on
the sale of properties and a $1,032 pre-tax charge for voluntary terminations at our daily newspaper.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



As of January 1, 2004, we adopted a 52-53 week fiscal year ending on the last Sunday of December
in each year. In addition, we have four quarterly reporting periods, each consisting of thirteen weeks and ending on a Sunday, provided that once every six years, starting in 2006, the fourth quarterly reporting period will be fourteen weeks.



The first quarter of 2005 contained 91 days, while the first
quarter of 2004 contained 88 days. The second, third and fourth quarters of 2005 and 2004 each contained 91 days.



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors and Shareholders

Journal Communications, Inc.



We have audited the accompanying consolidated balance sheets of Journal Communications, Inc. as of December 25, 2005
and December 26, 2004, and the related consolidated statements of earnings, shareholders equity, and cash flows for each of the three years in the period ended December 25, 2005. Our audits also included the financial statement
schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and schedule based on our
audits.



We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (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 25, 2005 and December 26, 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 25, 2005, 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.



We also have audited, in
accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Journal Communication Inc.s internal control over financial reporting as of December 25, 2005, based on criteria
established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 1, 2006, expressed an unqualified opinion thereon.



/S/    ERNST &
YOUNG LLPErnst & Young LLP




Milwaukee, Wisconsin

February 1, 2006



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors and Shareholders

Journal Communications, Inc.



We have audited managements assessment, included in the accompanying Managements Report on Internal Control Over Financial Reporting, that
Journal Communications, Inc. maintained effective internal control over financial reporting as of December 25, 2005, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (the COSO criteria). Journal Communication Inc.s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting. Our responsibility is to express an opinion on managements assessment and an opinion on the effectiveness of the companys internal control over financial reporting based on our audit.



We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures
as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.



A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.



In
our opinion, managements assessment that Journal Communications, Inc. maintained effective internal control over financial reporting as of December 25, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in
our opinion, Journal Communications, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 25, 2005, based on the COSO criteria.



We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of Journal Communications, Inc. as of December 25, 2005 and December 26, 2004, and the related consolidated statements of earnings, shareholders equity, and
cash flows for each of the three years in the period ended December 25, 2005 and our report dated February 1, 2006 expressed an unqualified opinion thereon.



/s/    ERNST & YOUNG
LLPErnst & Young LLP




Milwaukee, Wisconsin

February 1, 2006



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##### Table of Contents

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



None.



|ITEM 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------



Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures



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



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



Managements Report on Internal Control Over Financial Reporting



We are responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we
conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on our evaluation under this framework, our management concluded that our internal control over financial reporting was effective as of December 25, 2005.



Our assessment of the effectiveness of our internal control over financial reporting as of December 25, 2005 has been
audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in Item 8 hereto.



|ITEM 9B. | OTHER INFORMATION
|-------- | -----------------



None.



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PART III



|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
|-------- | --------------------------------------------------



The information contained under the headings Election of Directors and Other Matters-Section 16(a) Beneficial Ownership Reporting
Compliance in the Proxy Statement for our April 27, 2006 Annual Meeting of Shareholders is incorporated by reference herein. Reference is also made to the information under the heading Executive Officers of the Registrant
included under Part I of this Annual Report on Form 10-K.



We
have adopted a Code of Ethics for Financial Executives (meeting the definition of code of ethics as that term is defined in Item 406(b) of Regulation S-K) that applies to our Chief Executive Officer and senior financial and
accounting officers and employees. We have also adopted a Code of Ethics, applicable to all employees, and a Code of Conduct and Ethics for Members of the Board of Directors, applicable to all directors, which together satisfy the requirements
of the New York Stock Exchange regarding a code of business conduct. Finally, we have adopted Corporate Governance Guidelines addressing the subjects required by the New York Stock Exchange. We make copies of the foregoing, as
well as the charters of our Board committees, available free of charge on our website at www.journalcommunications.com, and this information is available in print to any shareholder who requests it by writing to Paul E. Kritzer, Vice
President and Secretary, Journal Communications, Inc., P.O. Box 661, Milwaukee, Wisconsin 53201-0661. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, our Code of Ethics for
Financial Executives by posting such information on our web site at the address stated above. We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K.



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------



The information contained under the heading Executive Compensation and Election of Directors-Director Compensation, in the Proxy
Statement for our April 27, 2006 Annual Meeting of Shareholders is incorporated by reference herein; provided, however, the information contained under the heading Report on Executive Compensation 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 Stock Ownership of Management and Others in the Proxy Statement for
our April 27, 2006 Annual Meeting of Shareholders is incorporated by reference herein.



Equity Compensation Plan Information



Securities available under our equity compensation plans as of December 25, 2005 are as follows:



|                                                           |  |                                                                          |     |  |                                                          |       |                                                                                                                                              |           |    
|---------------------------------------------------------- |  | ------------------------------------------------------------------------ | --- |  | -------------------------------------------------------- | ----- | -------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ---
|                                                           |  | Number of securities to be issued uponexercise ofoutstanding options (a) |     |  | Weighted-averageexercise price of outstanding options(b) |       | Number of securities remaining available for future issuance under equity compensationplans (excludingsecurities reflected incolumn (a)) (c) |          
|Equity compensation plans approved by security holders     |  | 65,750                                                                   | (1) |  | $                                                        | 18.24 |                                                                                                                                              | 8,709,636 | (2)
|Equity compensation plans not approved by security holders |  |                                                                         |     |  |                                                          |      |                                                                                                                                              |          |    
|                                                           |  |                                                                          |     |  |                                                          |       |                                                                                                                                              |           |    
|Total                                                      |  | 65,750                                                                   |     |  | $                                                        | 18.24 |                                                                                                                                              | 8,709,636 |    
|                                                           |  |                                                                          |     |  |                                                          |       |                                                                                                                                              |           |    

---

|(1) | Represents options to purchase shares of class B common stock under our 2003 Equity Incentive Plan.
|--- | ---------------------------------------------------------------------------------------------------

|(2) | All of the available shares under the 2003 Equity Incentive Plan (2,934,250) may be issued upon the exercise of stock options or granted as restricted stock, performance
shares, performance units or restricted stock units. Also includes 2,878,639 shares available for issuance under the Employee Stock Purchase Plan.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For further information on our equity compensation plans, see Note 7 in our Notes to Consolidated Financial Statements.



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##### Table of Contents

|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------



The information contained under the heading Executive Compensation-Compensation Committee Interlocks and Insider Participation and
Certain Transactions in the Proxy Statement for our April 27, 2006 Annual Meeting of Shareholders is incorporated by reference herein.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------



The information contained under the heading Ernst & Young LLP Disclosure in the Proxy Statement for our April 27, 2006 Annual
Meeting of Shareholders is incorporated by reference herein.



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PART IV



|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|-------- | ---------------------------------------



Financial Statements, Financial Statement Schedule and Exhibits



|                                                                                                                  |  |                 
|----------------------------------------------------------------------------------------------------------------- |  | ----------------
|                                                                                                                  |  | Form 10-KPage(s)
|(1) Financial Statements                                                                                          |  |                 
|                                                                                                                  | 
|Consolidated Balance Sheets at December 25, 2005 and December 26, 2004                                            |  | 64              
|                                                                                                                  | 
|Consolidated Statements of Earnings for each of the three years in the period ended December 25, 2005             |  | 65              
|                                                                                                                  | 
|Consolidated Statements of Shareholders Equity for each of the three years in the period ended December 25, 2005 |  | 66 and 67       
|                                                                                                                  | 
|Consolidated Statements of Cash Flows for each of the three years in the period ended December 25, 2005           |  | 68              
|                                                                                                                  | 
|Notes to Consolidated Financial Statements                                                                        |  | 69              
|                                                                                                                  | 
|Reports of Independent Registered Public Accounting Firm                                                          |  | 91 and 92       
|                                                                                                                  | 
|(2) Financial Statement Schedule for the years ended December 25, 2005, December 26, 2004 and December 31, 2003   |  |                 
|                                                                                                                  | 
|Schedule IIConsolidated Valuation and Qualifying Accounts                                                        |  | 97              



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 the accompanying Index to
Exhibits (on pages 99 and 100) are filed, or incorporated by reference, as part of this Annual Report on Form 10-K.



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##### Table of Contents

JOURNAL COMMUNICATIONS, INC.



SCHEDULE IICONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

Years ended December 25,
2005, December 26, 2004 and December 31, 2003

(dollars in thousands)



|                                                                               |  |                           |       |                            |   |                            |  |   |            |   |                      |   |       |  |   |      
|------------------------------------------------------------------------------ |  | ------------------------- | ----- | -------------------------- | - | -------------------------- |  | - | ---------- | - | -------------------- | - | ----- |  | - | -----
|Description                                                                    |  | BalanceatBeginningof Year |       | AdditionsChargedtoEarnings |   | OtherAdditions(Deductions) |  |   | Deductions |   | Balanceat Endof Year
|Allowance for doubtful accounts:                                               |  |                           |       |                            |   |                            |  |   |            |   |                      |   |       |  |   |      
|2005(2)(5)                                                                     |  | $                         | 8,210 |                            | $ | 5,411                      |  | $ | (1,000     | ) |                      | $ | 2,666 |  | $ | 9,955
|2004(1)(2)(3)                                                                  |  | $                         | 6,716 |                            | $ | 3,833                      |  | $ | 1,717      |   |                      | $ | 4,056 |  | $ | 8,210
|2003(2)                                                                        |  | $                         | 6,379 |                            | $ | 2,643                      |  | $ |           |   |                      | $ | 2,306 |  | $ | 6,716
|Reserve for litigation:                                                        |  |                           |       |                            |   |                            |  |   |            |   |                      |   |       |  |   |      
|2005                                                                           |  | $                         |      |                            | $ |                           |  | $ |           |   |                      | $ |      |  | $ |     
|2004(3)                                                                        |  | $                         | 1,487 |                            | $ |                           |  | $ |           |   |                      | $ | 1,487 |  | $ |     
|2003(4)                                                                        |  | $                         |      |                            | $ |                           |  | $ | 1,487      |   |                      | $ |      |  | $ | 1,487
|Deferred income taxes                                                          |  |                           |       |                            |   |                            |  |   |            |   |                      |   |       |  |   |      
|Valuation allowances on state net operating loss and tax credit carryforwards: |  |                           |       |                            |   |                            |  |   |            |   |                      |   |       |  |   |      
|2005(6)                                                                        |  | $                         | 2,541 |                            | $ | 7                          |  | $ |           |   |                      | $ | 497   |  | $ | 2,051
|2004(6)                                                                        |  | $                         | 3,555 |                            | $ | 87                         |  | $ |           |   |                      | $ | 1,101 |  | $ | 2,541
|2003(6)                                                                        |  | $                         | 3,609 |                            | $ | 472                        |  | $ |           |   |                      | $ | 526   |  | $ | 3,555

---

|(1) | During 2004, $217 was added to the allowance for doubtful accounts due to the purchase of Executone of Western Michigan, Inc. (d/b/a Netcom Group) by our telecommunications
business.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Deductions from the allowance for doubtful accounts equal accounts receivable written off, less recoveries, against the allowance.
|--- | ----------------------------------------------------------------------------------------------------------------------------------



|(3) | The TeleRep, Inc. reserve for litigation was reclassified as an allowance for doubtful accounts against the receivable recorded in other assets due to us from our new national
representative and reduced by $487 upon reaching an out-of-court settlement. See Note 9 to our Consolidated Financial Statements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | A signing bonus from our prior national representative, TeleRep, Inc., was reclassified as a reserve for litigation in response to the suit they filed against our subsidiary,
Journal Broadcast Group, Inc.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | The remaining reserve for the TeleRep, Inc. receivable was reduced by $1,000.
|--- | -----------------------------------------------------------------------------



|(6) | Deductions from the valuation allowances on state net operating loss and tax credit carryforwards equal expired, utilized or re-valued state net operating loss and tax credit
carryforwards.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES



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 on February 27, 2006.



JOURNAL COMMUNICATIONS, INC.By:

/s/    Steven J. SmithSteven J. SmithChairman 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:



|                         |  |  |  |                                                                                 
|------------------------ |  |  |  | --------------------------------------------------------------------------------
|                         |  | 
|/s/    Steven J. Smith   |  |  |  | Chairman of the Board & Chief Executive Officer (Principal Executive Officer)   
|Steven J. Smith          |  |  | 
|                         |  | 
|/s/    Douglas G. Kiel   |  |  |  | President                                                                       
|Douglas G. Kiel          |  |  |  |                                                                                 
|                         |  | 
|/s/    Paul M. Bonaiuto  |  |  |  | Executive Vice President & Chief Financial Officer (Principal Financial Officer)
|Paul M. Bonaiuto         |  |  | 
|                         |  | 
|/s/    Anne M. Bauer     |  |  |  | Vice President & Controller (Principal Accounting Officer)                      
|Anne M. Bauer            |  |  | 
|                         |  | 
|/s/    Don H. Davis, Jr. |  |  |  | Director                                                                        
|Don H. Davis, Jr.        |  |  |  |                                                                                 
|                         |  | 
|/s/    David J. Drury    |  |  |  | Director                                                                        
|David J. Drury           |  |  |  |                                                                                 
|                         |  | 
|/s/    David G. Meissner |  |  |  | Director                                                                        
|David G. Meissner        |  |  |  |                                                                                 
|                         |  | 
|/s/    Jonathan Newcomb  |  |  |  | Director                                                                        
|Jonathan Newcomb         |  |  |  |                                                                                 
|                         |  | 
|/s/    Roger D. Peirce   |  |  |  | Director                                                                        
|Roger D. Peirce          |  |  |  |                                                                                 
|                         |  | 
|/s/    Mary Ellen Stanek |  |  |  | Director                                                                        
|Mary Ellen Stanek        |  |  |  |                                                                                 
|                         |  | 
|/s/    Jeanette Tully    |  |  |  | Director                                                                        
|Jeanette Tully           |  |  |  |                                                                                 



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JOURNAL COMMUNICATIONS, INC.



INDEX TO EXHIBITS



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|              | 
|(2.1)         |  | Asset Purchase Agreement, dated January 25, 2005, between Multi-Color Corporation and Journal Communications, Inc. (incorporated by reference to Exhibit 10.15 to Journal Communications,
Inc.s Annual Report on Form 10-K for the period ended December 26, 2004 [Commission File No. 1-31805]).                                                                                                                                                                                                                                                                          
|              | 
|(2.2)         |  | Asset Purchase Agreement, dated as of August 19, 2005, among Emmis Television Broadcasting, L.P., Emmis Television License, LLC, Journal Broadcast Corporation and Journal Broadcast Group,
Inc. (incorporated by reference to Exhibit 2.1 to Journal Communications, Inc.s Current Report on Form 8-K dated August 19, 2005 [Commission File No. 1-31805]).                                                                                                                                                                                                               
|              | 
|(3.1)         |  | Amended and Restated Articles of Incorporation of Journal Communications, Inc., as amended.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|              | 
|(3.2)         |  | By-Laws of Journal Communications, Inc., as amended (incorporated by reference to Exhibit 3.3 to Journal Communications, Inc.s Annual Report on Form 10-K for the period ended December
26, 2004 [Commission File No. 1-31805]).                                                                                                                                                                                                                                                                                                                                           
|              | 
|(4.1)         |  | Amended and Restated Credit Agreement, dated December 2, 2005, among Journal Communications, Inc., certain subsidiaries thereof from time to time party thereto, the financial institutions
party thereto, Suntrust Bank, as syndication agent, Bank of America, N.A., as co-documentation agent, Wachovia Bank, National Association, as co-documentation agent, and U.S. Bank, N.A., as administrative agent (incorporated by reference to Exhibit
4.1 to Journal Communications, Inc.s Current Report on Form 8-K dated December 2, 2005 [Commission File No. 1-31805]).
|              | 
|(10.1)        |  | Journal Communications, Inc. Executive Management Incentive Plan (f/k/a the Management Long Term Incentive Plan) (incorporated by reference to Exhibit 10.2 to Journal Communications,
Inc.s (now known as The Journal Company) Annual Report on Form 10-K for the period ended December 31, 2002 [Commission File No. 0-7831]).*                                                                                                                                                                                                                                          
|              | 
|(10.2)        |  | Journal Communications, Inc. Annual Management Incentive Plan (f/k/a the Management Annual Incentive Plan) (incorporated by reference to Exhibit 10.3 to Journal Communications, Inc.s
(now known as the Journal Company) Annual Report on Form 10-K for the period ended December 31, 2002 [Commission File No. 0-7831]).*                                                                                                                                                                                                                                                
|              | 
|(10.3)        |  | Journal Communications, Inc. Non-Qualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.4 to Journal Communications, Inc.s (now known as The Journal Company)
Annual Report on Form 10-K for the period ended December 31, 2002 [Commission File No. 0-7831]).*                                                                                                                                                                                                                                                                                     
|              | 
|(10.4)        |  | Journal Communications, Inc. Supplemental Benefit Plan (incorporated by reference to Exhibit 10.5 to Journal Communications, Inc.s (now known as The Journal Company) Annual Report on
Form 10-K for the period ended December 31, 2002 [Commission File No. 0-7831]).*                                                                                                                                                                                                                                                                                                    
|              | 
|(10.5)        |  | Journal Communications, Inc. 2003 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.5 to Journal Communications, Inc.s Annual Report on Form 10-K for the period
ended December 26, 2004 [Commission File No. 1-31805]).*                                                                                                                                                                                                                                                                                                                         
|              | 
|(10.6)        |  | Journal Communications, Inc. (f/k/a The Journal Company) 2003 Employee Stock Purchase Plan incorporated by reference to Exhibit 10.6 to The Journal Companys (now known as Journal
Communications, Inc.) Registration Statement on Form S-1 [Registration File No. 333-105210]).                                                                                                                                                                                                                                                                                           



99



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|              |  |                                                                                                                                                                                                                                                                                                                                                                       
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                           
|(10.7)        |  | Journal Communications, Inc. Executive Management Incentive Plan (incorporated by reference to Exhibit 10.7 to Journal Communications, Inc.s Annual Report on Form 10-K for the period
ended December 26, 2004 [Commission File No. 1-31805]).*                                                                                                                      
|              | 
|(10.8)        |  | Form of Journal Communications, Inc. 2003 Equity Incentive Plan Stock Option Award Agreement (Non-Statutory Stock Option Grant) for Directors (incorporated by reference to Exhibit 10.1 to
Journal Communications Current Report on Form 8-K dated February 3, 2005 [Commission File No. 1-31805]).*                                                                
|              | 
|(10.9)        |  | Form of Journal Communications, Inc. 2003 Equity Incentive Plan Stock Option Award Agreement (Non-Statutory Stock Option Grant) for Officers and Employees (incorporated by reference to
Exhibit 10.2 to Journal Communications Current Report on Form 8-K dated February 3, 2005 [Commission File No. 1-31805]).*                                                   
|              | 
|(10.10)       |  | Form of Journal Communications, Inc. 2003 Equity Incentive Plan Stock Grant Award Agreement (incorporated by reference to Exhibit 10.3 to Journal Communications Current Report on Form
8-K dated February 3, 2005 [Commission File No. 1-31805]).*                                                                                                                  
|              | 
|(10.11)       |  | Form of Journal Communications, Inc. 2003 Equity Incentive Plan Restricted Stock Award Agreement for Directors (incorporated by reference to Exhibit 10.4 to Journal Communications
Current Report on Form 8-K dated February 3, 2005 [Commission File No. 1-31805]).*                                                                                               
|              | 
|(10.12)       |  | Form of Journal Communications, Inc. 2003 Equity Incentive Plan Restricted Stock Award Agreement for Officers and Employees (incorporated by reference to Exhibit 10.5 to Journal
Communications Current Report on Form 8-K dated February 3, 2005 [Commission File No. 1-31805]).*                                                                                  
|              | 
|(10.13)       |  | Employment Agreement, dated February 8, 2005, between Steven J. Smith and Journal Communications, Inc (incorporated by reference to Exhibit 10.13 to Journal Communications, Inc.s Annual
Report on Form 10-K for the period ended December 26, 2004 [Commission File No. 1-31805]).*                                                                                
|              | 
|(10.14)       |  | Summary of Non-Employee Director Compensation, effective April 28, 2005 (incorporated by reference to Exhibit 10.4 to Journal Communications, Inc.s Annual Report on Form 10-K for the
period ended December 26, 2004 [Commission File No. 1-31805]).*                                                                                                               
|              | 
|(21)          |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                                                                                                       
|              | 
|(23)          |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                                                             
|              | 
|(31.1)        |  | Certification by Steven J. Smith, Chairman and Chief Executive Officer of Journal Communications, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                    
|              | 
|(31.2)        |  | Certification by Paul M. Bonaiuto, Executive Vice President and Chief Financial Officer of Journal Communications, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.                                                                                                                                                                                   
|              | 
|(32)          |  | Certification of Steven J. Smith, Chairman and Chief Executive Officer and Paul M. Bonaiuto, Executive Vice President and Chief Financial Officer of Journal Communications, Inc., pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                          
|              | 
|(99.1)        |  | Proxy Statement for the April 27, 2006 Annual Meeting of Shareholders of Journal Communications, Inc. (Except to the extent specifically incorporated by reference, the Proxy Statement for the
April 27, 2006 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.)

---

|* | Denotes a management or compensatory plan or arrangement.
|- | ---------------------------------------------------------



100