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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
26, 2004

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-1 Common Stock, $0.01 par
value per share

Class B-2 Common Stock, $0.01 par value per share

(title of class)



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



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



The aggregate market value of the class A common stock held by non-affiliates of the registrant as of June 27, 2004 was
approximately $500,440,366 (based on the closing price of such stock on the New York Stock Exchange, Inc. as of June 25, 2004). 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 22, 2005 (excluding 4,338,352 and 4,338,353 shares of class B-1 and B-2 common stock, respectively, held by our
subsidiary, The Journal Company):



|                       |  |                                 
|---------------------- |  | --------------------------------
|Class                  |  | Outstanding at February 22, 2005
|Class A Common Stock   |  | 28,041,555                      
|Class B-1 Common Stock |  | 8,646,900                       
|Class B-2 Common Stock |  | 35,638,709                      
|Class C Common Stock   |  | 3,264,000                       



Documents
Incorporated by Reference



Portions of the Proxy Statement
for our April 28, 2005 Annual Meeting of Shareholders are incorporated by reference into Part III.



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JOURNAL COMMUNICATIONS, INC.



INDEX TO
FORM 10-K



|                           |  |                                                                                                              |  |         
|-------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | --------
|                           |  |                                                                                                              |  | Page No.
|Forward-Looking Statements |  | 1                                                                                                           
|                           |  |                                                                                                             
|Part I                     |  |                                                                                                              |  |         
|                           |  |                                                                                                             
|Item 1.                    |  | Business                                                                                                     |  | 2       
|Item 2.                    |  | Properties                                                                                                   |  | 21      
|Item 3.                    |  | Legal Proceedings                                                                                            |  | 23      
|Item 4.                    |  | Submission of Matters to a Vote of Security Holders                                                          |  | 23      
|Item 4A.                   |  | Executive Officers of Registrant                                                                             |  | 23      
|                           |  |                                                                                                             
|Part II                    |  |                                                                                                              |  |         
|                           |  |                                                                                                             
|Item 5.                    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 25      
|Item 6.                    |  | Selected Financial Data                                                                                      |  | 26      
|Item 7.                    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 28      
|Item 7A.                   |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 51      
|Item 8.                    |  | Financial Statements and Supplementary Data                                                                  |  | 52      
|Item 9.                    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 81      
|Item 9A.                   |  | Controls and Procedures                                                                                      |  | 81      
|                           |  |                                                                                                             
|Part III                   |  |                                                                                                              |  |         
|                           |  |                                                                                                             
|Item 10.                   |  | Directors and Executive Officers of the Registrant                                                           |  | 82      
|Item 11.                   |  | Executive Compensation                                                                                       |  | 82      
|Item 12.                   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 82      
|Item 13.                   |  | Certain Relationships and Related Transactions                                                               |  | 83      
|Item 14.                   |  | Principal Accountant Fees and Services                                                                       |  | 83      
|                           |  |                                                                                                             
|Part IV                    |  |                                                                                                              |  |         
|                           |  |                                                                                                             
|Item 15.                   |  | Exhibits, Financial Statement Schedules                                                                      |  | 84      
|                           | 
|Signatures                 |  | 86                                                                                                          
|                           | 
|Index to Exhibits          |  | 87                                                                                                          



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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;
| | - |  | ------------------------------



| |  |  | 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 available to our customers;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | 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 more than 90 community newspapers and shoppers in eight states. Our broadcasting segment consists of 38 radio
stations and seven television stations in 11 states, as well as the operation of one additional television station under a local marketing agreement. 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 3,800 route miles. Our printing services segment reflects the operations of our printing
and assembly and fulfillment business. Our other segment consists of a label printing business and direct marketing services business. Also included in other are corporate expenses and eliminations. On January 25, 2005, we sold our label printing
business.



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 2004, our
total revenue was $820.8 million, 60.9% of which was generated from our publishing and broadcasting operations, 17.5% from telecommunications and 21.6% 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:



|                   |  |       |   |  |       |   |  |       |  
|------------------ |  | ----- | - |  | ----- | - |  | ----- | -
|                   |  | 2004  |   |  | 2003  |   |  | 2002  |  
|Publishing         |  | 39.9  | % |  | 39.7  | % |  | 38.8  | %
|Broadcasting       |  | 21.0  |   |  | 18.9  |   |  | 19.1  |  
|Telecommunications |  | 17.5  |   |  | 18.7  |   |  | 18.6  |  
|Printing Services  |  | 9.3   |   |  | 10.8  |   |  | 12.2  |  
|Other              |  | 12.3  |   |  | 11.9  |   |  | 11.3  |  
|                   |  |       |   |  |       |   |  |       |  
|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 consists of our daily newspaper, theMilwaukee Journal Sentinel, and our community newspapers
and shoppers. Our publishing business accounted for 39.9% of our revenue and 32.9% of



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our operating earnings for the year ended December 26, 2004. Within our publishing segment, our daily newspaper accounted for 69.9% of our publishing revenue
and 87.9% of our publishing operating earnings in 2004. 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 projected 12-month average net paid circulation at March 31, 2005 of approximately 425,000 on Sunday and 240,000 daily. TheMilwaukee Journal Sentinel serves as the only major
daily and Sunday newspaper for the Milwaukee metropolitan area. According to a 2004 readership survey conducted by Scarborough Research, the SundayMilwaukee Journal Sentinel ranks number one in readership among the 50 largest geographic
markets in the United States with a 72% penetration rate and the daily newspaper ranks number three with a 49% penetration rate. These rankings are calculated by dividing the number of adults reading the newspaper in a newspapers Metropolitan
Statistical Area by the number of persons over the age of 18 in the newspapers MSA. TheMilwaukee 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 are from organizations such as the National Headliner, National Association of Black Journalists, Associated Press Managing Editors, Association of Food Journalists, American Heart Association, Inland Press Association and
Governing Magazine. These awards relate to a columnist for business reporting, our reporting on cardiovascular disease and our series related to China, obesity, and the Great Lakes water supply.



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, under the name of Journal Interactive. Also, we have developed a subscription-based website, PackerInsider.com, dedicated to coverage of the Green Bay
Packers, to which viewers must pay to subscribe. During 2004, advertising revenue for Journal Interactive increased 54.2% over 2003.



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.



Our primary goal is to grow readership, circulation, revenue and margins in our five-county primary market area (which we refer to as our PMA
and includes our MSA plus Racine county). While our efforts center on this five-county region, we also actively seek expansion opportunities in nearby market areas. In order to achieve this goal, we have developed strategies based on the findings of
a nationwide survey of 37,000 newspaper readers by the Readership Institute at Northwestern University. This study, conducted in 2001 in about 100 markets including Milwaukee, concluded that the most important objective for the newspaper industry is
readership growth. The Institute identified four cornerstones for increasing readership growth: compelling content, a strong brand, over-the-top customer service and a constructive culture. We have adopted those cornerstones as our strategic
imperatives. TheMilwaukee Journal Sentinel is focused on increasing the appeal of both its editorial and advertising content in order to better meet readers interests and to make the paper easier to read and navigate. We have
undertaken concentrated efforts to develop, implement, communicate and track strategies to grow our well-established brand. As one of our top customer service priorities, we are committed to on-time delivery. Finally, we are focused on enhancing our
constructive, collaborative internal culture to support additional readership growth.



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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 as reported in the Audit Bureau of Circulations
Publishers Statements and Annual Audits:



|                        |  |                               |  |                          |  |         |  |         |  |         |  |        
|----------------------- |  | ----------------------------- |  | ------------------------ |  | ------- |  | ------- |  | ------- |  | -------
|                        |  | Six-Months Ended September 30 |  | 12-Months Ended March 31
|                        |  | 2004                          |  | 2003                     |  | 2002    |  | 2004    |  | 2003    |  | 2002   
|Daily (Six day average) |  | 238,382                       |  | 242,609                  |  | 240,637 |  | 242,108 |  | 247,298 |  | 250,356
|Sunday                  |  | 435,127                       |  | 437,578                  |  | 434,023 |  | 434,100 |  | 434,349 |  | 445,396



Circulation revenue
accounted for 18.9% of our daily newspapers total revenue in 2004. TheMilwaukee Journal Sentinel single copy prices are $0.50 for daily and $1.75 for Sunday in our PMA.



Advertising revenue accounted for 78.8% of our daily newspapers total revenue in 2004. 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 and that are inserted into the
newspapers) inserted into theMilwaukee Journal Sentinels daily and Sunday editions and its total market coverage product, Weekend Plus, for the last three years. We believe the advertising volume decline during 2004 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
switching to preprints or Weekend Plus and direct mail. We believe some advertisers utilize preprints because preprints can offer opportunities for targeted advertising, print quality and, possibly, lower cost. Preprint pieces decreased in 2004
compared to 2003 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.



|                              |  |                           |  |         |  |        
|----------------------------- |  | ------------------------- |  | ------- |  | -------
|                              |  | Annual Advertising Linage
|                              |  | 2004                      |  | 2003    |  | 2002   
|                              |  | (inches in thousands)    
|Full run in column inches     |  | 1,629.3                   |  | 1,653.3 |  | 1,668.3
|Part run in column inches     |  | 172.1                     |  | 124.9   |  | 80.3   
|Preprint pieces (in millions) |  | 800.7                     |  | 834.6   |  | 760.5  



Community
Newspapers and Shoppers



We own and operate more than
90 community newspapers and shoppers and six printing plants through our subsidiary, Journal Community Publishing Group.



We publish 43 community newspapers, with a combined paid and free average weekly circulation of more than 320,000. 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 41 shoppers with a combined circulation of more than 775,000 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.



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We also publish 9 niche publications that appeal to a very specific advertiser and reader, with a
combined paid and unpaid average weekly circulation of more than 130,000. 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 67.5% and 2.9%,
respectively, of our community newspapers and shoppers total revenue in 2004. 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 29.6% of our community newspapers and shoppers total revenue in 2004.



Our community newspapers, shoppers and niche publication groups are:



|                       |  |                                |            |           |          |    |                   |  
|---------------------- |  | ------------------------------ | ---------- | --------- | -------- | -- | ----------------- | -
|                       |  | 2004 Average WeeklyCirculation |            | Number of
|                       |  |                                | Newspapers |           | Shoppers |    | NichePublications
|Southeastern Wisconsin |  | 338,000                        |            | 24        |          | 14 |                   | 
|Northern Wisconsin     |  | 316,000                        |            | 4         |          | 12 |                   | 3
|Ohio                   |  | 206,000                        |            |          |          | 9  |                   | 
|New York/Connecticut   |  | 120,000                        |            | 11        |          |   |                   | 1
|Florida                |  | 104,000                        |            | 4         |          |   |                   | 3
|Louisiana              |  | 76,000                         |            |          |          | 2  |                   | 2
|Vermont/Massachusetts  |  | 66,000                         |            |          |          | 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 contract. We purchase our remaining estimated newsprint requirements in the spot market from these suppliers or 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, 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 $530 in 2004 compared to an average net price per ton of $482 in 2003. Our consumption of newsprint decreased to 81,308 metric tons in 2004 from 82,667 metric tons in 2003, and our
total cost of newsprint increased $3.2 million during 2004. Based on the average net price per ton in 2004 and consumption of newsprint in 2004, a $10 per ton increase or decrease in the price of newsprint would increase or decrease our total cost
of newsprint by $0.8 million.



The decrease in consumption in
2004 is primarily attributed to a decrease in average net paid circulation and improved production efficiencies 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



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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. Advertising revenue is also generally affected by cyclical changes in national and regional economic conditions. 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 (doing business as Journal Broadcast Group), and its subsidiaries, which together operate seven television stations and 38 radio stations in 11 states, as well as the
operation of one additional television station under a local marketing agreement. Our broadcasting business accounted for 21.0% of our revenue and 33.4% of our operating earnings for the year ended December 26, 2004. 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 in order 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 increased revenue and continue to drive operating margin improvement.



In two of our markets, Milwaukee, Wisconsin and Boise, Idaho, we own and
operate both television and radio stations.



Radio
Broadcasting



Based on the Fall 2004 Arbitron ratings
book, we have the number one station in terms of station audience rank in four of the eight markets in which our radio stations operate, including in Milwaukee where WTMJ-AM has been the top rated radio station for 34 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 38 radio stations since 1999. In 2004, revenue from radio operations accounted for 47.8% 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                      |   |  | 30                       |  | B                 
|WKTI-FM            |  | Milwaukee, WI     |  | 1940         |  | Adult Contemporary           |  | 12                     |   |  | 30                       |  | B                 
|                   |  |                   |  |              |  |                             
|Omaha, NE          |  |                   |  |              |  |                              |  |                        |   |  |                          |  |                   
|KOSR-AM            |  | Omaha, NE         |  | 1995         |  | Sports                       |  | 19                     | + |  | 20                       |  | C                 
|KHLP-AM(4)         |  | Omaha, NE         |  | 1997         |  | Talk                         |  | N/A                    |   |  | 20                       |  | B                 
|KEZO-FM            |  | Omaha, NE         |  | 1995         |  | Rock                         |  | 3                      |   |  | 20                       |  | C                 
|KKCD-FM            |  | Omaha, NE         |  | 1995         |  | Classic Hits Hot Adult       |  | 8                      | + |  | 20                       |  | C2                
|KSRZ-FM            |  | Omaha, NE         |  | 1998         |  | Contemporary                 |  | 7                      |   |  | 20                       |  | C                 
|KOMJ-AM            |  | Omaha, NE         |  | 1999         |  | Adult Standards              |  | 14                     |   |  | 20                       |  | B                 
|KQCH-FM            |  | Omaha, NE         |  | 1999         |  | Contemporary Hits            |  | 4                      | + |  | 20                       |  | C                 
|KBBX-FM            |  | Nebraska City, NE |  | 1997         |  | Regional Mexican             |  | 15                     | + |  | 20                       |  | C1                
|                   |  |                   |  |              |  |                             
|Tucson, AZ         |  |                   |  |              |  |                              |  |                        |   |  |                          |  |                   
|KFFN-AM            |  | Tucson, AZ        |  | 1996         |  | Sports                       |  | 21                     |   |  | 28                       |  | C                 
|KMXZ-FM            |  | Tucson, AZ        |  | 1996         |  | Adult Contemporary Hot Adult |  | 1                      |   |  | 28                       |  | C                 
|KZPT-FM            |  | Tucson, AZ        |  | 1996         |  | Contemporary                 |  | 17                     | + |  | 28                       |  | A                 
|KGMG-FM            |  | Oracle, AZ        |  | 1998         |  | Rhythmic Oldies              |  | 11                     | + |  | 28                       |  | C2                
|                   |  |                   |  |              |  |                             
|Knoxville, TN      |  |                   |  |              |  |                              |  |                        |   |  |                          |  |                   
|WQBB-AM(4)         |  | Powell, TN        |  | 1998         |  | Sports Hot Adult             |  | N/A                    |   |  | 20                       |  | D                 
|WMYU-FM            |  | Karns, TN         |  | 1997         |  | Contemporary                 |  | 12                     |   |  | 20                       |  | A                 
|WWST-FM            |  | Sevierville, TN   |  | 1997         |  | Contemporary Hits            |  | 3                      |   |  | 20                       |  | C1                
|WKHT-FM            |  | Knoxville, TN     |  | 1998         |  | Rhythmic CHR                 |  | 7                      |   |  | 20                       |  | A                 
|                   |  |                   |  |              |  |                             
|Boise, ID          |  |                   |  |              |  |                              |  |                        |   |  |                          |  |                   
|KGEM-AM            |  | Boise, ID         |  | 1998         |  | Adult Standards              |  | 15                     |   |  | 24                       |  | B                 
|KJOT-FM            |  | Boise, ID         |  | 1998         |  | Rock                         |  | 11                     | + |  | 24                       |  | C                 
|KQXR-FM            |  | Boise, ID         |  | 1998         |  | Alternative Rock             |  | 7                      | + |  | 24                       |  | C1                
|KTHI-FM            |  | Caldwell, ID      |  | 1998         |  | Classic Hits                 |  | 6                      |   |  | 24                       |  | C                 
|KRVB-FM            |  | Nampa, ID         |  | 2000         |  | Adult Alternative            |  | 13                     | + |  | 24                       |  | C                 
|KCID-AM(4)         |  | Caldwell, ID      |  | 1998         |  | Oldies                       |  | N/A                    |   |  | 24                       |  | C                 
|                   |  |                   |  |              |  |                             
|Wichita, KS        |  |                   |  |              |  |                              |  |                        |   |  |                          |  |                   
|KFTI-AM            |  | Wichita, KS       |  | 1999         |  | Classic Country              |  | 7                      | + |  | 22                       |  | B                 
|KFDI-FM            |  | Wichita, KS       |  | 1999         |  | Country                      |  | 1                      |   |  | 22                       |  | C                 
|KICT-FM            |  | Wichita, KS       |  | 1999         |  | Rock                         |  | 7                      | + |  | 22                       |  | C1                
|KFXJ-FM            |  | Augusta, KS       |  | 1999         |  | Classic Hits                 |  | 7                      | + |  | 22                       |  | C2                
|KYQQ-FM            |  | Arkansas City, KS |  | 1999         |  | Regional Mexican Hot Adult   |  | 18                     | + |  | 22                       |  | C                 
|KMXW-FM            |  | Newton, KS        |  | 2000         |  | Contemporary                 |  | 14                     |   |  | 22                       |  | C1                
|                   |  |                   |  |              |  |                             
|Springfield, MO    |  |                   |  |              |  |                              |  |                        |   |  |                          |  |                   
|KSGF-AM            |  | Springfield, MO   |  | 1999         |  | News/Talk                    |  | 16                     |   |  | 19                       |  | B                 
|KTTS-FM            |  | Springfield, MO   |  | 1999         |  | Country Rhythmic             |  | 1                      |   |  | 19                       |  | C                 
|KSPW-FM            |  | Sparta, MO        |  | 1999         |  | Contemporary Hits            |  | 4                      |   |  | 19                       |  | C2                
|KZRQ-FM            |  | Mt. Vernon, MO    |  | 2003         |  | Active Rock                  |  | 12                     |   |  | 19                       |  | C3                
|KSGF-FM            |  | Ash Grove, MO     |  | 2003         |  | News/Talk                    |  | 14                     |   |  | 19                       |  | C3                
|                   |  |                   |  |              |  |                             
|Tulsa, OK          |  |                   |  |              |  |                              |  |                        |   |  |                          |  |                   
|KFAQ-AM            |  | Tulsa, OK         |  | 1999         |  | Talk                         |  | 3                      |   |  | 26                       |  | A                 
|KVOO-FM            |  | Tulsa, OK         |  | 1999         |  | Country                      |  | 6                      |   |  | 26                       |  | C                 
|KXBL-FM            |  | Henryetta, OK     |  | 1999         |  | Classic Country              |  | 5                      |   |  | 26                       |  | C1                



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---

|(1) | Station audience rank equals the ranking of each station, in its market, according to the Fall 2004 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 2004 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 6:00 a.m. 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) | KHLP-AM, WQBB-AM, and KCID-AM did not qualify to be reported in the Fall 2004 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 reach 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, network compensation 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 which advertisers want to reach, as well as the number of stations competing in the market. Advertising rates generally are the highest during
morning and evening drive-time hours. We have predetermined the number of commercials that are broadcast each hour, depending on the format of a particular station. We attempt to determine the number of commercials broadcast hourly that can maximize
available revenue dollars without diminishing listening levels. Although the number of advertisements broadcast during a given time period may vary, the total number of advertisements broadcast on a particular station generally does not vary
significantly from year to year, unless there has been a format change.



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. 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 two of our radio stations to add digital transmission and plan to convert 15 additional radio stations to digital by the end of 2007.



Television Broadcasting



Based on the November 2004 Nielsen ratings book, we are ranked among the top
three stations in terms of station audience rating in six of the seven markets in which our television stations operate. As of November 2004, WTMJ-TV, our Milwaukee television station, had the top rated late night local newscast in its Designated
Market Area in 52 of the previous 53 ratings periods (based on the percentage of the total potential household audience). In 2004, revenue from television operations accounted for 52.2% 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                |  | 1+                   |  | 13                      |  | 13                        
|KTNV-TV    |  | Las Vegas, NV    |  | 1979         |  | ABC                |  | 3+                   |  | 6                       |  | 13                        
|WSYM-TV    |  | Lansing, MI      |  | 1984         |  | Fox                |  | 3+                   |  | 6                       |  | 7                         
|KMIR-TV    |  | Palm Springs, CA |  | 1999         |  | NBC                |  | 3+                   |  | 7                       |  | 10                        
|KIVI-TV    |  | Boise, ID        |  | 2001         |  | ABC                |  | 2+                   |  | 10                      |  | 7                         
|KSAW-TV(3) |  | Twin Falls, ID   |  | 2001         |  | ABC                |  | 3+                   |  | 4                       |  | 6                         
|WGBA-TV    |  | Green Bay, WI    |  | 2004         |  | NBC                |  | 4                    |  | 9                       |  | 7                         
|WACY-TV(4) |  | Appleton, WI     |  | 2004         |  | UPN                |  | N/A                  |  | N/A                     |  | 7                         

---

|(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 2004 Nielsen ratings
book. A + indicates a tie with another station in the market.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(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. WACY-TV did not qualify to be reported in the November 2004
Nielsen ratings book.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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. The success of our NBC affiliate stations in Milwaukee and Palm
Springs is partially attributable to the strong ratings NBC network programming has generated in recent years. Likewise, lower ratings at ABC in the past have contributed to the relative underperformance at our Las Vegas and Boise stations. We
believe all of our television stations are strong affiliates with good relationships with the respective networks. We believe that both Las Vegas and Boise 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 share of
advertising spending in a given market. Based on the November 2004 Nielsen ratings book, we had the number one local late evening news program in two of our six markets (based on the percentage of the total potential household audience)KMIR-TV
in Palm Springs, California, 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. For example, political advertising
revenue was $12.6 million in 2004 compared to $1.1 million in 2003. 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 for our three NBC
affiliates will allow them to sell advertising at premium rates.



We intend to pursue additional acquisitions of television stations, particularly stations in mid-sized growth markets with potential for operating improvement. For example, 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



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agreement between WGBA-TV and WACY-TV. 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, primarily as a medium for local advertising. Changes in market demographics, the entry of competitive stations or the adoption of competitive formats by existing stations could result in lower
ratings, which could in turn reduce advertising revenue. Technology can play an important role in competition as the ratings each station receives also depend upon the strength of the stations signal in each market and, therefore, the number
of 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 newer national networks, such as UPN, WB and Paxson Communications Corporation (or PAX TV). The third category includes independent stations that
are not affiliated with any network and rely principally on local and syndicated programming. Affiliation with a television network can have a significant influence on the revenue of a television station because the audience ratings generated by a
networks programming can affect the rates at which a station can sell advertising time. Generally, rates for national and local spot advertising sold by us are determined by each station, which receives all of the revenue, net of agency
commissions, for that advertising. Rates are influenced by the demand for advertising time, the popularity of the stations programming and market size.



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. This coincides with increased advertising around certain holidays. The second quarter tends to show an increase in automotive
advertising as well as increases in tourism and travel advertising before the summer months. Because television and radio broadcasters rely upon advertising revenue, they are subject to cyclical changes in the economy. The size of advertisers
budgets, which are affected by broad economic trends, affects the broadcast industry in general and the revenue of individual television and radio stations.



Telecommunications



We conduct our telecommunications business through our subsidiary, Norlight Telecommunications, Inc., which provides both wholesale telecommunications
services, sometimes referred to as carrier services, and



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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 17.5% of our revenue and 26.1% of our
operating earnings for the year ended December 26, 2004. 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 fiber optic network while earning a substantial return on our investment.



Our wholesale telecommunications business provides network transmission
solutions for other telecommunications carriers, including interexchange (nationwide long distance) carriers, wireless carriers, Internet service providers, incumbent local exchange carriers and competitive local exchange carriers in order to
provide voice, video, data and Internet applications for their customers 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 broadcast quality video signals to broadcast, entertainment and sports industries, educational institutions and businesses. 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 dedicated circuits, frame relay (statistically multiplexed packet data service), ATM (Asynchronous Transfer Modea very high speed transmission
technology), Internet access and switched voice services (pay-by-the-minute long distance including domestic, international and calling card services). Our managed services products include hosted IP (Internet Protocol) telephony, managed security,
managed routers, data center services, business continuity programs and integrated web/audio/video conferencing offerings.



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 2004 survey conducted by Peregrine Marketing Research showing a 96.0% 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 reliability and responsiveness to customers. Each customer has its own dedicated account team to manage and design effective telecommunications
solutions.



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 3,794 route miles of fiber optic network connecting Wisconsin,
Michigan, Indiana, Minnesota, Illinois, Iowa and Ohio. We also have an additional 669 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 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, who include MCI
(formerly WorldCom Inc.) and Global Crossing, accounted for 37.0% and 38.1% of our telecommunications revenue in 2004 and 2003, respectively. During 2004, we signed a



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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.



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, MCI, Global Crossing and Sprint; regional carriers, such as McLeodUSA Telecommunications, US Signal, TDS Telecom; and local exchange carriers, such as SBC Communications, Verizon and Qwest Communications. Section 271
Authority, which permits Regional Bell Operating Companies to provide long-distance service, has resulted in stiff price competition primarily from SBC and Qwest. We are vigorously competing with these providers and have been proactively working
with the majority of our current customers by leveraging our customer service and new bundled services as we extend contracts.



We believe that aggressively reduced pricing as a result of overcapacity continues to be a significant issue within the telecommunications industry. In
addition, pending and other potential future carrier consolidations could impact our telecommunications business; 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 subsidiary IPC Print
Services, Inc. Our printing services business accounted for 9.3% of our revenue and a $0.4 million operating loss for the year ended December 26, 2004. See Note 13 to our Consolidated Financial Statements for additional financial information
regarding our printing services business.



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, kit assembly 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 printing processes. We are also a Microsoft-authorized replicator of certificates of authenticity applied to various software products. All of these markets are served through our direct national sales force.



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. In 2004, we closed certain unprofitable operations and implemented other cost containment
initiatives. In addition, 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



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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 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.



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 businesses consist of our label printing
business conducted through our former subsidiary, NorthStar Print Group, and our direct marketing services business conducted through our subsidiary, PrimeNet Marketing Services. These businesses, along with intercompany eliminations and corporate
expenses, accounted for 12.3% of our revenue and 7.8% of our operating earnings for the year ended December 26, 2004. See Note 13 to our Consolidated Financial Statements for additional financial information regarding these businesses.



On January 25, 2005, we entered into a definitive asset purchase 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 preliminary purchase price, excluding certain
real estate holdings, was $27.0 million in cash. In 2004, NorthStar Print Group, Inc. contributed approximately $56.8 million in revenues and approximately $6.9 million in operating earnings, including a $3.1 million gain on the sale of property.
NorthStar Print Group, Inc. will be accounted for as a discontinued operation beginning with the first quarter ending March 27, 2005.



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.



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.



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Regulation



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



Television and Radio Regulation



Introduction



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



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 pattern of abuse. After considering these factors, the FCC may renew a broadcast
stations license, either with conditions or without, or it may designate the renewal application for hearing. Although there can be no assurance that our licenses will be renewed, we have not to date had a violation of the FCCs
regulations that jeopardized the renewal of our licenses and we are not currently aware of any facts that would prevent their timely renewal.



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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 Broadcast-Newspaper Cross-Ownership Rule; the Local Radio Ownership Rule; the Television-Radio Cross-Ownership Rule; the Dual Network Rule; and the Local Television 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 have 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. The FCC did not appeal the Third Circuits June 24, 2004 opinion. However, several
parties have filed petitions seeking review by the U.S. Supreme Court. We cannot predict the outcome of any of these judicial proceedings or 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, which was signed by the President in January 2004, included a provision instructing the FCC to set the cap at 39%.



Under the currently effective Broadcast-Newspaper
Cross-Ownership Rule, unless grandfathered or subject to waiver, no party can have an attributable interest in both a television station and a daily English-language newspaper in the same market if the television stations Grade A contour
encompasses 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 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. 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 commercial stations in such 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 Arbitron 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 new rule, a radio station that brokers more than 15% of another in-market stations weekly advertising time will be
deemed to have an attributable interest in the brokered station counting toward the applicable local numerical ownership limitation.



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The currently effective Television-Radio Cross-Ownership Rule generally allows common ownership of one or
two television stations and up to six 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 circulation, and a cable system of sufficient size. Under the new, stayed 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 newspaper ownership.



Under the currently effective Local Television 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
just 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 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 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 Consolidated Appropriations Act, which was signed by the President in
January 2004, included a provision instructing the FCC to set the cap at 39%. Under the new law, any entity is prohibited from controlling television stations the combined audience reach of which 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.



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



The transition to DTV is to occur, if not delayed pursuant to statute, by
December 31, 2006. The FCC is required to reclaim the non-core spectrum from broadcasters unless certain conditions are not met, including that digital-to-analog be generally available and that at least 85% of TV households in a given market have
access to digital broadcast signals either over-the-air or through cable or satellite. At the end of the transition period, broadcasters will be required to return one of the two channels to the FCC and broadcast exclusively in digital format. 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. We have completed and paid for the installation of High Definition
transmission in facilities at each of our television stations and each station is broadcasting in High Definition in accordance with standards set forth by the FCC.



Relationship With Cable/Satellite



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



To ensure that every local television
station can be received in its local market without requiring a cable subscriber to switch between cable and off-air signals, the FCC allows every full-power television broadcast station to require that all local cable systems transmit that
stations analog programming to their subscribers within the stations market (the so-called must-carry rule). Alternatively, a station can elect to forego its must-carry rights and seek a negotiated agreement to establish the
terms of its carriage by a local cable system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. 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.



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



On March 2, 2004, the U.S. Court of Appeals for the D.C. Circuit (the
D.C. Circuit) issued a decision that vacates and remands many key portions of the FCCs Triennial Review Order that had established new federal rules governing local telephony competition. In particular, pursuant to challenges by
the ILECs, the D.C. Circuit vacated the unbundling of local switching, which is a critical component of the unbundled network element platform (UNE-P) used to serve small business (and residential) customers. The D.C. Circuits
decision also affirmed the portions of the FCCs Order that no longer required the ILECs to lease unbundled elements for the provision of broadband services. Although several petitions were filed at the Supreme Court seeking review of the D.C.
Circuits decision, the Solicitor General and the FCC declined to seek such review. On October 12, 2004, the Supreme Court denied the petitions. On remand from the D.C. Circuit, the FCC adopted new unbundling rules on December 15, 2004.
However, the text of those new rules has not yet been released and they have not gone into effect. Until those new rules are in effect, the FCC has adopted interim unbundling rules (effective September 13, 2004) to maintain certain ILEC unbundling
obligations under interconnection agreements as they existed prior to the D.C. Circuits mandate. ILECs are challenging the interim rules in the D.C. Circuit as a violation of the D.C. Circuits decision and otherwise unlawful, although a
ruling on their challenges is not expected until later in 2005. The impact of the rules on our telecommunications operations is therefore highly uncertain and difficult to predict.



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 Voice over Internet Protocol (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, as well
as whether VoIP providers should pay access charges and should contribute to the federal universal service fund. In February 2004, the FCC issued an order finding that one type



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of VoIP, involving a specific form of computer-to-computer services for which no charge is assessed, is an unregulated information service,
rather than a telecommunications service, and preempting any attempts by state regulatory authorities to regulate this service. On March 10, 2004, the FCC released the text of a notice of proposed rulemaking that considers generally how Internet
Protocol (IP)-enabled services should be treated for regulatory purposes, including such matters as whether such services should be classified as information services, the application of access charges, universal service assessments and
other regulatory obligations. On April 21, 2004, the FCC ruled against a petition filed by AT&T Corp. (AT&T) in October 2002, in which AT&T asked the FCC to rule that its long distance phone-to-phone Internet Protocol
(IP) telephony services are exempt from terminating access charges over end user local services. On November 9, 2004, the FCC preempted traditional state public utility regulation of a type of Internet telephony service offered by Vonage
Holdings Corp. (Vonage). The Commission also stated that other types of IP-enabled services, such as those offered by cable companies that have characteristics similar to the Vonage service would also not be subject to traditional state
public utility regulation.



We cannot predict the outcome of
the IP-enabled proceeding or other FCC or state 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 non-common carrier telecommunications or common carrier telecommunications services or as unregulated information
services will also affect our contributions. In an order adopted in 2002, the FCC requested comments on how to further reform the manner in which the FCC assesses carrier contributions to the universal service fund. We are unable to predict the
changes, if any, the FCC will adopt and the effect of any such changes on our total universal service contribution payments.



In 2001, the FCC launched a proceeding to determine whether access charges, as well as reciprocal compensation for local interconnected calls, should be
replaced either by a bill-and-keep system under which intercarrier compensation would be eliminated and all carriers would recover their costs solely from end-user customers or by a unified intercarrier compensation system in which the
same rates would apply to all forms of intercarrier compensation (access and reciprocal compensation). This proceeding remains pending with the FCC and it is difficult to predict the changes that might result or their timing and impact.



State



Changes made in 1996 to the Communications Act of 1934 were intended to
increase competition in the telecommunications industry, especially in the local exchange market. With respect to local services, ILECs are required to allow interconnection to their networks and to provide unbundled access to network facilities, as
well as a number of other pro-competitive measures. Because the implementation of these requirements is subject to numerous state rulemaking proceedings, some of which hinge on FCC determinations concerning unbundled elements, it is difficult to
predict the effect of such state regulation on our operations.



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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 means such as interconnection agreements or collocation arrangements, among others, we intend to
secure improved service levels at a reduced cost for the last mile of service connection. To facilitate obtaining this path from our point-of-presence to the local exchange authority central office (the last mile), we are in the process
of securing local exchange authority in a number of states in which we conduct business. We have approved interconnection agreements with SBC in Wisconsin, Michigan, Illinois, Indiana and Ohio, and with Qwest in Minnesota, and will be required to
obtain and maintain interconnection agreements with other ILECs where we wish to provide local service or otherwise utilize unbundled elements of resale.



Local



Our networks will be 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 will 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 of 1934, 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 26, 2004, we and our
subsidiaries had approximately 4,100 full-time and 1,600 part-time employees compared to approximately 4,100 full-time and 1,700 part-time employees at December 31, 2003. The decrease in the number of employees is a result of workforce reduction
programs and attrition. Currently, there are 11 bargaining units representing approximately 800 (or approximately 14%) of our total number of employees. We have various collective bargaining agreements with these bargaining units. Seven of our 11
agreements will expire within the next two years.



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|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 in which the approximate areas are reported in square feet, as of
December 26, 2004:



|                                                                                                                                                                                                                                               |  |         |  |       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------- |  | ------
|                                                                                                                                                                                                                                               |  | Owned   |  | Leased
|Publishing                                                                                                                                                                                                                                     |  |         |  |       
|Printing plants, newsrooms, offices, warehouses and a garage located in:                                                                                                                                                                       |  |         |  |       
|Milwaukee, WI(1)                                                                                                                                                                                                                               |  | 596,000 |  | 77,000
|West Milwaukee, WI(2)                                                                                                                                                                                                                          |  | 449,000 |  |      
|Cedarburg, WI                                                                                                                                                                                                                                  |  | 16,000  |  |      
|Waukesha, WI                                                                                                                                                                                                                                   |  |        |  | 23,000
|Wauwatosa, WI                                                                                                                                                                                                                                  |  | 20,000  |  |      
|Sturtevant, WI                                                                                                                                                                                                                                 |  |        |  | 11,000
|New Berlin, WI(3)                                                                                                                                                                                                                              |  | 15,000  |  | 21,000
|Madison, WI                                                                                                                                                                                                                                    |  |        |  | 10,000
|Menomonee Falls, WI                                                                                                                                                                                                                            |  | 12,000  |  |      
|Waupaca, WI                                                                                                                                                                                                                                    |  | 58,000  |  |      
|Hartland, WI                                                                                                                                                                                                                                   |  | 59,000  |  |      
|Mukwonago, WI                                                                                                                                                                                                                                  |  |        |  | 6,000 
|Elkhorn, WI                                                                                                                                                                                                                                    |  |        |  | 5,000 
|Waterford, WI                                                                                                                                                                                                                                  |  |        |  | 7,000 
|Oconomowoc, WI                                                                                                                                                                                                                                 |  |        |  | 8,000 
|West Bend, WI                                                                                                                                                                                                                                  |  | 7,000   |  |      
|Hartford, WI                                                                                                                                                                                                                                   |  | 7,000   |  |      
|New London, WI                                                                                                                                                                                                                                 |  | 6,000   |  |      
|Rhinelander, WI                                                                                                                                                                                                                                |  | 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   |  | 52,000
|Shelton, CT                                                                                                                                                                                                                                    |  |        |  | 7,000 
|Trumbull, CT                                                                                                                                                                                                                                   |  | 57,000  |  |      
|Venice, Orange Park, Sarasota and Ponte Vedra, FL                                                                                                                                                                                              |  |        |  | 11,000
|Baton Rouge and Kenner, LA                                                                                                                                                                                                                     |  |        |  | 31,000
|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 
|Omaha, NE                                                                                                                                                                                                                                      |  | 24,000  |  |      



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|                                                    |  |         |  |        
|--------------------------------------------------- |  | ------- |  | -------
|                                                    |  | Owned   |  | Leased 
|Broadcasting, continued                             |  |         |  |        
|Tucson, AZ                                          |  | 1,000   |  | 9,000  
|Knoxville, TN(4)                                    |  | 26,000  |  |       
|Boise, ID                                           |  | 49,000  |  | 13,000 
|Wichita, KS(5)                                      |  | 23,000  |  | 6,000  
|Springfield, MO                                     |  | 2,000   |  | 16,000 
|Tulsa, OK                                           |  | 22,000  |  | 1,000  
|                                                    |  |        
|Telecommunications                                  |  |         |  |        
|Offices and satellite antennae located in:          |  |         |  |        
|Brookfield, WI(3)                                   |  |        |  | 68,000 
|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  
|Traverse City, MI                                   |  |        |  | 2,000  
|Indianapolis, IN                                    |  |        |  | 2,000  
|St. Paul, MN                                        |  |        |  | 3,000  
|                                                    |  |        
|Printing services                                   |  |         |  |        
|Offices, printing plants and warehouses located in: |  |         |  |        
|St. Joseph, MI(3)                                   |  |        |  | 333,000
|Foothill Ranch, CA(6)                               |  |        |  | 201,000
|San Jose, CA(7)                                     |  |        |  | 368,000
|                                                    |  |        
|Label printing                                      |  |         |  |        
|Offices, printing plants and warehouses located in: |  |         |  |        
|Norway, MI(8)                                       |  | 133,000 |  |       
|Watertown, WI(3)(8)                                 |  | 63,000  |  | 22,000 
|Green Bay, WI                                       |  | 40,000  |  |       
|                                                    |  |        
|Direct marketing services                           |  |         |  |        
|Offices, plants and warehouses located in:          |  |         |  |        
|St. Paul, MN(3)                                     |  |        |  | 87,000 
|Clearwater, FL                                      |  |        |  | 56,000 
|Milwaukee, WI                                       |  |        |  | 23,000 

---

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

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

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

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

|(5) | Includes 4,700 square feet sublet to third party pursuant to sublease expiring in August 2005.
|--- | ----------------------------------------------------------------------------------------------

|(6) | 138,000 square feet is sublet to third parties pursuant to subleases expiring June 2005. 63,000 square feet is not in use.
|--- | --------------------------------------------------------------------------------------------------------------------------

|(7) | Property is sublet to third parties pursuant to subleases that expire in February 2006.
|--- | ---------------------------------------------------------------------------------------

|(8) | Subsequently sold on January 25, 2005.
|--- | --------------------------------------



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|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 2004.



|ITEM 4A. | EXECUTIVE OFFICERS OF REGISTRANT
|-------- | --------------------------------



The following table sets forth the names, ages and positions of our executive officers as of February 22, 2005.



|                     |  |                                                             |  |    
|-------------------- |  | ----------------------------------------------------------- |  | ---
|Name                 |  | Title                                                       |  | Age
|Steven J. Smith      |  | Chairman of the Board, Chief Executive Officer and Director |  | 54 
|Douglas G. Kiel      |  | President                                                   |  | 56 
|Paul M. Bonaiuto     |  | Executive Vice President and Chief Financial Officer        |  | 54 
|Mary Hill Leahy      |  | Senior Vice President and General Counsel                   |  | 50 
|Anne M. Bauer        |  | Vice President and Controller                               |  | 40 
|Elizabeth Brenner    |  | Vice President                                              |  | 50 
|James J. Ditter      |  | Vice President                                              |  | 43 
|Robert M. Dye        |  | Vice President of Employee Investor Relations               |  | 57 
|Carl D. Gardner      |  | Vice President                                              |  | 48 
|Daniel L. Harmsen    |  | Vice President of Human Resources                           |  | 49 
|Mark J. Keefe        |  | Vice President                                              |  | 45 
|Kenneth J. Kozminski |  | Vice President                                              |  | 39 
|Paul E. Kritzer      |  | Vice President, Secretary and General Counsel-Media         |  | 62 
|Scott H. McElhaney   |  | Vice President                                              |  | 48 
|James P. Prather     |  | Vice President                                              |  | 47 
|Karen O. Trickle     |  | Vice President and Treasurer                                |  | 48 



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 is a member of the Executive
Committee, and has been a director 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 and
General Counsel. She was elected Senior Vice President and General Counsel in May 2003. 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.



23



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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 President-Radio, Journal Broadcast Group since December 1998.



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 Marketing Services
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 Senior Vice President and
President of News, Journal Broadcast Group and President and General Manager of KTNV-TV since August 2003. 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. 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.



24



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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; 60
million shares of class B-1 common stock; 60 million shares of class B-2 common stock; 10 million shares of class C common stock; and 10 million shares of preferred stock. After the expiration of the public sale restriction periods for our class B-1
and B-2 common stock, our articles of incorporation will be amended to combine the classes of class B common stock into one class and 120 million shares of class B common stock will be authorized. The public sale restriction period for our class B-1
common stock expired in September 2004 and the class B-2 public sale restriction period ends on March 16, 2005.



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 after the expiration of the applicable public sale restriction periods 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
22, 2005, there are 4,338,353 class B-2 shares and 4,338,352 class B-1 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 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.



As
of February 22, 2005, there were 3,357 record holders of class B common stock, 90 record holders of class A common stock and four record holders of class C common stock. We have no outstanding shares of preferred stock.



The high and low sales prices of our class A common shares for the four
quarters of 2004 and for the third and fourth quarters of 2003 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 2004 and third and fourth quarter of 2003 were as
follows:



|               |  |      |       |      |   |              |  |      |       |     |   |              |  |   |       |  |   |      
|-------------- |  | ---- | ----- | ---- | - | ------------ |  | ---- | ----- | --- | - | ------------ |  | - | ----- |  | - | -----
|               |  | 2004 |       | 2003
|               |  | High |       | Low  |   | CashDividend |  | High |       | Low |   | CashDividend
|First Quarter  |  | $    | 20.35 |      | $ | 17.11        |  | $    | 0.065 |     |   |              |  |   |       |  |   |      
|Second Quarter |  |      | 20.20 |      |   | 17.29        |  |      | 0.065 |     |   |              |  |   |       |  |   |      
|Third Quarter  |  |      | 18.99 |      |   | 15.71        |  |      | 0.065 |     | $ | 17.25        |  | $ | 16.05 |  | $ |     
|Fourth Quarter |  |      | 18.15 |      |   | 15.48        |  |      | 0.065 |     |   | 18.80        |  |   | 16.40 |  |   | 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 articles of incorporation,
each class of common stock has



25



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##### Table of Contents

equal rights with respect to cash dividends, except that dividends on class C shares are cumulative and will not be less than $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.



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 there from.



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



The following table presents our selected financial data. The selected financial data for the years ended December 31, 2002, December 31, 2003 and
December 26, 2004 and as of December 31, 2003 and December 26, 2004 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, 2000 and 2001 and as of December 31, 2000, 2001 and 2002 have been derived from our audited consolidated financial statements, including the notes thereto, not included in this Annual Report on Form 10-K. This
table should be read together with our other financial information, including Managements Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements, including the notes
thereto, appearing elsewhere in this Annual Report on Form 10-K. Fox Cities Newspapers and IPC Communication Services, S.A. have been reflected as discontinued operations in all years presented.



|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|----------------------------------------------------------------------------- |  | ----------------------------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | -------
|                                                                              |  | 2004(1)                                                     |         |   | 2003 |   |         | 2002 |  |   | 2001    |   |  | 2000
|                                                                              |  | (dollars and shares in thousands, except per share amounts)
|Statement of Earnings Data                                                    |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Revenue                                                                       |  | $                                                           | 820,761 |   |      | $ | 798,289 |      |  | $ | 801,376 |   |  | $    | 808,787 |   |  | $ | 819,232
|Operating costs and expenses                                                  |  |                                                             | 688,001 |   |      |   | 684,880 |      |  |   | 687,303 |   |  |      | 724,683 |   |  |   | 710,041
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Operating earnings                                                            |  |                                                             | 132,760 |   |      |   | 113,409 |      |  |   | 114,073 |   |  |      | 84,104  |   |  |   | 109,191
|Non-operating income (loss), net                                              |  |                                                             | (1,945  | ) |      |   | (1,467  | )    |  |   | 339     |   |  |      | 1,235   |   |  |   | 884    
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Earnings from continuing operations before income taxes and accounting change |  |                                                             | 130,815 |   |      |   | 111,942 |      |  |   | 114,412 |   |  |      | 85,339  |   |  |   | 110,075
|Income taxes                                                                  |  |                                                             | 52,335  |   |      |   | 45,149  |      |  |   | 49,418  |   |  |      | 35,860  |   |  |   | 44,162 
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Earnings from continuing operations before accounting change                  |  |                                                             | 78,480  |   |      |   | 66,793  |      |  |   | 64,994  |   |  |      | 49,479  |   |  |   | 65,913 
|Gain (loss) from discontinued operations, net of taxes                        |  |                                                             |        |   |      |   |        |      |  |   | (565    | ) |  |      | (1,722  | ) |  |   | 471    
|Cumulative effect of accounting change, net of taxes                          |  |                                                             |        |   |      |   |        |      |  |   | (6,509  | ) |  |      |        |   |  |   |       
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Net earnings(2)(3)                                                            |  | $                                                           | 78,480  |   |      | $ | 66,793  |      |  | $ | 57,920  |   |  | $    | 47,757  |   |  | $ | 66,384 
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Basic weighted average shares outstanding                                     |  |                                                             | 72,931  |   |      |   | 78,645  |      |  |   | 79,291  |   |  |      | 84,252  |   |  |   | 81,301 
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Basic Earnings Per Share Amounts(4)                                           |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Continuing operations before accounting change                                |  | $                                                           | 1.05    |   |      | $ | 0.84    |      |  | $ | 0.82    |   |  | $    | 0.59    |   |  | $ | 0.81   
|Discontinued operations, net of taxes                                         |  |                                                             |        |   |      |   |        |      |  |   | (0.01   | ) |  |      | (0.02   | ) |  |   | 0.01   
|Cumulative effect of accounting change, net of taxes                          |  |                                                             |        |   |      |   |        |      |  |   | (0.08   | ) |  |      |        |   |  |   |       
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Net earnings(2)(3)                                                            |  | $                                                           | 1.05    |   |      | $ | 0.84    |      |  | $ | 0.73    |   |  | $    | 0.57    |   |  | $ | 0.82   
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Diluted weighted average shares outstanding                                   |  |                                                             | 77,387  |   |      |   | 83,097  |      |  |   | 79,291  |   |  |      | 84,252  |   |  |   | 81,301 
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Diluted Earnings Per Share Amounts(4)                                         |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Continuing operations before accounting change                                |  | $                                                           | 1.01    |   |      | $ | 0.80    |      |  | $ | 0.82    |   |  | $    | 0.59    |   |  | $ | 0.81   
|Discontinued operations, net of taxes                                         |  |                                                             |        |   |      |   |        |      |  |   | (0.01   | ) |  |      | (0.02   | ) |  |   | 0.01   
|Cumulative effect of accounting change, net of taxes                          |  |                                                             |        |   |      |   |        |      |  |   | (0.08   | ) |  |      |        |   |  |   |       
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Net earnings(2)(3)                                                            |  | $                                                           | 1.01    |   |      | $ | 0.80    |      |  | $ | 0.73    |   |  | $    | 0.57    |   |  | $ | 0.82   
|                                                                              |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Cash dividends                                                                |  |                                                             |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|Common                                                                        |  | $                                                           |        |   |      | $ | 0.500   |      |  | $ | 0.40    |   |  | $    | 0.45    |   |  | $ | 0.45   
|Class C                                                                       |  | $                                                           | 0.57    |   |      | $ | 0.142   |      |  |   |        |   |  |      |        |   |  |   |       
|Class B                                                                       |  | $                                                           | 0.26    |   |      | $ | 0.065   |      |  |   |        |   |  |      |        |   |  |   |       
|Class A                                                                       |  | $                                                           | 0.26    |   |      | $ | 0.065   |      |  |   |        |   |  |      |        |   |  |   |       



26



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##### Table of Contents

|                                 |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|-------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | -------- | - |  | - | ------- | -
|                                 |  | 2004(1)                |         |   | 2003 |   |         | 2002 |  |   | 2001    |   |  | 2000 |         
|                                 |  | (dollars in thousands) |        
|Segment Data                     |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Revenue:                         |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Publishing                       |  | $                      | 327,687 |   |      | $ | 316,976 |      |  | $ | 311,138 |   |  | $    | 320,615  |   |  | $ | 345,321 |  
|Broadcasting                     |  |                        | 172,073 |   |      |   | 150,744 |      |  |   | 152,749 |   |  |      | 134,801  |   |  |   | 149,886 |  
|Telecommunications               |  |                        | 144,020 |   |      |   | 149,538 |      |  |   | 148,674 |   |  |      | 151,992  |   |  |   | 126,586 |  
|Printing services                |  |                        | 76,308  |   |      |   | 85,958  |      |  |   | 97,841  |   |  |      | 114,612  |   |  |   | 107,334 |  
|Other                            |  |                        | 100,673 |   |      |   | 95,073  |      |  |   | 90,974  |   |  |      | 86,767   |   |  |   | 90,105  |  
|                                 |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Total revenue                    |  | $                      | 820,761 |   |      | $ | 798,289 |      |  | $ | 801,376 |   |  | $    | 808,787  |   |  | $ | 819,232 |  
|                                 |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Operating earnings (loss):(2)    |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Publishing                       |  | $                      | 43,708  |   |      | $ | 33,199  |      |  | $ | 30,315  |   |  | $    | 24,898   |   |  | $ | 39,265  |  
|Broadcasting                     |  |                        | 44,404  |   |      |   | 29,879  |      |  |   | 33,384  |   |  |      | 15,453   |   |  |   | 30,435  |  
|Telecommunications               |  |                        | 34,691  |   |      |   | 38,858  |      |  |   | 40,956  |   |  |      | 48,007   |   |  |   | 40,114  |  
|Printing services                |  |                        | (367    | ) |      |   | 3,760   |      |  |   | 2,131   |   |  |      | (756     | ) |  |   | 3,336   |  
|Other                            |  |                        | 10,324  |   |      |   | 7,713   |      |  |   | 7,287   |   |  |      | (3,498   | ) |  |   | (3,959  | )
|                                 |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Total operating earnings         |  | $                      | 132,760 |   |      | $ | 113,409 |      |  | $ | 114,073 |   |  | $    | 84,104   |   |  | $ | 109,191 |  
|                                 |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Other Financial Data             |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Depreciation(3)                  |  | $                      | 45,231  |   |      | $ | 46,381  |      |  | $ | 44,726  |   |  | $    | 40,882   |   |  | $ | 38,710  |  
|Amortization(3)                  |  | $                      | 1,396   |   |      | $ | 2,241   |      |  | $ | 1,909   |   |  | $    | 10,814   |   |  | $ | 11,408  |  
|EBITDA(3)                        |  | $                      | 179,387 |   |      | $ | 162,031 |      |  | $ | 160,708 |   |  | $    | 135,800  |   |  | $ | 159,309 |  
|Capital expenditures             |  | $                      | 29,275  |   |      | $ | 39,685  |      |  | $ | 53,169  |   |  | $    | 90,172   |   |  | $ | 96,758  |  
|Cash dividends                   |  | $                      | 20,792  |   |      | $ | 44,080  |      |  | $ | 31,597  |   |  | $    | 37,866   |   |  | $ | 36,765  |  
|Cash Flow Data                   |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Net cash provided by (used for): |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Operating activities             |  | $                      | 133,966 |   |      | $ | 128,523 |      |  | $ | 86,321  |   |  | $    | 117,342  |   |  | $ | 133,589 |  
|Investing activities             |  | $                      | (69,272 | ) |      | $ | (40,213 | )    |  | $ | (51,670 | ) |  | $    | (107,075 | ) |  | $ | (94,496 | )
|Financing activities             |  | $                      | (66,763 | ) |      | $ | (88,321 | )    |  | $ | (31,714 | ) |  | $    | (11,918  | ) |  | $ | (33,035 | )
|Balance Sheet Data               |  |                        |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |         |  
|Property and equipment, net      |  | $                      | 303,566 |   |      | $ | 314,595 |      |  | $ | 324,405 |   |  | $    | 320,436  |   |  | $ | 271,293 |  
|Intangible assets, net           |  | $                      | 293,447 |   |      | $ | 253,731 |      |  | $ | 249,605 |   |  | $    | 261,346  |   |  | $ | 253,239 |  
|Total assets                     |  | $                      | 775,062 |   |      | $ | 747,175 |      |  | $ | 744,967 |   |  | $    | 730,778  |   |  | $ | 687,035 |  
|Total debt                       |  | $                      | 70,310  |   |      | $ | 84,000  |      |  | $ | 90,775  |   |  | $    | 4,420    |   |  | $ |        |  
|Shareholders equity             |  | $                      | 489,495 |   |      | $ | 463,750 |      |  | $ | 476,544 |   |  | $    | 532,880  |   |  | $ | 508,519 |  

---

|(1) | Includes Green Bay, Wisconsin television station WGBA-TV and a local marketing agreement between WGBA-TV and WACY-TV from October 6.
|--- | ------------------------------------------------------------------------------------------------------------------------------------



|(2) | 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 estimated fair values. Adjusted net earnings and earnings per share are presented below, assuming this accounting change
is applied retroactively as of January 1, 2000. The adjustment represents amortization expense for goodwill and broadcast licenses in 2000 and 2001.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                       |  |                                                  |        |      |   |        |  |      |        |      |   |        |  |   |       
|-------------------------------------- |  | ------------------------------------------------ | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                       |  | 2004(1)                                          |        | 2003 |   | 2002   |  | 2001 |        | 2000
|                                       |  | (dollars in thousands, except per share amounts)
|Net earnings                           |  | $                                                | 78,480 |      | $ | 66,793 |  | $    | 57,920 |      | $ | 47,757 |  | $ | 66,384
|Adjustment                             |  |                                                  |       |      |   |       |  |      |       |      |   | 5,454  |  |   | 5,447 
|                                       |  |                                                  |        |      |   |        |  |      |        |      |   |        |  |   |       
|Adjusted net earnings                  |  | $                                                | 78,480 |      | $ | 66,793 |  | $    | 57,920 |      | $ | 53,211 |  |   | 71,831
|                                       |  |                                                  |        |      |   |        |  |      |        |      |   |        |  |   |       
|Adjusted basic earnings per share(4)   |  | $                                                | 1.05   |      | $ | 0.84   |  | $    | 0.73   |      | $ | 0.63   |  | $ | 0.88  
|                                       |  |                                                  |        |      |   |        |  |      |        |      |   |        |  |   |       
|Adjusted diluted earnings per share(4) |  | $                                                | 1.01   |      | $ | 0.80   |  | $    | 0.73   |      | $ | 0.63   |  | $ | 0.88  
|                                       |  |                                                  |        |      |   |        |  |      |        |      |   |        |  |   |       



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|(3) | We define EBITDA as net earnings plus 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 and to value prospective acquisitions. 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 accounting principles generally accepted in the United States. EBITDA should not be considered in isolation of, or as a substitute
for, net earnings as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. EBITDA, as we calculate it, may not be comparable to EBITDA measures reported by other companies. 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:



|                                              |  |                        |         |      |   |         |  |   |         |   |  |      |         |   |  |   |         |  
|--------------------------------------------- |  | ---------------------- | ------- | ---- | - | ------- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                              |  | 2004(1)                |         | 2003 |   | 2002    |  |   | 2001    |   |  | 2000 |        
|                                              |  | (dollars in thousands) |        
|Net earnings                                  |  | $                      | 78,480  |      | $ | 66,793  |  | $ | 57,920  |   |  | $    | 47,757  |   |  | $ | 66,384  |  
|(Gain) loss from discontinued operations, net |  |                        |        |      |   |        |  |   | 565     |   |  |      | 1,722   |   |  |   | (471    | )
|Cumulative effect of accounting change, net   |  |                        |        |      |   |        |  |   | 6,509   |   |  |      |        |   |  |   |        |  
|Provision for income taxes                    |  |                        | 52,335  |      |   | 45,149  |  |   | 49,418  |   |  |      | 35,860  |   |  |   | 44,162  |  
|Total other (income) and expense              |  |                        | 1,945   |      |   | 1,467   |  |   | (339    | ) |  |      | (1,235  | ) |  |   | (884    | )
|Depreciation                                  |  |                        | 45,231  |      |   | 46,381  |  |   | 44,726  |   |  |      | 40,882  |   |  |   | 38,710  |  
|Amortization                                  |  |                        | 1,396   |      |   | 2,241   |  |   | 1,909   |   |  |      | 10,814  |   |  |   | 11,408  |  
|                                              |  |                        |         |      |   |         |  |   |         |   |  |      |         |   |  |   |         |  
|EBITDA                                        |  | $                      | 179,387 |      | $ | 162,031 |  | $ | 160,708 |   |  | $    | 135,800 |   |  | $ | 159,309 |  
|                                              |  |                        |         |      |   |         |  |   |         |   |  |      |         |   |  |   |         |  

|(4) | 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 26, 2004, 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 more than 90 community newspapers and shoppers in eight states. Our broadcasting segment consists of 38 radio
stations and seven television stations in 11 states, as well as the operation of one additional television station under a local marketing agreement. 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 3,800 route miles. Our printing services segment reflects the operations of our printing
and assembly and fulfillment business. Our other segment consists of a label printing business and direct marketing services business. Also included in other are corporate expenses and eliminations. On January 25, 2005, we sold our label printing
business.



In 2004, Journal Communications recorded broad-based
advertising revenue growth at our television and radio stations and our daily newspaper. Our operating earnings in the publishing and broadcast groups increased



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31.7% and 48.6%, respectively, compared to 2003. The daily newspapers production facility continued to provide favorable year-over-year benefits from
operating efficiencies and cost savings despite it having been in operation for more than one year. At the daily newspaper, classified and retail advertising increased and we continued to record gains in our online products and solo and shared mail.
Additionally, commercial printing at our community newspapers and shoppers contributed to revenue growth in 2004. Operating earnings at our television stations increased 87.8%, reflecting significant political advertising at our operations in
Milwaukee and Las Vegas  both located in political swing states  and Olympics advertising at our NBC affiliates in Milwaukee and Palm Springs. Operating earnings at our radio stations increased 18.4% over last year. Our
telecommunications segment continues to grow its enterprise revenue, which was up 7.0% in 2004. As expected, the wholesale telecommunications business experienced continued pricing pressure and service disconnections in the year, resulting in a
10.4% drop in revenue. Operating earnings decreased at our printing services company due to reduced sales volume from several computer-related customers and production inefficiencies. As we move into 2005, we anticipate further margin expansion in
our publishing segment, continued improvement in developmental markets in radio and television and tougher comparisons at our television stations due to an off-cycle year in political and Olympic advertising. In our telecommunications segment, we
expect ongoing declines in wholesale revenue partially offset by growth in the enterprise business. The fiscal year 2004 contained 361 days, while the fiscal year 2003 contained 365 days.



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 $1.1 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 WGBA-TV 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.



Subsequent Event



On January 25, 2005, we entered into a definitive asset purchase 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 preliminary purchase price, excluding certain real estate holdings, was $27.0 million in cash. In 2004, NorthStar Print Group,
Inc. contributed approximately $56.8 million in revenues and approximately $6.9 million in operating earnings, including a $3.1 million gain on the sale of property. NorthStar Print Group, Inc. will be accounted for as a discontinued operation
beginning with the first quarter ending March 27, 2005.



Results of
Operations



2004 compared to 2003



Consolidated



Our consolidated operating revenue in 2004 was $820.8 million, an increase
of $22.5 million, or 2.8%, compared to $798.3 million in 2003. Our consolidated operating costs and expenses in 2004 were $463.7 million,



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an increase of $4.6 million, or 1.0%, compared to $459.1 million in 2003. Our consolidated selling and administrative expenses in 2004 were $224.3 million, a
decrease of $1.5 million, or 0.7%, compared to $225.8 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 ofTotal Revenue |       |   | 2003 |   | Percent ofTotal Revenue | 
|                                                                           |  | (dollars in millions) |      
|Revenue:                                                                   |  |                       |       |                         |       |   |      |   |                         |  |       |  
|Publishing                                                                 |  | $                     | 327.7 |                         | 39.9  | % |      | $ | 317.0                   |  | 39.7  | %
|Broadcasting                                                               |  |                       | 172.1 |                         | 21.0  |   |      |   | 150.7                   |  | 18.9  |  
|Telecommunications                                                         |  |                       | 144.0 |                         | 17.5  |   |      |   | 149.5                   |  | 18.7  |  
|Printing services                                                          |  |                       | 76.3  |                         | 9.3   |   |      |   | 86.0                    |  | 10.8  |  
|Other                                                                      |  |                       | 100.7 |                         | 12.3  |   |      |   | 95.1                    |  | 11.9  |  
|                                                                           |  |                       |       |                         |       |   |      |   |                         |  |       |  
|Total revenue                                                              |  |                       | 820.8 |                         | 100.0 |   |      |   | 798.3                   |  | 100.0 |  
|Total operating costs and expenses                                         |  |                       | 463.7 |                         | 56.5  |   |      |   | 459.1                   |  | 57.5  |  
|Selling and administrative expenses                                        |  |                       | 224.3 |                         | 27.3  |   |      |   | 225.8                   |  | 28.3  |  
|                                                                           |  |                       |       |                         |       |   |      |   |                         |  |       |  
|Total operating costs and expenses and selling and administrative expenses |  |                       | 688.0 |                         | 83.8  |   |      |   | 684.9                   |  | 85.8  |  
|                                                                           |  |                       |       |                         |       |   |      |   |                         |  |       |  
|Total operating earnings                                                   |  | $                     | 132.8 |                         | 16.2  | % |      | $ | 113.4                   |  | 14.2  | %
|                                                                           |  |                       |       |                         |       |   |      |   |                         |  |       |  



The increase in total
revenue was due to increases in political and issue, local and Olympics advertising revenue at our television stations, increases in other advertising, classified, and retail 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, an increase in
printing revenue at our community newspapers and shoppers and an increase in gravure label printing revenue. 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 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 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.



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Our consolidated operating earnings in 2004 were $132.8 million, an increase of $19.4 million, or 17.1%,
compared to $113.4 million in 2003. The following table presents our operating earnings by segment for 2004 and 2003:



|                         |  |                       |       |   |                                   |       |   |      |   |                                   |  |       |  
|------------------------ |  | --------------------- | ----- | - | --------------------------------- | ----- | - | ---- | - | --------------------------------- |  | ----- | -
|                         |  | 2004                  |       |   | Percent ofTotal OperatingEarnings |       |   | 2003 |   | Percent ofTotal OperatingEarnings | 
|                         |  | (dollars in millions) |      
|Publishing               |  | $                     | 43.7  |   |                                   | 32.9  | % |      | $ | 33.2                              |  | 29.3  | %
|Broadcasting             |  |                       | 44.4  |   |                                   | 33.4  |   |      |   | 29.9                              |  | 26.3  |  
|Telecommunications       |  |                       | 34.7  |   |                                   | 26.1  |   |      |   | 38.8                              |  | 34.3  |  
|Printing services        |  |                       | (0.3  | ) |                                   | (0.2  | ) |      |   | 3.8                               |  | 3.3   |  
|Other                    |  |                       | 10.3  |   |                                   | 7.8   |   |      |   | 7.7                               |  | 6.8   |  
|                         |  |                       |       |   |                                   |       |   |      |   |                                   |  |       |  
|Total operating earnings |  | $                     | 132.8 |   |                                   | 100.0 | % |      | $ | 113.4                             |  | 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 which conformed asset lives across our
businesses.



Our consolidated EBITDA in 2004 was $179.4
million, an increase of $17.4 million, or 10.7%, compared to $162.0 million in 2003. We define EBITDA as net earnings plus provision for income taxes, total other 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 and value prospective acquisitions. 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 accounting principles generally accepted in the United States. EBITDA should not be considered in isolation of, or as a substitute for, net earnings as an indicator of operating performance or cash flows
from operating activities as a measure of liquidity. EBITDA, as we calculate it, may not be comparable to EBITDA measures reported by other companies. 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 
|Provision for income taxes |  |                       | 52.3  |      |   | 45.1 
|Total other expense        |  |                       | 2.0   |      |   | 1.5  
|Depreciation               |  |                       | 45.2  |      |   | 46.4 
|Amortization               |  |                       | 1.4   |      |   | 2.2  
|                           |  |                       |       |      |   |      
|EBITDA                     |  | $                     | 179.4 |      | $ | 162.0
|                           |  |                       |       |      |   |      



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



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Publishing



Revenue from publishing in 2004 was $327.7 million, an increase of $10.7 million, or 3.4%, compared to $317.0 million in
2003. Operating earnings from publishing were $43.7 million, an increase of $10.5 million, or 31.7%, compared to $33.2 million in 2003.



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



|                   |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |     
|------------------ |  | --------------------- | ----- | ----------------------------- | - | ----- |  | -------------- | ----- | ----------------------------- | - | ----- |  | ------------- | ---- |  | - | ----- |  | ----
|                   |  | 2004                  |       | 2003                          |   |      
|                   |  | DailyNewspaper        |       | CommunityNewspapers& Shoppers |   | Total |  | DailyNewspaper |       | CommunityNewspapers& Shoppers |   | Total |  | PercentChange
|                   |  | (dollars in millions)
|Revenue            |  | $                     | 229.1 |                               | $ | 98.6  |  | $              | 327.7 |                               | $ | 219.6 |  | $             | 97.4 |  | $ | 317.0 |  | 3.4 
|                   |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |     
|Operating earnings |  | $                     | 38.4  |                               | $ | 5.3   |  | $              | 43.7  |                               | $ | 29.0  |  | $             | 4.2  |  | $ | 33.2  |  | 31.7
|                   |  |                       |       |                               |   |       |  |                |       |                               |   |       |  |               |      |  |   |       |  |     



The following table
presents our publishing revenue by category for 2004 and 2003:



|                          |  |                       |       |                                |   |       |  |                 |       |                               |   |       |  |               |      |  |   |       |  |      |  
|------------------------- |  | --------------------- | ----- | ------------------------------ | - | ----- |  | --------------- | ----- | ----------------------------- | - | ----- |  | ------------- | ---- |  | - | ----- |  | ---- | -
|                          |  | 2004                  |       | 2003                           |   |       | 
|                          |  | DailyNewspaper        |       | Community Newspaper & Shoppers |   | Total |  | Daily Newspaper |       | Community Newspaper& Shoppers |   | Total |  | PercentChange |     
|                          |  | (dollars in millions) |      
|Advertising revenue:      |  |                       |       |                                |   |       |  |                 |       |                               |   |       |  |               |      |  |   |       |  |      |  
|Retail                    |  | $                     | 83.5  |                                | $ | 55.5  |  | $               | 139.0 |                               | $ | 80.7  |  | $             | 56.1 |  | $ | 136.8 |  | 1.6  |  
|Classified                |  |                       | 63.8  |                                |   | 9.1   |  |                 | 72.9  |                               |   | 60.7  |  |               | 8.7  |  |   | 69.4  |  | 5.2  |  
|General                   |  |                       | 11.5  |                                |   |      |  |                 | 11.5  |                               |   | 11.0  |  |               |     |  |   | 11.0  |  | 4.9  |  
|Other                     |  |                       | 21.7  |                                |   | 1.9   |  |                 | 23.6  |                               |   | 18.2  |  |               | 2.0  |  |   | 20.2  |  | 17.1 |  
|                          |  |                       |       |                                |   |       |  |                 |       |                               |   |       |  |               |      |  |   |       |  |      |  
|Total advertising revenue |  |                       | 180.5 |                                |   | 66.5  |  |                 | 247.0 |                               |   | 170.6 |  |               | 66.8 |  |   | 237.4 |  | 4.1  |  
|Circulation revenue       |  |                       | 43.2  |                                |   | 2.9   |  |                 | 46.1  |                               |   | 43.9  |  |               | 2.9  |  |   | 46.8  |  | (1.4 | )
|Other revenue             |  |                       | 5.4   |                                |   | 29.2  |  |                 | 34.6  |                               |   | 5.1   |  |               | 27.7 |  |   | 32.8  |  | 5.1  |  
|                          |  |                       |       |                                |   |       |  |                 |       |                               |   |       |  |               |      |  |   |       |  |      |  
|Total revenue             |  | $                     | 229.1 |                                | $ | 98.6  |  | $               | 327.7 |                               | $ | 219.6 |  | $             | 97.4 |  | $ | 317.0 |  | 3.4  |  
|                          |  |                       |       |                                |   |       |  |                 |       |                               |   |       |  |               |      |  |   |       |  |      |  



Advertising revenue in
2004 accounted for 75.4% of total publishing revenue compared to 74.9% in 2003.



Retail advertising revenue in 2004 was $139.0 million, an increase of $2.2 million, or 1.6.%, compared to $136.8 million in 2003. A $2.8 million increase in daily newspaper retail advertising was partially offset by a
$0.6 million decrease in community newspapers and shoppers retail advertising. The $2.8 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. Combined retail and classified automotive advertising
increased 0.6% in 2004 compared to 2003. 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 $72.9 million, an increase of $3.5 million, or 5.2%, compared to $69.4 million in 2003. At our daily newspaper, increases in employment advertising of $2.0 million, real
estate advertising of $1.3 million, general/other advertising of $1.0 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 $1.2
million. Employment advertising, which accounted for 36.5% of classified advertising at the daily newspaper in 2004, increased 9.6% 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.



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General advertising revenue in 2004 was $11.5 million, an increase of $0.5 million, or 4.9%, 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.



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                     |  | 850,820   |  | 877,715   |  | (3.1          | )
|General                        |  | 54,213    |  | 51,521    |  | 5.2           |  
|                               |  |           |  |           |  |               |  
|Total full run                 |  | 1,629,253 |  | 1,653,352 |  | (1.5          | )
|Part run                       |  | 172,125   |  | 124,937   |  | 37.8          |  
|                               |  |           |  |           |  |               |  
|Total advertising linage       |  | 1,801,378 |  | 1,778,289 |  | 1.3           |  
|                               |  |           |  |           |  |               |  
|Preprint pieces (in thousands) |  | 800,700   |  | 834,587   |  | (4.1          | )
|                               |  |           |  |           |  |               |  



Total advertising
linage in 2004 increased 1.3% 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 1.5% compared to 2003 due to a 3.1% 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 or maintaining the same advertising rates.



Other advertising revenue in 2004, consisting of revenue from
direct mail and event marketing efforts, and Journal Interactive for our daily newspaper and company-sponsored event advertising for our community newspapers and shoppers, was $23.6 million, an increase of $3.4 million, or 17.1%, compared to $20.2
million in



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2003. The increase was due to a $1.7 million increase in Journal Interactive advertising and a $1.7 million increase in direct mail advertising and printing
at our daily newspaper. Other advertising revenue at our community newspapers and shoppers in 2004 was essentially even compared to 2003.



Circulation revenue in 2004 accounted for 14.1% of total publishing revenue compared to 14.8% in 2003. Circulation revenue in 2004 was $46.1 million, a
decrease of $0.7 million, or 1.4%, compared to $46.8 million in 2003. The decrease is primarily due to lower daily and Sunday average net paid circulation for single copy and home delivery 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%.



At our daily newspaper for the March 2005 Audit Bureau of Circulations Publishers Statement, we are projecting a year-over-year decline in the
six-month average net paid circulation for Sunday copies of approximately 3.7%, and the six-month average net paid circulation for daily copies to be essentially flat. For the 12-month average net paid circulation for the period ending March 31,
2005, we are projecting annual declines of approximately 0.8% in daily copies and approximately 2.1% in Sunday copies as compared with the Audit Bureau of Circulations audited figures for the prior 12-month period. These declines are due to changes
in certain third party and single copy circulation programs and a decrease in both single copy sales and home delivery.



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 10.5% of total publishing revenue in 2004 compared to 10.3% in 2003. Other revenue in 2004 was $34.6 million, an increase of $1.8 million, or 5.1%, 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 31.7%, 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       |   | PercentChange
|                   |  | 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
|                   |  |                       |      |            |   |               |  |       |       |            |   |       |  |   |      |  |   |       |  |     



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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 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 offset by an
increase in technology expense, incentive compensation, and programming expenses.



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 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 WGBA-TV 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, who include MCI (formerly WorldCom Inc.) and Global Crossing, 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.



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##### Table of Contents

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 exisiting 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 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 $0.3 million, a decrease of $4.1 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 $100.7
million, an increase of $5.6 million, or 5.9%, compared to $95.1 million in 2003. Other operating earnings in 2004 were $10.3 million, an increase of $2.6 million, or 33.9%, compared to $7.7 million in 2003.



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##### Table of Contents

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



|                   |  |                       |      |                         |   |                          |  |   |       |   |               |   |                         |  |                          |      |  |       |      |  |   |      |   |  |   |      |  |     
|------------------ |  | --------------------- | ---- | ----------------------- | - | ------------------------ |  | - | ----- | - | ------------- | - | ----------------------- |  | ------------------------ | ---- |  | ----- | ---- |  | - | ---- | - |  | - | ---- |  | ----
|                   |  | 2004                  |      | 2003                    |   | PercentChange           
|                   |  | LabelPrinting         |      | DirectMarketingServices |   | CorporateandEliminations |  |   | Total |   | LabelPrinting |   | DirectMarketingServices |  | CorporateandEliminations |      |  | Total |     
|                   |  | (dollars in millions) |      |                        
|Revenue            |  | $                     | 58.6 |                         | $ | 46.9                     |  | $ | (4.8  | ) |               | $ | 100.7                   |  | $                        | 57.4 |  | $     | 42.0 |  | $ | (4.3 | ) |  | $ | 95.1 |  | 5.9 
|                   |  |                       |      |                         |   |                          |  |   |       |   |               |   |                         |  |                          |      |  |       |      |  |   |      |   |  |   |      |  |     
|Operating earnings |  | $                     | 6.9  |                         | $ | 0.4                      |  | $ | 3.0   |   |               | $ | 10.3                    |  | $                        | 2.9  |  | $     | 2.4  |  | $ | 2.4  |   |  | $ | 7.7  |  | 33.9
|                   |  |                       |      |                         |   |                          |  |   |       |   |               |   |                         |  |                          |      |  |       |      |  |   |      |   |  |   |      |  |     



The increase in other
revenue in 2004 compared to 2003 was primarily attributed to an increase in postage amounts and mailing services at our direct marketing services business and an increase in gravure label sales, including sales to our largest customer, SAB/Miller
Brewing Company, at our label printing business 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 increase in other operating earnings was primarily attributed to a $3.1 million gain on the sale of property at our label printing business and a $1.7
million employment tax charge in 2003. These operating earnings increases were partially offset by 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.



SAB/Miller Brewing Company accounted for 45.5%
and 45.3% of our label printing business revenue in 2004 and 2003, respectively.



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 19.4%, compared to $1.9 million in 2003. Gross
interest expense from borrowings under our credit agreement was $1.8 million in 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 40.0% in 2004 and 40.3% 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. 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.



2003 compared to 2002



Consolidated



Our consolidated revenue in 2003 was $798.3 million, a decrease of $3.1
million, or 0.4%, compared to $801.4 million in 2002. Our consolidated operating costs and expenses in 2003 were $455.8 million, an increase of $8.2 million, or 1.8%, compared to $447.6 million in 2002. Our consolidated selling and administrative
expenses in 2003 were $229.1 million, a decrease of $10.6 million, or 4.4%, compared to $239.7 million in 2002.



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##### Table of Contents

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 2003 and 2002:



|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  
|-------------------------------------------------------------------------- |  | --------------------- | ----- | ---------------------- | ----- | - | ---- | - | ---------------------- |  | ----- | -
|                                                                           |  | 2003                  |       | Percent ofTotalRevenue |       |   | 2002 |   | Percent ofTotalRevenue | 
|                                                                           |  | (dollars in millions) |      
|Revenue:                                                                   |  |                       |       |                        |       |   |      |   |                        |  |       |  
|Publishing                                                                 |  | $                     | 317.0 |                        | 39.7  | % |      | $ | 311.1                  |  | 38.8  | %
|Broadcasting                                                               |  |                       | 150.7 |                        | 18.9  |   |      |   | 152.8                  |  | 19.1  |  
|Telecommunications                                                         |  |                       | 149.5 |                        | 18.7  |   |      |   | 148.7                  |  | 18.6  |  
|Printing services                                                          |  |                       | 86.0  |                        | 10.8  |   |      |   | 97.8                   |  | 12.2  |  
|Other                                                                      |  |                       | 95.1  |                        | 11.9  |   |      |   | 91.0                   |  | 11.3  |  
|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  
|Total revenue                                                              |  |                       | 798.3 |                        | 100.0 |   |      |   | 801.4                  |  | 100.0 |  
|Total operating costs and expenses                                         |  |                       | 459.1 |                        | 57.5  |   |      |   | 450.9                  |  | 56.3  |  
|Selling and administrative expenses                                        |  |                       | 225.8 |                        | 28.3  |   |      |   | 236.4                  |  | 29.5  |  
|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  
|Total operating costs and expenses and selling and administrative expenses |  |                       | 684.9 |                        | 85.8  |   |      |   | 687.3                  |  | 85.8  |  
|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  
|Total operating earnings                                                   |  | $                     | 113.4 |                        | 14.2  | % |      | $ | 114.1                  |  | 14.2  | %
|                                                                           |  |                       |       |                        |       |   |      |   |                        |  |       |  



The decrease in total
revenue was due to a reduction in revenue from our largest customer in our printing services business, carrier customer disconnections at our telecommunications business and the decrease in Olympic and political and issue advertising at our
television stations. These decreases were partially offset by an increase in long distance services for enterprise customers at our telecommunications business, increases in retail and other advertising at our daily newspaper, an increase in direct
mail services from our direct marketing services business and an increase in gravure label printing from our label printing business.



The increase in total operating costs and expenses was primarily due to additional costs related to the daily newspapers transition to its new
production facility and the increase in depreciation expense for this new facility, the increase in newsprint costs at our publishing businesses, the increase in technology, depreciation and programming expenses at our television broadcasting
business, an increase in operating costs and expenses associated with the increase in revenue in our enterprise telecommunications business and an increase in revenue at our direct marketing business. These increases were partially offset by lower
costs at our printing services business due to the decrease in revenue.



The decrease in selling and administrative expenses was primarily due to the structural reorganization and cost reduction initiatives at our community newspapers and shoppers business, the decrease in promotion and sales expenses in our
radio broadcasting business, a gain on the sale of property at our other reportable segment, cost reduction initiatives at our printing services business and the loss on impairment of a customer list at our direct marketing services business during
2002.



Our consolidated operating earnings in 2003 were $113.4
million, a decrease of $0.7 million, or 0.6%, compared to $114.1 million in 2002. The following table presents our operating earnings by segment for 2002 and 2003:



|                         |  |                       |       |                                  |       |   |      |   |                                  |  |       |  
|------------------------ |  | --------------------- | ----- | -------------------------------- | ----- | - | ---- | - | -------------------------------- |  | ----- | -
|                         |  | 2003                  |       | Percent ofTotalOperatingEarnings |       |   | 2002 |   | Percent ofTotalOperatingEarnings | 
|                         |  | (dollars in millions) |      
|Publishing               |  | $                     | 33.2  |                                  | 29.3  | % |      | $ | 30.3                             |  | 26.6  | %
|Broadcasting             |  |                       | 29.9  |                                  | 26.3  |   |      |   | 33.4                             |  | 29.3  |  
|Telecommunications       |  |                       | 38.8  |                                  | 34.3  |   |      |   | 41.0                             |  | 35.9  |  
|Printing services        |  |                       | 3.8   |                                  | 3.3   |   |      |   | 2.1                              |  | 1.8   |  
|Other                    |  |                       | 7.7   |                                  | 6.8   |   |      |   | 7.3                              |  | 6.4   |  
|                         |  |                       |       |                                  |       |   |      |   |                                  |  |       |  
|Total operating earnings |  | $                     | 113.4 |                                  | 100.0 | % |      | $ | 114.1                            |  | 100.0 | %
|                         |  |                       |       |                                  |       |   |      |   |                                  |  |       |  



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##### Table of Contents

The decrease in total operating earnings was primarily due to the increase in technology, depreciation
and programming costs at our television broadcasting business and wholesale service disconnections and the decrease in the profit margin due to the change in the revenue mix at our telecommunications business partially offset by the structural
reorganization and cost reduction initiatives at our community newspapers and shoppers business, the reduction in operational costs due to the decrease in revenue at our printing services business, the decrease in promotional and sales expenses at
our radio broadcasting business and the gain on the sale of property in our other segment.



Our consolidated EBITDA in 2003 was $162.0 million, an increase of $1.3 million, or 0.8%, compared to $160.7 million in 2002. We define EBITDA as net earnings plus 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 and to value prospective acquisitions. 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 accounting principles generally
accepted in the United States. EBITDA should not be considered in isolation of, or as a substitute for, net earnings as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. EBITDA, as we calculate
it, may not be comparable to EBITDA measures reported by other companies. 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 2003 and 2002:



|                                            |  |                       |       |      |   |       |  
|------------------------------------------- |  | --------------------- | ----- | ---- | - | ----- | -
|                                            |  | 2003                  |       | 2002 |  
|                                            |  | (dollars in millions) |      
|Net earnings                                |  | $                     | 66.8  |      | $ | 57.9  |  
|Loss from discontinued operations, net      |  |                       |      |      |   | 0.6   |  
|Cumulative effect of accounting change, net |  |                       |      |      |   | 6.5   |  
|Provision for income taxes                  |  |                       | 45.1  |      |   | 49.4  |  
|Total other (income) expense                |  |                       | 1.5   |      |   | (0.3  | )
|Depreciation                                |  |                       | 46.4  |      |   | 44.7  |  
|Amortization                                |  |                       | 2.2   |      |   | 1.9   |  
|                                            |  |                       |       |      |   |       |  
|EBITDA                                      |  | $                     | 162.0 |      | $ | 160.7 |  
|                                            |  |                       |       |      |   |       |  



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



Publishing



Revenue from publishing in 2003 was $317.0 million, an increase of $5.9
million, or 1.9%, compared to $311.1 million in 2002. Operating earnings from publishing were $33.2 million, an increase of $2.9 million, or 9.5%, compared to $30.3 million in 2002.



39



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##### Table of Contents

The following table presents our publishing revenue and operating earnings for 2003 and 2002:



|                   |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |    
|------------------ |  | --------------------- | ----- | ----------------------------- | - | ------------- |  | -------------- | ----- | ----------------------------- | - | ----- |  | - | ---- |  | - | ----- |  | ---
|                   |  | 2003                  |       | 2002                          |   | PercentChange
|                   |  | DailyNewspaper        |       | CommunityNewspapers& Shoppers |   | Total         |  | DailyNewspaper |       | CommunityNewspapers& Shoppers |   | Total | 
|                   |  | (dollars in millions) |       |                              
|Revenue            |  | $                     | 219.6 |                               | $ | 97.4          |  | $              | 317.0 |                               | $ | 212.9 |  | $ | 98.2 |  | $ | 311.1 |  | 1.9
|                   |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |    
|Operating earnings |  | $                     | 29.0  |                               | $ | 4.2           |  | $              | 33.2  |                               | $ | 28.7  |  | $ | 1.6  |  | $ | 30.3  |  | 9.5
|                   |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |    



The following table
presents our publishing revenue by category for 2003 and 2002:



|                          |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  
|------------------------- |  | --------------------- | ----- | ----------------------------- | - | ------------- |  | -------------- | ----- | ----------------------------- | - | ----- |  | - | ---- |  | - | ----- |  | ---- | -
|                          |  | 2003                  |       | 2002                          |   | PercentChange | 
|                          |  | DailyNewspaper        |       | CommunityNewspapers& Shoppers |   | Total         |  | DailyNewspaper |       | CommunityNewspapers& Shoppers |   | Total | 
|                          |  | (dollars in millions) |       |                               |  
|Advertising revenue:      |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  
|Retail                    |  | $                     | 80.7  |                               | $ | 56.1          |  | $              | 136.8 |                               | $ | 75.5  |  | $ | 57.0 |  | $ | 132.5 |  | 3.2  |  
|Classified                |  |                       | 60.7  |                               |   | 8.7           |  |                | 69.4  |                               |   | 62.4  |  |   | 9.7  |  |   | 72.1  |  | (3.7 | )
|General                   |  |                       | 11.0  |                               |   |              |  |                | 11.0  |                               |   | 10.1  |  |   |     |  |   | 10.1  |  | 8.9  |  
|Other                     |  |                       | 18.2  |                               |   | 2.0           |  |                | 20.2  |                               |   | 15.9  |  |   | 1.4  |  |   | 17.3  |  | 16.8 |  
|                          |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  
|Total advertising revenue |  |                       | 170.6 |                               |   | 66.8          |  |                | 237.4 |                               |   | 163.9 |  |   | 68.1 |  |   | 232.0 |  | 2.3  |  
|Circulation revenue       |  |                       | 43.9  |                               |   | 2.9           |  |                | 46.8  |                               |   | 45.3  |  |   | 3.1  |  |   | 48.4  |  | (3.3 | )
|Other revenue             |  |                       | 5.1   |                               |   | 27.7          |  |                | 32.8  |                               |   | 3.7   |  |   | 27.0 |  |   | 30.7  |  | 6.8  |  
|                          |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  
|Total revenue             |  | $                     | 219.6 |                               | $ | 97.4          |  | $              | 317.0 |                               | $ | 212.9 |  | $ | 98.2 |  | $ | 311.1 |  | 1.9  |  
|                          |  |                       |       |                               |   |               |  |                |       |                               |   |       |  |   |      |  |   |       |  |      |  

Advertising revenue in 2003 accounted for 74.9% of total publishing revenue compared to 74.6% in
2002.



Retail advertising revenue in 2003 was $136.8 million,
an increase of $4.3 million, or 3.2%, compared to $132.5 million in 2002. The increase is comprised of a $2.9 million, or 6.0%, increase in daily newspaper retail ROP (run-of-press) and retail niche publications and a $2.3 million, or 8.9%, increase
in daily newspaper retail preprints partially offset by a $0.9 million decrease in community newspaper and shopper retail advertising. The increase in advertising revenue at the daily newspaper in 2003 is primarily due to the increased color
capacity and reproduction quality of our new presses, increased advertising from several telecommunications and department store advertisers and a sales program that encouraged our advertisers to increase or maintain their advertising with us.
Preprint advertising increased in 2003 due to certain retail and furniture advertisers increasing their preprint advertising over 2002, several advertisers switching from retail ROP and an increase in average net paid circulation.



Classified advertising revenue in 2003 was $69.4 million, a decrease of $2.7
million, or 3.7%, compared to $72.1 million in 2002. Decreases in employment advertising of $2.1 million and automotive advertising of $1.8 million at our daily newspaper and a $1.0 million decrease at our community newspapers and shoppers were
partially offset by increases in general advertising of $1.4 million and real estate advertising of $0.8 million. The decrease in employment advertising, which accounted for 35.0% of total classified advertising in 2003, represented a 9.1% decrease
from 2002. We believe the decrease in employment advertising resulted primarily from continuing economic uncertainty. The decrease in automotive advertising is due to certain advertisers switching their ad placement from the classified section to
retail sections of the paper and switching to direct mail.



General advertising revenue in 2003 was $11.0 million, an increase of $0.9 million, or 8.9%, compared to $10.1 million in 2002. The increase was primarily due to an increase in preprints from national advertisers and a large computer
hardware manufacturer.



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The following table presents our daily newspapers core newspaper advertising linage by category for
2003 and 2002:



|                                          |  |           |  |           |  |               |  
|----------------------------------------- |  | --------- |  | --------- |  | ------------- | -
|                                          |  | 2003      |  | 2002      |  | PercentChange |  
|Advertising linage (inches in thousands): |  |           |  |           |  |               |  
|Full run                                  |  |           |  |           |  |               |  
|Retail                                    |  | 724,116   |  | 695,242   |  | 4.2           |  
|Classified                                |  | 877,715   |  | 920,396   |  | (4.6          | )
|General                                   |  | 51,521    |  | 52,678    |  | (2.2          | )
|                                          |  |           |  |           |  |               |  
|Total full run                            |  | 1,653,352 |  | 1,668,316 |  | (0.9          | )
|Part run                                  |  | 124,937   |  | 80,313    |  | 55.6          |  
|                                          |  |           |  |           |  |               |  
|Total advertising linage                  |  | 1,778,289 |  | 1,748,629 |  | 1.7           |  
|                                          |  |           |  |           |  |               |  
|Preprint pieces (in thousands)            |  | 834,587   |  | 760,523   |  | 9.7           |  
|                                          |  |           |  |           |  |               |  



Total advertising
linage in 2003 increased 1.7% compared to 2002. The increase was largely due to a 55.6% increase in part run linage offset by a 0.9% decrease in full run linage. Part run linage increased in 2003 due to an increase in zoned retail advertising. Full
run linage in 2003 decreased primarily due to a 4.6% decrease in classified advertising and a 2.2% decrease in general ROP advertising partially offset by a 4.2% increase in retail advertising. The decrease in classified advertising linage is
consistent with the decrease in classified advertising revenue and the decrease in general advertising linage is due to a switch from general ROP to preprints. The increase in retail advertising lineage is consistent with our increase in retail ROP
revenue. Preprint advertising pieces rose 9.7% due to the increase in retail and general preprint revenue.



The following table presents the full pages of advertising and revenue per page of our community newspapers and shoppers and specialty products for 2003
and 2002:



|                                |  |      |         |      |   |               |  |      |  
|------------------------------- |  | ---- | ------- | ---- | - | ------------- |  | ---- | -
|                                |  | 2003 |         | 2002 |   | PercentChange | 
|Full pages of advertising:      |  |      |         |      |   |               |  |      |  
|Community newspapers            |  |      | 109,114 |      |   | 117,600       |  | (7.2 | )
|Shoppers and specialty products |  |      | 114,554 |      |   | 118,755       |  | (3.5 | )
|                                |  |      |         |      |   |               |  |      |  
|Total full pages of advertising |  |      | 223,668 |      |   | 236,355       |  | (5.4 | )
|                                |  |      |         |      |   |               |  |      |  
|Revenue per page                |  | $    | 264.54  |      | $ | 258.05        |  | 2.5  |  
|                                |  |      |         |      |   |               |  |      |  



Total pages of full
page advertising for our community newspapers and shoppers in 2003 decreased 5.4% compared to 2002. The decrease was due to a decrease in advertising in community newspapers and shoppers offset by an increase in advertising in specialty pages.
Revenue per page increased 4.1% primarily due to rate increases which contributed to a decrease in advertising revenue and the number of full pages of advertising.



Other advertising revenue in 2003, consisting of revenue from direct marketing and event marketing efforts, JSOnline for our
daily newspaper and internet advertising for our community newspapers and shoppers, was $20.2 million, an increase of $2.9 million, or 16.1%, compared to $17.3 million in 2002. The increase was largely due to a $1.7 million increase in direct mail
advertising revenue and a $0.9 million increase in online classified advertising revenue at our daily newspaper.



Circulation revenue in 2003 accounted for 14.8% of total publishing revenue compared to 15.6% in 2002. Circulation revenue in 2003 was $46.8 million, a
decrease of $1.6 million, or 3.3%, compared to $48.4 million in 2002. The decrease in circulation revenue is mainly attributed to an increase in reduced rate offerings at the daily newspaper. During 2002, in an effort to increase readership in
certain areas of Milwaukee County, we began



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offering greater discounts on home delivery and single copy sales. Circulation in those areas increased since offering the discounts. According to the Audit
Bureau of Circulations Newspaper Publishers Statement for the six month period ended September 30, 2003, average net paid circulation increased 0.8% for both the daily edition and the Sunday edition compared to the six month period ended
September 2002. Average paid circulation for our community newspapers decreased 1.6% in 2003 compared to 2002.



Other revenue, which consists of revenue from commercial printing at the print plants for our community newspapers and shoppers and promotional,
distribution and commercial printing revenue at our daily newspaper, in 2003 accounted for 10.3% of total publishing revenue compared to 9.8% in 2002. Other revenue in 2003 was $32.8 million, an increase of $2.1 million, or 6.8%, compared to $30.7
million in 2002. The increase was primarily attributed to the $1.2 million of commercial printing revenue at the daily newspaper as a result of the increased printing capabilities and capacity of our new presses and an increase of $0.8 million in
printing revenue at our community newspapers and shoppers from new customers.



Publishing operating earnings in 2003 were $33.2 million, an increase of $2.9 million, or 9.5%, compared to $30.3 million in 2002. The increase was primarily due to $1.9 million in savings from the structural
reorganization and other cost reduction initiatives of our community newspapers and shoppers business, the decrease in payroll expenses primarily related to the daily newspapers new production facility and the increase in revenue at our daily
newspaper. These increases were partially offset by an increase in depreciation expense and the additional costs related to the initial start-up of the daily newspapers new production facility and running duplicate production operations during
the first quarter of 2003, an increase in operating costs due to the increased commercial printing volume, the increase in direct mail advertising revenue and an increase in the cost of newsprint. Total newsprint cost in 2003 was $39.8 million, an
increase of $1.6 million, or 4.2%, compared to $38.2 million in 2003. The increase in the cost of newsprint was primarily attributed to a 8.0% average price increase per metric ton and partially offset by $1.6 million in savings at the daily
newspaper from utilizing a smaller page size.



As of March 30,
2003, all production and distribution of the daily newspaper have been transitioned to the new production facility. Production and distribution of the newspaper were done at both the old and new production facilities from October 2002 until March
2003.



Broadcasting



Revenue from broadcasting in 2003 was $150.7 million, a decrease of $2.1
million, or 1.3%, compared to $152.8 million in 2002. Operating earnings from broadcasting in 2003 were $29.9 million, a decrease of $3.5 million, or 10.5%, compared to $33.4 million in 2002.



The following table presents our broadcasting revenue and operating earnings
for 2003 and 2002:



|                   |  |                       |      |            |   |               |  |       |       |            |   |       |  |   |      |  |   |       |  |       |  
|------------------ |  | --------------------- | ---- | ---------- | - | ------------- |  | ----- | ----- | ---------- | - | ----- |  | - | ---- |  | - | ----- |  | ----- | -
|                   |  | 2003                  |      | 2002       |   | PercentChange | 
|                   |  | Radio                 |      | Television |   | Total         |  | Radio |       | Television |   | Total | 
|                   |  | (dollars in millions) |      |            |  
|Revenue            |  | $                     | 77.9 |            | $ | 72.8          |  | $     | 150.7 |            | $ | 78.2  |  | $ | 74.6 |  | $ | 152.8 |  | (1.3  | )
|                   |  |                       |      |            |   |               |  |       |       |            |   |       |  |   |      |  |   |       |  |       |  
|Operating earnings |  | $                     | 16.8 |            | $ | 13.1          |  | $     | 29.9  |            | $ | 15.2  |  | $ | 18.2 |  | $ | 33.4  |  | (10.5 | )
|                   |  |                       |      |            |   |               |  |       |       |            |   |       |  |   |      |  |   |       |  |       |  



Revenue from our radio
stations in 2003 was $77.9 million, a decrease of $0.3 million, or 0.4%, compared to $78.2 million in 2002. The decrease was primarily attributed to a $0.6 million decrease in political and issue advertising revenue, a $0.4 million decrease from
local advertising revenue, and a $0.3 million decrease in promotional advertising revenue offset by a $1.0 million increase in national advertising.



Operating earnings from our radio stations in 2003 were $16.8 million, an increase of $1.6 million, or 10.5%, compared to $15.2 million in 2002. The
increase was primarily attributed to decreases in promotional, sales and administrative expenses due to cost reduction initiatives.



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Revenue from our television stations in 2003 was $72.8 million, a decrease of $1.8 million, or 2.4%,
compared to $74.6 million in 2002. The decrease was primarily attributed to a $4.3 million decrease in political and issue advertising revenue and a $2.6 million decrease in Olympics advertising revenue offset by a $5.2 million increase in local
advertising and a $0.1 million increase in national advertising.



The threatened outbreak of hostilities in Iraq in March 2003 and the war itself had a $0.6 million negative impact on our television broadcasting revenue in 2003 due to reduced spending levels by some advertisers. There was hesitancy on the
part of some advertisers to place schedules during the period of time leading up to the war, cancellations by some advertisers for the duration of war coverage and elimination of advertising inventory available from our television networks, our
local news products and syndicated and local programming during their coverage of the war.



Operating earnings from our television stations in 2003 were $13.1 million, a decrease of $5.1 million, or 28.0%, compared to $18.2 million in 2002. The decrease was primarily attributed to increases in technology and
depreciation expenses, programming and news expenses, expenses related to organizational changes and sales expenses.



Telecommunications



Revenue from telecommunications in 2003 was $149.5 million, an increase of $0.8 million, or 0.6%, compared to $148.7 million in 2002. Operating earnings
from telecommunications in 2003 were $38.8 million, a decrease of $2.2 million, or 5.1%, compared to $41.0 million in 2002.



Wholesale telecommunication services provide network transmission solutions for other service providers by offering bulk transmission capacity. Revenue
from wholesale services in 2003 was $91.7 million, a decrease of $5.6 million, or 5.8%, compared to $97.3 million in 2002. The decrease was primarily due to service disconnections. Due to the turmoil in the telecommunications industry, we have
experienced a significant increase in customers disconnecting or terminating service. 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 will continue, primarily due to consolidating traffic on least cost routes and economic and other changes occurring within our customers end-user customer base. Monthly recurring revenue from wholesale services at the
end of 2003 was $6.9 million compared to $7.5 million at the beginning of 2003 and $8.1 million at the beginning of 2002. During 2003, new circuit connections of $0.7 million in monthly recurring revenue were more than offset by service
disconnections.



MCI and Global Crossing together accounted for
18.0% and 20.1% of our telecommunications revenue in 2003 and 2002, respectively. Global Crossing filed for Chapter 11 bankruptcy protection in January 2002 and emerged in December 2003. 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. MCI filed for Chapter 11 bankruptcy protection in July 2002 and emerged in April 2004. In April 2003, we sold our MCI pre-petition receivable, net of applicable set-off accounts payable, to a third party. We
continue to provide services to MCI and receive advance or timely payment for those services. 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 existing circuits being disconnected. We believe they will remain a significant customer, though we can not predict the outcome of a potential
sale or merger of MCI. In 2003, we continued to record monthly revenues from MCI that remained at recent levels and are not wholly reflective of the coming transition to contract renewal terms. The loss of the ongoing business from either of these
two customers would have a significant adverse effect on our results of operations.



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,



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Minnesota and Illinois. Revenue from enterprise services in 2003 was $57.8 million, an increase of $6.4 million, or 12.4%, compared to $51.4 million in 2002.
The increase was primarily attributed to an increase in the number of customers served, principally providing long distance services. Monthly recurring revenue from enterprise advanced data services at the end of 2003 was $3.3 million compared to
$3.0 million at the beginning of 2003 and 2002. Recently, 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 telecommunication services could adversely impact us through the loss of existing customers or by reducing the success rate of securing new customers.



The decrease in operating earnings from telecommunications was primarily attributed to wholesale service disconnections that
occurred during 2003 and 2002, a decrease in profit margin due to higher operating costs and expenses associated with the higher mix of enterprise revenue, the recording of a lease abandonment expense and an increase in depreciation expense,
partially offset by gains on the sales of towers and a decrease in bad debt expense.



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 2003 was $86.0
million, a decrease of $11.8 million, or 12.1%, compared to $97.8 million in 2002. Operating earnings from printing services in 2003 were $3.8 million, an increase of $1.7 million, or 76.4%, compared to $2.1 million in 2002.



The decrease in printing services revenue was primarily attributed to the
reduction in revenue from our largest customer, Dell Computer Corporation, resulting from its decision to purchase certain products that are supplied by a different vendor and the loss of sales resulting from the consolidation of assembly and
fulfillment operations into Michigan during 2002. These decreases have been offset by an increase in publication printing revenue.



The increase in printing services operating earnings was primarily attributed to a reduction in operational costs due to the decrease in revenue, the
closure of our CD-ROM mastering and replication operations and cost reduction initiatives. These increases were partially offset by a $0.5 million charge for the settlement of a customer invoicing dispute and $0.9 million in closure costs for the
CD-ROM mastering and replications operations.



Dell Computer
Corporation accounted for 29.1% and 38.4% of our printing services revenue in 2003 and 2002, respectively.



Other



Other revenue in 2003 was $95.1 million, an increase of $4.1 million, or 4.5%, compared to $91.0 million in 2002. Other operating earnings in 2003 were
$7.7 million, an increase of $0.4 million, or 5.8%, compared to $7.3 million in 2002.



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The following table presents our other revenue and operating earnings for 2003 and 2002:



|                   |  |                       |      |                         |   |                            |  |   |       |   |               |   |                          |  |   |                           |  |   |       |   |               |   |      |   |  |   |      |  |    
|------------------ |  | --------------------- | ---- | ----------------------- | - | -------------------------- |  | - | ----- | - | ------------- | - | ------------------------ |  | - | ------------------------- |  | - | ----- | - | ------------- | - | ---- | - |  | - | ---- |  | ---
|                   |  | 2003                  |      | 2002                    |   |                           
|                   |  | LabelPrinting         |      | DirectMarketingServices |   | Corporate and Eliminations |  |   | Total |   | LabelPrinting |   | DirectMarketing Services |  |   | Corporate andEliminations |  |   | Total |   | PercentChange
|                   |  | (dollars in millions) |      |                        
|Revenue            |  | $                     | 57.4 |                         | $ | 42.0                       |  | $ | (4.3  | ) |               | $ | 95.1                     |  | $ | 56.5                      |  | $ | 38.3  |   |               | $ | (3.8 | ) |  | $ | 91.0 |  | 4.5
|                   |  |                       |      |                         |   |                            |  |   |       |   |               |   |                          |  |   |                           |  |   |       |   |               |   |      |   |  |   |      |  |    
|Operating earnings |  | $                     | 2.9  |                         | $ | 2.4                        |  | $ | 2.4   |   |               | $ | 7.7                      |  | $ | 2.4                       |  | $ | (0.1  | ) |               | $ | 5.0  |   |  | $ | 7.3  |  | 5.8
|                   |  |                       |      |                         |   |                            |  |   |       |   |               |   |                          |  |   |                           |  |   |       |   |               |   |      |   |  |   |      |  |    



The increase in other
revenue was primarily attributed to an increase in list and database marketing services at our direct marketing services business and an increase in our label printing operation with new products for our consumer goods and beverage customers.
Included in revenue and operating costs and expenses from our direct marketing services business is $22.2 million and $21.2 million of postage amounts billed to customers in 2003 and 2002, respectively.



The increase in other operating earnings was primarily attributed to a $3.2
million gain on the sale of property during 2003, the $1.3 million loss on impairment of a customer list at our direct marketing services business during 2002 and the increase in revenue at our direct marketing services business and the related
increased profit margins on list and database marketing services revenue. These increases were offset by a $1.7 million liability recorded for employment taxes in 2003 and the decrease in the litigation reserve by $4.1 million during 2002 to reflect
a settlement.



SAB/Miller Brewing Company accounted for 45.3%
and 50.7% of our label printing business revenue in 2003 and 2002, respectively.



Non Operating Income and Taxes from Continuing Operations



Interest income and dividends in 2003 were $0.4 million, a decrease of $0.6 million, or 55.1%, compared to $1.0 million in 2002. The decrease was
primarily attributed to the decrease in the invested balances of cash and cash equivalents and interest income received in 2002 from refunds of state income taxes. Interest expense in 2003 was $1.9 million compared to $0.6 million in 2002. The
increase was primarily attributed to $0.1 million of interest expense being capitalized as part of our construction of the Milwaukee Journal Sentinel production facility in 2003 compared to $1.2 million in 2002. Gross interest expense from
borrowings under our credit agreement was $1.8 million in 2003 and $1.6 million in 2002. Amortization of deferred financing costs was $0.1 million in 2003 related to our new $350 million unsecured revolving credit facility entered into in September
2003.



The effective tax rate on continuing operations was
40.3% in 2003 compared to 43.2% in 2002. The difference between the statutory federal and state income tax rates and the effective income tax rate in 2002 was primarily the result of non deductible expenses related to litigation that was settled in
2002 and a non deductible excise tax related to funding of the pension plan obligations of $44.7 million in 2002.



Earnings per Share



Our basic and diluted earnings per share in 2003 were $0.84 and $0.80, respectively, an increase of $0.11 and $0.07, respectively, compared to basic and
diluted earnings per share of $0.73 in 2002. Earnings per share amounts reflect our new capital structure effected by our initial public offering in September 2003 and the tender offer that was completed in November 2003.



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Cumulative Effect of Accounting Change



Effective January 1, 2002, we adopted Statement No. 142, Goodwill and
Other Intangible Assets. Under Statement No. 142, goodwill and intangible assets deemed to have indefinite lives, including broadcast licenses and network affiliation agreements, are no longer amortized but are reviewed for impairment and
written down and charged to operations when their carrying amounts exceed their estimated fair values. We performed transitional impairment tests on the carrying value of our goodwill and indefinite-lived intangible assets as of January 1, 2002. The
resulting impairment charges of $7.7 million ($6.5 million after tax) were recorded during the first quarter ended March 24, 2002 and are reported as the cumulative effect of accounting change in our consolidated condensed statements of earnings.



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



We have a $350 million unsecured revolving credit facility expiring on September 4, 2008. The interest rate on borrowings is either LIBOR plus a margin
that ranges from 87.5 basis points to 150 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 one percent per annum. As of December
26, 2004, we had borrowings outstanding of $70.3 million under the facility at a weighted average interest rate of 3.29%. Fees of $2.0 million in connection with the facility are being amortized over the term of the facility using the straight-line
method which approximates the effective-interest method. In addition, an annual fee of $0.1 million is being amortized using the straight line method from October 2004 through September 2005. 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------

| |  |  | A fixed charge coverage ratio as determined for the four fiscal quarter period preceding the date of determination.
| | - |  | -------------------------------------------------------------------------------------------------------------------

| |  |  | A consolidated tangible net worth as of the end of any quarter.
| | - |  | ---------------------------------------------------------------

| |  |  | Consolidated capital expenditures during any fiscal year.
| | - |  | ---------------------------------------------------------

| |  |  | A consolidated rent expense during any fiscal year.
| | - |  | ---------------------------------------------------



As of December 26, 2004, we are in compliance with all of our material covenants.



Cash balances were $6.4 million at December 26, 2004. We believe our expected cash flows from operations and borrowings
available under our credit facility will adequately meet our needs for the foreseeable future. In January 2005, the proceeds from the sale of our label printing business reduced our $350 million unsecured revolving credit facility. 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.



Cash Flow



Cash provided by operating activities was $134.0 million in 2004 compared to $128.5 million in 2003. The increase was primarily due to the increase in net
earnings.



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Cash used for investing activities was $69.3 million in 2004 compared to $40.2 million in 2003.
Acquisition of business were $44.6 million in 2004 compared to $6.8 million in 2003. Capital expenditures for property and equipment were $29.3 million in 2004 compared to $39.7 million in 2003. Proceeds from the sales of assets were $4.6 million in
2004 compared to $6.3 million in 2003.



Cash used for financing
activities was $66.8 million in 2004 compared to $88.3 million in 2003. Borrowings under our new credit facility during 2004 were $276.4 million and we made payments of $290.1 million. We decreased our borrowing under our old credit agreement by
$90.8 million in 2003. In 2004, we received $116.5 million in proceeds from the issuance of common stock, of which we received $115.9 million in net proceeds from the issuance of our class A common stock and employees purchased $0.6 million worth of
our class B-2 common stock under our Employee Stock Purchase Plan. In 2004, we paid $148.7 million to purchase and retire our class B common stock compared to $300.3 million in 2003. We paid cash dividends of $20.8 million and $44.1 million in 2004
and 2003, 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) |  | $                      | 78.8  |                 | $ | 2.3      |  | $        | 4.6  |                  | $ | 71.9  |  | $ |    
|Operating leases                    |  |                        | 51.7  |                 |   | 13.7     |  |          | 15.3 |                  |   | 10.1  |  |   | 12.6
|Purchase commitments                |  |                        | 144.9 |                 |   | 45.9     |  |          | 70.4 |                  |   | 28.5  |  |   | 0.1 
|Other long-term liabilities         |  |                        | 14.2  |                 |   | 3.6      |  |          | 6.2  |                  |   | 3.0   |  |   | 1.4 
|                                    |  |                        |       |                 |   |          |  |          |      |                  |   |       |  |   |     
|Total                               |  | $                      | 289.6 |                 | $ | 65.5     |  | $        | 96.5 |                  | $ | 113.5 |  | $ | 14.1
|                                    |  |                        |       |                 |   |          |  |          |      |                  |   |       |  |   |     

---

|(1) | Includes the associated interest calculated on our borrowings of $70.3 million outstanding as of December 26, 2004 at a weighted average rate of 3.29%.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



Our long-term notes payable to banks are
borrowings under our $350 million unsecured revolving credit facility which expires on September 4, 2008. As of December 26, 2004, we had borrowings outstanding of $70.3 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, which run through 2006 and 2008, from two newsprint suppliers, was $137.5 million as of December 26, 2004. 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 printing equipment and broadcasting equipment and systems were approximately $1.8 million and $1.3 million as of December 26, 2004, respectively. In addition, we have the right to broadcast certain television programs
during the years 2005-2010 under contracts aggregating $4.3 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.



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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.



Property and equipment



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



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



Impairment of goodwill and indefinite-lived intangibles



Goodwill and broadcast licenses account for 36.0% and 32.6% of total assets in 2004 and 2003, 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.



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Accrued income taxes



The Internal Revenue Service and various state Departments of Revenue routinely examine our federal and state tax returns.
From time to time, the IRS and the state Departments of Revenue may challenge certain of our tax positions. We believe our tax positions comply with applicable tax law and we would vigorously defend these positions if challenged. The final
disposition of any positions challenged by the IRS or state Departments of Revenue could require us to make additional tax payments 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.



Accrued litigation



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



Employee benefits



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



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



| |  |  | 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 postretirement obligations; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------

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



The weighted average assumptions used in accounting for pension benefits and
other postretirement benefits for 2004 and 2003 are:



|                               |  |                  |   |  |                              |   |  |      |   |  |      |  
|------------------------------ |  | ---------------- | - |  | ---------------------------- | - |  | ---- | - |  | ---- | -
|                               |  | Pension Benefits |   |  | OtherPostretirement Benefits |  
|                               |  | 2004             |   |  | 2003                         |   |  | 2004 |   |  | 2003 |  
|Discount rate for expense      |  | 6.25             | % |  | 6.75                         | % |  | 6.25 | % |  | 6.75 | %
|Discount rate for obligations  |  | 5.75             |   |  | 6.25                         |   |  | 6.00 |   |  | 6.25 |  
|Rate of compensation increases |  | 4.50             |   |  | 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 $2.0 million or raised by $2.5 million, respectively, the plans 2004 expense and would have lowered the plans projected benefit obligations by $15.9 million or
raised by $19.9 million, respectively, as of December 26, 2004.



Moodys Aa Corporate bonds, as of the measurement date, is a benchmark we use to determine the assumed discount rate. In 2004, we studied our plan specific discount rate by matching our projected benefit payments to a



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yield curve developed from high grade corporate bonds. It was determined that this rate along with the Moodys Aa Corporate bond rate supported our
discount rate assumption of 6.25%. We make other assumptions that affect the accounting for pension benefits, such as the expected rate of return on plan assets and 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 the actuarial firms with the assumption of the discount rate and medical cost inflation. These assumptions could have a significant effect on our obligation. The discount rate is used to arrive at the net present
value of the obligation. The health care cost trend rate is used to calculate the impact future medical costs would have on postretirement obligations.



New Accounting Standards



In December 2004, the FASB issued Statement No. 123R (revised 2004), Share-Based Payment, which replaces 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. 123R 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. Statement No. 123R is effective as of the beginning of the first interim or annual reporting period beginning after June 15, 2005. We will adopt Statement No. 123R in the third quarter of fiscal 2005.



Under Statement No. 123R, we must determine the appropriate fair value
model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at the date of adoption. The transition methods include prospective and retroactive adoption options. Under the
retroactive option, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted
stock at the beginning of the first quarter of adoption of Statement 123R, while the retroactive method would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. We are evaluating
the requirements of Statement No. 123R and have not yet determined the method of adoption or the effect of adopting Statement 123R, including whether the adoption will result in amounts that are similar to the current pro forma disclosures under
Statement No. 123. We do not believe the effect of adopting Statement No. 123R will have a material impact on our consolidated financial statements.



In December 2004, the FASB issued Statement No. 153, Exchanges of Nonmonetary AssetsAn Amendment of APB Opinion No. 29, Accounting for
Nonmonetary Transactions. Statement No. 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary
Transactions, and replaces it with an exception for exchanges that do not have commercial substance. Statement No. 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. Statement No. 153 is effective for fiscal years beginning after June 15, 2005 and we are required to adopt Statement No. 153 in the first quarter of fiscal 2006. We do not believe the effect of adopting
Statement No. 153 will have a material impact on our consolidated financial statements.



In November 2004, the FASB issued Statement No. 151, Inventory Costs, an amendment of ARB No. 43, Chapter 4, which clarifies the types of inventory costs that should be expensed rather than capitalized.
Statement No. 151 also clarifies the circumstances under which fixed overhead costs associated with operating facilities involved in inventory processing should be capitalized. The provisions of Statement No. 151 are effective for fiscal years
beginning after June 15, 2005 and we are required to adopt Statement No. 151 in the first quarter of



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2006. We do not believe the effect of adopting Statement No. 151 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 $350 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 the current unsecured revolving credit facility is either at
LIBOR plus a margin that ranges from 87.5 basis points to 150 basis points, 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 one percent per annum. Average interest rates
on borrowings under our credit facility were 2.4% in 2004. 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 $531 in 2004. Based on the average net price per ton in 2004 and consumption of
newsprint in 2004, a $10 per ton increase or decrease in the price of newsprint would increase or decrease our total cost of newsprint by $0.8 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
26 and December 31

(in thousands, except per share amounts)



|                                                                                                                                                    |  |      |          |   |      |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                                                                                                    |  | 2004 |          |   | 2003 |  
|ASSETS                                                                                                                                              |  |      |          |   |      |   |          |  
|Current assets:                                                                                                                                     |  |      |          |   |      |   |          |  
|Cash and cash equivalents                                                                                                                           |  | $    | 6,375    |   |      | $ | 8,444    |  
|Receivables, net                                                                                                                                    |  |      | 94,725   |   |      |   | 89,526   |  
|Inventories, net                                                                                                                                    |  |      | 16,998   |   |      |   | 15,216   |  
|Prepaid expenses                                                                                                                                    |  |      | 13,390   |   |      |   | 13,236   |  
|Deferred income taxes                                                                                                                               |  |      | 9,446    |   |      |   | 8,948    |  
|Investment in preferred stock                                                                                                                       |  |      | 4,394    |   |      |   |         |  
|                                                                                                                                                    |  |      |          |   |      |   |          |  
|Total Current Assets                                                                                                                                |  |      | 145,328  |   |      |   | 135,370  |  
|Property and equipment:                                                                                                                             |  |      |          |   |      |   |          |  
|Land and land improvements                                                                                                                          |  |      | 26,950   |   |      |   | 26,270   |  
|Buildings and building improvements                                                                                                                 |  |      | 130,939  |   |      |   | 127,793  |  
|Equipment                                                                                                                                           |  |      | 503,324  |   |      |   | 483,869  |  
|Construction in progress                                                                                                                            |  |      | 8,324    |   |      |   | 8,321    |  
|                                                                                                                                                    |  |      |          |   |      |   |          |  
|                                                                                                                                                    |  |      | 669,537  |   |      |   | 646,253  |  
|Less accumulated depreciation                                                                                                                       |  |      | 365,971  |   |      |   | 331,658  |  
|                                                                                                                                                    |  |      |          |   |      |   |          |  
|Net property and equipment                                                                                                                          |  |      | 303,566  |   |      |   | 314,595  |  
|Goodwill                                                                                                                                            |  |      | 138,648  |   |      |   | 114,283  |  
|Broadcast licenses                                                                                                                                  |  |      | 140,046  |   |      |   | 129,548  |  
|Other intangible assets, net                                                                                                                        |  |      | 14,753   |   |      |   | 9,900    |  
|Prepaid pension costs                                                                                                                               |  |      | 24,156   |   |      |   | 28,421   |  
|Other assets                                                                                                                                        |  |      | 8,565    |   |      |   | 15,058   |  
|                                                                                                                                                    |  |      |          |   |      |   |          |  
|Total Assets                                                                                                                                        |  | $    | 775,062  |   |      | $ | 747,175  |  
|                                                                                                                                                    |  |      |          |   |      |   |          |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                |  |      |          |   |      |   |          |  
|Current liabilities:                                                                                                                                |  |      |          |   |      |   |          |  
|Accounts payable                                                                                                                                    |  | $    | 42,005   |   |      | $ | 38,369   |  
|Accrued compensation                                                                                                                                |  |      | 24,025   |   |      |   | 23,346   |  
|Accrued employee benefits                                                                                                                           |  |      | 10,872   |   |      |   | 9,830    |  
|Deferred revenue                                                                                                                                    |  |      | 20,536   |   |      |   | 22,590   |  
|Other current liabilities                                                                                                                           |  |      | 13,554   |   |      |   | 13,049   |  
|Current portion of long-term liabilities                                                                                                            |  |      | 3,600    |   |      |   | 2,164    |  
|                                                                                                                                                    |  |      |          |   |      |   |          |  
|Total Current Liabilities                                                                                                                           |  |      | 114,592  |   |      |   | 109,348  |  
|Accrued employee benefits                                                                                                                           |  |      | 17,839   |   |      |   | 17,815   |  
|Long-term notes payable to banks                                                                                                                    |  |      | 70,310   |   |      |   | 84,000   |  
|Deferred income taxes                                                                                                                               |  |      | 66,143   |   |      |   | 56,477   |  
|Other long-term liabilities                                                                                                                         |  |      | 16,683   |   |      |   | 15,785   |  
|Shareholders equity:                                                                                                                               |  |      |          |   |      |   |          |  
|Preferred stock, $0.01 par  authorized 10,000,000 shares; no shares outstanding atDecember 26, 2004 and December 31,
2003                          |  |      |         |   |      |   |         |  
|Common stock, $0.01 par:                                                                                                                            |  |      |          |   |      |   |          |  
|Class C  authorized 10,000,000 shares; issued and outstanding: 3,264,000 shares atDecember 26, 2004 and December 31,
2003                          |  |      | 33       |   |      |   | 33       |  
|Class B-2  authorized 60,000,000 shares; issued and outstanding: 35,539,783 shares at December 26, 2004 and 38,301,224 shares at
December 31, 2003 |  |      | 399      |   |      |   | 427      |  
|Class B-1  authorized 60,000,000 shares; issued and outstanding: 9,270,929 shares at December 26, 2004 and 14,972,117 shares at December
31, 2003  |  |      | 136      |   |      |   | 193      |  
|Class A  authorized 170,000,000 shares; issued and outstanding: 27,417,326 shares at December 26, 2004 and 20,191,542 shares at December
31, 2003  |  |      | 274      |   |      |   | 201      |  
|Additional paid-in capital                                                                                                                          |  |      | 385,219  |   |      |   | 268,907  |  
|Unearned compensation                                                                                                                               |  |      | (104     | ) |      |   | (129     | )
|Retained earnings                                                                                                                                   |  |      | 212,253  |   |      |   | 302,833  |  
|Treasury stock, at cost                                                                                                                             |  |      | (108,715 | ) |      |   | (108,715 | )
|                                                                                                                                                    |  |      |          |   |      |   |          |  
|Total Shareholders Equity                                                                                                                          |  |      | 489,495  |   |      |   | 463,750  |  
|                                                                                                                                                    |  |      |          |   |      |   |          |  
|Total Liabilities And Shareholders Equity                                                                                                          |  | $    | 775,062  |   |      | $ | 747,175  |  
|                                                                                                                                                    |  |      |          |   |      |   |          |  



See accompanying
notes.



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CONSOLIDATED STATEMENTS OF EARNINGS

Years Ended December 26, 2004, December 31, 2003 and December 31, 2002

(in
thousands, except per share amounts)



|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                  |  | 2004 |         |   | 2003 |   |         | 2002 | 
|Continuing operations:                                                            |  |      |         |   |      |   |         |      |  |   |         |  
|Revenue:                                                                          |  |      |         |   |      |   |         |      |  |   |         |  
|Publishing                                                                        |  | $    | 327,687 |   |      | $ | 316,976 |      |  | $ | 311,138 |  
|Broadcasting                                                                      |  |      | 172,073 |   |      |   | 150,744 |      |  |   | 152,749 |  
|Telecommunications                                                                |  |      | 144,020 |   |      |   | 149,538 |      |  |   | 148,674 |  
|Printing services                                                                 |  |      | 76,308  |   |      |   | 85,958  |      |  |   | 97,841  |  
|Other                                                                             |  |      | 100,673 |   |      |   | 95,073  |      |  |   | 90,974  |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Total revenue                                                                     |  |      | 820,761 |   |      |   | 798,289 |      |  |   | 801,376 |  
|Operating costs and expenses:                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|Publishing                                                                        |  |      | 161,946 |   |      |   | 160,072 |      |  |   | 151,591 |  
|Broadcasting                                                                      |  |      | 68,832  |   |      |   | 64,698  |      |  |   | 59,674  |  
|Telecommunications                                                                |  |      | 83,215  |   |      |   | 84,722  |      |  |   | 81,658  |  
|Printing services                                                                 |  |      | 66,519  |   |      |   | 71,316  |      |  |   | 82,597  |  
|Other                                                                             |  |      | 83,141  |   |      |   | 78,254  |      |  |   | 75,420  |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Total operating costs and expenses                                                |  |      | 463,653 |   |      |   | 459,062 |      |  |   | 450,940 |  
|Selling and administrative expenses                                               |  |      | 224,348 |   |      |   | 225,818 |      |  |   | 236,363 |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Total operating costs and expenses and selling and administrative expenses        |  |      | 688,001 |   |      |   | 684,880 |      |  |   | 687,303 |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Operating earnings                                                                |  |      | 132,760 |   |      |   | 113,409 |      |  |   | 114,073 |  
|Other income and expense:                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Interest income and dividends                                                     |  |      | 335     |   |      |   | 442     |      |  |   | 984     |  
|Interest expense, net                                                             |  |      | (2,280  | ) |      |   | (1,909  | )    |  |   | (645    | )
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Total other income and expense                                                    |  |      | (1,945  | ) |      |   | (1,467  | )    |  |   | 339     |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Earnings from continuing operations before income taxes and accounting change     |  |      | 130,815 |   |      |   | 111,942 |      |  |   | 114,412 |  
|Provision for income taxes                                                        |  |      | 52,335  |   |      |   | 45,149  |      |  |   | 49,418  |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Earnings from continuing operations before accounting change                      |  |      | 78,480  |   |      |   | 66,793  |      |  |   | 64,994  |  
|Loss from discontinued operations, net of applicable income tax benefit of $6,624 |  |      |        |   |      |   |        |      |  |   | (565    | )
|Cumulative effect of accounting change, net of applicable income taxes of $1,161  |  |      |        |   |      |   |        |      |  |   | (6,509  | )
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Net earnings                                                                      |  | $    | 78,480  |   |      | $ | 66,793  |      |  | $ | 57,920  |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Earnings available to class A and B common shareholders                           |  | $    | 76,624  |   |      | $ | 66,329  |      |  | $ | 57,920  |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Earnings per share:                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|Basic:                                                                            |  |      |         |   |      |   |         |      |  |   |         |  
|Continuing operations before accounting change                                    |  | $    | 1.05    |   |      | $ | 0.84    |      |  | $ | 0.82    |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Net earnings                                                                      |  | $    | 1.05    |   |      | $ | 0.84    |      |  | $ | 0.73    |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Diluted:                                                                          |  |      |         |   |      |   |         |      |  |   |         |  
|Continuing operations before accounting change                                    |  | $    | 1.01    |   |      | $ | 0.80    |      |  | $ | 0.82    |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  
|Net earnings                                                                      |  | $    | 1.01    |   |      | $ | 0.80    |      |  | $ | 0.73    |  
|                                                                                  |  |      |         |   |      |   |         |      |  |   |         |  



See accompanying
notes.



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##### Table of Contents

JOURNAL COMMUNICATIONS, INC.



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

Years Ended December 26, 2004, December 31, 2003 and December 31, 2002

(in
thousands, except per share amounts)



|                                                                                   |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|---------------------------------------------------------------------------------- |  | -------------- | - | ----------- | - | -------- | ------------ |  | ------------------------- | -- |  | ------ | --- | - |  | - | ---- | - |  | - | --- |  | - | ------- | -
|                                                                                   |  | PreferredStock |   | CommonStock |   |          | Common Stock |  | AdditionalPaid-in-Capital |   
|                                                                                   |  |                |   | ClassC      |   | ClassB-2 |              |  | ClassB-1                  |    |  | ClassA |    
|Balance at December 31, 2001                                                       |  | $              |  |             | $ | 3,600    |              |  | $                         |   |  | $      |    |   |  | $ |     |   |  | $ |    |  | $ |        |  
|Net earnings                                                                       |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Other comprehensive income:                                                        |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Reversal of prior year minimum pension liability adjustment (net of tax of $1,906) |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Realization of foreign currency translation adjustments                            |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|                                                                                   |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Other comprehensive income                                                         |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|                                                                                   |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Comprehensive income                                                               |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|                                                                                   |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Dividends declared ($0.40 per common share)                                        |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Units of beneficial interest purchased                                             |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Units of beneficial interest sold                                                  |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|                                                                                   |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|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 |  |        | 432 |   |  |   | 395  |   |  |   |     |  |   | 2,735   |  
|Issuance of shares:                                                                |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Initial public offering                                                            |  |                |   |             |   |          |              |  |                           |    |  |        | (3  | ) |  |   | (1   | ) |  |   | 198 |  |   | 266,419 |  
|Conversion of class B to class A                                                   |  |                |   |             |   |          |              |  |                           |    |  |        | (2  | ) |  |   | (1   | ) |  |   | 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 |  |        | 427 |   |  |   | 193  |   |  |   | 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                                                   |  |                |   |             |   |          |              |  |                           |    |  |        | (1  | ) |  |   | (5   | ) |  |   | 6   |  |   |         |  
|Restricted stock grants                                                            |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   | 215     |  
|Employee stock purchase plan                                                       |  |                |   |             |   |          |              |  |                           |    |  |        | 1   |   |  |   |      |   |  |   |     |  |   | 524     |  
|Amortization of unearned compensation                                              |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Shares purchased and retired in tender offer                                       |  |                |   |             |   |          |              |  |                           |    |  |        | (28 | ) |  |   | (52  | ) |  |   |     |  |   | (303    | )
|                                                                                   |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  
|Balance at December 26, 2004                                                       |  | $              |  |             | $ |         |              |  | $                         | 33 |  | $      | 399 |   |  | $ | 136  |   |  | $ | 274 |  | $ | 385,219 |  
|                                                                                   |  |                |   |             |   |          |              |  |                           |    |  |        |     |   |  |   |      |   |  |   |     |  |   |         |  



See accompanying
notes.



54



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##### Table of Contents













|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  |   |       
|-------------------- | ---- | - | ---------------- | - | -------- | ---------------------- |  | - | ------------------------------------------------ | - |  | ------------------------------------------- | -------- | - | ----- | - | ------ | -------------------------- |  | - | -------- | - |  | - | ------
|UnearnedCompensation |      |   | RetainedEarnings |   |          | TreasuryStock, at cost |  |   | Units of Beneficial Interestin treasury, at cost |   |  | Accumulated OtherComprehensiveIncome (Loss) |          |   | Total |   |        | ComprehensiveIncome (Loss)
|                     |      |   |                  |   |         
|$                    |     |   |                  | $ | 556,139  |                        |  | $ |                                                 |   |  | $                                           | (23,046  | ) |       | $ | (3,813 | )                          |  | $ | 532,880  |   |  |   |       
|                     |      |   |                  |   | 57,920   |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   | 57,920   |   |  | $ | 57,920
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  |   |       
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   | 2,856  |                            |  |   | 2,856    |   |  |   | 2,856 
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   | 957    |                            |  |   | 957      |   |  |   | 957   
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  |   |       
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  |   | 3,813 
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  |   |       
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  | $ | 61,733
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  |   |       
|                     |      |   |                  |   | (31,597  | )                      |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   | (31,597  | ) |  |   |       
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             | (125,347 | ) |       |   |        |                            |  |   | (125,347 | ) |  |   |       
|                     |      |   |                  |   | (1,101   | )                      |  |   |                                                  |   |  |                                             | 39,976   |   |       |   |        |                            |  |   | 38,875   |   |  |   |       
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  |   |       
|                     |     |   |                  |   | 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  |   |  |   |       
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |         |   |  |   |       
|                     | (26  | ) |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   | 189      |   |  |   |       
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   | 525      |   |  |   |       
|                     | 51   |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   | 51       |   |  |   |       
|                     |      |   |                  |   | (148,268 | )                      |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   | (148,651 | ) |  |   |       
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  |   |       
|$                    | (104 | ) |                  | $ | 212,253  |                        |  | $ | (108,715                                         | ) |  | $                                           |         |   |       | $ |       |                            |  | $ | 489,495  |   |  |   |       
|                     |      |   |                  |   |          |                        |  |   |                                                  |   |  |                                             |          |   |       |   |        |                            |  |   |          |   |  |   |       



55



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##### Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 26, 2004, December 31, 2003 and December 31, 2002

(in
thousands)



|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|-------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                                             |  | 2004 |          |   | 2003 |   |          | 2002 | 
|Cash flow from operating activities:                                                         |  |      |          |   |      |   |          |      |  |   |          |  
|Net earnings                                                                                 |  | $    | 78,480   |   |      | $ | 66,793   |      |  | $ | 57,920   |  
|Less loss from discontinued operations                                                       |  |      |         |   |      |   |         |      |  |   | (565     | )
|Less cumulative effect of accounting change                                                  |  |      |         |   |      |   |         |      |  |   | (6,509   | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Earnings from continuing operations before accounting change                                 |  |      | 78,480   |   |      |   | 66,793   |      |  |   | 64,994   |  
|Adjustments for non-cash items:                                                              |  |      |          |   |      |   |          |      |  |   |          |  
|Depreciation                                                                                 |  |      | 45,231   |   |      |   | 46,381   |      |  |   | 44,726   |  
|Amortization                                                                                 |  |      | 1,396    |   |      |   | 2,241    |      |  |   | 1,909    |  
|Provision for doubtful accounts                                                              |  |      | 3,211    |   |      |   | 2,473    |      |  |   | 3,480    |  
|Deferred income taxes                                                                        |  |      | 9,168    |   |      |   | 13,399   |      |  |   | 12,413   |  
|Net (gain) loss from disposal of assets                                                      |  |      | (2,682   | ) |      |   | (2,723   | )    |  |   | 404      |  
|Impairment of long-lived assets                                                              |  |      |         |   |      |   |         |      |  |   | 3,762    |  
|Net changes in operating assets and liabilities, excluding effect of sales and acquisitions: |  |      |          |   |      |   |          |      |  |   |          |  
|Receivables                                                                                  |  |      | (7,703   | ) |      |   | (1,966   | )    |  |   | (976     | )
|Inventories                                                                                  |  |      | (1,261   | ) |      |   | 984      |      |  |   | 3,687    |  
|Accounts payable                                                                             |  |      | 2,696    |   |      |   | (1,290   | )    |  |   | (4,013   | )
|Other assets and liabilities                                                                 |  |      | 5,430    |   |      |   | 2,231    |      |  |   | (44,065  | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net Cash Provided By Operating Activities                                                    |  |      | 133,966  |   |      |   | 128,523  |      |  |   | 86,321   |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Cash flow from investing activities:                                                         |  |      |          |   |      |   |          |      |  |   |          |  
|Capital expenditures for property and equipment                                              |  |      | (29,275  | ) |      |   | (39,685  | )    |  |   | (53,169  | )
|Proceeds from sales of assets                                                                |  |      | 4,556    |   |      |   | 6,266    |      |  |   | 1,548    |  
|Acquisition of businesses                                                                    |  |      | (44,553  | ) |      |   | (6,794   | )    |  |   | (49      | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net Cash Used For Investing Activities                                                       |  |      | (69,272  | ) |      |   | (40,213  | )    |  |   | (51,670  | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Cash flow from financing activities:                                                         |  |      |          |   |      |   |          |      |  |   |          |  
|Net (decrease) increase in notes payable to banks                                            |  |      |         |   |      |   | (90,775  | )    |  |   | 86,355   |  
|Financing costs on long-term notes payable to banks                                          |  |      | (98      | ) |      |   | (1,959   | )    |  |   |         |  
|Net proceeds from long-term notes payable to banks                                           |  |      | 276,432  |   |      |   | 111,455  |      |  |   |         |  
|Payments of long-term notes payable to banks                                                 |  |      | (290,122 | ) |      |   | (27,455  | )    |  |   |         |  
|Proceeds from issuance of common stock, net                                                  |  |      | 116,468  |   |      |   | 266,871  |      |  |   |         |  
|Redemption of common stock, net                                                              |  |      | (148,651 | ) |      |   | (300,305 | )    |  |   |         |  
|Redemption of units of beneficial interest                                                   |  |      |         |   |      |   | (1,775   | )    |  |   |         |  
|Purchases of units of beneficial interest                                                    |  |      |         |   |      |   | (298     | )    |  |   | (125,347 | )
|Sales of units of beneficial interest                                                        |  |      |         |   |      |   |         |      |  |   | 38,875   |  
|Cash dividends                                                                               |  |      | (20,792  | ) |      |   | (44,080  | )    |  |   | (31,597  | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net Cash Used For Financing Activities                                                       |  |      | (66,763  | ) |      |   | (88,321  | )    |  |   | (31,714  | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net Cash Used For Discontinued Operations                                                    |  |      |         |   |      |   |         |      |  |   | (3,393   | )
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net Decrease in Cash and Cash Equivalents                                                    |  |      | (2,069   | ) |      |   | (11      | )    |  |   | (456     | )
|Cash and cash equivalents                                                                    |  |      |          |   |      |   |          |      |  |   |          |  
|Beginning of year                                                                            |  |      | 8,444    |   |      |   | 8,455    |      |  |   | 8,911    |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|End of year                                                                                  |  | $    | 6,375    |   |      | $ | 8,444    |      |  | $ | 8,455    |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Supplemental Cash Flow Information                                                           |  |      |          |   |      |   |          |      |  |   |          |  
|Cash paid for income taxes                                                                   |  | $    | 41,192   |   |      | $ | 27,722   |      |  | $ | 34,404   |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Cash paid for interest                                                                       |  | $    | 1,466    |   |      | $ | 1,526    |      |  | $ | 2,036    |  
|                                                                                             |  |      |          |   |      |   |          |      |  |   |          |  



See accompanying
notes.





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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 26, 2004 (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.



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, including potential future acquisitions.



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 under our $350 million debt facility and a portion of the net proceeds of the follow-on equity offering to fund the tender offer.



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.
Circulation revenue is recognized when the newspaper is purchased by 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 is generated
primarily from label printing and direct marketing services. Revenue is recognized at the time of shipment when title passes to the customer and at the time the service is performed, respectively.



Amounts we receive from customers in advance of revenue recognition are
deferred as liabilities. Deferred revenue to be earned more than 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 $8,218, $8,127, and $9,292 in 2004, 2003 and 2002 respectively.



Interest expenseInterest expense attributable to Journal
Sentinels self-constructed production facility has been capitalized as a component of the cost of the asset in 2002 and 2003. Capitalized interest for the years ended December 26, 2004, December 31, 2003 and December 31, 2002 is as follows:



|                        |  |      |       |      |   |       |      |  |   |        |  
|----------------------- |  | ---- | ----- | ---- | - | ----- | ---- |  | - | ------ | -
|                        |  | 2004 |       | 2003 |   |       | 2002 | 
|Total interest incurred |  | $    | 2,280 |      | $ | 1,975 |      |  | $ | 1,805  |  
|Less amount capitalized |  |      |      |      |   | (66   | )    |  |   | (1,160 | )
|                        |  |      |       |      |   |       |      |  |   |        |  
|Interest expense        |  | $    | 2,280 |      | $ | 1,909 |      |  | $ | 645    |  
|                        |  |      |       |      |   |       |      |  |   |        |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Earnings per shareBeginning in 2003, 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, the assumed common shares purchased upon exercise of certain of our non-statutory stock options, and the assumed common shares outstanding upon expiration of
the vesting periods for our non-vested restricted stock. Prior to 2003, basic and diluted earnings were the same because there were no dilutive securities. The term share includes both shares and units of beneficial interest outstanding.



Basic and diluted earnings per share, retroactively reflecting
the three-for-one share exchange in 2003, are computed as follows:



|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|Years ended December 26, December 31 and December 31                                          |  | 2004 |        |   | 2003 |   |        | 2002 | 
|Basic earnings:                                                                               |  |      |        |   |      |   |        |      |  |   |        |  
|Earnings from continuing operations before accounting change                                  |  | $    | 78,480 |   |      | $ | 66,793 |      |  | $ | 64,994 |  
|Discontinued operations                                                                       |  |      |       |   |      |   |       |      |  |   | (565   | )
|Cumulative effect of accounting change                                                        |  |      |       |   |      |   |       |      |  |   | (6,509 | )
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Net earnings                                                                                  |  |      | 78,480 |   |      |   | 66,793 |      |  |   | 57,920 |  
|Less dividends on class C common stock                                                        |  |      | (1,856 | ) |      |   | (464   | )    |  |   |       |  
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Earnings available to class A and B common shareholders                                       |  | $    | 76,624 |   |      | $ | 63,329 |      |  | $ | 57,920 |  
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Weighted average class A and B shares outstanding                                             |  |      | 72,931 |   |      |   | 78,645 |      |  |   | 79,291 |  
|Basic earnings per share:                                                                     |  |      |        |   |      |   |        |      |  |   |        |  
|Continuing operations before accounting change                                                |  | $    | 1.05   |   |      | $ | 0.84   |      |  | $ | 0.82   |  
|Discontinued operations                                                                       |  |      |       |   |      |   |       |      |  |   | (0.01  | )
|Cumulative effect of accounting change                                                        |  |      |       |   |      |   |       |      |  |   | (0.08  | )
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Net earnings                                                                                  |  | $    | 1.05   |   |      | $ | 0.84   |      |  | $ | 0.73   |  
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Diluted earnings:                                                                             |  |      |        |   |      |   |        |      |  |   |        |  
|Earnings available to class A and B common shareholders                                       |  | $    | 76,624 |   |      | $ | 66,329 |      |  | $ | 57,920 |  
|Plus dividends on class C common stock                                                        |  |      | 1,856  |   |      |   | 464    |      |  |   |       |  
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Net earnings                                                                                  |  | $    | 78,480 |   |      | $ | 66,793 |      |  | $ | 57,920 |  
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Weighted average class A and B shares outstanding                                             |  |      | 72,931 |   |      |   | 78,645 |      |  |   | 79,291 |  
|Assumed exercise of stock options, net of common shares assumed repurchased with the proceeds |  |      | 1      |   |      |   |       |      |  |   |       |  
|Assumed vesting of restricted stock                                                           |  |      | 3      |   |      |   |       |      |  |   |       |  
|Incremental class A and B shares for assumed conversion of class C shares                     |  |      | 4,452  |   |      |   | 4,452  |      |  |   |       |  
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Adjusted weighted average shares outstanding                                                  |  |      | 77,387 |   |      |   | 83,097 |      |  |   | 79,291 |  
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Diluted earnings per share:                                                                   |  |      |        |   |      |   |        |      |  |   |        |  
|Continuing operations before accounting change                                                |  | $    | 1.01   |   |      | $ | 0.80   |      |  | $ | 0.82   |  
|Discontinued operations                                                                       |  |      |       |   |      |   |       |      |  |   | (0.01  | )
|Cumulative effect of accounting change                                                        |  |      |       |   |      |   |       |      |  |   | (0.08  | )
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  
|Net earnings                                                                                  |  | $    | 1.01   |   |      | $ | 0.80   |      |  | $ | 0.73   |  
|                                                                                              |  |      |        |   |      |   |        |      |  |   |        |  



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).



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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. 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 26, December 31 and December 31                                                                                    |  | 2004 |        |   | 2003 |   |        | 2002
|Net earnings as reported                                                                                                                |  | $    | 78,480 |   |      | $ | 66,793 |      |  | $ | 57,920
|Add compensation cost of restricted stock grants, net of related tax effects, included in the determination of net earnings as
reported |  |      | 30     |   |      |   | 5      |      |  |   |      
|Deduct stock based compensation determined under fair value based-method, net of related tax effects:                                   |  |      |        |   |      |   |        |      |  |   |       
|Stock options                                                                                                                           |  |      | (111   | ) |      |   | (15    | )    |  |   |      
|Employee stock purchase plan                                                                                                            |  |      | (35    | ) |      |   | (17    | )    |  |   |      
|Restricted stock grants                                                                                                                 |  |      | (30    | ) |      |   | (5     | )    |  |   |      
|                                                                                                                                        |  |      |        |   |      |   |        |      |  |   |       
|Pro forma net earnings                                                                                                                  |  | $    | 78,334 |   |      | $ | 66,761 |      |  | $ | 57,920
|                                                                                                                                        |  |      |        |   |      |   |        |      |  |   |       
|Net earnings per share of common stock:                                                                                                 |  |      |        |   |      |   |        |      |  |   |       
|Basic earnings per share:                                                                                                               |  |      |        |   |      |   |        |      |  |   |       
|As reported                                                                                                                             |  | $    | 1.05   |   |      | $ | 0.84   |      |  | $ | 0.73  
|                                                                                                                                        |  |      |        |   |      |   |        |      |  |   |       
|Pro forma                                                                                                                               |  | $    | 1.05   |   |      | $ | 0.84   |      |  | $ | 0.73  
|                                                                                                                                        |  |      |        |   |      |   |        |      |  |   |       
|Diluted earnings per share:                                                                                                             |  |      |        |   |      |   |        |      |  |   |       
|As reported                                                                                                                             |  | $    | 1.01   |   |      | $ | 0.80   |      |  | $ | 0.73  
|                                                                                                                                        |  |      |        |   |      |   |        |      |  |   |       
|Pro forma                                                                                                                               |  | $    | 1.01   |   |      | $ | 0.80   |      |  | $ | 0.73  
|                                                                                                                                        |  |      |        |   |      |   |        |      |  |   |       



Fair value was
calculated using the Black-Scholes option pricing model, with the following weighted-average assumptions:



|                                               |  |       |   |  |       |   |  |     
|---------------------------------------------- |  | ----- | - |  | ----- | - |  | ----
|                                               |  | 2004  |   |  | 2003  |   |  | 2002
|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 26, 2004 and December 31, 2003.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 26, 2004 and December 31, 2003 was $7,308 and $6,836, respectively.



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



|                            |  |      |        |   |      |   |        |  
|--------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|December 26 and December 31 |  | 2004 |        |   | 2003 |  
|Paper and supplies          |  | $    | 8,892  |   |      | $ | 6,903  |  
|Work in process             |  |      | 3,046  |   |      |   | 2,328  |  
|Finished goods              |  |      | 5,678  |   |      |   | 6,816  |  
|Less obsolescence reserve   |  |      | (618   | ) |      |   | (831   | )
|                            |  |      |        |   |      |   |        |  
|Inventories, net            |  | $    | 16,998 |   |      | $ | 15,216 |  
|                            |  |      |        |   |      |   |        |  



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



|                                         |  |      
|---------------------------------------- |  | -----
|                                         |  | Years
|Land and building 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. In 2002, we recorded a $2,502 loss on impairment of certain equipment at our printing services segment and a $1,260 loss on impairment of a customer list at our direct marketing services business.
Fair value was determined by independent professional appraisers. These losses are recorded in total operating costs and expenses and selling and administrative expenses in the accompanying consolidated statements of earnings.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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.



ReclassificationsCertain prior year amounts have been
reclassified to conform to the 2004 presentation.



New
accounting standardsIn December 2004, the FASB issued Statement No. 123R, Share-Based Payment, which replaces 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. 123R 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. Statement No. 123R is effective as of the
beginning of the first interim or annual reporting period beginning after June 15, 2005. We will adopt Statement No. 123R in the third quarter of fiscal 2005.



Under Statement No. 123R, we must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for
compensation cost and the transition method to be used at the date of adoption. The transition methods include prospective and retroactive adoption options. Under the retroactive option, prior periods may be restated either as of the beginning of
the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of Statement 123R, while
the retroactive method would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. We are evaluating the requirements of Statement No. 123R and have not yet determined the method of
adoption or the effect of adopting Statement 123R, including whether the adoption will result in amounts that are similar to the current pro forma disclosures under Statement No. 123. We do not believe the effect of adopting Statement No. 123R will
have a material impact on our consolidated financial statements.



In December 2004, the FASB issued Statement No. 153, Exchanges of Nonmonetary AssetsAn Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions. Statement No. 153 eliminates the exception from fair value
measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary Transactions, and replaces it with an exception for exchanges that do not have commercial substance.
Statement No. 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Statement No. 153 is effective for fiscal years beginning after
June 15, 2005 and we are required to adopt Statement No. 153 in the first quarter of fiscal 2006. We do not believe the effect of adopting Statement No. 153 will have a material impact on our consolidated financial statements.



In November 2004, the FASB issued Statement No. 151, Inventory Costs,
an amendment of ARB No. 43, Chapter 4, which clarifies that certain types of inventory costs that should be expensed rather than capitalized.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Statement No. 151 also clarifies the circumstances under which fixed overhead costs associated with operating facilities involved in inventory processing
should be capitalized. The provisions of Statement No. 151 are effective for fiscal years beginning after June 15, 2005 and we are required to adopt Statement No. 151 in the first quarter of 2006. We do not believe the effect of adopting Statement
No. 151 will have a material impact on our consolidated financial statements.



2    NOTES PAYABLE TO BANKS



Effective September 29, 2003, we entered into a $350 million unsecured revolving credit facility expiring on September 4, 2008. The interest rate on borrowings are either LIBOR plus a margin that ranges from 87.5 basis points to 150 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 one percent per annum. As of December 26, 2004 and December 31, 2003, we had borrowings
of $70,310 and $84,000, respectively, under the facility at a weighted average rate of 3.29% and 2.06%, respectively. Fees in connection with the facility of $1,997 are being amortized over the term of the facility using the straight-line method
which approximates the effective-interest method. In addition, an annual fee of $60 is being amortized using the straight line method from October 2004 through September 2005.



3    EMPLOYEE BENEFIT PLANS



We have defined benefit pension plans 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. 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 Drug, Improvement and Modernization Act of 2003, was issued on May 19, 2004 and is effective as of the first interim or annual period beginning after June 15, 2004. Actuarially equivalent benefits to the Medicare Part D benefit
reduced our postretirement benefit obligation by approximately $5,100 and our net periodic postretirement benefit cost for 2004 by $639.



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.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|---------------------------------------------- |  | ---------------- | ------- | - | ----------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                               |  | Pension Benefits |         |   | Other Postretirement Benefits |  
|Years ended December 26 and December 31        |  | 2004             |         |   | 2003                          |   |         | 2004 |  |   | 2003    |  
|Change in benefit obligations                  |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Benefit obligation at beginning of year        |  | $                | 136,668 |   |                               | $ | 123,815 |      |  | $ | 34,245  |   |  | $ | 32,363  |  
|Service cost                                   |  |                  | 4,998   |   |                               |   | 4,248   |      |  |   | 371     |   |  |   | 372     |  
|Plan amendments                                |  |                  | (6,166  | ) |                               |   |        |      |  |   |        |   |  |   |        |  
|Interest cost                                  |  |                  | 8,347   |   |                               |   | 8,086   |      |  |   | 1,697   |   |  |   | 2,058   |  
|Actuarial loss                                 |  |                  | 13,406  |   |                               |   | 7,821   |      |  |   | 4,804   |   |  |   | 3,724   |  
|Medicare subsidy effect                        |  |                  |        |   |                               |   |        |      |  |   | (5,100  | ) |  |   |        |  
|Benefits paid                                  |  |                  | (7,454  | ) |                               |   | (7,302  | )    |  |   | (3,355  | ) |  |   | (4,272  | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Benefit obligation at end of year              |  | $                | 149,799 |   |                               | $ | 136,668 |      |  | $ | 32,662  |   |  | $ | 34,245  |  
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Change in plan assets                          |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Fair value of plan assets at beginning of year |  | $                | 119,584 |   |                               | $ | 102,169 |      |  | $ |        |   |  | $ |        |  
|Actual gain on plan assets                     |  |                  | 12,835  |   |                               |   | 24,431  |      |  |   |        |   |  |   |        |  
|Company contributions                          |  |                  | 303     |   |                               |   | 286     |      |  |   | 3,355   |   |  |   | 4,272   |  
|Benefits paid                                  |  |                  | (7,454  | ) |                               |   | (7,302  | )    |  |   | (3,355  | ) |  |   | (4,272  | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Fair value of plan assets at end of year       |  | $                | 125,268 |   |                               | $ | 119,584 |      |  | $ |        |   |  | $ |        |  
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Funded status of the plan                      |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Underfunded status of the plan                 |  | $                | (24,531 | ) |                               | $ | (17,084 | )    |  | $ | (32,662 | ) |  | $ | (34,245 | )
|Unrecognized net actuarial loss                |  |                  | 48,807  |   |                               |   | 39,513  |      |  |   | 13,571  |   |  |   | 14,293  |  
|Unrecognized prior service cost                |  |                  | (5,634  | ) |                               |   | 789     |      |  |   |        |   |  |   |        |  
|Unrecognized transition obligation             |  |                  | 54      |   |                               |   | 162     |      |  |   | 4,389   |   |  |   | 4,938   |  
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Prepaid (accrued) net benefit cost             |  | $                | 18,696  |   |                               | $ | 23,380  |      |  | $ | (14,702 | ) |  | $ | (15,014 | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Prepaid (accrued) net benefit cost             |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Prepaid benefit cost                           |  | $                | 24,156  |   |                               | $ | 28,418  |      |  | $ |        |   |  | $ |        |  
|Accrued benefit cost                           |  |                  | (5,460  | ) |                               |   | (5,038  | )    |  |   | (14,702 | ) |  |   | (15,014 | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  
|Prepaid (accrued) net benefit cost             |  | $                | 18,696  |   |                               | $ | 23,380  |      |  | $ | (14,702 | ) |  | $ | (15,014 | )
|                                               |  |                  |         |   |                               |   |         |      |  |   |         |   |  |   |         |  



The accumulated
benefit obligation for all defined benefit pension plans was $122,408 and $113,718 at December 26, 2004 and December 31, 2003, respectively.



|                                                                         |  |                  |         |   |      |   |         |      |  |   |        |  
|------------------------------------------------------------------------ |  | ---------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                         |  | Pension Benefits |        
|Years ended December 26, December 31 and December 31                     |  | 2004             |         |   | 2003 |   |         | 2002 | 
|Components of net periodic benefit cost                                  |  |                  |         |   |      |   |         |      |  |   |        |  
|Service cost                                                             |  | $                | 4,998   |   |      | $ | 4,248   |      |  | $ | 3,690  |  
|Interest cost                                                            |  |                  | 8,347   |   |      |   | 8,086   |      |  |   | 7,851  |  
|Expected return on plan assets                                           |  |                  | (10,409 | ) |      |   | (10,568 | )    |  |   | (8,212 | )
|Amortization of:                                                         |  |                  |         |   |      |   |         |      |  |   |        |  
|Unrecognized prior service cost                                          |  |                  | 258     |   |      |   | 257     |      |  |   | 257    |  
|Unrecognized net transition obligation                                   |  |                  | 108     |   |      |   | 108     |      |  |   | 108    |  
|Unrecognized net (gain) loss                                             |  |                  | 1,685   |   |      |   | 626     |      |  |   | (103   | )
|                                                                         |  |                  |         |   |      |   |         |      |  |   |        |  
|Net periodic benefit cost included in selling and administrative expense |  | $                | 4,987   |   |      | $ | 2,757   |      |  | $ | 3,591  |  
|                                                                         |  |                  |         |   |      |   |         |      |  |   |        |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                                         |  |                               |       |      |   |       |  |   |      
|------------------------------------------------------------------------ |  | ----------------------------- | ----- | ---- | - | ----- |  | - | -----
|                                                                         |  | Other Postretirement Benefits
|Years ended December 26, December 31 and December 31                     |  | 2004                          |       | 2003 |   | 2002 
|Components of net periodic benefit cost                                  |  |                               |       |      |   |       |  |   |      
|Service cost                                                             |  | $                             | 371   |      | $ | 372   |  | $ | 379  
|Interest cost                                                            |  |                               | 1,697 |      |   | 2,058 |  |   | 2,261
|Special termination benefits                                             |  |                               |      |      |   |      |  |   | 48   
|Amortization of:                                                         |  |                               |       |      |   |       |  |   |      
|Unrecognized net transition obligation                                   |  |                               | 549   |      |   | 549   |  |   | 642  
|Unrecognized net loss                                                    |  |                               | 393   |      |   | 449   |  |   | 429  
|                                                                         |  |                               |       |      |   |       |  |   |      
|Net periodic benefit cost included in selling and administrative expense |  | $                             | 3,010 |      | $ | 3,428 |  | $ | 3,759
|                                                                         |  |                               |       |      |   |       |  |   |      



The costs for our
pension benefits and other postretirement benefits are actuarially determined. Key assumptions utilized at the measurement dates of December 26, 2004 and December 31, 2003 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 |  
|                                                                         |  | 2004             |   |  | 2003                         |   |  | 2004 |   |  | 2003 |  
|Discount rate                                                            |  | 5.75             | % |  | 6.25                         | % |  | 6.00 | % |  | 6.25 | %
|Rate of compensation increases                                           |  | 4.50             |   |  | 4.50                         |   |  |     |   |  |     |  
|                                                                         |  |                 
|Weighted-average assumptions used to determine net periodic benefit cost |  |                  |   |  |                              |   | 
|Discount rate                                                            |  | 6.25             | % |  | 6.75                         | % |  | 6.25 | % |  | 6.75 | %
|Expected return on plan assets                                           |  | 8.50             |   |  | 8.50                         |   |  |     |   |  |     |  
|Rate of compensation increases                                           |  | 4.50             |   |  | 4.50                         |   |  |     |   |  |     |  



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 2005 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 2004     |  | $          | 73  |            | $ | (65  | )
|Effect on postretirement benefit obligation as of December 26, 2004 |  | $          | 382 |            | $ | (469 | )



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Plan Assets



Our pension plan weighted average asset allocations at December 26, 2004 and December 31, 2003, by asset category are as follows:



|                        |  |             |   |  |       |  
|----------------------- |  | ----------- | - |  | ----- | -
|                        |  | Plan Assets |  
|                        |  | 2004        |   |  | 2003  |  
|Equity securities       |  | 70.1        | % |  | 77.2  | %
|Fixed-income securities |  | 29.9        |   |  | 22.8  |  
|                        |  |             |   |  |       |  
|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     |  



Contributions



We do not expect to contribute to our defined benefit
pension plan in 2005. We expect to contribute $271 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:



|          |  |                 |        |                                |   |       
|--------- |  | --------------- | ------ | ------------------------------ | - | ------
|          |  | PensionBenefits |        | Other Post-Retirement Benefits
|2005      |  | $               | 7,403  |                                | $ | 3,291 
|2006      |  |                 | 7,462  |                                |   | 3,523 
|2007      |  |                 | 7,629  |                                |   | 3,521 
|2008      |  |                 | 7,633  |                                |   | 3,503 
|2009      |  |                 | 7,680  |                                |   | 3,436 
|20102014 |  |                 | 43,488 |                                |   | 15,921



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The effect the Medicare subsidy has on the other post-retirement benefit payment projections above is
as follows:



|          |  |   |      
|--------- |  | - | -----
|2005      |  | $ |     
|2006      |  |   | 294  
|2007      |  |   | 322  
|2008      |  |   | 351  
|2009      |  |   | 377  
|20102014 |  |   | 2,252



The Investment Savings
Plan is a defined contribution benefit plan covering substantially all employees. The plan allows employees to defer up to 50% of their eligible wages, up to the IRS limit, on a pre-tax basis. In addition, employees can contribute up to 50% of their
eligible wages after taxes. The maximum combined total contributed may not exceed 50%. Each employee who elects to participate is eligible to receive company matching contributions. We may contribute $0.50 for each dollar contributed by the
participant, up to 5% of eligible wages as defined by the plan. The matching contributions, recorded as an operating expense, were $2,603, $2,517 and $2,594 in 2004, 2003 and 2002, respectively. We made additional contributions into the Investment
Savings Plan on behalf of certain employees not covered by the defined benefit pension plan of $927, $930 and $875 in 2004, 2003 and 2002, respectively. We expect to contribute $940 on behalf of these employees in 2005.



4    INCOME TAXES



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



|                                                     |  |      |        |      |   |        |  |   |       
|---------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|Years ended December 26, December 31 and December 31 |  | 2004 |        | 2003 |   | 2002  
|Current:                                             |  |      |        |      |   |        |  |   |       
|Federal                                              |  | $    | 34,954 |      | $ | 25,793 |  | $ | 31,440
|State                                                |  |      | 8,213  |      |   | 5,957  |  |   | 5,565 
|                                                     |  |      |        |      |   |        |  |   |       
|                                                     |  |      | 43,167 |      |   | 31,750 |  |   | 37,005
|Deferred                                             |  |      | 9,168  |      |   | 13,399 |  |   | 12,413
|                                                     |  |      |        |      |   |        |  |   |       
|Total                                                |  | $    | 52,335 |      | $ | 45,149 |  | $ | 49,418
|                                                     |  |      |        |      |   |        |  |   |       



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



|                                                     |  |      |   |  |      |   |  |      |  
|---------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|Years ended December 26, December 31 and December 31 |  | 2004 |   |  | 2003 |   |  | 2002 |  
|Statutory federal income tax rate                    |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
|State income taxes, net of federal tax benefit       |  | 4.5  |   |  | 4.9  |   |  | 4.6  |  
|Non-deductible litigation expenses                   |  |     |   |  |     |   |  | 1.8  |  
|Other                                                |  | 0.5  |   |  | 0.4  |   |  | 1.8  |  
|                                                     |  |      |   |  |      |   |  |      |  
|Effective income tax rate                            |  | 40.0 | % |  | 40.3 | % |  | 43.2 | %
|                                                     |  |      |   |  |      |   |  |      |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Temporary differences that give rise to the deferred tax assets and liabilities at December 26, 2004
and December 31, 2003 are as follows:



|                                                                              |  |      |         |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|Current assets                                                                |  | 2004 |         |   | 2003 |  
|Receivables                                                                   |  | $    | 2,528   |   |      | $ | 2,437   |  
|Inventories                                                                   |  |      | 260     |   |      |   | 336     |  
|Other assets                                                                  |  |      | 2,443   |   |      |   | 2,176   |  
|Accrued compensation                                                          |  |      | 2,951   |   |      |   | 2,887   |  
|Accrued employee benefits                                                     |  |      | 1,264   |   |      |   | 1,112   |  
|                                                                              |  |      |         |   |      |   |         |  
|Total current deferred tax assets                                             |  | $    | 9,446   |   |      | $ | 8,948   |  
|                                                                              |  |      |         |   |      |   |         |  
|Non-current assets                                                            |  |      |         |   |      |   |         |  
|Accrued employee benefits                                                     |  | $    | 5,650   |   |      | $ | 6,392   |  
|State net operating loss and tax credit carryforwards                         |  |      | 3,340   |   |      |   | 4,355   |  
|Other assets                                                                  |  |      | 861     |   |      |   | 1,067   |  
|Valuation allowances on state net operating loss and tax credit carryforwards |  |      | (2,541  | ) |      |   | (3,555  | )
|                                                                              |  |      |         |   |      |   |         |  
|Total non-current deferred tax assets                                         |  |      | 7,310   |   |      |   | 8,259   |  
|                                                                              |  |      |         |   |      |   |         |  
|Non-current liabilities                                                       |  |      |         |   |      |   |         |  
|Property and equipment                                                        |  | $    | (26,436 | ) |      | $ | (21,166 | )
|Intangible assets                                                             |  |      | (34,962 | ) |      |   | (30,939 | )
|Accrued employee benefits                                                     |  |      | (6,584  | ) |      |   | (8,085  | )
|Other liabilities                                                             |  |      | (5,471  | ) |      |   | (4,546  | )
|                                                                              |  |      |         |   |      |   |         |  
|Total non-current deferred tax liabilities                                    |  |      | (73,453 | ) |      |   | (64,736 | )
|                                                                              |  |      |         |   |      |   |         |  
|Total net non-current deferred tax liabilities                                |  | $    | (66,143 | ) |      | $ | (56,477 | )
|                                                                              |  |      |         |   |      |   |         |  



At December 26, 2004,
we have $39,754 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 2005. 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 26, 2004, we have $609 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 2005. 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.



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 26, 2004, our future minimum rental payments due under noncancellable operating lease agreements consist of the following:



|           |  |   |        
|---------- |  | - | -------
|2005       |  | $ | 13,699 
|2006       |  |   | 8,356  
|2007       |  |   | 6,921  
|2008       |  |   | 5,454  
|2009       |  |   | 4,668  
|Thereafter |  |   | 12,584 
|           |  |   |        
|           |  |   | $51,682
|           |  |   |        



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Rent expense charged to operations for 2004, 2003 and 2002 was $24,567, $26,985 and $27,734,
respectively. Rental income from subleases included in operations for 2004, 2003 and 2002 was $3,796, $5,419 and $4,565, respectively. Aggregate future minimum rentals to be received under noncancellable subleases totaled $3,930 as of December 26,
2004.



Purchase commitments from two suppliers for newsprint
for our publishing businesses run through 2006 and 2008 and total $137,520 as of December 26, 2004. 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 commitment would expire without obligation. Purchase commitments related to printing equipment and broadcasting equipment and systems were approximately $1,777 and $1,332 as of
December 26, 2004, respectively. In addition, we have the right to broadcast certain television programs during the years 2005-2010 under contracts aggregating $4,326. We have $1,702 of standby letters of credit for business insurance purposes.



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. Class B-2 shares are not convertible to class A shares until after the public sale restriction period ends on March 16, 2005. Class B-1 shares 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 are equal to those declared on the class A
shares. As of December 26, 2004, there are 4,338,353 class B-2 shares and 4,338,352 class B-1 shares included in treasury stock. Class A shares are publicly traded on the New York Stock Exchange under the symbol JRN.



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



|                                                                       |  |              |  |                |   |  |           |   |  |         |  |      
|---------------------------------------------------------------------- |  | ------------ |  | -------------- | - |  | --------- | - |  | ------- |  | -----
|                                                                       |  | Common Stock |  | Treasury stock
|                                                                       |  | Class C      |  | Class B-2      |   |  | Class B-1 |   |  | Class A | 
|Balance as December 31, 2003                                           |  | 3,264        |  | 38,301         |   |  | 14,972    |   |  | 20,192  |  | 8,677
|Shares issued in follow-on equity offering                             |  |             |  |                |   |  |          |   |  | 6,725   |  |      
|Conversion of class B shares to class A shares                         |  |             |  | (25            | ) |  | (475      | ) |  | 500     |  |     
|Shares purchased and retired in tender offer                           |  |             |  | (2,779         | ) |  | (5,226    | ) |  |        |  |     
|Shares issued under equity incentive and employee stock purchase plans |  |             |  | 43             |   |  |          |   |  |        |  |     
|                                                                       |  |              |  |                |   |  |           |   |  |         |  |      
|Balance at December 26, 2004                                           |  | 3,264        |  | 35,540         |   |  | 9,271     |   |  | 27,417  |  | 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,



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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-2 common stock are authorized to be issued under the plan. Not more than 3,000,000 shares of our class B-2 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 26, 2004, 2,980,076 shares are available for grant.



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:



|                                 |  |               |  |                           |       |               |   |                           |   |      
|-------------------------------- |  | ------------- |  | ------------------------- | ----- | ------------- | - | ------------------------- | - | -----
|                                 |  | 2004          |  | 2003                     
|                                 |  | Shares(000s) |  | WeightedAverageFair Value |       | Shares(000s) |   | WeightedAverageFair Value
|Outstanding at beginning of year |  | 8             |  | $                         | 18.20 |               |  |                           | $ |     
|Granted                          |  | 12            |  |                           | 17.31 |               | 8 |                           |   | 18.20
|                                 |  |               |  |                           |       |               |   |                           |   |      
|Outstanding at end of year       |  | 20            |  |                           | 17.64 |               | 8 |                           |   | 18.20
|                                 |  |               |  |                           |       |               |   |                           |   |      
|Fully vested at end of year      |  | 11            |  |                           | 17.29 |               |  |                           |   |     



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-2 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 26, 2004, 5,911,826 shares are available for grant.



|                                 |  |               |   |      |                               |       |               |    |                               |   |      
|-------------------------------- |  | ------------- | - | ---- | ----------------------------- | ----- | ------------- | -- | ----------------------------- | - | -----
|                                 |  | 2004          |   | 2003
|                                 |  | Shares(000s) |   |      | WeightedAverageExercise Price |       | Shares(000s) |    | WeightedAverageExercise Price
|Outstanding at beginning of year |  | 20            |   |      | $                             | 18.40 |               |   |                               | $ |     
|Granted                          |  | 49            |   |      |                               | 18.21 |               | 20 |                               |   | 18.40
|Exercised                        |  |              |   |      |                               |      |               |   |                               |   |     
|Forfeited                        |  | (1            | ) |      |                               | 19.95 |               |   |                               |   |     
|Expired                          |  |              |   |      |                               |      |               |   |                               |   |     
|                                 |  |               |   |      |                               |       |               |    |                               |   |      
|Outstanding at end of year       |  | 68            |   |      |                               | 18.26 |               | 20 |                               |   | 18.40
|                                 |  |               |   |      |                               |       |               |    |                               |   |      
|Exercisable at end of year       |  | 20            |   |      |                               | 18.40 |               |   |                               |   | 18.40



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-2 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 were no incentive stock options granted during 2004 or 2003.



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-2 common stock, and will have a value established by



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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
no performance units or stock units granted during 2004 or 2003.



The 2003 Employee Stock Purchase Plan permits eligible employees to purchase our class B-2 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-2 common stock are authorized for sale under this plan. During fiscal 2004, 30,934 class B-2 common shares were sold to employees under this plan at a price of $16.95. As of December
26, 2004, 2,954,023 shares were available for sale.



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 $1,396 for the year ended December 26, 2004. Estimated amortization expense is $1,306 for 2005, $1,291 for 2006, $1,253 for 2007, $1,198 for 2008 and $912 for 2009.



The gross carrying amount, accumulated amortization and net carrying amount
of the major classes of definite-lived intangible assets as of December 26, 2004 and December 31, 2003 is as follows:



|                                  |  |                     |        |                         |   |         |                   |  |   |       
|--------------------------------- |  | ------------------- | ------ | ----------------------- | - | ------- | ----------------- |  | - | ------
|December 26, 2004                 |  | GrossCarryingAmount |        | AccumulatedAmortization |   |         | NetCarryingAmount
|Definite-lived intangible assets: |  |                     |        |                         |   |         |                   |  |   |       
|Network affiliation agreements    |  | $                   | 12,142 |                         | $ | (1,198  | )                 |  | $ | 10,944
|Customer lists                    |  |                     | 19,849 |                         |   | (16,105 | )                 |  |   | 3,744 
|Non-compete agreements            |  |                     | 24,838 |                         |   | (24,776 | )                 |  |   | 62    
|Other                             |  |                     | 2,868  |                         |   | (2,865  | )                 |  |   | 3     
|                                  |  |                     |        |                         |   |         |                   |  |   |       
|Total                             |  | $                   | 59,697 |                         | $ | (44,944 | )                 |  | $ | 14,753
|                                  |  |                     |        |                         |   |         |                   |  |   |       
|December 31, 2003                 |  |                     |        |                         |   |         |                   |  |   |       
|Definite-lived intangible assets: |  |                     |        |                         |   |         |                   |  |   |       
|Network affiliation agreements    |  | $                   | 7,759  |                         | $ | (863    | )                 |  | $ | 6,896 
|Customer lists                    |  |                     | 18,011 |                         |   | (15,581 | )                 |  |   | 2,430 
|Non-compete agreements            |  |                     | 24,811 |                         |   | (24,256 | )                 |  |   | 555   
|Other                             |  |                     | 2,867  |                         |   | (2,848  | )                 |  |   | 19    
|                                  |  |                     |        |                         |   |         |                   |  |   |       
|Total                             |  | $                   | 53,448 |                         | $ | (43,548 | )                 |  | $ | 9,900 
|                                  |  |                     |        |                         |   |         |                   |  |   |       



Indefinite-lived Intangibles



Broadcast licenses are deemed to have indefinite useful
lives because we have renewed these agreements without issue in the past and we intend to renew them indefinitely in the future. Accordingly, we expect the cash flows from our broadcast licenses to continue indefinitely. We performed transitional
impairment tests on our



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broadcast licenses and recorded a transitional broadcast license impairment charge of $722 ($458 after tax) at our broadcasting business, which is reported
as a component of the cumulative effect of accounting change in the consolidated statement of earnings for 2002. No impairment resulted from our annual impairment tests in 2004 or 2003.



Goodwill



In 2002, we performed transitional impairment tests on the goodwill of our reporting units with goodwill. As a result, we recorded a transitional goodwill
impairment charge of $6,948 ($6,051 after tax) at our direct marketing services business, which is reported as a component of the cumulative effect of accounting change in the consolidated statement of earnings for 2002. No impairment resulted from
our annual impairment tests in 2004 or 2003.



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    
|Label printing                    |  |                           | 2,362   |                                |   |                            |  |   | 2,362  
|Direct marketing services         |  |                           | 410     |                                |   |                            |  |   | 410    
|                                  |  |                           |         |                                |   |                             |  |   |        
|Total                             |  | $                         | 114,283 |                                | $ | 24,365                      |  | $ | 138,648
|                                  |  |                           |         |                                |   |                             |  |   |        



The changes in the
carrying amount of goodwill for the year ended December 31, 2003 are as follows:



|                                  |  |                           |         |                                |   |                             |  |   |        
|--------------------------------- |  | ------------------------- | ------- | ------------------------------ | - | --------------------------- |  | - | -------
|Reporting Unit                    |  | Goodwill atJanuary 1,2003 |         | Goodwillrelated toacquisitions |   | Goodwill atDecember 31,2003
|Daily newspaper                   |  | $                         | 2,084   |                                | $ |                            |  | $ | 2,084  
|Community newspapers and shoppers |  |                           | 24,835  |                                |   | 1,375                       |  |   | 26,210 
|Broadcasting                      |  |                           | 82,119  |                                |   | 910                         |  |   | 83,029 
|Telecommunications                |  |                           | 188     |                                |   |                            |  |   | 188    
|Label printing                    |  |                           | 2,362   |                                |   |                            |  |   | 2,362  
|Direct marketing services         |  |                           | 410     |                                |   |                            |  |   | 410    
|                                  |  |                           |         |                                |   |                             |  |   |        
|Total                             |  | $                         | 111,998 |                                | $ | 2,285                       |  | $ | 114,283
|                                  |  |                           |         |                                |   |                             |  |   |        



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 2004 and 2003 annual impairment tests as of the beginning of the fourth quarter and, as noted above, there was no resulting impairment.



Statement No. 142 does not change the requirements for recognition of
deferred taxes related to differences in the financial reporting and tax basis of broadcast licenses and tax-deductible goodwill. We recognize a



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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 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.



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 $7.0 million at December 26, 2004 is payable to the
prior representative over a period of time. A receivable of $7.0 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, net of applicable reserves.



Newspaper Merger Class Action Suit.    On May 4, 1999, five former employees filed a lawsuit in connection with the 1995 merger of the Milwaukee Journal and Milwaukee Sentinel. This lawsuit was
granted class action status to include other unitholders who separated from us as part of the merger. The plaintiffs alleged that an internal memorandum created a contract permitting members of the plaintiff class to offer to sell units at any time
over a period of up to 10 years, depending on their retirement status or years of unit ownership. On May 7, 2002, the parties reached an out-of-court settlement. On July 1, 2002, the judge approved the settlement. We agreed to pay the plaintiffs
$8.9 million in cash in settlement of all claims. We also agreed to allow certain members of the plaintiff class to retain certain rights, for a period of time, as to units of beneficial interest in JESTA. Plaintiffs and their counsel valued these
rights at approximately $0.6 million. We reduced our litigation reserve by $4.1 million and reduced selling and administrative expenses in 2002 to reflect the settlement amount, net of insurance proceeds.



10    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. 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 which results in recognizing goodwill.



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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 $5,344.



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 $1,450.



The purchase price allocations for these acquisitions are as follows:



|                               |  |             |        |   |                            |   |        |                          |  |   |                           |   |  |   |      
|------------------------------ |  | ----------- | ------ | - | -------------------------- | - | ------ | ------------------------ |  | - | ------------------------- | - |  | - | -----
|                               |  | 2004        |        |   | 2003                      
|                               |  | NetcomGroup |        |   | Green BayTelevisionStation |   |        | SpringfieldRadioStations |  |   | Antigo AreaShoppersGuide
|Accounts receivable            |  | $           | 475    |   |                            | $ |       |                          |  | $ |                          |   |  | $ |     
|Inventories                    |  |             | 522    |   |                            |   |       |                          |  |   |                          |   |  |   |     
|Property and equipment         |  |             | 112    |   |                            |   | 7,077  |                          |  |   | 380                       |   |  |   | 50   
|Non-compete agreements         |  |             |       |   |                            |   |       |                          |  |   |                          |   |  |   | 25   
|Other assets                   |  |             | 80     |   |                            |   | 1,623  |                          |  |   |                          |   |  |   |     
|Customer list                  |  |             | 1,838  |   |                            |   |       |                          |  |   |                          |   |  |   |     
|Goodwill                       |  |             |       |   |                            |   | 24,040 |                          |  |   | 910                       |   |  |   | 1,375
|Broadcast licenses             |  |             |       |   |                            |   | 10,498 |                          |  |   | 4,057                     |   |  |   |     
|Network affiliation agreements |  |             |       |   |                            |   | 4,383  |                          |  |   |                          |   |  |   |     
|Other liabilities              |  |             | (1,895 | ) |                            |   | (4,387 | )                        |  |   | (3                        | ) |  |   |     
|                               |  |             |        |   |                            |   |        |                          |  |   |                           |   |  |   |      
|Total purchase price           |  | $           | 1,132  |   |                            | $ | 43,234 |                          |  | $ | 5,344                     |   |  | $ | 1,450
|                               |  |             |        |   |                            |   |        |                          |  |   |                           |   |  |   |      



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



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.



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



11    DISCONTINUED OPERATIONS



In January 2002, we announced the closure of Fox Cities Newspapers, consisting of six weekly newspapers in our publishing segment located in Appleton,
Wisconsin. On April 29, 2002, we decided to liquidate IPC Communications Services, S.A., a business in our printing services segment located in Roncq, France.



The following table summarizes the results of operations of Fox Cities Newspapers and IPC Communication Services, S.A., which are included in the loss
from discontinued operations in the consolidated statement of earnings for 2002:



|                               |  |   |        |  
|------------------------------ |  | - | ------ | -
|Revenue                        |  | $ | 3,253  |  
|Loss before income tax benefit |  |   | (7,189 | )



There were no assets
or liabilities of Fox Cities Newspapers or IPC Communication Services, S.A. included in the consolidated balance sheets at December 26, 2004 and December 31, 2003.



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12    WORKFORCE REDUCTION AND BUSINESS IMPROVEMENT INITIATIVES



During 2004, we recorded a pretax 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 pretax 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.



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



Activity associated with the workforce reduction and business improvement initiatives during the years ended December 26, 2004, December 31, 2003 and December 31, 2002 was as follows:



|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |      
|------------------------------- |  | -------------------------- | ----- | --------- | - | ------------------- |  | - | -------------------------- | - |  | - | -----
|                                |  | 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  
|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |      
|                                |  |                            |       |          
|                                |  | Balance atDecember 31,2001 |       | Additions |   | Payments/Reductions |  |   | Balance atDecember 31,2002
|Employee severance and benefits |  | $                          | 2,531 |           | $ | 1,905               |  | $ | (2,059                     | ) |  | $ | 2,377
|Facility costs                  |  |                            | 1,022 |           |   |                    |  |   | (1,022                     | ) |  |   |     
|Other                           |  |                            | 126   |           |   | 61                  |  |   | (187                       | ) |  |   |     
|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |      
|                                |  | $                          | 3,679 |           | $ | 1,966               |  | $ | (3,268                     | ) |  | $ | 2,377
|                                |  |                            |       |           |   |                     |  |   |                            |   |  |   |      



Related expenses and
obligations were recorded in selling and administrative expenses and other current liabilities in the consolidated statements of earnings and consolidated balance sheets, respectively. The remaining costs associated with these actions are expected
to be paid in 2005.



13    SEGMENT ANALYSIS



We conduct our operations through four reportable
segments: publishing, broadcasting, telecommunications and printing services. In addition, our label printing business, our direct marketing services business and certain



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administrative activities are aggregated and reported as other. All operations conduct their business in the United States. We publish the
Milwaukee Journal Sentinel and more than 90 weekly shopper and community newspapers in eight states. Our broadcasting segment consists of 38 radio stations and seven television stations in 11 states, as well as the operation of one additional
television station under a local marketing agreement. 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 3,800 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 26, 2004, December 31, 2003 and
December 31, 2002 and identifiable total assets of continuing operations at December 26, 2004 and December 31, 2003:



|                              |  |      |         |   |      |   |         |  |   |        
|----------------------------- |  | ---- | ------- | - | ---- | - | ------- |  | - | -------
|                              |  | 2004 |         |   | 2003 |   | 2002   
|Revenue                       |  |      |         |   |      |   |         |  |   |        
|Publishing                    |  | $    | 327,687 |   |      | $ | 316,976 |  | $ | 311,138
|Broadcasting                  |  |      | 172,073 |   |      |   | 150,744 |  |   | 152,749
|Telecommunications            |  |      | 144,020 |   |      |   | 149,538 |  |   | 148,674
|Printing services             |  |      | 76,308  |   |      |   | 85,958  |  |   | 97,841 
|Other                         |  |      | 100,673 |   |      |   | 95,073  |  |   | 90,974 
|                              |  |      |         |   |      |   |         |  |   |        
|                              |  | $    | 820,761 |   |      | $ | 798,289 |  | $ | 801,376
|                              |  |      |         |   |      |   |         |  |   |        
|Operating earnings (loss)     |  |      |         |   |      |   |         |  |   |        
|Publishing                    |  | $    | 43,708  |   |      | $ | 33,199  |  | $ | 30,315 
|Broadcasting                  |  |      | 44,404  |   |      |   | 29,879  |  |   | 33,384 
|Telecommunications            |  |      | 34,691  |   |      |   | 38,858  |  |   | 40,956 
|Printing services             |  |      | (367    | ) |      |   | 3,760   |  |   | 2,131  
|Other                         |  |      | 10,324  |   |      |   | 7,713   |  |   | 7,287  
|                              |  |      |         |   |      |   |         |  |   |        
|                              |  | $    | 132,760 |   |      | $ | 113,409 |  | $ | 114,073
|                              |  |      |         |   |      |   |         |  |   |        
|Depreciation and amortization |  |      |         |   |      |   |         |  |   |        
|Publishing                    |  | $    | 15,855  |   |      | $ | 16,513  |  | $ | 14,157 
|Broadcasting                  |  |      | 8,516   |   |      |   | 8,658   |  |   | 7,310  
|Telecommunications            |  |      | 17,465  |   |      |   | 17,676  |  |   | 17,192 
|Printing services             |  |      | 2,381   |   |      |   | 3,162   |  |   | 5,218  
|Other                         |  |      | 2,410   |   |      |   | 2,613   |  |   | 2,758  
|                              |  |      |         |   |      |   |         |  |   |        
|                              |  | $    | 46,627  |   |      | $ | 48,622  |  | $ | 46,635 
|                              |  |      |         |   |      |   |         |  |   |        
|Capital expenditures          |  |      |         |   |      |   |         |  |   |        
|Publishing                    |  | $    | 9,221   |   |      | $ | 16,024  |  | $ | 30,291 
|Broadcasting                  |  |      | 7,711   |   |      |   | 10,369  |  |   | 8,788  
|Telecommunications            |  |      | 6,672   |   |      |   | 9,738   |  |   | 10,132 
|Printing services             |  |      | 3,807   |   |      |   | 1,998   |  |   | 2,555  
|Other                         |  |      | 1,864   |   |      |   | 1,556   |  |   | 1,403  
|                              |  |      |         |   |      |   |         |  |   |        
|                              |  | $    | 29,275  |   |      | $ | 39,685  |  | $ | 53,169 
|                              |  |      |         |   |      |   |         |  |   |        



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|                          |  |      |         |      |   |        
|------------------------- |  | ---- | ------- | ---- | - | -------
|                          |  | 2004 |         | 2003
|Identifiable total assets |  |      |         |      |   |        
|Publishing                |  | $    | 218,806 |      | $ | 222,582
|Broadcasting              |  |      | 361,872 |      |   | 315,748
|Telecommunications        |  |      | 96,290  |      |   | 104,161
|Printing services         |  |      | 27,011  |      |   | 26,623 
|Other                     |  |      | 71,083  |      |   | 78,061 
|                          |  |      |         |      |   |        
|                          |  | $    | 775,062 |      | $ | 747,175
|                          |  |      |         |      |   |        



14    QUARTERLY
FINANCIAL INFORMATION (UNAUDITED)



|                    |  |               |         |        |   |         |  |        |         |       |   |         |  |   |        
|------------------- |  | ------------- | ------- | ------ | - | ------- |  | ------ | ------- | ----- | - | ------- |  | - | -------
|                    |  | 2004 Quarters
|                    |  | First         |         | Second |   | Third   |  | Fourth |         | Total
|Revenue             |  | $             | 192,670 |        | $ | 208,022 |  | $      | 204,424 |       | $ | 215,645 |  | $ | 820,761
|Gross profit        |  |               | 80,317  |        |   | 92,081  |  |        | 88,334  |       |   | 96,376  |  |   | 357,108
|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   
|                    | 
|                    |  | 2003 Quarters
|                    |  | First         |         | Second |   | Third   |  | Fourth |         | Total
|Revenue             |  | $             | 189,870 |        | $ | 199,391 |  | $      | 199,098 |       | $ | 209,930 |  | $ | 798,289
|Gross profit        |  |               | 77,034  |        |   | 85,604  |  |        | 83,626  |       |   | 92,963  |  |   | 339,227
|Net earnings        |  |               | 12,458  |        |   | 15,231  |  |        | 18,591  |       |   | 20,513  |  |   | 66,793 
|Earnings per share: |  |               |         |        |   |         |  |        |         |       |   |         |  |   |        
|Basic               |  |               | 0.16    |        |   | 0.20    |  |        | 0.24    |       |   | 0.25    |  |   | 0.84   
|Diluted             |  |               | 0.16    |        |   | 0.20    |  |        | 0.24    |       |   | 0.24    |  |   | 0.80   



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.



In the third quarter of 2003, class C shares were issued. The results for the third quarter of 2003 include a $3,179 pre-tax gain on the sale of
property. The results for the second quarter of 2003 include a $2,425 pre-tax charge for employment taxes. This charge was reduced by $700 in the fourth quarter of 2003.



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 2004 contained 88 days, while the first quarter of 2003
contained 89 days. The second and third quarters of 2004 and 2003 each contained 91 days, and the fourth quarter of 2004 contained 91 days, while the fourth quarter of 2003 contained 94 days.



15    SUBSEQUENT EVENT



On January 25, 2005, we entered into a definitive asset purchase agreement
with Multi-Color Corporation pursuant to which Multi-Color Corporation acquired substantially all of the assets and certain liabilities of



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NorthStar Print Group, Inc., our label printing business. The preliminary purchase price, excluding certain real estate holdings, was $27,031 in cash. In
2004, NorthStar Print Group, Inc. contributed approximately $56,800 in revenues and approximately $6,900 in operating earnings, including a $3,138 gain on the sale of property. NorthStar Print Group, Inc. will be accounted for as a discontinued
operation beginning with the first quarter ending March 27, 2005.



77



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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 26, 2004 and December 31, 2003, and the
related consolidated statements of earnings, shareholders equity, and cash flows for each of the three years in the period ended December 26, 2004. 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 26, 2004 and December 31, 2003, and
the consolidated results of its operations and its cash flows for each of the three years in the period ended December 26, 2004, 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 26, 2004, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated January 28, 2005, expressed an unqualified opinion thereon.



/S/    ERNST & YOUNG
LLPErnst & Young LLP




Milwaukee, Wisconsin

January 28, 2005



78



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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 26, 2004, 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 26, 2004, 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 26, 2004, 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 26, 2004 and December 31, 2003, and the related consolidated statements of earnings, shareholders equity, and cash flows for each of the three years in the period ended
December 26, 2004 and our report dated January 28, 2005 expressed an unqualified opinion thereon.



/S/    ERNST & YOUNG
LLPErnst & Young LLP




Milwaukee, Wisconsin

January 28, 2005



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##### Table of Contents

JOURNAL COMMUNICATIONS, INC.



Presented below is our unaudited consolidated statement of earnings covering the five quarters ended December 26, 2004,
which covers the period September 29, 2003 to December 26, 2004.



UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

(in thousands, except per-share amounts)



|                                                                           |  |                                      |           |  
|-------------------------------------------------------------------------- |  | ------------------------------------ | --------- | -
|                                                                           |  | Five Quarters EndedDecember 26, 2004 |          
|Revenue:                                                                   |  |                                      |           |  
|Publishing                                                                 |  | $                                    | 412,048   |  
|Broadcasting                                                               |  |                                      | 214,426   |  
|Telecommunications                                                         |  |                                      | 182,463   |  
|Printing services                                                          |  |                                      | 98,129    |  
|Other                                                                      |  |                                      | 123,625   |  
|                                                                           |  |                                      |           |  
|Total revenue                                                              |  |                                      | 1,030,691 |  
|Operating costs and expenses:                                              |  |                                      |           |  
|Publishing                                                                 |  |                                      | 200,530   |  
|Broadcasting                                                               |  |                                      | 85,412    |  
|Telecommunications                                                         |  |                                      | 105,495   |  
|Printing services                                                          |  |                                      | 84,543    |  
|Other                                                                      |  |                                      | 101,880   |  
|                                                                           |  |                                      |           |  
|Total operating costs and expenses                                         |  |                                      | 577,860   |  
|Selling and administrative expenses                                        |  |                                      | 285,879   |  
|                                                                           |  |                                      |           |  
|Total operating costs and expenses and selling and administrative expenses |  |                                      | 863,739   |  
|                                                                           |  |                                      |           |  
|Operating earnings                                                         |  |                                      | 166,952   |  
|Other income and expense:                                                  |  |                                      |           |  
|Interest income and dividends                                              |  |                                      | 558       |  
|Interest expense, net                                                      |  |                                      | (2,378    | )
|                                                                           |  |                                      |           |  
|Total other income and expense                                             |  |                                      | (1,820    | )
|                                                                           |  |                                      |           |  
|Earnings before income taxes                                               |  |                                      | 165,132   |  
|Provision for income taxes                                                 |  |                                      | 66,139    |  
|                                                                           |  |                                      |           |  
|Net earnings                                                               |  | $                                    | 98,993    |  
|                                                                           |  |                                      |           |  



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|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 26, 2004.



Our assessment of the effectiveness of our internal control over financial reporting as of December 26, 2004 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.



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PART III



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



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.



|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 28, 2005 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 28, 2005 Annual Meeting of Shareholders is incorporated by reference herein.



Equity Compensation Plan Information



Securities available under our equity compensation plans as of December 26, 2004 are as follows:



|                                                           |  |                                                                         |     |  |                                                          |       |                                                                                                                                           |           |    
|---------------------------------------------------------- |  | ----------------------------------------------------------------------- | --- |  | -------------------------------------------------------- | ----- | ----------------------------------------------------------------------------------------------------------------------------------------- | --------- | ---
|                                                           |  | Number of securitiesto be issued
uponexercise of outstandingoptions (a) |     |  | Weighted-averageexercise price ofoutstanding options (b) |       | Number of securitiesremaining available forfuture issuance underequity
compensationplans (excludingsecurities reflected incolumn (a)) (c) |          
|Equity compensation plans approved by security holders     |  | 68,750                                                                  | (1) |  | $                                                        | 18.26 |                                                                                                                                           | 8,865,349 | (2)
|Equity compensation plans not approved by security holders |  |                                                                        |     |  |                                                          |      |                                                                                                                                           |          |    
|                                                           |  |                                                                         |     |  |                                                          |       |                                                                                                                                           |           |    
|Total                                                      |  | 68,750                                                                  |     |  | $                                                        | 18.26 |                                                                                                                                           | 8,865,349 |    
|                                                           |  |                                                                         |     |  |                                                          |       |                                                                                                                                           |           |    

---

|(1) | Represents options to purchase shares of class B-2 common stock under our 2003 Equity Incentive Plan.
|--- | -----------------------------------------------------------------------------------------------------

|(2) | All of the available shares under the 2003 Equity Incentive Plan (2,931,250) may be issued upon the exercise of stock options or granted as restricted stock, performance shares,
performance units or restricted stock units. Also includes 2,954,023 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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|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 28, 2005 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 28, 2005 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-K Page(s)
|(1) Financial Statements                                                                                          |  |                  
|Consolidated Balance Sheets at December 26, 2004 and December 31, 2003                                            |  | 52               
|                                                                                                                  | 
|Consolidated Statements of Earnings for each of the three years in the period ended December 26, 2004             |  | 53               
|                                                                                                                  | 
|Consolidated Statements of Shareholders Equity for each of the three years in the period ended December 26, 2004 |  | 54               
|                                                                                                                  | 
|Consolidated Statements of Cash Flows for each of the three years in the period ended December 26, 2004           |  | 56               
|                                                                                                                  | 
|Notes to Consolidated Financial Statements                                                                        |  | 57               
|                                                                                                                  | 
|Reports of Independent Registered Public Accounting Firm                                                          |  | 78 and 79        
|                                                                                                                  | 
|(2) Financial Statement Schedule for the years ended December 26, 2004, December 31, 2003 and December 31, 2002   |  |                  
|                                                                                                                  | 
|II Consolidated Valuation and Qualifying Accounts                                                                |  | 85               



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 87 and 88) are filed, or incorporated by reference, as part of this Annual Report on Form 10-K.



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JOURNAL COMMUNICATIONS, INC.



SCHEDULE IICONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

Years ended December 26, 2004, December 31, 2003 and December 31, 2002

(dollars in thousands)



|                                                                               |  |                           |        |                            |   |        |                |  |            |       |                      |   |       |  |   |      
|------------------------------------------------------------------------------ |  | ------------------------- | ------ | -------------------------- | - | ------ | -------------- |  | ---------- | ----- | -------------------- | - | ----- |  | - | -----
|Description                                                                    |  | BalanceatBeginningof Year |        | AdditionsChargedtoEarnings |   |        | OtherAdditions |  | Deductions |       | Balanceat Endof Year
|Receivables, net                                                               |  |                           |        |                            |   |        |                |  |            |       |                      |   |       |  |   |      
|Allowance for doubtful accounts:                                               |  |                           |        |                            |   |        |                |  |            |       |                      |   |       |  |   |      
|2004(1)(2)(3)                                                                  |  | $                         | 6,836  |                            | $ | 3,838  |                |  | $          | 1,717 |                      | $ | 4,083 |  | $ | 8,308
|2003(2)                                                                        |  | $                         | 6,453  |                            | $ | 2,711  |                |  | $          |      |                      | $ | 2,328 |  | $ | 6,836
|2002(2)                                                                        |  | $                         | 5,477  |                            | $ | 3,944  |                |  | $          |      |                      | $ | 2,968 |  | $ | 6,453
|Reserve for litigation:                                                        |  |                           |        |                            |   |        |                |  |            |       |                      |   |       |  |   |      
|2004(3)                                                                        |  | $                         | 1,487  |                            | $ |       |                |  | $          |      |                      | $ | 1,487 |  | $ |     
|2003(4)                                                                        |  | $                         |       |                            | $ |       |                |  | $          | 1,487 |                      | $ |      |  | $ | 1,487
|2002(5)                                                                        |  | $                         | 10,000 |                            | $ | (4,100 | )              |  | $          |      |                      | $ | 5,900 |  | $ |     
|Deferred income taxes                                                          |  |                           |        |                            |   |        |                |  |            |       |                      |   |       |  |   |      
|Valuation allowances on state net operating loss and tax credit carryforwards: |  |                           |        |                            |   |        |                |  |            |       |                      |   |       |  |   |      
|2004(6)                                                                        |  | $                         | 3,555  |                            | $ | 87     |                |  | $          |      |                      | $ | 1,101 |  | $ | 2,541
|2003(6)                                                                        |  | $                         | 3,609  |                            | $ | 472    |                |  | $          |      |                      | $ | 526   |  | $ | 3,555
|2002(6)                                                                        |  | $                         | 2,685  |                            | $ | 1,041  |                |  | $          |      |                      | $ | 117   |  | $ | 3,609

---

|(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 deduction from the reserve for litigation in 2002 represents a final settlement payment. See Note 9 to our Consolidated Financial Statements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

|(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 March 9, 2005.



JOURNAL COMMUNICATIONS, INC.By:  /s/    Steven J. SmithSteven J. Smith Chairman and Chief Executive
Officer




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



|                                        |  |                                                                                  |  |              
|--------------------------------------- |  | -------------------------------------------------------------------------------- |  | -------------
|/s/    Steven J. SmithSteven J. Smith   |  | Chairman of the Board & Chief Executive Officer (Principal Executive Officer)    |  | March 9, 2005
|                                        |  |                                                                                 
|/s/    Douglas G. Kiel                  |  | President                                                                        |  | March 9, 2005
|Douglas G. Kiel                         |  |                                                                                  |  |              
|                                        |  |                                                                                 
|/s/    Paul M. BonaiutoPaul M. Bonaiuto |  | Executive Vice President & Chief Financial Officer (Principal Financial Officer) |  | March 9, 2005
|                                        |  |                                                                                 
|/s/    Anne M. BauerAnne M. Bauer       |  | Vice President & Controller (Principal Accounting
Officer)                       |  | March 9, 2005
|                                        |  |                                                                                 
|                                        |  | Director                                                                         |  |              
|Don H. Davis, Jr.                       |  |                                                                                  |  |              
|                                        |  |                                                                                 
|/s/    David J. Drury                   |  | Director                                                                         |  | March 9, 2005
|David J. Drury                          |  |                                                                                  |  |              
|                                        |  |                                                                                 
|/s/    James L. Forbes                  |  | Director                                                                         |  | March 9, 2005
|James L. Forbes                         |  |                                                                                  |  |              
|                                        |  |                                                                                 
|                                        |  | Director                                                                         |  |              
|David G. Meissner                       |  |                                                                                  |  |              
|                                        |  |                                                                                 
|                                        |  | Director                                                                         |  |              
|Jonathan Newcomb                        |  |                                                                                  |  |              
|                                        |  |                                                                                 
|/s/    Roger D. Peirce                  |  | Director                                                                         |  | March 9, 2005
|Roger D. Peirce                         |  |                                                                                  |  |              
|                                        |  |                                                                                 
|/s/    Mary Ellen Stanek                |  | Director                                                                         |  | March 9, 2005
|Mary Ellen Stanek                       |  |                                                                                  |  |              
|                                        |  |                                                                                 
|/s/    Jeanette Tully                   |  | Director                                                                         |  | March 9, 2005
|Jeanette Tully                          |  |                                                                                  |  |              



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JOURNAL COMMUNICATIONS, INC.



INDEX TO EXHIBITS



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3.1)         |  | Articles of Incorporation of Journal Communications, Inc., as amended (incorporated by reference to Exhibit 3.2 to Journal Communications, Inc.s Quarterly Report on Form 10-Q for the
quarterly period ended October 5, 2003 [Commission File No. 1-31805]).                                                                                                                                                                                                                                                                                                                                                                                                                                       
|              | 
|(3.2)         |  | Amendment to the By-Laws of Journal Communications, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|              | 
|(3.3)         |  | By-Laws of Journal Communications, Inc., as amended.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|              | 
|(4.1)         |  | Credit Agreement, dated as of September 5, 2003, by and among (i) The Journal Company (now known as Journal Communications, Inc.), as Borrower; (ii) Journal Communications, Inc. (now known as
The Journal Company), as Guarantor; (iii) certain subsidiaries of Journal Communications, Inc. (now known as The Journal Company), as Guarantors; (iv) U.S. Bank National Association, as Lead Arranger and Administrative Agent; and (v) the several
lenders from time to time parties thereto (incorporated by reference to Exhibit 4 to the Current Report on Form 8-K, filed September 9, 2003, of The Journal Company (now known as Journal Communications, Inc.) [Commission File No.
0-7831]).
|              | 
|(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.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|              | 
|(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]).                                                                                                                                                                                                                                                                                                                                                                                                                    
|              | 
|(10.7)        |  | Journal Communications, Inc. Executive Management Incentive Plan. *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|              | 
|(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]). *                                                                                                                                                                                                                                                                                                                                                                                 



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##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                                                                                                       
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                           
|(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. *                                                                                                                                                                                                                                                              
|              | 
|(10.14)       |  | Summary of Non-Employee Director Compensation, effective April 28, 2005. *                                                                                                                                                                                                                                                                                            
|              | 
|(10.15)       |  | Asset Purchase Agreement, dated January 25, 2005, between Multi-Color Corporation and Journal Communications, Inc.                                                                                                                                                                                                                                                    
|              | 
|(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 28, 2005 Annual Meeting of Shareholders of Journal Communications, Inc. (Except to the extent specifically incorporated by reference, the Proxy Statement for the
April 28, 2005 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.
|- | ---------------------------------------------------------



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