10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

x          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  June 26, 2011

or

o           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-31805

JOURNAL COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

Wisconsin	20-0020198
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

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

(414) 224-2000

Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o Accelerated Filer x Non-accelerated Filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o  No x

Number of shares outstanding of each of the issuer’s classes of common stock as of July 29, 2011 (excluding 8,676,705 shares of class B common stock held by our subsidiary, The Journal Company):

Class	Outstanding at July 29, 2011
Class A Common Stock	44,784,110
Class B Common Stock	7,328,054.282
Class C Common Stock	3,264,000

JOURNAL COMMUNICATIONS, INC.

INDEX

			Page No.
Part I.	Financial Information
	Item 1.	Financial Statements
		Unaudited Consolidated Condensed Balance Sheets as of June 26, 2011 and December 26, 2010	2
		Unaudited Consolidated Condensed Statements of Operations for the Second Quarter and Two Quarters Ended June 26, 2011 and June 27, 2010	3
		Unaudited Consolidated Condensed Statement of Equity for the Two Quarters Ended June 26, 2011	4
		Unaudited Consolidated Condensed Statement of Equity for the Two Quarters Ended June 27, 2010	5
		Unaudited Consolidated Condensed Statements of Cash Flows for the Two Quarters Ended June 26, 2011 and June 27, 2010	6
		Notes to the Unaudited Consolidated Condensed Financial Statements as of June 26, 2011	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3.	Quantitative and Qualitative Disclosure of Market Risk	37
	Item 4.	Controls and Procedures	37
Part II.	Other Information
	Item 1.	Legal Proceedings	37
	Item 1A.	Risk Factors	38
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
	Item 3.	Defaults Upon Senior Securities	38
	Item 4.	Reserved	38
	Item 5.	Other Information	38
	Item 6.	Exhibits	39

PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

JOURNAL COMMUNICATIONS, INC.

Unaudited Consolidated Condensed Balance Sheets

(in thousands, except share and per share amounts)

	June 26, 2011			December 26, 2010
Assets
Current assets:
Cash and cash equivalents	$	2,395		$	2,056
Investments of variable interest entity		500			500
Receivables, net		50,697			55,309
Inventories, net		1,417			1,035
Prepaid expenses and other current assets		5,278			3,961
Syndicated programs		3,764			7,361
Deferred income taxes		4,046			4,809
Total Current Assets		68,097			75,031
Property and equipment, at cost, less accumulated depreciation of $231,742 and $228,820		174,014			179,725
Syndicated programs		3,407			3,083
Goodwill		8,916			9,098
Broadcast licenses		82,426			82,426
Other intangible assets, net		22,204			22,988
Deferred income taxes		48,945			54,077
Other assets		4,845			5,342
Total Assets	$	412,854		$	431,770
Liabilities And Equity
Current liabilities:
Accounts payable	$	20,360		$	22,895
Accrued compensation		10,403			13,703
Accrued employee benefits		5,575			5,087
Deferred revenue		14,732			13,899
Syndicated programs		4,544			8,685
Accrued income taxes		651			7,332
Other current liabilities		7,207			6,493
Current portion of long-term liabilities		530			561
Total Current Liabilities		64,002			78,655
Accrued employee benefits		56,923			58,534
Syndicated programs		5,078			5,114
Long-term notes payable to banks		60,965			74,570
Other long-term liabilities		6,947			5,970
Equity:
Preferred stock, $0.01 par – authorized 10,000,000 shares; no shares outstanding at June 26, 2011 and December 26, 2010		--
Common stock, $0.01 par:
Class C – authorized 10,000,000 shares; issued and outstanding: 3,264,000 shares at June 26, 2011 and December 26, 2010		33			33
Class B – authorized 120,000,000 shares; issued and outstanding (excluding treasury stock): 7,345,647.282 shares at June 26, 2011 and 8,594,541.684 shares at December 26, 2010		153			165
Class A – authorized 170,000,000 shares; issued and outstanding: 44,716,208 shares at June 26, 2011 and 43,196,321 shares at December 26, 2010		447			432
Additional paid-in capital		261,402			260,376
Accumulated other comprehensive loss		(31,901	)		(32,295	)
Retained earnings		96,356			87,767
Treasury stock, at cost (8,676,705 class B shares)		(108,715	)		(108,715	)
Total Journal Communications, Inc. shareholders’ equity		217,775			207,763
Noncontrolling interest		1,164			1,164
Total Equity		218,939			208,927
Total Liabilities And Equity	$	412,854		$	431,770

See accompanying notes to unaudited consolidated condensed financial statements.

2

JOURNAL COMMUNICATIONS, INC.

Unaudited Consolidated Condensed Statements of Operations

 (in thousands, except per share amounts)

	Second Quarter Ended						Two Quarters Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Revenue:
Publishing	$	44,119		$	47,386		$	85,919		$	91,938
Broadcasting		46,083			47,012			88,192			89,617
Corporate eliminations		(100	)		(79	)		(148	)		(299	)
Total revenue		90,102			94,319			173,963			181,256
Operating costs and expenses:
Publishing		27,273			28,734			54,918			57,868
Broadcasting		22,069			22,300			44,004			43,896
Corporate eliminations		(100	)		(79	)		(148	)		(299	)
Total operating costs and expenses		49,242			50,955			98,774			101,465
Selling and administrative expenses		29,369			29,589			57,690			56,656
Total operating costs and expenses and selling and administrative expenses		78,611			80,544			156,464			158,121
Operating earnings		11,491			13,775			17,499			23,135
Other income and (expense)
Interest income		20			25			38			33
Interest expense		(928	)		(544	)		(2,008	)		(1,106	)
Total other income and (expense)		(908	)		(519	)		(1,970	)		(1,073	)
Earnings from continuing operations before income taxes		10,583			13,256			15,529			22,062
Provision for income taxes		4,442			5,332			6,354			8,878
Earnings from continuing operations		6,141			7,924			9,175			13,184
Earnings from discontinued operations, net of $0, $91, $221 and $87 applicable income tax provision , respectively		--			176			341			219
Net earnings	$	6,141		$	8,100		$	9,516		$	13,403
Earnings per share:
Basic – Class A and B common stock:
Continuing operations	$	0.10		$	0.14		$	0.15		$	0.22
Discontinued operations		--			--			0.01			0.01
Net earnings	$	0.10		$	0.14		$	0.16		$	0.23
Diluted – Class A and B common stock:
Continuing operations	$	0.10		$	0.14		$	0.15		$	0.22
Discontinued operations		--			--			0.01			0.01
Net earnings	$	0.10		$	0.14		$	0.16		$	0.23
Basic and diluted – Class C common stock:
Continuing operations	$	0.24		$	0.28		$	0.43		$	0.51
Discontinued operations		--			--			0.01			--
Net earnings	$	0.24		$	0.28		$	0.44		$	0.51

See accompanying notes to unaudited consolidated condensed financial statements.

3

Journal Communications, Inc.
Unaudited Consolidated Statements of Equity
For the Two Quarters Ended June 26, 2011
(in thousands, except per share amounts)
	Preferred		Common Stock							Additional Paid-in-			Accumulated Other Comprehensive			Retained			Noncontrolling		Treasury Stock,
	Stock		Class C		Class B			Class A		Capital			Loss			Earnings			Interests		at cost			Total
Balance at December 26, 2010	$	-	$	33	$	165		$	432	$	260,376		$	(32,295	)	$	87,767		$	1,164	$	(108,715	)	$	208,927
Net earnings																	3,375								3,375
Change in pension and postretirement (net of deferred tax of $127)														197											197
Class C dividends declared ($0.142 per share)																	(464	)							(464	)
Issuance of shares:
Conversion of class B to class A						(11	)		11																-
Stock grants						3					17														20
Employee stock purchase plan						-					181														181
Shares withheld from employees for tax withholding						(1	)				(505	)													(506	)
Stock-based compensation											261						1								262
Income tax benefits from vesting of non-vested restricted stock											368														368
Balance at March 27, 2011		-		33		156			443		260,698			(32,098	)		90,679			1,164		(108,715	)		212,360
Net earnings																	6,141								6,141
Change in pension and postretirement (net of deferred tax of $128)														197											197
Class C dividends declared ($0.142 per share)																	(464	)							(464	)
Issuance of shares:
Conversion of class B to class A						(4	)		4																-
Stock grants						1					432														433
Shares withheld from employees for tax withholding											(13	)													(13	)
Stock-based compensation											285														285
Balance at June 26, 2011	$	-	$	33	$	153		$	447	$	261,402		$	(31,901	)	$	96,356		$	1,164	$	(108,715	)	$	218,939

See accompanying notes to unaudited consolidated condensed financial statements.

4

Journal Communications, Inc.
Unaudited Consolidated Statements of Equity
Two Quarters Ended June 27, 2010
(in thousands, except per share amounts)
	Preferred		Common Stock							Additional Paid-in-			Accumulated Other Comprehensive			Retained			Noncontrolling		Treasury Stock,
	Stock		Class C		Class B			Class A		Capital			Loss			Earnings			Interests		at cost			Total
Balance at December 27, 2009	$	-	$	33	$	174		$	418	$	258,413		$	(34,487	)	$	55,239		$	-	$	(108,715	)	$	171,075
Net earnings																	5,303								5,303
Change in pension and postretirement (net of deferred tax of $280)														441											441
Class C dividends declared ($0.142 per share)																	(464	)							(464	)
Issuance of shares:
Conversion of class B to class A						(4	)		4																-
Stock grants						2					30														32
Employee stock purchase plan						1					162														163
Shares withheld from employees for tax withholding						(1	)				(267	)													(268	)
Stock-based compensation											294														294
Consolidation of variable interest entity																				1,164					1,164
Income tax benefits from vesting of non-vested restricted stock											95														95
Balance at March 28, 2010		-		33		172			422		258,727			(34,046	)		60,078			1,164		(108,715	)		177,835
Net earnings																	8,100								8,100
Change in pension and postretirement (net of deferred tax of $278)														442											442
Class C dividends declared ($0.142 per share)																	(464	)							(464	)
Issuance of shares:
Conversion of class B to class A						(7	)		7																-
Stock grants						1					493														494
Stock-based compensation											302														302
Balance at June 27, 2010	$	-	$	33	$	166		$	429	$	259,522		$	(33,604	)	$	67,714		$	1,164	$	(108,715	)	$	186,709

See accompanying notes to unaudited consolidated condensed financial statements.

5

JOURNAL COMMUNICATIONS, INC.

Unaudited Consolidated Condensed Statements of Cash Flows

(in thousands)

	Two Quarters Ended
	June 26, 2011			June 27, 2010
Cash flow from operating activities:
Net earnings	$	9,516		$	13,403
Less earnings from discontinued operations		341			219
Earnings from continuing operations		9,175			13,184
Adjustments for non-cash items:
Depreciation		10,788			11,469
Amortization		784			979
Provision for doubtful accounts		411			350
Deferred income taxes		5,962			5,152
Non-cash stock-based compensation		1,000			1,082
Net (gain) loss from disposal of assets		(238	)		90
Net changes in operating assets and liabilities, excluding effect of sales and acquisitions:
Receivables		4,121			4,599
Inventories		(382	)		19
Accounts payable		(2,535	)		439
Other assets and liabilities		(11,577	)		(2,172	)
Net Cash Provided By Operating Activities		17,509			35,191
Cash flow from investing activities:
Capital expenditures for property and equipment		(5,405	)		(5,164	)
Proceeds from sales of assets and insurance proceeds		73			3
Insurance proceeds from tower collapse and replacement		--			728
Proceeds from sale of business		745			17
Net Cash Used For Investing Activities		(4,587	)		(4,416	)
Cash flow from financing activities:
Proceeds from long-term notes payable to banks		53,396			43,645
Payments on long-term notes payable to banks		(67,001	)		(77,205	)
Principal payments under capital lease obligations		(171	)		(187	)
Proceeds from issuance of common stock		163			146
Income tax benefits from vesting of non-vested restricted stock		430			95
Net Cash Used For Financing Activties		(13,183	)		(33,506	)
Cash from discontinued operations:
Net operating activities of discontinued operations		(223	)		2,334
Net investing activities of discontinued operations		823			(288	)
Net Cash Provided by Discontinued Operations		600			2,046
Net Increase (Decrease) In Cash And Cash Equivalents		339			(685	)
Cash and cash equivalents:
Beginning of year		2,056			3,369
At June 26, 2011 and June 27, 2010	$	2,395		$	2,684

See accompanying notes to unaudited consolidated condensed financial statements.

6

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

1  BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements include the accounts of Journal Communications, Inc., its wholly owned subsidiaries and a variable interest entity (VIE) for which we are the primary beneficiary in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the Securities and Exchange Commission and reflect normal and recurring adjustments, which we believe to be necessary for a fair presentation.  As permitted by these regulations, these statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for annual financial statements.  However, we believe that the disclosures are adequate to make the information presented not misleading.  The gain on the sale of NorthStar Print Group Inc.’s (NorthStar) real estate holdings the operations of PrimeNet Marketing Services (PrimeNet), our former direct marketing services business, and IPC Print Services, Inc. (IPC), our former printing services business, have been reflected as discontinued operations in our consolidated condensed statement of operations.   The balance sheet as of December 26, 2010 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  The operating results for the second quarter and two quarters ended June 26, 2011 are not necessarily indicative of the operating results that may be expected for the fiscal year ending December 25, 2011.  You should read these unaudited consolidated condensed financial statements in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 26, 2010.

2  ACCOUNTING PERIODS

We report on 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 13 weeks and ending on a Sunday, provided that once every six years, the fourth quarterly reporting period will be 14 weeks.

3  NEW ACCOUNTING STANDARDS

In June 2011, the Financial Accounting Standards Board (FASB) issued amended guidance for comprehensive income. The guidance requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new guidance eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted.  We will adopt this guidance in the first quarter of 2012.  We do not expect the adoption of these disclosures to have a material impact on our consolidated financial statements.

In May 2011, the FASB issued amended guidance for fair value measurement and disclosure requirements between U.S. generally accepted accounting principles and International Financial Reporting Standards (IFRS).  The new guidance includes amendments to clarify the definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. generally accepted accounting principles and IFRS. The guidance also changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  We will adopt this guidance in the first quarter of 2012.  We do not expect the adoption of these disclosures to have a material impact on our consolidated financial statements.

In December 2010, the FASB issued amended guidance for goodwill.  The guidance applies to entities that have recognized goodwill and have one or more reporting units whose carrying amount for purposes of performing step one of the goodwill impairment test is zero or negative.  The guidance modifies step one so that for those reporting units, an entity is required to perform step two of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.  In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist.  The qualitative factors are consistent with existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010, with no early adoption permitted. We adopted this guidance in the first quarter of 2011.  There was no impact on our consolidated financial statements.

7

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

3  NEW ACCOUNTING STANDARDS continued

In December 2010, the FASB issued amended guidance for business combinations.  The guidance requires a public entity that presents comparative financial statements to disclose revenue and earnings of the combined entity as though the material business combination(s) on an individual or aggregate basis that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  This guidance also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  This guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted.  We adopted this guidance in the first quarter of 2011 for future business combinations.  There was no impact on our consolidated financial statements.

In July 2010, the FASB issued amended guidance for receivables.  The guidance for disclosures about activity that occurs during a period is effective for interim and annual reporting periods beginning on or after December 15, 2010.  We adopted this guidance for activity that occurs for our financing receivables in the first quarter of 2011.  The adoption of these disclosures did not have a material impact on our consolidated financial statements.  See Note 9, “Receivables,” for disclosures regarding our adoption of the FASB’s amended guidance for financing receivables.

In January 2010, the FASB issued amended guidance for fair value measurements and disclosures.  The guidance requires new disclosures about purchases, sales, issuances, and settlements in the roll forward of activity for level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.  We adopted this guidance in the first quarter of 2011.  The adoption of this guidance did not have a material impact on our consolidated financial statements.

In October 2009, the FASB amended the accounting standards related to revenue recognition for arrangements with multiple deliverables.  This new guidance requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables, based on their relative selling price.  The guidance also establishes a hierarchy for determining the selling price of a deliverable which is based on vendor-specific objective evidence, third-party evidence, or management’s best estimate of selling price.  We adopted this guidance in the first quarter of 2011.  The adoption of this guidance did not have a material impact on our consolidated financial statements.  See Note 4, “Multiple-Deliverable Revenue Arrangements,” for disclosures regarding our adoption of the FASB’s amended guidance for revenue recognition for arrangements with multiple deliverables.

4  MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS

Our daily newspaper sells print and online advertising in bundled arrangements, where multiple products are involved.  Significant deliverables within these arrangements include advertising in the printed daily newspaper and advertising placed on various company websites, each of which are considered separate units of accounting.  Our broadcast business sells airtime on television and radio stations and online advertising in bundled arrangements, where multiple products are involved.  Significant deliverables within these arrangements include advertising on television and radio stations and advertising placed on various company websites, each of which are considered separate units of accounting.  There were no significant changes in units of accounting, the allocation process or the pattern and timing of revenue recognition upon adoption of the amended guidance related to revenue recognition for arrangements with multiple deliverables.

5  EARNINGS PER SHARE

Basic

We apply the two-class method for calculating and presenting our basic earnings per share.  As noted in the FASB’s guidance for earnings per share, the two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared (or accumulated) and participation rights in undistributed earnings.  Under that method:

a) Income (loss) from continuing operations (“net earnings (loss)”) is reduced by the amount of dividends declared in the current period for each class of stock and by the contractual amount of dividends that must be paid or accrued during the current period.

b) The remaining earnings, which may include earnings from discontinued operations (“undistributed earnings”), are allocated to each class of common stock to the extent that each class of stock may share in earnings if all of the earnings for the period were distributed.

8

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

5  EARNINGS PER SHARE continued

c) The remaining losses (“undistributed losses”) are allocated to the class A and B common stock.  Undistributed losses are not allocated to the class C common stock and non-vested restricted stock because the class C common stock and the non-vested restricted stock are not contractually obligated to share in the losses.  Losses from discontinued operations are allocated to class A and B shares and may be allocated to class C shares and non-vested restricted stock if there is undistributed earnings after deducting earnings distributed to class C shares from income from continuing operations.

d) The total earnings (loss) allocated to each class of common stock are then divided by the number of weighted average shares outstanding of the class of common stock to which the earnings (loss) are allocated to determine the earnings (loss) per share for that class of common stock.

e) Basic earnings (loss) per share data are presented for class A and B common stock in the aggregate and for class C common stock.  The basic earnings (loss) per share for class A and B common stock are the same; hence, these classes are reported together.

In applying the two-class method, we have determined that undistributed earnings should be allocated equally on a per share basis among each class of common stock due to the lack of any contractual participation rights of any class to those undistributed earnings.  Undistributed losses are allocated to only the class A and B common stock for the reason stated above.

The following table sets forth the computation of basic earnings per share under the two-class method:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Numerator for basic earnings from continuing operations for each class of common stock and non-vested restricted stock:
Earnings from continuing operations	$	6,141	$	7,924	$	9,175	$	13,184
Less dividends declared or accrued:
Class A and B		--		--		--		--
Class C		464		464		928		928
Non-vested restricted stock		--		--		--		--
Total undistributed earnings from continuing operations	$	5,677	$	7,460	$	8,247	$	12,256
Class A and B undistributed earnings from continuing operations	$	5,269	$	6,892	$	7,650	$	11,320
Class C undistributed earnings from continuing operations		335		443		487		729
Non-vested restricted stock undistributed earnings from continuing operations	$	73		125		110		207
Total undistributed earnings from continuing operations	$	5,677	$	7,460	$	8,247	$	12,256
Numerator for basic earnings from continuing operations per class A and B common stock:
Dividends on class A and B	$	--	$	--	$	--	$	--
Class A and B undistributed earnings		5,269		6,892		7,650		11,320
Numerator for basic earnings from continuing operations per class A and B common stock	$	5,269	$	6,892		7,650	$	11,320

9

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

5  EARNINGS PER SHARE continued

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Numerator for basic earnings from continuing operations per class C common stock:
Dividends accrued on class C	$	464	$	464	$	928	$	928
Class C undistributed earnings		335		443		487		729
Numerator for basic earnings from continuing operations per class C common stock	$	799	$	907	$	1,415	$	1,657
Denominator for basic earnings from continuing operations for each class of common stock:
Weighted average shares outstanding –
Class A and B		51,318		50,784		51,222		50,700
Class C		3,264		3,264		3,264		3,264
Basic earnings per share from continuing operations:
Class A and B	$	0.10	$	0.14	$	0.15	$	0.22
Class C	$	0.24	$	0.28	$	0.43	$	0.51
Numerator for basic earnings from discontinued operations for eachclass of common stock and non-vested restricted stock:
Total undistributed earnings from discontinued operations	$	--	$	176	$	341	$	219
Undistributed earnings from discontinued operations:
Class A and B	$	--	$	162	$	316	$	203
Class C		--		10		20		12
Non-vested restricted stock		--		4		5		4
Total undistributed earnings from discontinued operations	$	--	$	176	$	341	$	219
Denominator for basic earnings from discontinued operations for each class of common stock:
Weighted average shares outstanding –
Class A and B		51,318		50,784		51,222		50,700
Class C		3,264		3,264		3,264		3,264
Basic earnings per share from discontinued operations:
Class A and B	$	--	$	--	$	0.01	$	0.01
Class C	$	--	$	--	$	0.01	$	--
Numerator for basic net earnings for each class of common stock:
Net earnings	$	6,141	$	8,100	$	9,516	$	13,403
Less dividends declared or accrued:
Class A and B		--		--		--		--
Class C		464		464		928		928
Non-vested restricted stock		--		--		--		--
Total undistributed net earnings	$	5,677	$	7,636	$	8,588	$	12,475

10

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

5  EARNINGS PER SHARE continued

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Undistributed net earnings:
Class A and B	$	5,269	$	7,054	$	7,966	$	11,523
Class C		335		453		507		741
Non-vested restricted stock		73		129		115		211
Total undistributed net earnings	$	5,677	$	7,636	$	8,588	$	12,475
Numerator for basic net earnings per class A and Bcommon stock:
Dividends declared on class A and B	$	--	$	--	$	--	$	--
Class A and B undistributed net earnings		5,269		7,054		7,966		11,523
Numerator for basic net earnings per class A and B common stock	$	5,269	$	7,054	$	7,966	$	11,523
Numerator for basic net earnings per class C common stock:
Dividends accrued on class C	$	464	$	464	$	928	$	928
Class C undistributed net earning		335		453		507		741
Numerator for basic net earnings per class C common stock	$	799	$	917	$	1,435	$	1,669
Denominator for basic net earnings for each class of common stock:
Weighted average shares outstanding –
Class A and B		51,318		50,784		51,222		50,700
Class C		3,264		3,264		3,264		3,264
Basic net earnings per share:
Class A and B	$	0.10	$	0.14	$	0.16	$	0.23
Class C	$	0.24	$	0.28	$	0.44	$	0.51

Diluted

Diluted earnings per share is computed based upon the assumption that common shares are issued upon exercise of our non-statutory stock options or stock appreciation rights when the exercise price is less than the average market price of our common shares and common shares will be outstanding upon expiration of the vesting periods for our non-vested restricted stock.  For the second quarter and two quarters of 2011, 217 and 240 non-vested restricted class B common shares, respectively, are not deemed to be outstanding upon expiration of the vesting periods because they are anti-dilutive.  For the second quarter and two quarters of 2010, 454 and 434 non-vested restricted class B common shares, respectively, are not deemed to be outstanding upon expiration of the vesting periods because they are anti-dilutive.  The class C shares are not converted into class A and B shares because they are anti-dilutive for all periods presented.  Therefore, the class C shares are not included in the diluted weighted average shares outstanding.

11

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

5  EARNINGS PER SHARE continued

The following table sets forth the computation of diluted net earnings per share for class A and B common stock:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Numerator for diluted net earnings per share:
Dividends on class A and B common stock	$	--	$	--	$	--	$	--
Total undistributed earnings from continuing operations		5,269		6,892		7,650		11,320
Total undistributed earnings from discontinued operations		--		162		316		203
Net earnings	$	5,269	$	7,054	$	7,966	$	11,523
Denominator for diluted net earnings per share:
Weighted average shares outstanding - class A and B		51,318		50,784		51,222		50,700
Diluted earnings per share:
Continuing operations	$	0.10	$	0.14	$	0.15	$	0.22
Discontinued operations		--		--		0.01		0.01
Net earnings	$	0.10	$	0.14	$	0.16	$	0.23

Diluted earnings per share for the class C common stock is the same as basic earnings per share for class C common stock because there are no class C common stock equivalents.

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).

6  COMPREHENSIVE INCOME

The following table sets forth our comprehensive income:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Net earnings	$	6,141	$	8,100	$	9,516	$	13,403
Change in pension and post-retirement (net of tax of $128, $278, $255 and $558, respectively)		197		442		394		883
Comprehensive income	$	6,338	$	8,542	$	9,910	$	14,286

7  VARIABLE INTEREST ENTITY

We have an affiliation agreement with ACE TV, Inc. for the rights under a local marketing agreement for WACY-TV in Appleton, Wisconsin and to acquire certain assets of ACE TV, Inc. including the broadcast license of WACY-TV, pending FCC rule changes and approval.  Under the affiliation agreement, ACE TV, Inc. provides the programming for WACY-TV and we sell advertising time, provide all other television operating activities and own the non-broadcast license assets used by WACY-TV.  Based on our power to direct certain activities and our right to ultimately acquire the broadcast license, we have determined that ACE TV, Inc. is a VIE and that we are the primary beneficiary of the variable interests of WACY-TV.  As a result, we have consolidated the net assets of ACE TV, Inc., aggregating $1,164 which consists primarily of a broadcast license and investments.  The investments of ACE TV Inc. can be used only to settle obligations of ACE TV, Inc.  Creditors of ACE TV, Inc. have no recourse to our general credit.  We have not provided financial or other support that we are not contractually required to provide.

12

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

8  INVENTORIES

Inventories are stated at the lower of cost (first in, first out method) or market.  Inventories as of June 26, 2011 and December 26, 2010 consist of the following:

	June 26, 2011			December 26, 2010
Paper and supplies	$	1,400		$	1,043
Work in process		52			36
Less obsolescence reserve		(35	)		(44	)
Inventories, net	$	1,417		$	1,035

9  RECEIVABLES

Our non-interest bearing accounts receivable arise primarily from the sale of advertising, commercial printing, commercial distribution and the retransmission of our television programs by cable, satellite and telecommunications providers.  We record accounts receivable at original invoice amounts.  The accounts receivable balance is reduced by an estimated allowance for doubtful accounts. We evaluate the collectability 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 patterns and 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, 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 as of June 26, 2011 and December 26, 2010 was $2,278 and $3,286, respectively.

We have a $450 secured note resulting from the sale of two radio stations in Boise, Idaho in September 2009.  Interest-only payments are due monthly and the principal balance of the note is due on September 25, 2014.  The note receivable balance as of June 26, 2011 and December 26, 2010 was $430.  This note receivable is reported in other assets in the consolidated condensed balance sheets.  Management monitors the level of payment activity and, to date, all monthly interest-only payments have been received on time and in full.  We believe that we will collect the amount owed to us.

In consideration for the sale of the Clearwater, Florida-based operations of PrimeNet in February 2010, we received a $700 promissory note repayable over four years and a $147 working capital note repayable over three years.  At the time of the sale, we recorded receivables of $587 and $129, respectively, representing the fair value of the notes discounted at 6.785% and 9.08%, respectively.  As of June 26, 2011, the notes receivable balances were $419 and $76, respectively, and as of December 26, 2010, the notes receivable balances were $624 and $96, respectively.  As of June 26, 2011, the current portion of the notes receivable balances was $197 and is reported in receivables, net in the consolidated condensed balance sheets.  The non-current portion of the notes receivable was $298 and is reported in other assets in the consolidated condensed balance sheets.  Management monitors the operating performance of the buyer by reviewing quarterly revenue performance reports and annual financial statements.  Based on our monitoring, we believe that we will collect all amounts owed to us pursuant to these notes receivable.

Interest income and the unamortized discount on our notes receivable are recorded using the effective interest method.

10  GOODWILL AND OTHER INTANGIBLE ASSETS

Definite-lived Intangibles

Our definite-lived intangible assets consist primarily of network affiliation agreements, customer lists, non-compete agreements and trade names.  We amortize the network affiliation agreements over a period of 25 years based on our good relationships with the networks, our long history of renewing these agreements and because 25 years is deemed to be the length of time before a material modification of the underlying contract would occur.  We amortize the customer lists over a period of five to 15 years, the non-compete agreements and franchise agreement fees over the terms of the contracts and the tradenames over a period of 25 years.  Management determined there were no significant adverse changes in the value of these assets as of June 26, 2011.

Amortization expense was $392 and $784 for the second quarter and two quarters ended June 26, 2011, respectively, and $487 and $979 for the second quarter and two qurarters ended June 27, 2010.  Estimated amortization expense for our next five fiscal years is $1,569 for 2011, $1,494 for 2012, $1,375 for 2013, $1,276 for 2014 and $1,263 for 2015.

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JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

10  GOODWILL AND OTHER INTANGIBLE ASSETS continued

The gross carrying amount, accumulated amortization and net carrying amount of the major classes of definite-lived intangible assets as of June 26, 2011 and December 26, 2010 are as follows:

	Gross CarryingAmount		AccumulatedAmortization			Net CarryingAmount
June 26, 2011
Network affiliation agreements	$	26,930	$	(7,596	)	$	19,334
Customer lists		6,794		(5,518	)		1,276
Non-compete agreements		10,410		(10,376	)		34
Other		3,896		(2,336	)		1,560
Total	$	48,030	$	(25,826	)	$	22,204
December 26, 2010
Network affiliation agreements	$	26,930	$	(7,062	)	$	19,868
Customer lists		6,794		(5,353	)		1,441
Non-compete agreements		10,435		(10,392	)		43
Other		3,896		(2,260	)		1,636
Total	$	48,055	$	(25,067	)	$	22,988

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.  The net carrying amount of our broadcast licenses was $82,426 as of June 26, 2011 and December 26, 2010.

The costs incurred to renew or extend the term of our broadcast licenses and certain customer relationships are expensed as incurred.

Goodwill

Goodwill recorded at our community newspapers and shoppers and broadcasting reporting units was $4,285 and $4,813, respectively, as of December 26, 2010. In June 2011, our community newspapers and shoppers reporting unit sold the Pelican Press and PelicanPress Marketplace businesses, and we disposed of $182 of goodwill allocated to those businesses. Goodwill recorded at our community newspapers and shoppers and broadcasting reporting units was $4,103 and $4,813, respectively, as of June 26, 2011.  We do not believe either of these reporting units is at risk for failing the step one impairment test in accordance with the FASB’s guidance for accounting for goodwill and intangible assets.

11  WORKFORCE REDUCTIONS AND BUSINESS IMPROVEMENTS

During the second quarter and two quarters of 2011, we recorded a pre-tax charge of $(1) and $14, respectively, for workforce separation benefits.  These charges are recorded in operating costs and expenses and selling and administrative expenses in the consolidated statement of operations.  Activity associated with the workforce reduction and business initiatives during the two quarters of 2011 was as follows:

	Balance as ofDecember 26, 2010		Charge for SeparationBenefits		Payments for SeparationBenefits			Balance as of June 26, 2011
Daily newspaper	$	1,365	$	--	$	(456	)	$	909
Community newspapers and shoppers		72		14		(81	)		5
Total	$	1,437	$	14	$	(537	)	$	914

14

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

12  INCOME TAXES                                     

We file tax returns in the United States federal jurisdiction, as well as approximately 15 state and local jurisdictions.  The statute of limitations for assessing additional taxes is three years for federal purposes and typically between three and four years for state and local purposes, unless the statute of limitations has been previously extended.  Accordingly, our 2007 through 2009 tax returns are open for federal purposes, and our 2006 through 2009 tax returns remain open for state tax purposes.  Currently, we are under audit in Wisconsin for our 2004 through 2007 tax returns and Illinois for our 2006 and 2007 tax returns.

As of June 26, 2011, our liability for unrecognized tax benefits was $917, which, if recognized, would have an impact on our effective tax rate.  We recognize interest income/expense and penalties related to unrecognized tax benefits in our provision for income taxes.  As of June 26, 2011, we had $262 accrued for interest expense and penalties.  We recognized $19 in interest expense during the second quarter of 2011.

As of June 26, 2011, it is possible for $297 of unrecognized tax benefits and related interest to be recognized within the next 12 months due to settlements with taxing authorities.

13  GUARANTEES

We provided a guarantee to the landlord of our former New England community newspapers and shopper business, which was sold in 2007, with respect to tenant liabilities and obligations associated with a lease which expires in December 2016.  Our maximum potential obligation pursuant to the guarantee was $972 as of June 26, 2011.  As part of the sales transaction, we received a guarantee from the buyer of our New England business that they will satisfy all the liabilities and obligations of the assigned lease.  In the event that they fail to satisfy their liabilities and obligations and the landlord invokes our guarantee, we have a right to indemnification from the buyer.

We provided a guarantee to the landlord of our former Clearwater, Florida-based operations of PrimeNet, which was sold in February 2010, with respect to tenant liabilities and obligations associated with a lease which expired in May 2011.  In addition, the buyer has assumed certain leases for equipment and we have provided a guarantee for the remaining lease obligations.  The equipment leases expire in March 2012.  Our maximum potential obligations pursuant to the guarantee and the assumed leases are $201 as of June 26, 2011.

14  EMPLOYEE BENEFIT PLANS

The components of our net periodic benefit costs for our defined benefit and non-qualified pension plans and our postretirement health benefit plan are as follows:

	Pension Benefits
	Second Quarter Ended						Two Quarters Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Service cost	$	--		$	--		$	--		$	--
Interest cost		1,962			2,085			3,925			4,170
Expected return on plan assets		(2,398	)		(2,571	)		(4,797	)		(5,142	)
Amortization of:
Unrecognized prior service cost		(2	)		(41	)		(5	)		(82	)
Unrecognized net loss		245			680			490			1,360
Net periodic benefit (income) cost included in total operating costs and expenses and selling and administrative expenses	$	(193	)	$	153		$	(387	)	$	306

15

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

14  EMPLOYEE BENEFIT PLANS continued

We fund our defined benefit pension plan at the minimum amount required by the Pension Protection Act of 2006.   We do not expect to contribute to the qualified pension plan in 2011.  Based on current projections, we expect to contribute $3,300 to our qualified defined benefit pension plan in 2012.  We expect to contribute $469 and $517 to our unfunded non-qualified pension plan in 2011 and 2012, respectively.

	Other Postretirement Benefits
	Second Quarter Ended						Two Quarters Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Service cost	$	14		$	21		$	27		$	42
Interest cost		206			238			413			476
Amortization of:
Unrecognized prior service cost		(55	)		(55	)		(110	)		(110	)
Unrecognized net transition obligation		138			137			275			274
Net periodic benefit cost included in total operating costs and expenses and selling and administrative expenses	$	303		$	341		$	605		$	682

15  NOTES PAYABLE TO BANKS

On August 13, 2010, we entered into an amendment of our formerly unsecured credit facility which, among other things, provided for the pledge of certain collateral by us and our subsidiaries (as amended, the secured credit facility).  In connection with this amendment, certain lenders reduced their commitments to $225,000 and extended the expiration date to December 2, 2013 (extending lenders).  The maturity date for the remaining lenders, with terms and commitments that remain unchanged at $74,000, was June 2, 2011 (non-extending lenders).  The secured credit facility is secured by liens on certain of our assets and the assets of our subsidiaries and contains affirmative, negative and financial covenants which are customary for financings of this type, including, among other things, limits on the creation of liens, limits on the incurrence of indebtedness, restrictions on dispositions and restrictions on dividends.  At our option, the commitments under the secured credit facility may be increased from time to time to an aggregate amount of incremental commitments not to exceed $100,000.  The increase option is subject to the satisfaction of certain conditions, including the identification of lenders (which may include existing lenders or new lenders) willing to provide the additional commitments.

Our borrowings from extending lenders under the secured credit facility incur interest at either LIBOR plus a margin that ranges from 225.0 basis points to 350.0 basis points, depending on our leverage, or (i) the base rate, which equals the highest of the prime rate set by U.S. Bank National Association, the Federal Funds Rate plus 100.0 basis points or one-month LIBOR plus 150.0 basis points, plus (ii) a margin that ranges from 125.0 basis points to 250.0 basis points, depending on our leverage.  As of June 26, 2011 and December 26, 2010, we had borrowings of $60,965 and $74,570, respectively, under our credit facility at a weighted average rate of 2.57% and 3.06%, respectively.

Fees in connection with the secured credit facility of $3,338 and the unamortized deferred financing costs from the unsecured revolving credit facility of $213 are being amortized over the term of the secured credit facility using the effective interest method.  Unamortized deferred financing costs related to the non-extending lenders of $39 are fully amortized.

We estimate the fair value of our secured credit facility as of June 26, 2011 to be $60,234, based on discounted cash flows using an interest rate of 3.1%.  We estimated the fair value of our secured revolving facility as of December 26, 2010 to be $72,547, based on discounted cash flows using an interest rate of 4.05%.  These fair value measurements fall within level 3 of the fair value hierarchy.

16

JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

15  NOTES PAYABLE TO BANKS continued

The secured credit facility contains the following financial covenants, which remain constant over the term of the agreement:

· A consolidated funded debt ratio of not greater than 3.50-to-1, as determined for the four fiscal quarter period preceding the date of determination.  This ratio compares, for any period, our funded debt to our consolidated EBITDA, defined in the secured credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals and non-cash charges.

· A minimum interest coverage ratio of not less than 3-to-1, as determined for the four fiscal quarter period preceding the date of determination.  This ratio compares, for any period, our consolidated EBITDA, defined in the secured credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals and non-cash charges, to our interest expense.

One or more of the lenders in our secured credit facility syndicate could be unable to fund future draws thereunder or take other positions adverse to us.  In such an event, our liquidity could be constrained with an adverse impact on our ability to operate our businesses.

16  STOCK-BASED COMPENSATION

2007 Journal Communications, Inc. Omnibus Incentive Plan

The purpose of the 2007 Journal Communications, Inc. Omnibus Incentive Plan (2007 Plan) is to promote our success by linking personal interests of our employees, officers and non-employee directors to those of our shareholders, and by providing participants with an incentive for outstanding performance.  The 2007 Plan is also intended to enhance our ability to attract, motivate and retain the services of employees, officers, and directors upon whose judgment, interest, and special effort the successful conduct of our operation is largely dependent.

Subject to adjustment as provided in the 2007 Plan, the aggregate number of shares of class A common stock or class B common stock reserved and available for issuance pursuant to awards granted under the 2007 Plan is 4,800,000 shares which may be awarded in the form of nonstatutory or incentive stock options, stock appreciation rights, restricted stock, restricted or deferred stock units, performance awards, dividend equivalents or other stock-based awards.  The 2007 Plan also provides for the issuance of cash-based awards.  The 2007 Plan replaced the 2003 Equity Incentive Plan (2003 Plan) and, as of May 3, 2007, all equity grants are made from the 2007 Plan.  We will not grant any additional awards under the 2003 Plan.  As of June 26, 2011 there are 2,680,219 shares available for issuance under the 2007 Plan.

During the second quarter and two quarters ended June 26, 2011 we recognized $727 and $1,019, respectively, in stock-based compensation expense.  Total income tax benefit recognized related to stock-based compensation for the second quarter and two quarters ended June 26, 2011 was $305 and $417 respectively.  During the second quarter ended June 27, 2010, we recognized $806 and $1,141, respectively, in stock-based compensation expense, including $13 and $41, respectively, recorded in earnings from discontinued operations.  Total income tax benefit recognized related to stock-based compensation for the second quarter and two quarters ended June 27, 2010 was $324 and $458, respectively.  We recognize stock-based compensation expense on a straight-line basis over the service period based upon the fair value of the award on the grant date.  As of June 26, 2011, total unrecognized compensation cost related to stock-based compensation awards (consisting of non-vested restricted stock) was $2,131 net of estimated forfeitures, which we expect to recognize over a weighted average period of 1.2 years.  Stock-based compensation expense is reported in selling and administrative expenses and earnings from discontinued operations in our consolidated condensed statements of operations.

Stock grants

The compensation committee of our board of directors has granted class B common stock to employees and non-employee directors under our 2003 Plan and our 2007 Plan.  Each stock grant may have been accompanied by restrictions, or may have been made without any restrictions, as the compensation committee of our board of directors determined.  Such restrictions could have included requirements that the participant remain in our continuous employment for a specified period of time, or that we or the participant meet designated performance goals.  We value non-vested restricted stock grants at the closing market prices of our class A common stock on the grant date.

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JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

16  STOCK-BASED COMPENSATION continued

A summary of stock grant activity during the two quarters of 2011 is:

	Shares			Weighted Average Fair Value
Non-vested at December 26, 2010		777,872		$	2.69
Granted		331,570			4.36
Vested		(395,948	)		3.19
Forfeited		(6,150	)		5.28
Non-vested at June 26, 2011		707,344			3.81

Our non-vested restricted stock grants vest from one to four years from the grant date.  The total fair value of shares vesting during the two quarters of 2011 was $1,264.  There was an aggregate of 344,853 unrestricted and non-vested restricted stock grants issued to our non-employee directors (93,853 unrestricted shares) and employees (251,000 restricted shares) in the two quarters of 2010 at a weighted average fair value of $4.24 per share, of which 75,591 of the non-vested restricted shares have since vested.

Employee stock purchase plan

The 2003 Employee Stock Purchase Plan permits eligible employees to purchase our class B common stock at 90% of the fair market value measured as of the closing market price of our class A common stock on the day of purchase.  We recognize compensation expense equal to the 10% discount of the fair market value.  Subject to certain adjustments, 3,000,000 shares of our class B common stock are authorized for sale under this plan.  There were 35,683 class B common shares sold to employees under this plan in the two quarters of 2011 at a weighted average fair value of $4.55.  As of June 26, 2011, there are 2,292,164 shares available for sale under the plan.

Stock appreciation rights

A stock appreciation right, or SAR, represents the right to receive an amount equal to the excess of the fair value of a share of our class B common stock on the exercise date over the base value of the SAR, which shall not be less than the fair value of a share of our class B common stock on the grant date.  Each SAR is settled only in shares of our class B common stock.  The term during which any SAR may be exercised is 10 years from the grant date, or such shorter period as determined by the compensation committee of our board of directors.

Our SARs vest over a three year graded vesting schedule and it is our policy to recognize compensation cost for awards with graded vesting on a straight-line basis over the vesting period for the entire award.  We ensure the compensation cost recognized at any date is at least equal to the portion of the grant-date value of the award that is vested at that date.  The fixed price SARs have a fixed base value equal to the closing price of our class A common stock on the date of grant.  The escalating price SARs have an escalating base value that starts with the closing price of our class A common stock on the date of grant and increases by six percent per year for each year that the SARs remain outstanding, starting on the first anniversary of the grant date.

A summary of SAR activity during the two quarters of 2011 is:

	SARs		Weighted Average Exercise Price		Weighted Average Contractual Term Remaining (years)
Outstanding at December 26, 2010		1,083,207	$	10.71		6.6
Exercisable at December 26, 2010		909,527		11.21		6.5
Outstanding and exercisable at June 26, 2011		1,083,207		10.71		6.1

173,680 SARs vested during the two quarters of 2011.  The aggregate intrinsic value of the SARs outstanding and exercisable at the end of the second quarter of 2011 is zero because the fair market value of our class B common stock on June 26, 2011 was lower than the weighted average exercise price of the SARs.

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JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

16   STOCK-BASED COMPENSATION continued

Nonstatutory stock options

The compensation committee of our board of directors has granted nonstatutory stock options to employees and non-employee directors at a purchase price equal to at least the fair market value of our class B common stock on the grant date for an exercise term determined by the committee, not to exceed 10 years from the grant date.  It is our policy to issue new class B common stock upon the exercise of nonstatutory stock options.

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

A summary of stock option activity during the two quarters of 2011 is:

	Options			Weighted Average  Exercise Price		Weighted Average Contractual Term Remaining (years)
Outstanding and exercisable at December 26, 2010		26,500		$	18.06		0.3
Expired		(26,500	)		18.06		--
Outstanding and exercisable at June 26, 2011		--			--		--

17  DISCONTINUED OPERATIONS

NorthStar Print Group, Inc.

During 2005, Multi-Color Corporation (Multi-Color) acquired substantially all of the assets and certain liabilities of NorthStar Print Group, Inc. (NorthStar), our former label printing business.  Certain liabilities were excluded from the sale of NorthStar and primarily consisted of environmental site closure costs for both the Green Bay, Wisconsin real estate and real estate located in Norway, Michigan.  In January 2011, upon environmental site closure in Green Bay, Wisconsin, we sold the real estate holdings to Multi-Color according to the 2005 sale agreement.  The net proceeds were $822 and we recorded a pre-tax gain of $610.  We continue to have environmental site closure obligations with respect to the Norway, Michigan real estate, which was sold to Multi-Color in 2005.

The following table summarizes NorthStar’s revenue and earnings before income taxes as reported in earnings from discontinued operations, net of applicable income taxes in the consolidated condensed statement of operations for the second quarter and two quarters ended June 26, 2011 and June 27, 2010:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Revenue	$	-	$	-	$	-	$	-
Earnings before income taxes	$	-	$	-	$	562	$	-

PrimeNet Marketing Services

During 2010, we sold substantially all of the operating assets of PrimeNet, our former direct marketing services business, located in St. Paul, Minnesota and Clearwater, Florida in two separate transactions.  We received a $700 note repayable over four years and a $147 working capital note repayable over three years for the sale of the Clearwater, Florida based operations.

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JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

17  DISCONTINUED OPERATIONS continued

The following table summarizes PrimeNet’s revenue and loss before income taxes as reported in earnings from the discontinued operations, net of applicable income taxes in the consolidated condensed statement of operations for the second quarter and two quarters ended June 26, 2011 and June 27, 2010.

	Second Quarter Ended					Two Quarters Ended
	June 26, 2011		June 27, 2010			June 26, 2011		June 27, 2010
Revenue	$	-	$	-		$	-	$	2,144
Loss before income taxes	$	-	$	(373	)	$	-	$	(1,060	)

IPC Print Services, Inc.

During 2010, we sold substantially all of the assets and certain liabilities of IPC, our former printing services business, to Walsworth Publishing Company (Walsworth).  An escrow fund in the amount of $731 has been established to secure our representations and warranties pursuant to the purchase agreement for two years from the date of the sale, after which time, any remaining funds will be delivered to us.
 

The following table summarizes IPC’s revenue and earnings before income taxes as reported in earnings from discontinued operations, net of applicable taxes in the consolidated condensed statement of operations for the second quarter and two quarters ended June 26, 2011 and June 27, 2010:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Revenue	$	-	$	10,113	$	-	$	21,748
Earnings before income taxes	$	-	$	640	$	-	$	1,366

Certain liabilities were excluded from the sale of IPC and are included in continuing operations in the June 26, 2011 and December 26, 2010 consolidated condensed balance sheets.  These liabilities include workers’ compensation and working capital adjustments due to Walsworth pursuant to the sale agreement (payable in the third quarter of 2011).

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JOURNAL COMMUNICATIONS, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

(in thousands, except per share amounts)

18  SEGMENT REPORTING

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; and (iii) corporate.  Our publishing segment consists of the Milwaukee Journal Sentinel, which serves as the only major daily newspaper for the Milwaukee metropolitan area, and several community newspapers and shoppers in Wisconsin and Florida.  Our broadcasting segment, operating in 12 states, consists of 33 radio stations and 13 television stations and the operation of a television station under a local marketing agreement.  Our corporate segment consists of unallocated corporate expenses and revenue eliminations.

The following tables summarize revenue, operating earnings (loss), depreciation and amortization and capital expenditures for the second quarter and two quarters ended June 26, 2011 and June 27, 2010 and identifiable total assets as of June 26, 2011 and December 26, 2010:

	Second Quarter Ended						Two Quarters Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Revenue
Publishing	$	44,119		$	47,386		$	85,919		$	91,938
Broadcasting		46,083			47,012			88,192			89,617
Corporate eliminations		(100	)		(79	)		(148	)		(299	)
	$	90,102		$	94,319		$	173,963		$	181,256
Operating earnings (loss)
Publishing	$	5,347		$	6,623		$	7,172		$	10,012
Broadcasting		8,343			9,675			14,318			17,394
Corporate		(2,199	)		(2,523	)		(3,991	)		(4,271	)
	$	11,491		$	13,775		$	17,499		$	23,135
Depreciation and amortization
Publishing	$	2,624		$	2,902		$	5,256		$	5,800
Broadcasting		3,049			3,200			6,015			6,404
Corporate		155			122			301			244
	$	5,828		$	6,224		$	11,572		$	12,448
Capital expenditures
Publishing	$	212		$	202		$	578		$	614
Broadcasting		2,430			3,172			4,570			4,543
Corporate		107			--			257			7
	$	2,749		$	3,374		$	5,405		$	5,164

	June 26, 2011		December 26, 2010
Identifiable total assets
Publishing	$	117,771	$	125,870
Broadcasting		266,378		275,985
Corporate & discontinued operations		28,705		29,915
	$	412,854	$	431,770

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

The following discussion of our financial condition and results of operations should be read together with our unaudited consolidated condensed financial statements for the second quarter and two quarters ended June 26, 2011, including the notes thereto.

More information regarding us is available at our website at www.journalcommunications.com.  We are not including the information contained in our website as a part of, or incorporating it by reference into, this Quarterly Report on Form 10-Q.  Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports are made available to the public at no charge, other than a reader’s own internet access charges, through a link appearing on our website.  We provide access to such material through our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).

Forward-Looking Statements

We make certain statements in this Quarterly Report on Form 10-Q (including the information that we incorporate by reference herein) that are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in that Act, and we are including this statement for purposes of those safe harbor provisions.  These forward-looking statements generally include all statements other than statements of historical fact, including statements regarding our future financial position, business strategy, budgets, projected revenues and expenses, expected regulatory actions and plans and objectives of management for future operations.  We often use words such as "may," "will," "intend," "anticipate," "believe," or "should" and similar expressions in this Quarterly Report on Form 10-Q to identify forward-looking statements.  These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control.  These risks, uncertainties and other factors could cause actual results to differ materially from those expressed or implied by those forward-looking statements.  Among such risks, uncertainties and other factors that may impact us are the following as well as those contained in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 26, 2010:

· changes in advertising demand or the buying strategies of advertisers or the migration of advertising to the internet;

· 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 or the changes in spectrum allocation policies);

· 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, including increased sharing of retransmission revenue;

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

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

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

· an other than temporary decline in operating results and enterprise value that could lead to further non-cash impairment charges due to the impairment of goodwill, broadcast licenses, other intangible assets and property, plant and equipment;

· the impact of changing economic and financial market conditions and interest rates on our liquidity, on the value of our pension plan assets and on the availability of capital;

· our ability to remain in compliance with the terms of our credit agreement;

· changes in interest rates or statutory tax rates;

· the outcome of pending or future litigation;

· energy costs;

· the availability and effect of acquisitions, investments, dispositions and other capital expenditures including share repurchases on our results of operations, financial condition or stock price; and

· changes in general economic conditions.

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

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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; and (iii) corporate.  Our publishing segment consists of the Milwaukee Journal Sentinel, which serves as the only major daily newspaper for the Milwaukee metropolitan area, and several community newspapers and shoppers in Wisconsin and Florida.  Our broadcasting segment, operating in 12 states, consists of 33 radio stations and 13 television stations and the operation of a television station under a local marketing agreement.  Results from our interactive media assets are included in our publishing and broadcasting segments.  Our corporate segment consists of unallocated corporate expenses and revenue eliminations.

Over the past several years, fundamentals in the newspaper industry have deteriorated significantly.  Retail and classified run-of-press (ROP) advertising has decreased from historic levels due in part to department store consolidation, weakened employment, automotive and real estate economics and a migration of advertising to the internet and other advertising forms.  Circulation declines and online competition have also negatively impacted newspaper industry revenues.  Additionally, the continued housing market downturn has adversely impacted the newspaper industry, including real estate classified advertising as well as the home improvement, furniture and financial services advertising categories.

In the second quarter of 2011, our publishing businesses continued to be impacted by the uneven economic recovery and the secular and cyclical influences affecting the newspaper industry.  Revenue from our publishing businesses decreased $3.3 million in the second quarter compared to the second quarter of 2010.  We have seen advertisers reduce their advertising spending in virtually all advertising categories.  We had a slight increase in the average rate per inch of advertising in the second quarter of 2011 compared to the second quarter of 2010 as an increase in the average rate per inch for retail and national advertising was partially offset by a decrease in the average rate per inch for classified advertising.  Retail advertising revenue decreased $1.8 million in the second quarter of 2011 compared to the second quarter of 2010 primarily due to a decrease in ROP and preprint advertising primarily in the home improvement, communications, furniture, dining and entertainment, automotive and travel categories and the loss of certain advertisers from our total market coverage product (our non-subscriber product).  Classified advertising revenue decreased $1.0 million primarily in the real estate category in the second quarter of 2011 compared to the second quarter of 2010.  Interactive advertising revenue increased $0.2 million at our daily newspaper in the second quarter of 2011 compared to the second quarter of 2010 primarily due to an increase in sponsorships and packages sold and classified upsells.  National advertising revenue increased $0.1 million in the second quarter of 2011 primarily due to an increase in ROP advertising in the health services category.  At our daily newspaper, commercial delivery revenue increased $0.1 million and commercial printing revenue decreased $0.1 million in the second quarter of 2011 compared to the second quarter of 2010.  Operating earnings at our publishing businesses decreased $1.2 million in the second quarter of 2011 compared to the second quarter of 2010.  The decrease in operating earnings was primarily due to the impact of the decrease in advertising revenue.  Total expenses decreased $2.1 million, or 4.9%, in the second quarter of 2011 compared to the second quarter of 2010 primarily due to a decrease in employee related expenses and a decrease in newsprint and paper costs, partially offset by an increase in delivery costs for our total market coverage product.

Revenues in the broadcast industry are derived primarily from the sale of advertising time to local, national and political and issue advertisers and, to a lesser extent, from barter, digital revenues, retransmission fees, network compensation and other revenues.  Our television and radio stations are attracting new local advertisers through the creation of new local content and programs that combine television or radio with digital.  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 radio industry in general and the revenue of individual television stations, in particular.  Our broadcasting business continues to experience an uneven economic recovery across the markets in which we operate due to continued challenges in employment and the housing markets.  Our broadcasting business also is affected by audience fragmentation as audiences have an increasing number of options to access news and other programming.  Television advertising revenue and rates in even-numbered years typically benefit from political and issue advertising because there tends to be more pressure on available inventory as the demand for advertising increases and we have the opportunity to increase average unit rates we charge our customers.

Revenue from our broadcasting businesses decreased $0.9 million in the second quarter of 2011 compared to the second quarter of 2010 primarily due to a $1.0 million decrease in political and issue advertising revenue, a $0.3 million decrease in local advertising revenue and a $0.3 million decrease in national advertising revenue, partially offset by a $0.6 million increase in retransmission revenue.  Operating earnings from our broadcasting business decreased $1.4 million in the second quarter of 2011 compared to the second quarter of 2010, primarily due to the impact from the decrease in advertising revenue and an increase in expenses.  Total expenses increased $0.5 million, or 1.1%, in the second quarter of 2011 compared to the second quarter of 2010 primarily due to increases in employee related expenses, network programming expenses and expenses related to recent contract renegotiations.

Advertising revenue at our publishing and broadcasting businesses reflects continued cautious behavior of both our customers and consumers.  While we are seeing some improvement at our broadcasting businesses, persistent high unemployment, lack of strong economic growth and continued economic uncertainty temper our optimism with respect to improved revenue in the near term.  Revenue levels in our broadcasting business will continue to be affected by increased competition for audiences.  We do not expect that revenues at our daily newspaper will return to revenue levels reported in 2010 or prior years given the secular changes affecting the newspaper industry.

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In 2011, we intend to seek in-market growth opportunities in traditional or digital media, make capital investments in our businesses and consider broadcast acquisition opportunities. Our acquisition strategy will be subject to our ability to identify strategic acquisition candidates, negotiate definitive agreements on acceptable terms and, as necessary, secure additional financing.

In May 2011, we signed a multi-year agreement with DISH Network L.L.C. (DISH Network) for continued carriage on their system.  Aside from the DISH Network contract, we do not have any material retransmission contracts expiring this year with any other operators.

Results of Operations

Second Quarter Ended June 26, 2011 compared to the Second Quarter Ended June 27, 2010

Our consolidated revenue in the second quarter of 2011 was $90.1 million, a decrease of $4.2 million, or 4.5%, compared to $94.3 million in the second quarter of 2010.  Our consolidated operating costs and expenses in the second quarter of 2011 were $49.2 million, a decrease of $1.7 million, or 3.4%, compared to $50.9 million in the second quarter of 2010.  Our consolidated selling and administrative expenses in the second quarter of 2011 were $29.4 million, a decrease of $0.2 million, or 0.7%, compared to $29.6 million in the second quarter of 2010.

The following table presents our total revenue by segment, total operating costs and expenses, selling and administrative expenses and total operating earnings as a percent of total revenue for the second quarter of 2011 and the second quarter of 2010:

	2011			Percent of Total Revenue			2010			Percent of Total Revenue
	(dollars in millions)
Revenue:
Publishing	$	44.1			49.0	%	$	47.4			50.2	%
Broadcasting		46.1			51.1			47.0			49.9
Corporate eliminations		(0.1	)		(0.1	)		(0.1	)		(0.1	)
Total revenue		90.1			100.0			94.3			100.0
Total operating costs and expenses		49.2			54.6			50.9			54.0
Selling and administrative expense		29.4			32.6			29.6			31.4
Total operating costs and expenses and selling and administrative expenses		78.6			87.2			80.5			85.4
Total operating earnings	$	11.5			12.8	%	$	13.8			14.6	%

Our publishing businesses experienced an 8.9% decrease in retail advertising revenue in the second quarter of 2011 compared to the second quarter of 2010 primarily in consumer-driven categories.  The retail advertising revenue decreases were in the home improvement, communications, furniture, dining and entertainment, automotive and travel categories.  Classified advertising revenue decreased 15.7% in the second quarter of 2011 compared to the second quarter of 2010 primarily due to a decrease in the real estate and other categories.  Partially offsetting these revenue decreases was a 7.3% increase in online advertising revenue and a 7.5% increase in commercial delivery revenue at our daily newspaper in the second quarter of 2011 compared to the second quarter of 2010.  We believe consumers are still cautious in regards to spending discretionary income.  Secular changes affecting the newspaper industry also are resulting in the need to continue to reduce costs and align our cost structure in the face of continued decreasing revenues.

At our broadcasting businesses, advertising revenue decreased in the second quarter of 2011 compared to the second quarter of 2010 primarily due to decreases in political and issue, local and national advertising revenue.  Political and issue advertising revenue decreased because 2011 is considered a non-political and issue advertising year.  The above revenue decreases were partially offset by a $0.6 million increase in retransmission revenue in the second quarter of 2011 compared to the second quarter of 2010.

The decrease in total operating costs and expenses in the second quarter of 2011 compared to the second quarter of 2010 was primarily due to decreases in employee related expenses reflecting the savings from workforce reduction initiatives implemented in 2010, broadcast rights fees, syndicated programming expenses and newsprint and paper costs, partially offset by an increase in delivery fees for our re-launched, mail-based total market coverage product.  The decrease in selling and administrative expenses was primarily due to a decrease in executive incentive compensation expense and employee related expenses, partially offset by the expense related to restoring our company-wide 401(k) match and an increase in promotional expenses.

Our consolidated operating earnings were $11.5 million in the second quarter of 2011, a decrease of $2.3 million, or 16.6%, compared to $13.8 million in the second quarter of 2010.  The following table presents our operating earnings (loss) by segment for the second quarter of 2011 and the second quarter of 2010:

24

	2011			2010
	(dollars in millions)
Publishing	$	5.4		$	6.6
Broadcasting		8.3			9.7
Corporate		(2.2	)		(2.5	)
Total operating earnings	$	11.5		$	13.8

The decrease in total operating earnings was primarily due to the decrease in revenue at our publishing and broadcasting businesses, partially offset by the decrease in total operating costs and expenses and selling and administrative expenses.

EBITDA in the second quarter of 2011 was $17.3 million, a decrease of $2.7 million, or 13.4%, compared to $20.0 million in the second quarter of 2010.  We define EBITDA as net earnings (loss) excluding earnings/loss from discontinued operations, net, provision (benefit) for income taxes, total other expense, net (which is entirely comprised of interest income and expense), depreciation and amortization.  Management primarily uses EBITDA, among other things, to evaluate our operating performance compared to our operating plans and/or prior years and to value prospective acquisitions.  We believe the presentation of this measure is relevant and useful for investors because it allows investors to view performance in a manner similar to the method used by management, helps to improve their 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.  EBITDA is also a primary measure used externally by our investors and our peers in our industry for purposes of valuation and comparing our operating performance to other companies in the industry.  EBITDA is not a measure of performance or liquidity calculated in accordance with accounting principles generally accepted in the United States.  EBITDA should not be considered in isolation of, or as a substitute for, net earnings as an indicator of operating performance or cash flows from operating activities as a measure of liquidity.  EBITDA, as we calculate it, may not be comparable to EBITDA measures reported by other companies.

The following table presents a reconciliation of our consolidated net earnings to EBITDA for the second quarter of 2011 and the second quarter of 2010:

	2011		2010
	(dollars in millions)
Net earnings	$	6.1	$	8.1
Earnings from discontinued operations, net		--		(0.2	)
Provision for income taxes		4.5		5.3
Total other expense, net (which is entirely comprised of interest income and expense)		0.9		0.5
Depreciation		5.4		5.8
Amortization		0.4		0.5
EBITDA	$	17.3	$	20.0

The decrease in our EBITDA was consistent with the decrease in our operating earnings for the reasons described above.

Publishing

Revenue from publishing in the second quarter of 2011 was $44.1 million, a decrease of $3.3 million, or 6.9%, compared to $47.4 million in the second quarter of 2010.  Operating earnings from publishing were $5.4 million in the second quarter of 2011, a decrease of $1.2 million, or 19.3%, compared to $6.6 million in the second quarter of 2010.

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The following table presents our publishing revenue by category and operating earnings for the second quarter of 2011 and the second quarter of 2010:

	2011						2010
	Daily Newspaper		Community Newspapers & Shoppers		Total		Daily Newspaper		Community Newspapers & Shoppers		Total		Percent Change
					(dollars in millions)
Advertising revenue:
Retail	$	14.6	$	5.2	$	19.8	$	15.8	$	5.8	$	21.6		(8.9	)
Classified		4.5		1.0		5.5		5.2		1.3		6.5		(15.7	)
National		1.2		--		1.2		1.1		--		1.1		13.8
Direct marketing		--		--		--		0.1		--		0.1		(71.0	)
Total advertising revenue		20.3		6.2		26.5		22.2		7.1		29.3		(9.7	)
Circulation revenue		12.2		0.4		12.6		12.5		0.5		13.0		(2.5	)
Other revenue		4.2		0.8		5.0		4.3		0.8		5.1		(2.1	)
Total revenue	$	36.7	$	7.4	$	44.1	$	39.0	$	8.4	$	47.4		(6.9	)
Operating earnings	$	4.3	$	1.1	$	5.4	$	5.4	$	1.2	$	6.6		(19.3	)

Advertising revenue accounted for 60.1% of total publishing revenue in the second quarter of 2011 compared to 61.9% in the second quarter of 2010.  The ongoing secular changes in the newspaper industry and the current economic environment have caused advertisers to decrease their advertising spending across most of our advertising revenue categories.  In addition, due to the changing mix of revenue categories, frequency and placement of advertising in the newspaper and planned advertising rate decreases in order to increase volume, we continued to see decreases in the average rate per inch of advertising in the second quarter of 2011.

Retail advertising revenue in the second quarter of 2011 was $19.8 million, a decrease of $1.8 million, or 8.9%, compared to $21.6 million in the second quarter of 2010.  The $1.2 million decrease in retail advertising revenue at our daily newspaper was primarily due to a decrease in ROP advertising revenue, the loss of certain advertisers from our total market coverage product and a decrease in preprint advertising revenue, partially offset by an increase in retail online advertising revenue.  The revenue decreases were in the home improvement, communications, furniture, dining and entertainment, automotive and travel categories.  We believe consumers are still cautious in regards to spending discretionary income and advertisers are still decreasing their spending in traditional print products, including our daily newspaper.  The same trends persisted in our community newspapers and shoppers business.  The $0.6 million decrease in retail advertising revenue at our community newspapers and shoppers business was primarily due to decreases in automotive, retail and real estate advertising and a decrease from publications we decided to exit.

Classified advertising is generally the most sensitive to economic cycles because it is driven by the demand of employment, automotive sales and real estate transactions.  As a result of the ongoing secular trend of classified advertising transitioning to the internet and the current economic environment, our publishing businesses experienced a decrease in ROP classified advertising revenue in the second quarter of 2011 compared to the second quarter of 2010, partially offset by an increase in classified online advertising revenue.  Classified advertising revenue in the second quarter of 2011 was $5.5 million, a decrease of $1.0 million, or 15.7%, compared to $6.5 million in the second quarter of 2010.  At our daily newspaper, classified advertising revenue decreased $0.7 million, or 14.1%, in the second quarter of 2011 compared to the second quarter of 2010.  The decrease was lead by the real estate category, which decreased $0.4 million, or 36.6%.  The lack of any recovery in the Milwaukee area housing market and the decrease in real estate advertisers placing advertisements in our products continues to affect us.  Additionally, the other category decreased $0.2 million, or 13.3%, and the automotive category decreased $0.1 million or 8.4%.  The employment category was essentially even compared to the second quarter of 2010.  The average rate per inch of classified advertising decreased in the second quarter of 2011 compared to the second quarter of 2010, primarily due to the planned decrease in rates for employment classified advertising revenue in an effort to increase volume.  We believe this strategy was successful as we experienced an 18.8% increase in volume for employment classified advertising in the second quarter of 2011 compared to the second quarter of 2010.  Historically, rates for employment classified advertising have been higher than other classified advertising categories.  Average rates per inch for real estate and automotive advertising revenue also decreased compared to the second quarter of 2010, partially due to our planned decrease in rates for real estate classified advertising revenue.  We have not experienced the same level of success from our strategy to increase volume by decreasing rates for real estate classified advertising revenue.  At our community newspapers and shoppers business, classified advertising revenue decreased $0.3 million, or 22.0%, in the second quarter of 2011 compared to the second quarter of 2010, primarily due to decreases in automotive, employment and real estate classified advertising revenue and a decrease from publications we decided to exit.

The total decrease in retail and classified automotive ROP and online advertising at our daily newspaper in the second quarter of 2011 was $0.3 million, or 19.2%, compared to the second quarter of 2010.

Total retail and classified interactive advertising revenue at our daily newspaper was $3.0 million in the second quarter of 2011, an increase of $0.2 million, or 7.3%, compared to $2.8 million in the second quarter of 2010.  Interactive retail advertising revenue increased 6.9% compared to the second quarter of 2010 due to an increase in sponsorships sold.  Interactive classified advertising revenue increased 8.0% compared to the second quarter of 2010 due to an increase in classified upsells and packages sold.  Interactive advertising revenue is reported in the retail and classified advertising revenue categories.

26

National advertising revenue was $1.2 million in the second quarter of 2011, an increase of $0.1 million, or 13.8%, compared to $1.1 million in the second quarter of 2010.  The increase was primarily due to an increase in ROP advertising in the health services category.

Direct marketing revenue consists of revenue from the sale of direct mail products of our daily newspaper.  There was minimal direct marketing revenue in the second quarter of 2011 compared to $0.1 million in the second quarter of 2010.

Circulation revenue accounted for 28.7% of total publishing revenue in the second quarter of 2011 compared to 27.4% in the second quarter of 2010.  Circulation revenue was $12.6 million in the second quarter of 2011, a decrease of $0.4 million, or 2.5%, compared to $13.0 million in the second quarter of 2010.  At our daily newspaper, a decrease in revenue from the daily edition was partially offset by an increase in revenue from the Sunday edition.  In early 2011, our daily newspaper launched a program titled “Big Wednesday” in which Sunday-only subscribers receive the Wednesday edition of the daily newspaper as part of their existing Sunday-only subscription.  We believe this program will help our advertisers reach a larger mid-week audience.  At our community newspapers and shoppers business, circulation revenue of $0.4 million in the second quarter of 2011 decreased $0.1 million compared to $0.5 million in the second quarter of 2010.

Other revenue, which consists of revenue from commercial printing, commercial distribution and promotional revenue at our daily newspaper and commercial printing at the printing plants for our community newspapers and shoppers, accounted for 11.2% of total publishing revenue in the second quarter of 2011 compared to 10.7% in the second quarter of 2010.  Other revenue was $5.0 million in the second quarter of 2011, a decrease of $0.1 million, or 2.1%, compared to $5.1 million in the second quarter of 2010.  The $0.1 million decrease at our daily newspaper was primarily due to a decrease in commercial printing revenue from a decrease in the number of pages and contract renegotiations, partially offset by an increase in commercial delivery revenue as we continue to expand our distribution of other newspapers.  At our community newspapers and shoppers business, other revenue was $0.8 million in both the second quarter of 2011 and the second quarter of 2010.

In June 2011, we sold the Pelican Press and PelicanPress Marketplace businesses, which operate in Sarasota, Florida.  We recorded a pre-tax gain on the sale, net of transaction expenses, of $0.2 million.

Publishing operating earnings in the second quarter of 2011 were $5.4 million, a decrease of $1.2 million, or 19.3%, compared to $6.6 million in the second quarter of 2010.  The decrease in operating earnings was primarily due to the impact of the decrease in advertising revenue.  In an effort to partially offset the impact of the decrease in advertising revenue, our publishing businesses continue to reduce their expense platforms.  Total expenses decreased $2.1 million, or 4.9%, in the second quarter of 2011 compared to the second quarter of 2010 primarily due to a decrease in employee related expenses and a decrease in newsprint and paper costs, partially offset by an increase in delivery costs for our total market coverage product (which was re-launched as a mail-based product in the fourth quarter of 2010).  Total newsprint and paper costs for our publishing businesses in the second quarter of 2011 were $4.5 million, a decrease of $0.1 million, or 3.1%, compared to $4.6 million in the second quarter of 2010.  A 5.1% decrease in newsprint consumption due to the decrease in advertising pages was partially offset by a 5.1% increase in average newsprint pricing per metric ton.

Broadcasting

Revenue from broadcasting in the second quarter of 2011 was $46.1 million, a decrease of $0.9 million, or 2.0%, compared to $47.0 million in the second quarter of 2010.  Operating earnings from broadcasting in the second quarter of 2011 were $8.3 million, a decrease of $1.4 million, or 13.8%, compared to $9.7 million in the second quarter of 2010.

The following table presents our broadcasting revenue and operating earnings for the second quarter of 2011 and the second quarter of 2010:

	2011						2010						Percent
	Television		Radio		Total		Television		Radio		Total		Change
					(dollars in millions)
Revenue	$	28.7	$	17.4	$	46.1	$	29.3	$	17.7	$	47.0		(2.0	)
Operating earnings	$	4.3	$	4.0	$	8.3	$	5.4	$	4.3	$	9.7		(13.8	)

Revenue from our television stations in the second quarter of 2011 was $28.7 million, a decrease of $0.6 million, or 2.1%, compared to $29.3 million in the second quarter of 2010.  We experienced revenue increases in five of our nine television markets.  Compared to the second quarter of 2010, political and issue advertising revenue decreased $1.0 million, or 57.9%, and national advertising revenue decreased $0.6 million, or 9.5%, primarily due to a decrease in automotive advertising revenue. Partially offsetting these revenue decreases was an increase in retransmission revenue of $0.6 million, or 34.7%; an increase in local advertising revenue of $0.3 million, or 1.4%, primarily due to an increase in interactive advertising revenue; and other revenue increased $0.1 million, or 50.8%.  Political and issue advertising revenue decreased in the second quarter of 2011 compared to the second quarter of 2011 because 2011 is considered a non-political and issue advertising year. Television advertising revenue and rates in even-numbered years typically benefit from political and issue advertising because there tends to be more pressure on available inventory as the demand for advertising increases and we have the opportunity to increase the average unit rates we charge our customers.

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Our television stations experienced revenue decreases in a number of categories, specifically automotive, financial, packaged goods and home improvement, partially offset by increases in the medical, retail, media and communications categories.  Automotive advertising revenue represented 15.9% of television advertising revenue in the second quarter of 2011 compared to 17.4% in the second quarter of 2010.  Automotive advertising revenue was $4.6 million in the second quarter of 2011, a decrease of $0.5 million, or 10.2%, compared to $5.1 million in the second quarter of 2010 primarily due to the impact of the crisis in Japan on the automotive supply chain and inventories.  Our television stations are working to grow their local customer base by creating new local content and programs that combine television with digital platforms.  Interactive revenue was $0.5 million in the second quarter of 2011, an increase of $0.1 million, or 38.3%, compared to $0.4 million in the second quarter of 2010.  Interactive revenue is reported in local advertising revenue.

Operating earnings from our television stations in the second quarter of 2011 were $4.3 million, a decrease of $1.1 million, or 20.1%, compared to $5.4 million in the second quarter of 2010.  The decrease in operating earnings was primarily due to the impact from the decrease in advertising revenue and an increase in expenses.  Total television expenses in the second quarter of 2011 increased $0.5 million, or 2.0%, compared to the second quarter of 2010 primarily due to increases in employee related expenses, network programming fees and expenses related to our recent contract renegotiations.  Throughout 2011, we have selectively added back expense to invest in our employees, programming, and promotion of our products.

Revenue from our radio stations in the second quarter of 2011 was $17.4 million, a decrease of $0.3 million, or 1.8%, compared to $17.7 million in the second quarter of 2010.  We experienced revenue decreases in five of our eight radio markets.  Compared to the second quarter of 2010, local advertising revenue decreased $0.6 million, or 3.8%, partially offset by an increase in national advertising revenue of $0.3 million, or 21.2%.  Political and issue advertising revenue was $0.2 million in both the second quarter of 2011 and the second quarter of 2010.

Our radio stations experienced revenue decreases in a number of categories, specifically entertainment, other services and retail, partially offset by increases in the furniture and furnishings, professional services, media, pharmaceuticals, casino and gambling and automotive categories.  Automotive advertising represented 14.6% of radio advertising revenue in the second quarter of 2011 compared to 13.7% in the second quarter of 2010.  Automotive advertising revenue was $2.5 million in the second quarter of 2011, an increase of $0.1 million, or 5.1%, compared to $2.4 million in the second quarter of 2010.  Our radio stations are working to grow their local customer base by creating new local content and programs that combine radio with digital platforms.  Interactive revenue was $0.4 million in both the second quarter of 2011 and the second quarter of 2010.  Interactive revenue is reported in local advertising revenue.

Operating earnings from our radio stations in the second quarter of 2011 were $4.0 million, a decrease of $0.3 million, or 5.7%, compared to $4.3 million in the second quarter of 2010.  The decrease in operating earnings was primarily due to the impact from the decrease in advertising revenue.  Total radio expenses were $13.4 million in both the second quarter of 2011 and the second quarter of 2010.  A decrease in broadcast rights fees was offset by an increase in promotional expenses.  Throughout 2011, we have selectively added back expense to invest in our employees, programming, and promotion of our products.

Corporate

Revenue and expense eliminations were $0.1 million in both the second quarter of 2011 and the second quarter of 2010.  The corporate segment reflects the unallocated costs of our corporate executive management, as well as expenses related to corporate governance.  The unallocated expenses were $2.2 million in the second quarter of 2011, a decrease of $0.3 million compared to $2.5 million in the second quarter of 2010.  The decrease was primarily due to a decrease in our executive incentive compensation expense.

Other Income and Expense and Taxes

Interest income was insignificant in both the second quarter of 2011 and the second quarter of 2010.  Interest expense was $0.9 million in the second quarter of 2011 compared to $0.5 million in the second quarter of 2010.  The increase in interest expense was due to the increase in borrowing rates under our amended and extended credit agreement entered into on August 13, 2010, partially offset by the decrease in average borrowings.  Amortization of deferred financing costs, which is reported in interest expense, was $0.6 million in the second quarter of 2011 compared to $0.1 million in the second quarter of 2010.

Our effective tax rate was 42.0% in the second quarter of 2011 compared to 40.2% in the second quarter of 2010.  The increase was primarily due to a state tax law change that resulted in a write-off of a state deferred tax asset in the second quarter of 2011.

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Discontinued Operations

There were no earnings from discontinued operations, net of income tax expense, in the second quarter of 2011 compared to $0.2 million in the second quarter of 2010.  Income tax expense was $0.1 million in the second quarter of 2010.

During 2010, we sold substantially all of the operating assets of PrimeNet Marketing Services (PrimeNet), our former direct marketing services business located in St. Paul, Minnesota and Clearwater, Florida.  In the second quarter of 2010, there was no revenue from PrimeNet and we recorded a $0.2 million net loss from operations and shut down related costs.

Also during 2010, we sold substantially all of the assets and certain liabilities of IPC Print Services, Inc. (IPC), our former printing services business.  In the second quarter of 2010, revenue from IPC was $10.1 million and we recorded $0.4 million in net earnings from operations.

Net Earnings

Our net earnings in the second quarter of 2011 were $6.1 million, a decrease of $2.0 million, or 24.2%, compared to $8.1 million in the second quarter of 2010.  The decrease was due to the decrease in operating earnings from continuing operations for the reasons described above, the increase in interest expense and the decrease in earnings from discontinued operations, partially offset by the decrease in the provision for income taxes.

Earnings per Share for Class A and B Common Stock

In the second quarter of 2011, basic and diluted net earnings per share of class A and B common stock were $0.10 for both.  This compared to $0.14 for both in the second quarter of 2010.  Basic and diluted earnings per share of class A and B common stock from continuing operations were $0.10 for both in the second quarter of 2011.  This compared to $0.14 for both in the second quarter of 2010.  There were no basic and diluted earnings per share from discontinued operations in the second quarter of 2011 and the second quarter of 2010.

Two Quarters Ended June 26, 2011 compared to the Two Quarters Ended June 27, 2010

Our consolidated revenue in the two quarters of 2011 was $174.0 million, a decrease of $7.3 million, or 4.0%, compared to $181.3 million in the two quarters of 2010.  Our consolidated operating costs and expenses in the two quarters of 2011 were $98.8 million, a decrease of $2.7 million, or 2.7%, compared to $101.5 million in the two quarters of 2010.  Our consolidated selling and administrative expenses in the two quarters of 2011 were $57.7 million, an increase of $1.0 million, or 1.8%, compared to $56.7 million in the two quarters of 2010.

The following table presents our total revenue by segment, total operating costs and expenses, selling and administrative expenses and total operating earnings as a percent of total revenue for the two quarters of 2011 and the two quarters of 2010:

	2011			Percent of Total Revenue			2010			Percent of Total Revenue
				(dollars in millions)
Revenue:
Publishing	$	85.9			49.4	%	$	92.0			50.7	%
Broadcasting		88.2			50.7			89.6			49.5
Corporate eliminations		(0.1	)		(0.1	)		(0.3	)		(0.2	)
Total revenue		174.0			100.0			181.3			100.0
Total operating costs and expenses		98.8			56.8			101.5			56.0
Selling and administrative expense		57.7			33.1			56.7			31.2
Total operating costs and expenses and selling and administrative expenses		156.5			89.9			158.2			87.2
Total operating earnings	$	17.5			10.1	%	$	23.1			12.8	%

Our publishing businesses experienced an 8.1% decrease in retail advertising revenue in the two quarters of 2011 compared to the two quarters of 2010 primarily in consumer-driven categories.  The retail advertising revenue decreases were in the home improvement, communications, furniture, automotive, finance, food, dining and entertainment and travel categories.  Classified advertising revenue decreased 14.7% in the two quarters of 2011 compared to the two quarters of 2010 primarily due to a decrease in the real estate and other categories.  Partially offsetting these revenue decreases was a 9.3% increase in online advertising revenue and a 10.6% increase in commercial delivery revenue at our daily newspaper in the two quarters of 2011 compared to the two quarters of 2010.

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At our broadcasting businesses, advertising revenue decreased in the two quarters of 2011 compared to the two quarters of 2010 primarily due to the absence of Olympic advertising revenue and decreases in political and issue and national advertising revenue, partially offset by an increase in local advertising revenue and an increase in retransmission revenue.  Automotive advertising was $14.1 million in both the two quarters of 2011 and the two quarters of 2010.

The decrease in total operating costs and expenses in the two quarters of 2011 compared to the two quarters of 2010 was primarily due to a decrease in employee related expenses reflecting the savings from workforce reduction initiatives implemented in 2010, partially offset by an increase in broadcast rights fees and an increase in delivery fees for our re-launched, mail-based total market coverage product.  The increase in selling and administrative expenses was primarily due to increases in promotional expenses, professional services fees, and restoring our company-wide 401(k) match, partially offset by a decrease in executive incentive compensation expense.

Our consolidated operating earnings were $17.5 million in the two quarters of 2011, a decrease of $5.6 million, or 24.4%, compared to $23.1 million in the two quarters of 2010.  The following table presents our operating earnings (loss) by segment for the two quarters of 2011 and the two quarters of 2010:

	2011			2010
	(dollars in millions)
Publishing	$	7.2		$	10.0
Broadcasting		14.3			17.4
Corporate		(4.0	)		(4.3	)
Total operating earnings	$	17.5		$	23.1

The decrease in total operating earnings was primarily due to the decrease in revenue at our publishing and broadcasting businesses and the increase in selling and administrative expenses, partially offset by a decrease in operating costs and expenses primarily at our publishing businesses.

EBITDA in the two quarters of 2011 was $29.1 million, a decrease of $6.5 million, or 18.3%, compared to $35.6 million in the two quarters of 2010.

The following table presents a reconciliation of our consolidated net earnings to EBITDA for the two quarters of 2011 and the two quarters of 2010:

	2011			2010
	(dollars in millions)
Net earnings	$	9.5		$	13.4
Earnings from discontinued operations, net		(0.3	)		(0.2	)
Provision for income taxes		6.3			8.9
Total other expense, net (which is entirely comprised of interest income and expense)		2.0			1.1
Depreciation		10.8			11.4
Amortization		0.8			1.0
EBITDA	$	29.1		$	35.6

The decrease in our EBITDA was consistent with the decrease in our operating earnings for the reasons described above.

Publishing

Revenue from publishing in the two quarters of 2011 was $85.9 million, a decrease of $6.1 million, or 6.5%, compared to $92.0 million in the two quarters of 2010.  Operating earnings from publishing were $7.2 million in the two quarters of 2011, a decrease of $2.8 million, or 28.4%, compared to $10.0 million in the two quarters of 2010.

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The following table presents our publishing revenue by category and operating earnings for the two quarters of 2011 and the two quarters of 2010:

	2011						2010
	Daily Newspaper		Community Newspapers & Shoppers		Total		Daily Newspaper		Community Newspapers & Shoppers		Total		Percent Change
	(dollars in millions)
Advertising revenue:
Retail	$	27.4	$	9.6	$	37.0	$	29.6	$	10.7	$	40.3		(8.1	)
Classified		8.8		1.8		10.6		10.1		2.3		12.4		(14.7	)
National		2.4		--		2.4		2.4		--		2.4		2.2
Direct marketing		--		--		--		0.1		--		0.1		(46.2	)
Total advertising revenue		38.6		11.4		50.0		42.2		13.0		55.2		(9.2	)
Circulation revenue		24.8		0.8		25.6		25.1		0.9		26.0		(1.4	)
Other revenue		8.7		1.6		10.3		9.3		1.5		10.8		(5.1	)
Total revenue	$	72.1	$	13.8	$	85.9		76.6	$	15.4	$	92.0		(6.5	)
Operating earnings	$	6.2	$	1.0	$	7.2		8.9	$	1.1	$	10.0		(28.4	)

Advertising revenue accounted for 58.2% of total publishing revenue in the two quarters of 2011 compared to 60.0% in the two quarters of 2010.  The ongoing secular changes in the newspaper industry and the current economic environment have caused advertisers to decrease their advertising spending across most of our advertising revenue categories.  In addition, due to the changing mix of revenue categories, frequency and placement of advertising in the newspaper and planned advertising rate decreases in order to increase volume, we continued to see decreases in the average rate per inch of advertising in the two quarters of 2011.

Retail advertising revenue in the two quarters of 2011 was $37.0 million, a decrease of $3.3 million, or 8.1%, compared to $40.3 million in the two quarters of 2010.  The $2.2 million decrease in retail advertising revenue at our daily newspaper was primarily due to decreases in ROP and preprint advertising revenue and the loss of certain advertisers from our total market coverage product, partially offset by an increase in retail online advertising revenue.  The revenue decreases were in the home improvement, communications, furniture, automotive, finance, food, dining and entertainment and travel categories.  We believe consumers are still cautious in regards to spending discretionary income and advertisers are still decreasing their spending in traditional print products, including our daily newspaper.  The same trends persisted in our community newspapers and shoppers business.  The $1.1 million decrease in retail advertising revenue at our community newspapers and shoppers business was primarily due to decreases in automotive, retail and real estate advertising and a decrease from publications we decided to exit.

Classified advertising is generally the most sensitive to economic cycles because it is driven by the demand of employment, real estate transactions and automotive sales.  As a result of the ongoing secular trend of classified advertising transitioning to the internet and the current economic environment, our publishing businesses experienced a decrease in ROP classified advertising revenue in the two quarters of 2011 compared to the two quarters of 2010, partially offset by an increase in classified online advertising revenue.  Classified advertising revenue in the two quarters of 2011 was $10.6 million, a decrease of $1.8 million, or 14.7%, compared to $12.4 million in the two quarters of 2010.  At our daily newspaper, classified advertising revenue decreased $1.3 million, or 13.1%, in the two quarters of 2011 compared to the two quarters of 2010.  The decrease was lead by the real estate category, which decreased $0.8 million, or 36.6%.  The lack of any recovery in the Milwaukee area housing market and the decrease in real estate advertisers placing advertisements in our products continues to affect us.   Additionally, the other category decreased $0.3 million, or 11.0%, the automotive category decreased $0.1 million, or 6.6%, and the employment category decreased $0.1 million, or 2.9%, compared to the two quarters of 2010.  The average rate per inch of classified advertising decreased in the two quarters of 2011 compared to the two quarters of 2010 primarily due to the planned decrease in rates for employment classified revenue in an effort to increase volume.  We believe this strategy was successful as we experienced a 33.6% increase in volume for employment classified advertising in the two quarters of 2011 compared to the two quarters of 2010.  Historically, rates for employment classified advertising have been higher than other classified advertising categories.  Average rates per inch for real estate and automotive advertising revenue also decreased compared to the two quarters of 2010, partially due to our planned decrease in rates for real estate classified advertising revenue.  We have not experienced the same level of success from our strategy to increase volume by decreasing rates for real estate classified advertising revenue.  At our community newspapers and shoppers business, classified advertising revenue decreased $0.5 million, or 21.4%, in the two quarters of 2011 compared to the two quarters of 2010 primarily due to decreases in automotive, employment and real estate classified advertising revenue and a decrease from publications we decided to exit.

The total decrease in retail and classified automotive ROP and online advertising at our daily newspaper in the two quarters of 2011 was $0.4 million, or 16.1%, compared to the two quarters of 2010.

Total retail and classified interactive advertising revenue at our daily newspaper was $5.6 million in the two quarters of 2011, an increase of $0.5 million, or 9.3%, compared to $5.1 million in the two quarters of 2010.  Interactive retail advertising revenue increased 8.6% compared to the two quarters of 2010 due to an increase in sponsorships sold.  Interactive classified advertising revenue increased 10.3% compared to the two quarters of 2010 due to an increase in classified upsells and packages sold.  Interactive advertising revenue is reported in the retail and classified advertising revenue categories.

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National advertising revenue was $2.4 million in both the two quarters of 2011 and the two quarters of 2010.

Direct marketing revenue, consisting of revenue from the sale of direct mail products of our daily newspaper, was minimal in the two quarters of 2011 compared to $0.1 million and the two quarters of 2010.

Circulation revenue accounted for 29.8% of total publishing revenue in the two quarters of 2011 compared to 28.3% in the two quarters of 2010.  Circulation revenue was $25.6 million in the two quarters of 2011, a decrease of $0.4 million, or 1.4%, compared to $26.0 in the two quarters of 2010.  At our daily newspaper, a decrease in revenue from the daily edition was partially offset by an increase in revenue from the Sunday edition.  In early 2011, our daily newspaper launched a program titled “Big Wednesday” in which Sunday-only subscribers receive the Wednesday edition of the daily newspaper as part of their existing Sunday-only subscription.  We believe this program will help our advertisers reach a larger mid-week audience.  At our community newspapers and shoppers business, circulation revenue of $0.8 million in the two quarters of 2011 decreased $0.1 million compared to $0.9 million in the two quarters of 2010.

Other revenue, which consists of revenue from commercial printing, commercial distribution and promotional revenue at our daily newspaper and commercial printing at the printing plants for our community newspapers and shoppers, accounted for 12.0% of total publishing revenue in the two quarters of 2011 compared to 11.7% in the two quarters of 2010.  Other revenue was $10.3 million in the two quarters of 2011, a decrease of $0.5 million, or 5.1%, compared to $10.8 million in the two quarters of 2010.  The $0.6 million decrease at our daily newspaper was primarily due to a decrease in commercial printing revenue from the loss of a significant customer, a decrease in the number of pages printed and contract renegotiations, partially offset by an increase in commercial delivery revenue as we continue to expand our distribution of other newspapers.  At our community newspapers and shoppers business, other revenue was $1.6 million in the two quarters of 2011 compared to $1.5 million the two quarters of 2010.

In June 2011, we sold the Pelican Press and PelicanPress Marketplace businesses, which operate in Sarasota, Florida.  We recorded a pre-tax gain on the sale, net of transaction expenses, of $0.2 million.

Publishing operating earnings in the two quarters of 2011 were $7.2 million, a decrease of $2.8 million, or 28.4%, compared to $10.0 million in the two quarters of 2010.  The decrease in operating earnings was primarily due to the impact of the decrease in advertising revenue.  In an effort to partially offset the impact of the decrease in advertising revenue, our publishing businesses continue to reduce their expense platforms.  Total expenses decreased $3.2 million, or 3.9%, in the two quarters of 2011 compared to the two quarters of 2010 primarily due to a decrease in employee related expenses, partially offset by an increase in delivery costs for our total market coverage product (which was re-launched as a mail-based product in the fourth quarter of 2010).  Total newsprint and paper costs for our publishing businesses in the two quarters of 2011 were $8.6 million, an increase of $0.1 million, or 0.8%, compared to $8.5 million in the two quarters of 2010 due to an 8.9% increase in average newsprint pricing per metric ton, partially offset by a 5.4% decrease in newsprint consumption due to a decrease in advertising pages.

Broadcasting

Revenue from broadcasting in the two quarters of 2011 was $88.2 million, a decrease of $1.4 million, or 1.6%, compared to $89.6 million in the two quarters of 2010.  Operating earnings from broadcasting in the two quarters of 2011 were $14.3 million, a decrease of $3.1 million, or 17.7%, compared to $17.4 million in the two quarters of 2010.

The following table presents our broadcasting revenue and operating earnings for the two quarters of 2011 and the two quarters of 2010:

	2011						2010						Percent
	Television		Radio		Total		Television		Radio		Total		Change
					(dollars in millions)
Revenue	$	56.1	$	32.1	$	88.2	$	57.7	$	31.9	$	89.6		(1.6	)
Operating earnings	$	8.1	$	6.2	$	14.3	$	10.6	$	6.8	$	17.4		(17.7	)

Revenue from our television stations in the two quarters of 2011 was $56.1 million, a decrease of $1.6 million, or 2.7%, compared to $57.7 million in the two quarters of 2010.  We experienced revenue increases in six of our nine television markets.  There was no Olympic advertising revenue in the two quarters of 2011.  Olympic advertising revenue was $2.2 million in the two quarters of 2010.  Compared to the two quarters of 2010, political and issue advertising revenue decreased $0.8 million, or 35.7% and national advertising revenue decreased $0.6 million, or 5.5%, primarily due to a decrease in automotive advertising revenue.  Partially offsetting these revenue decreases, local advertising revenue increased $1.1 million, or 3.0%; retransmission revenue increased $0.8 million, or 24.2%; and other revenue increased $0.1 million, or 17.3%.  Local advertising revenue increased due to an increase in local inventory availability (due to this being a non-Olympic broadcast year), an increase in interactive advertising revenue and an increase in automotive advertising revenue.  Political and issue advertising revenue decreased in the two quarters of 2011 because 2011 is considered a non-political and issue advertising year.  Television advertising revenue and rates in even-numbered years typically benefit from political and issue advertising because there tends to be more pressure on available inventory as the demand for advertising increases and we have the opportunity to increase the average unit rates we charge our customers.

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Our television stations experienced revenue decreases in a number of categories, specifically financial, automotive, packaged goods, home improvement, furniture and furnishings and pharmaceuticals, partially offset by increases in the casino and gambling, educations and retail categories.  Automotive advertising revenue represented 16.9% of television advertising revenue in the two quarters of 2011 compared to 17.1% in the two quarters of 2010.  Automotive advertising revenue was $9.5 million in the two quarters of 2011, a decrease of $0.4 million, or 3.8%, compared to $9.9 million in the two quarters of 2010.  Our television stations are working to grow their local customer base by creating new local content and programs that combine television with digital platforms.  Interactive revenue was $1.0 million in the two quarters of 2011, an increase of $0.3 million, or 38.5%, compared to $0.7 million in the two quarters of 2010.  Interactive revenue is reported in local advertising revenue.

Operating earnings from our television stations in the two quarters of 2011 were $8.1 million, a decrease of $2.5 million, or 23.4%, compared to $10.6 million in the two quarters of 2010.  The decrease in operating earnings was primarily due to the impact from the decrease in advertising revenue and an increase in expenses.  Total television expenses in the two quarters of 2011 increased $0.9 million, or 1.9%, compared to the two quarters of 2010 primarily due to increases in employee related expenses, network programming fees, professional services fees, bad debt expense and expenses related to expanded news coverage of the Green Bay Packers and the Wisconsin political battles.  Throughout 2011, we have selectively added back expense to invest in our employees, programming, and promotion of our products.

Revenue from our radio stations in the two quarters of 2011 was $32.1 million, an increase of $0.2 million, or 0.5%, compared to $31.9 million in the two quarters of 2010.  We experienced revenue increases in four of our eight radio markets.  Compared to the two quarters of 2010, national advertising revenue increased $0.5 million, or 17.3%, primarily due to an increase in automotive advertising revenue.  Partially offsetting this revenue increase, local advertising revenue decreased $0.3 million, or 1.1%.  Political and issue advertising revenue was $0.3 million in both the two quarters of 2011 and the two quarters of 2010.

Our radio stations experienced revenue increases in a number of categories, specifically media, professional services, automotive, furniture and furnishings, pharmaceuticals, restaurants and financial, partially offset by decreases in the entertainment, other services and medical categories.  Automotive advertising represented 14.4% of radio advertising revenue in the two quarters of 2011 compared to 13.0% in the two quarters of 2010.  Automotive advertising revenue was $4.6 million in the two quarters of 2011, an increase of $0.4 million, or 11.1%, compared to $4.2 million in the two quarters of 2010.  Our radio stations are working to grow their local customer base by creating new local content and programs that combine radio with digital platforms.  Interactive revenue was $0.8 million in both the two quarters of 2011 and the two quarters of 2010.  Interactive revenue is reported in local advertising revenue.

Operating earnings from our radio stations in the two quarters of 2011 were $6.2 million, a decrease of $0.6 million, or 8.8%, compared to $6.8 million in the two quarters of 2010.  The decrease in operating earnings was primarily due to an increase in expenses.  Total radio expenses increased $0.8 million, or 3.0%, in the two quarters of 2011 compared to the two quarters of 2010 primarily due to an increase in broadcast rights fees for the broadcast of additional Green Bay Packers games and a charge recorded for the expected loss from the broadcast rights fee of a sports contract, an increase in promotional expenses and an increase in professional services fees.  Throughout 2011, we have selectively added back expense to invest in our employees, programming, and promotion of our products.

Corporate

Revenue and expense eliminations were $0.1 million in the two quarters of 2011 compared to $0.3 million in the two quarters of 2010.  The corporate segment reflects the unallocated costs of our corporate executive management, as well as expenses related to corporate governance.  The unallocated expenses were $4.0 million in the two quarters of 2011, a decrease of $0.3 million compared to $4.3 million in the two quarters of 2010.  The decrease was primarily due to a decrease in our executive incentive compensation expense.

Other Income and Expense and Taxes

Interest income was insignificant in both the two quarters of 2011 and the two quarters of 2010.  Interest expense was $2.0 million in the two quarters of 2011 compared to $1.1 million in the two quarters of 2010.  The increase in interest expense was due to the increase in borrowing rates under our amended and extended credit agreement entered into on August 13, 2010, partially offset by the decrease in average borrowings.  Amortization of deferred financing costs, which is reported in interest expense, was $0.6 million in the two quarters of 2011 compared to $0.2 million in the two quarters of 2010.

Our effective tax rate was 40.9% in the two quarters of 2011 compared to 40.2% in the two quarters of 2010.  The increase in the two quarters of 2011 compared to the two quarters of 2010 was primarily due to a state tax law change that resulted in a write-off of a state deferred tax asset, partially offset by an audit settlement.

33

Discontinued Operations

Earnings from discontinued operations, net of income tax expense, were $0.3 million in the two quarters of 2011 compared to $0.2 million in the two quarters of 2010.  Income tax expense was $0.2 million in the two quarters of 2011 compared to $0.1 million in the two quarters of 2010.

During 2005, Multi-Color Corporation (Multi-Color) acquired substantially all of the assets and certain liabilities of NorthStar Print Group, Inc. (NorthStar), our former label printing business.  Certain liabilities were excluded from the sale of NorthStar and primarily consisted of environmental site closure costs for both the Green Bay, Wisconsin real estate and real estate located in Norway, Michigan.  In January 2011, upon environmental site closure in Green Bay, Wisconsin, we sold the real estate holdings to Multi-Color according to the 2005 sale agreement.  The net proceeds were $0.8 million and we recorded a pre-tax gain of $0.6 million.  We continue to have environmental site closure obligations with respect to the Norway, Michigan real estate, which was sold to Multi-Color in 2005.

In the two quarters of 2010, revenue from PrimeNet was $2.1 million and we recorded a $0.6 million net loss from operations and shut down related costs.

In the two quarters of 2010, revenue from IPC was $21.7 million and we recorded $0.8 million in net earnings from operations.

Net Earnings

Our net earnings in the two quarters of 2011 were $9.5 million, a decrease of $3.9 million, or 29.0%, compared to $13.4 million in the two quarters of 2010.  The decrease was due to the decrease in operating earnings from continuing operations for the reasons described above and the increase in interest expense, partially offset by the decrease in the provision for income taxes and the increase in earnings from discontinued operations.

Earnings per Share for Class A and B Common Stock

In the two quarters of 2011, basic and diluted net earnings per share of class A and B common stock were $0.16 for both.  This compared to $0.23 for both in the two quarters of 2010.  Basic and diluted earnings per share of class A and B common stock from continuing operations were $0.15 for both in the two quarters of 2011.  This compared to $0.22 for both in the two quarters of 2010.  Basic and diluted earnings per share from discontinued operations were $0.01 in both the two quarters of 2011 and the two quarters of 2010.

Liquidity and Capital Resources

Our cash balance was $2.4 million as of June 26, 2011.  We believe our expected cash flows from operations and borrowings available under our credit facility of $164.0 million as of June 26, 2011, will meet our needs for the short-and long-term.  During the two quarters of 2011, we reduced our notes payable to banks by $13.6 million.  Throughout 2011, we expect to selectively invest resources in digital initiatives, our brands, employees, programming, products and capital projects while remaining in compliance with our debt covenants.  We also expect to repurchase shares of our common stock under the recently authorized share repurchase program.

On August 13, 2010, we entered into an amendment of our formerly unsecured credit facility which, among other things, provided for the pledge of certain collateral by us and our subsidiaries (as amended, the secured credit facility).  In connection with this amendment, certain lenders reduced their commitments to $225.0 million and extended the expiration date to December 2, 2013 (extending lenders).  The maturity date for the remaining lenders, with terms and commitments that remain unchanged at $74.0 million, was on June 2, 2011 (non-extending lenders).  The secured credit facility is secured by liens on certain of our assets and the assets of our subsidiaries and contains affirmative, negative and financial covenants which are customary for financings of this type, including, among other things, limits on the creation of liens, limits on the incurrence of indebtedness, restrictions on dispositions and restrictions on dividends.  At our option, the commitments under the secured credit facility may be increased from time to time to an aggregate amount of incremental commitments not to exceed $100.0 million.  The increase option is subject to the satisfaction of certain conditions, including the identification of lenders (which may include existing lenders or new lenders) willing to provide the additional commitments.

Our borrowings from extending lenders under the secured credit facility incur interest at either LIBOR plus a margin that ranges from 225.0 basis points to 350.0 basis points, depending on our leverage, or (i) the base rate, which equals the highest of the prime rate set by U.S. Bank National Association, the Federal Funds Rate plus 100.0 basis points or one-month LIBOR plus 150.0 basis points, plus (ii) a margin that ranges from 125.0 basis points to 250.0 basis points, depending on our leverage.  As of June 26, 2011 and December 26, 2010, we had borrowings of $61.0 million and $74.6 million, respectively, under our credit facility at a weighted average rate of 2.57% and 3.06%, respectively.

Fees in connection with the secured credit facility of $3.3 million and the unamortized deferred financing costs from the unsecured revolving credit facility of $0.2 million are being amortized over the term of the secured credit facility using the effective interest method.  Unamortized deferred financing costs related to the non-extending lenders are fully amortized.

34

We estimate the fair value of our secured credit facility as of June 26, 2011 to be $60.2 million, based on discounted cash flows using an interest rate of 3.1%.  We estimated the fair value of our secured revolving facility as of December 26, 2010 to be $72.5 million, based on discounted cash flows using an interest rate of 4.05%.  These fair value measurements fall within level 3 of the fair value hierarchy.

The secured credit facility contains the following financial covenants, which remain constant over the term of the agreement:

· A consolidated funded debt ratio of not greater than 3.50-to-1, as determined for the four fiscal quarter period preceding the date of determination.  This ratio compares, for any period, our funded debt to our consolidated EBITDA, defined in the secured credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals and non-cash charges.  As of June 26, 2011, our consolidated funded debt ratio was 0.80-to-1.  As of June 26, 2011, we are able to borrow an additional $164.0 million under our secured credit facility.  Our future borrowing capacity is subject to change due to the changes in our future operating results.

· A minimum interest coverage ratio of not less than 3-to-1, as determined for the four fiscal quarter period preceding the date of determination.  This ratio compares, for any period, our consolidated EBITDA, defined in the secured credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals and non-cash charges, to our interest expense.  As of June 26, 2011, our interest coverage ratio was 17.77-to-1.

One or more of the lenders in our secured credit facility syndicate could be unable to fund future draws thereunder or take other positions adverse to us.  In such an event, our liquidity could be constrained with an adverse impact on our ability to operate our businesses.

We have $2.5 million of standby letters of credit for business insurance purposes.

On October 12, 2010, our board of directors approved an amendment to our qualified defined benefit pension plan to permanently suspend the plan and permanently cease all benefit accruals under the plan effective January 1, 2011 for all active participants, except for any employee covered by a collective bargaining agreement which requires us to bargain over the permanent suspension of the plan accruals.  We also permanently suspended the unfunded non-qualified plan that provided additional benefits to certain employees whose benefits under the pension plan and 401(k) plan were restricted due to limitations imposed by the Internal Revenue Service.  For employees not covered by the qualified defined benefit pension plan, the 401(k) plan was also amended on October 12, 2010.  The annual employer contribution is no longer a component of the 401(k) plan effective January 1, 2011.  In addition, effective January 1, 2011, we enhanced the current matching contribution to our 401(k) plan.  Prior to the suspension in February 2009, we contributed $0.50 for each dollar contributed by the 401(k) participant, up to 5% of their eligible wages for a maximum match of 2.5% of eligible wages as defined by the 401(k) plan.  Starting January 1, 2011, we began contributing $0.50 for each dollar contributed by the 401(k) participant, up to 7% of their eligible wages for a maximum match of 3.5% of eligible wages as defined by the 401(k) plan.

Our liability for separation benefits of $0.9 million as of June 26, 2011 will be paid during the next 18 months.  The ongoing activity of our liability for separation benefits during the two quarters of 2011 was as follows:

	Balance as of December 26, 2010		Charge for Separation Benefits		Payments for Separation Benefits			Balance as of June 26, 2011
			(dollars in millions)
Daily newspaper and community newspapers and shoppers	$	1.4	$	--	$	(0.5	)	$	0.9
Total	$	1.4	$	--	$	(0.5	)	$	0.9

Dividends

Since April 2009, our board of directors has suspended dividends on our class A and class B shares.  Our board of directors also suspended the payment of the cumulative dividend on our class C shares.  The accumulated class C dividend of approximately $0.14 per share each quarter must be paid prior to the payment of any future dividends on our class A and class B shares.  As of July 12, 2011, we had $4.6 million accrued for class C dividends.  Our board of directors consistently reviews our dividend payment policy, as well as our ability to pay cash dividends, at each quarterly board of directors meeting.

Share Repurchase Authorization

In July 2011, our board of directors authorized a share repurchase program of up to $45.0 million of our outstanding class A common stock and/or class B common stock until the end of fiscal 2013. Under the program, shares may be repurchased from time to time in the open market and/or in private transactions and will depend on market conditions, share price, trading volume, credit agreement covenants and other factors.

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Cash Flow

Continuing Operations

During the past two years, we primarily used our cash to reduce our notes payable to banks.  We are accomplishing this reduction, in part, by suspending payment of cash dividends to shareholders, increasing efforts to collect receivables and extending payment terms for our payables.  In the two quarters of 2011, we reduced our notes payables to banks by $13.6 million while selectively adding back expense to invest in our employees, programming, and products.

Cash provided by operating activities was $17.5 million in the two quarters of 2011 compared to $35.2 million in the two quarters of 2010.  The decrease was primarily due to increased income tax payments and payments related to our executive incentive compensation plan and other performance based plans related to our 2010 results, a decrease in cash provided by working capital and the decrease in net earnings.

Cash used for investing activities was $4.6 million in the two quarters of 2011 compared to $4.4 million in the two quarters of 2010.  Capital expenditures were $5.4 million in the two quarters of 2011 compared to $5.2 million in the two quarters of 2010.  Our capital expenditures in the two quarters of 2011 were primarily at our broadcasting business for high definition equipment, digital content management solutions and needed improvements at our facilities.  We believe these capital expenditures will help us to better serve our advertisers, viewers and listeners and will facilitate our cost control initiatives.  In the two quarters of 2011, we received $0.7 million in proceeds from the sale of the Pelican Press and PelicanPress Marketplace businesses and the minimum guaranteed commission and seller financing of working capital from the sale of the Clearwater, Florida based operations of PrimeNet.  In the two quarters of 2010, we received $0.7 million in insurance proceeds for our broadcast tower that was destroyed in an ice storm in 2009.

Cash used for financing activities was $13.2 million in the two quarters of 2011 compared to $33.5 million in the two quarters of 2010.  Borrowings under our credit facility in the two quarters of 2011 were $53.4 million and we made payments of $67.0 million, reflecting a $13.6 million decrease in our notes payable to banks compared to borrowings of $43.6 million and payments of $77.2 million in the two quarters of 2010 reflecting a $33.6 million decrease in our notes payable to banks.

Discontinued Operations

Cash provided by discontinued operations was $0.6 million in the two quarters of 2011, reflecting the sale of real estate holdings of NorthStar, compared to $2.0 million in the two quarters of 2010.  The decrease was due to cash generated from the operations of IPC in the two quarters of 2010.

New Accounting Standards

In June 2011, the Financial Accounting Standards Board (FASB) issued amended guidance for comprehensive income. The guidance requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new guidance eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted.  We will adopt this guidance in the first quarter of 2012.  We do not expect the adoption of these disclosures to have a material impact on our consolidated financial statements.

In May 2011, the FASB issued amended guidance for fair value measurement and disclosure requirements between U.S. generally accepted accounting principles and International Financial Reporting Standards (IFRS).  The new guidance includes amendments to clarify the definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. generally accepted accounting principles and IFRS. The guidance also changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  We will adopt this guidance in the first quarter of 2012.  We do not expect the adoption of these disclosures to have a material impact on our consolidated financial statements.

In December 2010, the FASB issued amended guidance for goodwill.  The guidance applies to entities that have recognized goodwill and have one or more reporting units whose carrying amount for purposes of performing step one of the goodwill impairment test is zero or negative.  The guidance modifies step one so that for those reporting units, an entity is required to perform step two of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.  In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist.  The qualitative factors are consistent with existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010, with no early adoption permitted.  We adopted this guidance in the first quarter of 2011. There was no impact on our consolidated financial statements.

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In December 2010, the FASB issued amended guidance for business combinations.  The guidance requires a public entity that presents comparative financial statements to disclose revenue and earnings of the combined entity as though the material business combination(s) on an individual or aggregate basis that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  This guidance also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  This guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted.  We adopted this guidance in the first quarter of 2011 for future business combinations.  There was no impact on our consolidated financial statements.

In July 2010, the FASB issued amended guidance for receivables.  The guidance for disclosures about activity that occurs during a period is effective for interim and annual reporting periods beginning on or after December 15, 2010.  We adopted this guidance for activity that occurs for our financing receivables in the first quarter of 2011.  The adoption of these disclosures did not have a material impact on our consolidated financial statements.  See Note 9, “Receivables,” to our unaudited consolidated condensed financial statements for disclosures regarding our adoption of the FASB’s amended guidance for financing receivables.

In January 2010, the FASB issued amended guidance for fair value measurements and disclosures.  The guidance requires new disclosures about purchases, sales, issuances, and settlements in the roll forward of activity for level 3 fair value measurements.  Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.  We adopted this guidance in the first quarter of 2011.  The adoption of this guidance did not have a material impact on our consolidated financial statements.

In October 2009, the FASB amended the accounting standards related to revenue recognition for arrangements with multiple deliverables.  This new guidance requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables, based on their relative selling price. The guidance also establishes a hierarchy for determining the selling price of a deliverable which is based on vendor-specific objective evidence, third-party evidence, or management’s best estimate of selling price. We adopted this guidance in the first quarter of 2011.  The adoption of this guidance did not have a material impact on our consolidated financial statements.  See Note 4, “Multiple-Deliverable Revenue Arrangements,” to our unaudited consolidated condensed financial statements for disclosures regarding our adoption of the FASB’s amended guidance for revenue recognition for arrangements with multiple deliverables.

Critical Accounting Policies

There are no material changes to the disclosures regarding critical accounting policies made in our Annual Report on Form 10-K for the year ended December 26, 2010.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

There are no material changes to the disclosures regarding interest rate risk and foreign currency exchange risk made in our Annual Report on Form 10-K for the year ended December 26, 2010.

ITEM 4.     CONTROLS AND PROCEDURES

We carried out an evaluation, under the supervision and with the participation of our Disclosure Committee, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934, as amended, Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in our Securitites Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to them to allow timely decisions regarding required disclosure.

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

PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

None.

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ITEM 1A.    RISK FACTORS

There are no material changes to the disclosures regarding risk factors made in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 26, 2010

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

The following table provides information about our repurchases of our class B common stock in the second quarter ended June 26, 2011:

Issuer Purchases of Equity Securities

	(a)		(b)		(c)		(d)
Period	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans Or Programs		Maximum Number Of Shares that May Yet Be Purchased Under the Plans or Programs(2)
March 28 to April 24, 2011		--	$	--		--		--
April 25 to May 22, 2011		1,106	$	5.42		--		--
May 23 to June 26, 2011		1,309	$	4.92		--		--

(1) Represents shares of class B common stock transferred from employees to us to satisfy tax withholding requirements in connection with the vesting of restricted stock under the 2007 Omnibus Incentive Plan.

(2) In July 2011, our board of directors authorized a share repurchase program of up to $45.0 million of our oustanding class A common stock and/or class B common stock until the end of fiscal 2013.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.      RESERVED

ITEM 5.      OTHER INFORMATION

None.

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ITEM 6.      EXHIBITS

(a)      Exhibits

Exhibit No.                     Description

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

(31.2) Certification by Andre J. Fernandez, Executive Vice President, Finance & Strategy 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 Andre J. Fernandez, Executive Vice President, Finance & Strategy 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.

(101) The following materials from Journal Communications, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 26 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the Unaudited Consolidated Condensed Statements of Operations for the Second Quarter and Two Quarters Ended June 26, 2011 and June 27, 2010; (ii) the Unaudited Consolidated Condensed Statement of Equity for the Two Quarters Ended June 26, 2011; (iii) the Unaudited Consolidated Condensed Statement of Equity for the Two Quarters Ended June 27, 2010; (iv) the Unaudited Consolidated Condensed Statements of Cash Flows for the Two Quarters Ended June 26, 2011 and June 27, 2010; and (vii) Notes to the Unaudited Consolidated Condensed Consolidated Financial Statements (block tagging only), furnished herewith.

39

SIGNATURES

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

	JOURNAL COMMUNICATIONS, INC.
	Registrant
Date:  August 4, 2011	/s/ Steven J. Smith
	Steven J. Smith, Chairman and Chief Executive Officer
Date:  August 4, 2011	/s/ Andre J. Fernandez
	Andre J. Fernandez, Executive Vice President, Finance & Strategy
	and Chief Financial Officer

40

EX-31.1

Exhibit No. 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15(d)-14(a) under the Securities Exchange Act of 1934

I, Steven J. Smith, certify that:

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

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

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2011

/s/ Steven J. Smith   

Steven J. Smith

Chairman and Chief Executive Officer

EX-31.2

Exhibit No. 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15(d)-14(a) under the Securities Exchange Act of 1934

I, Andre J. Fernandez, certify that:

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

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

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2011

/s/ Andre J. Fernandez 

Andre J. Fernandez

Executive Vice President, Finance & Strategy and Chief Financial Officer

EX-32

Exhibit No. 32

Certification of Steven J. Smith, Chairman and Chief Executive Officer, and Andre J. Fernandez, Executive Vice President, Finance & Strategy and Chief Financial Officer of Journal Communications, Inc., pursuant to 18 U.S.C. Section 1350

Solely for the purposes of complying with 18 U.S.C. s.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chairman and Chief Executive Officer and the Executive Vice President, Finance & Strategy and Chief Financial Officer of Journal Communications, Inc. (the “Company”), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 26, 2011 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steven J. Smith

Steven J. Smith, Chairman and Chief Executive Officer

Date: August 4, 2011

/s/ Andre J. Fernandez

Andre J. Fernandez, Executive Vice President, Finance & Strategy and Chief Financial Officer

Date: August 4, 2011

XML



Unaudited Consolidated Condensed Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data	Jun. 26, 2011	Dec. 26, 2010
Unaudited Consolidated Condensed Balance Sheets (Parenthetical) [Abstract]
Property and equipment, accumulated depreciation	$ 231,742	$ 228,820
Preferred stock, par (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Common stock, par (in dollars per share)	$ 0.01	$ 0.01
Common Stock [Member] | Class C [Member]
Unaudited Consolidated Condensed Balance Sheets (Parenthetical) [Abstract]
Common stock authorized (in shares)	10,000,000	10,000,000
Common stock issued (in shares)	3,264,000.000	3,264,000.000
Common stock outstanding (in shares)	3,264,000.000	3,264,000.000
Common Stock [Member] | Class B [Member]
Unaudited Consolidated Condensed Balance Sheets (Parenthetical) [Abstract]
Common stock authorized (in shares)	120,000,000	120,000,000
Common stock issued (in shares)	7,345,647.282	8,594,541.684
Common stock outstanding (in shares)	7,345,647.282	8,594,541.684
Common Stock [Member] | Class A [Member]
Unaudited Consolidated Condensed Balance Sheets (Parenthetical) [Abstract]
Common stock authorized (in shares)	170,000,000	170,000,000
Common stock issued (in shares)	44,716,208.000	43,196,321.000
Common stock outstanding (in shares)	44,716,208.000	43,196,321.000

XML



Unaudited Consolidated Condensed Statements of Operations (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 26, 2011	Jun. 27, 2010	Jun. 26, 2011	Jun. 27, 2010
Revenue:
Publishing	$ 44,119	$ 47,386	$ 85,919	$ 91,938
Broadcasting	46,083	47,012	88,192	89,617
Corporate eliminations	(100)	(79)	(148)	(299)
Total revenue	90,102	94,319	173,963	181,256
Operating costs and expenses:
Publishing	27,273	28,734	54,918	57,868
Broadcasting	22,069	22,300	44,004	43,896
Corporate eliminations	(100)	(79)	(148)	(299)
Total operating costs and expenses	49,242	50,955	98,774	101,465
Selling and administrative expenses	29,369	29,589	57,690	56,656
Total operating costs and expenses and selling and administrative expenses....	78,611	80,544	156,464	158,121
Operating earnings	11,491	13,775	17,499	23,135
Other income and (expense):
Interest income	20	25	38	33
Interest expense	(928)	(544)	(2,008)	(1,106)
Total other income and (expense)	(908)	(519)	(1,970)	(1,073)
Earnings from continuing operations before income taxes	10,583	13,256	15,529	22,062
Provision for income taxes	4,442	5,332	6,354	8,878
Earnings from continuing operations	6,141	7,924	9,175	13,184
Earnings from discontinued operations, net of $0, $91, $221 and $87 applicable income tax provision , respectively	0	176	341	219
Net earnings	$ 6,141	$ 8,100	$ 9,516	$ 13,403
Earnings per share:
Continuing operations (in dollars per share)	$ 0.10	$ 0.14	$ 0.15	$ 0.22
Discontinued operations (in dollars per share)	$ 0	$ 0	$ 0.01	$ 0.01
Net earnings (in dollars per share)	$ 0.10	$ 0.14	$ 0.16	$ 0.23
Diluted - Class A and B common stock:
Continuing operations (in dollars per share)	$ 0.10	$ 0.14	$ 0.15	$ 0.22
Discontinued operations (in dollars per share)	$ 0	$ 0	$ 0.01	$ 0.01
Net earnings (in dollars per share)	$ 0.10	$ 0.14	$ 0.16	$ 0.23
Basic and diluted - Class C common stock:
Continuing operations (in dollars per share)	$ 0.24	$ 0.28	$ 0.43	$ 0.51
Discontinued operations (in dollars per share)	$ 0	$ 0	$ 0.01	$ 0
Net earnings (in dollars per share)	$ 0.24	$ 0.28	$ 0.44	$ 0.51

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DISCONTINUED OPERATIONS

6 Months Ended

Jun. 26, 2011

DISCONTINUED OPERATIONS [Abstract]

DISCONTINUED OPERATIONS

17  DISCONTINUED OPERATIONS

NorthStar Print Group, Inc.

During 2005, Multi-Color Corporation (Multi-Color) acquired substantially all of the assets and certain liabilities of NorthStar Print Group, Inc. (NorthStar), our former label printing business.  Certain liabilities were excluded from the sale of NorthStar and primarily consisted of environmental site closure costs for both the Green Bay, Wisconsin real estate and real estate located in Norway, Michigan.  In January 2011, upon environmental site closure in Green Bay, Wisconsin, we sold the real estate holdings to Multi-Color according to the 2005 sale agreement.  The net proceeds were $822 and we recorded a pre-tax gain of $610.  We continue to have environmental site closure obligations with respect to the Norway, Michigan real estate, which was sold to Multi-Color in 2005.

The following table summarizes NorthStar's revenue and earnings before income taxes as reported in earnings from discontinued operations, net of applicable income taxes in the consolidated condensed statement of operations for the second quarter and two quarters ended June 26, 2011 and June 27, 2010:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Revenue	$	-	$	-	$	-	$	-
Earnings before income taxes	$	-	$	-	$	562	$	-

PrimeNet Marketing Services

During 2010, we sold substantially all of the operating assets of PrimeNet, our former direct marketing services business, located in St. Paul, Minnesota and Clearwater, Florida in two separate transactions.  We received a $700 note repayable over four years and a $147 working capital note repayable over three years for the sale of the Clearwater, Florida based operations.

The following table summarizes PrimeNet's revenue and loss before income taxes as reported in earnings from the discontinued operations, net of applicable income taxes in the consolidated condensed statement of operations for the second quarter and two quarters ended June 26, 2011 and June 27, 2010.

	Second Quarter Ended					Two Quarters Ended
	June 26, 2011		June 27, 2010			June 26, 2011		June 27, 2010
Revenue	$	-	$	-		$	-	$	2,144
Loss before income taxes	$	-	$	(373	)	$	-	$	(1,060	)

IPC Print Services, Inc.

During 2010, we sold substantially all of the assets and certain liabilities of IPC, our former printing services business, to Walsworth Publishing Company (Walsworth).  An escrow fund in the amount of $731 has been established to secure our representations and warranties pursuant to the purchase agreement for two years from the date of the sale, after which time, any remaining funds will be delivered to us.
 

The following table summarizes IPC's revenue and earnings before income taxes as reported in earnings from discontinued operations, net of applicable taxes in the consolidated condensed statement of operations for the second quarter and two quarters ended June 26, 2011 and June 27, 2010:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Revenue	$	-	$	10,113	$	-	$	21,748
Earnings before income taxes	$	-	$	640	$	-	$	1,366

Certain liabilities were excluded from the sale of IPC and are included in continuing operations in the June 26, 2011 and December 26, 2010 consolidated condensed balance sheets.  These liabilities include workers' compensation and working capital adjustments due to Walsworth pursuant to the sale agreement (payable in the third quarter of 2011).

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Document And Entity Information (USD $)	6 Months Ended
	Jun. 26, 2011	Jul. 29, 2011	Jun. 24, 2011
Entity Registrant Name	JOURNAL COMMUNICATIONS INC
Entity Central Index Key	0001232241
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 220,462,265
Entity Common Stock, Shares Outstanding		55,376,164
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 26, 2011

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COMPREHENSIVE INCOME

6 Months Ended

Jun. 26, 2011

COMPREHENSIVE INCOME [Abstract]

COMPREHENSIVE INCOME

6  COMPREHENSIVE INCOME

The following table sets forth our comprehensive income:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Net earnings	$	6,141	$	8,100	$	9,516	$	13,403
Change in pension and post-retirement (net of tax of $128, $278, $255 and $558, respectively)		197		442		394		883
Comprehensive income	$	6,338	$	8,542	$	9,910	$	14,286

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WORKFORCE REDUCTIONS AND BUSINESS IMPROVEMENTS

6 Months Ended

Jun. 26, 2011

WORKFORCE REDUCTIONS AND BUSINESS IMPROVEMENTS [Abstract]

WORKFORCE REDUCTIONS AND BUSINESS IMPROVEMENTS

11  WORKFORCE REDUCTIONS AND BUSINESS IMPROVEMENTS

During the second quarter and two quarters of 2011, we recorded a pre-tax charge of $(1) and $14, respectively, for workforce separation benefits.  These charges are recorded in operating costs and expenses and selling and administrative expenses in the consolidated statement of operations.  Activity associated with the workforce reduction and business initiatives during the two quarters of 2011 was as follows:

	Balance as ofDecember 26, 2010		Charge for SeparationBenefits		Payments for SeparationBenefits			Balance as of June 26, 2011
Daily newspaper	$	1,365	$	--	$	(456	)	$	909
Community newspapers and shoppers		72		14		(81	)		5
Total	$	1,437	$	14	$	(537	)	$	914

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ACCOUNTING PERIODS

6 Months Ended

Jun. 26, 2011

ACCOUNTING PERIODS [Abstract]

ACCOUNTING PERIODS

2  ACCOUNTING PERIODS

We report on 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 13 weeks and ending on a Sunday, provided that once every six years, the fourth quarterly reporting period will be 14 weeks.

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INVENTORIES

6 Months Ended

Jun. 26, 2011

INVENTORIES [Abstract]

INVENTORIES

8  INVENTORIES

Inventories are stated at the lower of cost (first in, first out method) or market.  Inventories as of June 26, 2011 and December 26, 2010 consist of the following:

	June 26, 2011			December 26, 2010
Paper and supplies	$	1,400		$	1,043
Work in process		52			36
Less obsolescence reserve		(35	)		(44	)
Inventories, net	$	1,417		$	1,035

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GUARANTEES

6 Months Ended

Jun. 26, 2011

GUARANTEES [Abstract]

GUARANTEES

13  GUARANTEES

We provided a guarantee to the landlord of our former New England community newspapers and shopper business, which was sold in 2007, with respect to tenant liabilities and obligations associated with a lease which expires in December 2016.  Our maximum potential obligation pursuant to the guarantee was $972 as of June 26, 2011.  As part of the sales transaction, we received a guarantee from the buyer of our New England business that they will satisfy all the liabilities and obligations of the assigned lease.  In the event that they fail to satisfy their liabilities and obligations and the landlord invokes our guarantee, we have a right to indemnification from the buyer.

We provided a guarantee to the landlord of our former Clearwater, Florida-based operations of PrimeNet, which was sold in February 2010, with respect to tenant liabilities and obligations associated with a lease which expired in May 2011.  In addition, the buyer has assumed certain leases for equipment and we have provided a guarantee for the remaining lease obligations.  The equipment leases expire in March 2012.  Our maximum potential obligations pursuant to the guarantee and the assumed leases are $201 as of June 26, 2011.

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RECEIVABLES

6 Months Ended

Jun. 26, 2011

RECEIVABLES [Abstract]

RECEIVABLES

9  RECEIVABLES

Our non-interest bearing accounts receivable arise primarily from the sale of advertising, commercial printing, commercial distribution and the retransmission of our television programs by cable, satellite and telecommunications providers.  We record accounts receivable at original invoice amounts.  The accounts receivable balance is reduced by an estimated allowance for doubtful accounts. We evaluate the collectability 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 patterns and 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, 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 as of June 26, 2011 and December 26, 2010 was $2,278 and $3,286, respectively.

We have a $450 secured note resulting from the sale of two radio stations in Boise, Idaho in September 2009.  Interest-only payments are due monthly and the principal balance of the note is due on September 25, 2014.  The note receivable balance as of June 26, 2011 and December 26, 2010 was $430.  This note receivable is reported in other assets in the consolidated condensed balance sheets.  Management monitors the level of payment activity and, to date, all monthly interest-only payments have been received on time and in full.  We believe that we will collect the amount owed to us.

In consideration for the sale of the Clearwater, Florida-based operations of PrimeNet in February 2010, we received a $700 promissory note repayable over four years and a $147 working capital note repayable over three years.  At the time of the sale, we recorded receivables of $587 and $129, respectively, representing the fair value of the notes discounted at 6.785% and 9.08%, respectively.  As of June 26, 2011, the notes receivable balances were $419 and $76, respectively, and as of December 26, 2010, the notes receivable balances were $624 and $96, respectively.  As of June 26, 2011, the current portion of the notes receivable balances was $197 and is reported in receivables, net in the consolidated condensed balance sheets.  The non-current portion of the notes receivable was $298 and is reported in other assets in the consolidated condensed balance sheets.  Management monitors the operating performance of the buyer by reviewing quarterly revenue performance reports and annual financial statements.  Based on our monitoring, we believe that we will collect all amounts owed to us pursuant to these notes receivable.

Interest income and the unamortized discount on our notes receivable are recorded using the effective interest method.

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VARIABLE INTEREST ENTITY

6 Months Ended

Jun. 26, 2011

VARIABLE INTEREST ENTITY [Abstract]

VARIABLE INTEREST ENTITY

7  VARIABLE INTEREST ENTITY

We have an affiliation agreement with ACE TV, Inc. for the rights under a local marketing agreement for WACY-TV in Appleton, Wisconsin and to acquire certain assets of ACE TV, Inc. including the broadcast license of WACY-TV, pending FCC rule changes and approval.  Under the affiliation agreement, ACE TV, Inc. provides the programming for WACY-TV and we sell advertising time, provide all other television operating activities and own the non-broadcast license assets used by WACY-TV.  Based on our power to direct certain activities and our right to ultimately acquire the broadcast license, we have determined that ACE TV, Inc. is a VIE and that we are the primary beneficiary of the variable interests of WACY-TV.  As a result, we have consolidated the net assets of ACE TV, Inc., aggregating $1,164 which consists primarily of a broadcast license and investments.  The investments of ACE TV Inc. can be used only to settle obligations of ACE TV, Inc.  Creditors of ACE TV, Inc. have no recourse to our general credit.  We have not provided financial or other support that we are not contractually required to provide.

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Unaudited Consolidated Condensed Statements of Cash Flows (USD $) In Thousands	6 Months Ended
	Jun. 26, 2011	Jun. 27, 2010
Cash flow from operating activities:
Net earnings	$ 9,516	$ 13,403
Less earnings from discontinued operations	341	219
Earnings from continuing operations	9,175	13,184
Adjustments for non-cash items:
Depreciation	10,788	11,469
Amortization	784	979
Provision for doubtful accounts	411	350
Deferred income taxes	5,962	5,152
Non-cash stock-based compensation	1,000	1,082
Net (gain) loss from disposal of assets	(238)	90
Receivables	4,121	4,599
Inventories	(382)	19
Accounts payable	(2,535)	439
Other assets and liabilities	(11,577)	(2,172)
Net Cash Provided By Operating Activities	17,509	35,191
Cash flow from investing activities:
Capital expenditures for property and equipment	(5,405)	(5,164)
Proceeds from sales of assets and insurance proceeds	73	3
Insurance proceeds from tower collapse and replacement	0	728
Proceeds from sale of business	745	17
Net Cash Used For Investing Activities	(4,587)	(4,416)
Cash flow from financing activities:
Proceeds from long-term notes payable to banks	53,396	43,645
Payments on long-term notes payable to banks	(67,001)	(77,205)
Principal payments under capital lease obligations	(171)	(187)
Proceeds from issuance of common stock	163	146
Income tax benefits from vesting of non-vested restricted stock	430	95
Net Cash Used For Financing Activties	(13,183)	(33,506)
Cash from discontinued operations:
Net operating activities of discontinued operations	(223)	2,334
Net investing activities of discontinued operations	823	(288)
Net Cash Provided by Discontinued Operations	600	2,046
Net Decrease In Cash And Cash Equivalents	339	(685)
Cash and cash equivalents:
Beginning of year	2,056	3,369
At June 26, 2011 and June 27, 2010	$ 2,395	$ 2,684

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NEW ACCOUNTING STANDARDS

6 Months Ended

Jun. 26, 2011

NEW ACCOUNTING STANDARDS [Abstract]

NEW ACCOUNTING STANDARDS

3  NEW ACCOUNTING STANDARDS

In June 2011, the Financial Accounting Standards Board (FASB) issued amended guidance for comprehensive income. The guidance requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new guidance eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted.  We will adopt this guidance in the first quarter of 2012.  We do not expect the adoption of these disclosures to have a material impact on our consolidated financial statements.

In May 2011, the FASB issued amended guidance for fair value measurement and disclosure requirements between U.S. generally accepted accounting principles and International Financial Reporting Standards (IFRS).  The new guidance includes amendments to clarify the definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. generally accepted accounting principles and IFRS. The guidance also changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  We will adopt this guidance in the first quarter of 2012.  We do not expect the adoption of these disclosures to have a material impact on our consolidated financial statements.

In December 2010, the FASB issued amended guidance for goodwill.  The guidance applies to entities that have recognized goodwill and have one or more reporting units whose carrying amount for purposes of performing step one of the goodwill impairment test is zero or negative.  The guidance modifies step one so that for those reporting units, an entity is required to perform step two of the goodwill impairment test if it is more likely than not that a goodwill impairment exists.  In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist.  The qualitative factors are consistent with existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010, with no early adoption permitted. We adopted this guidance in the first quarter of 2011.  There was no impact on our consolidated financial statements.

In December 2010, the FASB issued amended guidance for business combinations.  The guidance requires a public entity that presents comparative financial statements to disclose revenue and earnings of the combined entity as though the material business combination(s) on an individual or aggregate basis that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  This guidance also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  This guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted.  We adopted this guidance in the first quarter of 2011 for future business combinations.  There was no impact on our consolidated financial statements.

In July 2010, the FASB issued amended guidance for receivables.  The guidance for disclosures about activity that occurs during a period is effective for interim and annual reporting periods beginning on or after December 15, 2010.  We adopted this guidance for activity that occurs for our financing receivables in the first quarter of 2011.  The adoption of these disclosures did not have a material impact on our consolidated financial statements.  See Note 9, “Receivables,” for disclosures regarding our adoption of the FASB's amended guidance for financing receivables.

In January 2010, the FASB issued amended guidance for fair value measurements and disclosures.  The guidance requires new disclosures about purchases, sales, issuances, and settlements in the roll forward of activity for level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.  We adopted this guidance in the first quarter of 2011.  The adoption of this guidance did not have a material impact on our consolidated financial statements.

In October 2009, the FASB amended the accounting standards related to revenue recognition for arrangements with multiple deliverables.  This new guidance requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables, based on their relative selling price.  The guidance also establishes a hierarchy for determining the selling price of a deliverable which is based on vendor-specific objective evidence, third-party evidence, or management's best estimate of selling price.  We adopted this guidance in the first quarter of 2011.  The adoption of this guidance did not have a material impact on our consolidated financial statements.  See Note 4, “Multiple-Deliverable Revenue Arrangements,” for disclosures regarding our adoption of the FASB's amended guidance for revenue recognition for arrangements with multiple deliverables.

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MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS

6 Months Ended

Jun. 26, 2011

MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS [Abstract]

MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS

4  MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS

Our daily newspaper sells print and online advertising in bundled arrangements, where multiple products are involved.  Significant deliverables within these arrangements include advertising in the printed daily newspaper and advertising placed on various company websites, each of which are considered separate units of accounting.  Our broadcast business sells airtime on television and radio stations and online advertising in bundled arrangements, where multiple products are involved.  Significant deliverables within these arrangements include advertising on television and radio stations and advertising placed on various company websites, each of which are considered separate units of accounting.  There were no significant changes in units of accounting, the allocation process or the pattern and timing of revenue recognition upon adoption of the amended guidance related to revenue recognition for arrangements with multiple deliverables.

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INCOME TAXES

6 Months Ended

Jun. 26, 2011

INCOME TAXES [Abstract]

INCOME TAXES

12  INCOME TAXES                                     

We file tax returns in the United States federal jurisdiction, as well as approximately 15 state and local jurisdictions.  The statute of limitations for assessing additional taxes is three years for federal purposes and typically between three and four years for state and local purposes, unless the statute of limitations has been previously extended.  Accordingly, our 2007 through 2009 tax returns are open for federal purposes, and our 2006 through 2009 tax returns remain open for state tax purposes.  Currently, we are under audit in Wisconsin for our 2004 through 2007 tax returns and Illinois for our 2006 and 2007 tax returns.

As of June 26, 2011, our liability for unrecognized tax benefits was $917, which, if recognized, would have an impact on our effective tax rate.  We recognize interest income/expense and penalties related to unrecognized tax benefits in our provision for income taxes.  As of June 26, 2011, we had $262 accrued for interest expense and penalties.  We recognized $19 in interest expense during the second quarter of 2011.

As of June 26, 2011, it is possible for $297 of unrecognized tax benefits and related interest to be recognized within the next 12 months due to settlements with taxing authorities.

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EARNINGS PER SHARE

6 Months Ended

Jun. 26, 2011

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

5  EARNINGS PER SHARE

Basic

We apply the two-class method for calculating and presenting our basic earnings per share.  As noted in the FASB's guidance for earnings per share, the two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared (or accumulated) and participation rights in undistributed earnings.  Under that method:

a) Income (loss) from continuing operations (“net earnings (loss)”) is reduced by the amount of dividends declared in the current period for each class of stock and by the contractual amount of dividends that must be paid or accrued during the current period.

b) The remaining earnings, which may include earnings from discontinued operations (“undistributed earnings”), are allocated to each class of common stock to the extent that each class of stock may share in earnings if all of the earnings for the period were distributed.

c) The remaining losses (“undistributed losses”) are allocated to the class A and B common stock.  Undistributed losses are not allocated to the class C common stock and non-vested restricted stock because the class C common stock and the non-vested restricted stock are not contractually obligated to share in the losses.  Losses from discontinued operations are allocated to class A and B shares and may be allocated to class C shares and non-vested restricted stock if there is undistributed earnings after deducting earnings distributed to class C shares from income from continuing operations.

d) The total earnings (loss) allocated to each class of common stock are then divided by the number of weighted average shares outstanding of the class of common stock to which the earnings (loss) are allocated to determine the earnings (loss) per share for that class of common stock.

e) Basic earnings (loss) per share data are presented for class A and B common stock in the aggregate and for class C common stock.  The basic earnings (loss) per share for class A and B common stock are the same; hence, these classes are reported together.

In applying the two-class method, we have determined that undistributed earnings should be allocated equally on a per share basis among each class of common stock due to the lack of any contractual participation rights of any class to those undistributed earnings.  Undistributed losses are allocated to only the class A and B common stock for the reason stated above.

The following table sets forth the computation of basic earnings per share under the two-class method:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Numerator for basic earnings from continuing operations for each class of common stock and non-vested restricted stock:
Earnings from continuing operations	$	6,141	$	7,924	$	9,175	$	13,184
Less dividends declared or accrued:
Class A and B		--		--		--		--
Class C		464		464		928		928
Non-vested restricted stock		--		--		--		--
Total undistributed earnings from continuing operations	$	5,677	$	7,460	$	8,247	$	12,256
Class A and B undistributed earnings from continuing operations	$	5,269	$	6,892	$	7,650	$	11,320
Class C undistributed earnings from continuing operations		335		443		487		729
Non-vested restricted stock undistributed earnings from continuing operations	$	73		125		110		207
Total undistributed earnings from continuing operations	$	5,677	$	7,460	$	8,247	$	12,256
Numerator for basic earnings from continuing operations per class A and B common stock:
Dividends on class A and B	$	--	$	--	$	--	$	--
Class A and B undistributed earnings		5,269		6,892		7,650		11,320
Numerator for basic earnings from continuing operations per class A and B common stock	$	5,269	$	6,892		7,650	$	11,320

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Numerator for basic earnings from continuing operations per class C common stock:
Dividends accrued on class C	$	464	$	464	$	928	$	928
Class C undistributed earnings		335		443		487		729
Numerator for basic earnings from continuing operations per class C common stock	$	799	$	907	$	1,415	$	1,657
Denominator for basic earnings from continuing operations for each class of common stock:
Weighted average shares outstanding –
Class A and B		51,318		50,784		51,222		50,700
Class C		3,264		3,264		3,264		3,264
Basic earnings per share from continuing operations:
Class A and B	$	0.10	$	0.14	$	0.15	$	0.22
Class C	$	0.24	$	0.28	$	0.43	$	0.51
Numerator for basic earnings from discontinued operations for eachclass of common stock and non-vested restricted stock:
Total undistributed earnings from discontinued operations	$	--	$	176	$	341	$	219
Undistributed earnings from discontinued operations:
Class A and B	$	--	$	162	$	316	$	203
Class C		--		10		20		12
Non-vested restricted stock		--		4		5		4
Total undistributed earnings from discontinued operations	$	--	$	176	$	341	$	219
Denominator for basic earnings from discontinued operations for each class of common stock:
Weighted average shares outstanding –
Class A and B		51,318		50,784		51,222		50,700
Class C		3,264		3,264		3,264		3,264
Basic earnings per share from discontinued operations:
Class A and B	$	--	$	--	$	0.01	$	0.01
Class C	$	--	$	--	$	0.01	$	--
Numerator for basic net earnings for each class of common stock:
Net earnings	$	6,141	$	8,100	$	9,516	$	13,403
Less dividends declared or accrued:
Class A and B		--		--		--		--
Class C		464		464		928		928
Non-vested restricted stock		--		--		--		--
Total undistributed net earnings	$	5,677	$	7,636	$	8,588	$	12,475

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Undistributed net earnings:
Class A and B	$	5,269	$	7,054	$	7,966	$	11,523
Class C		335		453		507		741
Non-vested restricted stock		73		129		115		211
Total undistributed net earnings	$	5,677	$	7,636	$	8,588	$	12,475
Numerator for basic net earnings per class A and Bcommon stock:
Dividends declared on class A and B	$	--	$	--	$	--	$	--
Class A and B undistributed net earnings		5,269		7,054		7,966		11,523
Numerator for basic net earnings per class A and B common stock	$	5,269	$	7,054	$	7,966	$	11,523
Numerator for basic net earnings per class C common stock:
Dividends accrued on class C	$	464	$	464	$	928	$	928
Class C undistributed net earning		335		453		507		741
Numerator for basic net earnings per class C common stock	$	799	$	917	$	1,435	$	1,669
Denominator for basic net earnings for each class of common stock:
Weighted average shares outstanding –
Class A and B		51,318		50,784		51,222		50,700
Class C		3,264		3,264		3,264		3,264
Basic net earnings per share:
Class A and B	$	0.10	$	0.14	$	0.16	$	0.23
Class C	$	0.24	$	0.28	$	0.44	$	0.51

Diluted

Diluted earnings per share is computed based upon the assumption that common shares are issued upon exercise of our non-statutory stock options or stock appreciation rights when the exercise price is less than the average market price of our common shares and common shares will be outstanding upon expiration of the vesting periods for our non-vested restricted stock.  For the second quarter and two quarters of 2011, 217 and 240 non-vested restricted class B common shares, respectively, are not deemed to be outstanding upon expiration of the vesting periods because they are anti-dilutive.  For the second quarter and two quarters of 2010, 454 and 434 non-vested restricted class B common shares, respectively, are not deemed to be outstanding upon expiration of the vesting periods because they are anti-dilutive.  The class C shares are not converted into class A and B shares because they are anti-dilutive for all periods presented.  Therefore, the class C shares are not included in the diluted weighted average shares outstanding.

The following table sets forth the computation of diluted net earnings per share for class A and B common stock:

	Second Quarter Ended				Two Quarters Ended
	June 26, 2011		June 27, 2010		June 26, 2011		June 27, 2010
Numerator for diluted net earnings per share:
Dividends on class A and B common stock	$	--	$	--	$	--	$	--
Total undistributed earnings from continuing operations		5,269		6,892		7,650		11,320
Total undistributed earnings from discontinued operations		--		162		316		203
Net earnings	$	5,269	$	7,054	$	7,966	$	11,523
Denominator for diluted net earnings per share:
Weighted average shares outstanding - class A and B		51,318		50,784		51,222		50,700
Diluted earnings per share:
Continuing operations	$	0.10	$	0.14	$	0.15	$	0.22
Discontinued operations		--		--		0.01		0.01
Net earnings	$	0.10	$	0.14	$	0.16	$	0.23

Diluted earnings per share for the class C common stock is the same as basic earnings per share for class C common stock because there are no class C common stock equivalents.

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 PAYABLE TO BANKS

6 Months Ended

Jun. 26, 2011

NOTES PAYABLE TO BANKS [Abstract]

NOTES PAYABLE TO BANKS

15  NOTES PAYABLE TO BANKS

On August 13, 2010, we entered into an amendment of our formerly unsecured credit facility which, among other things, provided for the pledge of certain collateral by us and our subsidiaries (as amended, the secured credit facility).  In connection with this amendment, certain lenders reduced their commitments to $225,000 and extended the expiration date to December 2, 2013 (extending lenders).  The maturity date for the remaining lenders, with terms and commitments that remain unchanged at $74,000, was June 2, 2011 (non-extending lenders).  The secured credit facility is secured by liens on certain of our assets and the assets of our subsidiaries and contains affirmative, negative and financial covenants which are customary for financings of this type, including, among other things, limits on the creation of liens, limits on the incurrence of indebtedness, restrictions on dispositions and restrictions on dividends.  At our option, the commitments under the secured credit facility may be increased from time to time to an aggregate amount of incremental commitments not to exceed $100,000.  The increase option is subject to the satisfaction of certain conditions, including the identification of lenders (which may include existing lenders or new lenders) willing to provide the additional commitments.

Our borrowings from extending lenders under the secured credit facility incur interest at either LIBOR plus a margin that ranges from 225.0 basis points to 350.0 basis points, depending on our leverage, or (i) the base rate, which equals the highest of the prime rate set by U.S. Bank National Association, the Federal Funds Rate plus 100.0 basis points or one-month LIBOR plus 150.0 basis points, plus (ii) a margin that ranges from 125.0 basis points to 250.0 basis points, depending on our leverage.  As of June 26, 2011 and December 26, 2010, we had borrowings of $60,965 and $74,570, respectively, under our credit facility at a weighted average rate of 2.57% and 3.06%, respectively.

Fees in connection with the secured credit facility of $3,338 and the unamortized deferred financing costs from the unsecured revolving credit facility of $213 are being amortized over the term of the secured credit facility using the effective interest method.  Unamortized deferred financing costs related to the non-extending lenders of $39 are fully amortized.

We estimate the fair value of our secured credit facility as of June 26, 2011 to be $60,234, based on discounted cash flows using an interest rate of 3.1%.  We estimated the fair value of our secured revolving facility as of December 26, 2010 to be $72,547, based on discounted cash flows using an interest rate of 4.05%.  These fair value measurements fall within level 3 of the fair value hierarchy.

The secured credit facility contains the following financial covenants, which remain constant over the term of the agreement:

· A consolidated funded debt ratio of not greater than 3.50-to-1, as determined for the four fiscal quarter period preceding the date of determination.  This ratio compares, for any period, our funded debt to our consolidated EBITDA, defined in the secured credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals and non-cash charges.

· A minimum interest coverage ratio of not less than 3-to-1, as determined for the four fiscal quarter period preceding the date of determination.  This ratio compares, for any period, our consolidated EBITDA, defined in the secured credit agreement as earnings before interest, taxes, depreciation, amortization, restructuring charges, gains/losses on asset disposals and non-cash charges, to our interest expense.

One or more of the lenders in our secured credit facility syndicate could be unable to fund future draws thereunder or take other positions adverse to us.  In such an event, our liquidity could be constrained with an adverse impact on our ability to operate our businesses.

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Unaudited Consolidated Statements of Equity (USD $) In Thousands	Total	Preferred Stock [Member]	Additional Paid-in-Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Retained Earnings [Member]	Noncontrolling Interests [Member]	Treasury Stock, at cost [Member]	Class C [Member]	Class B [Member]	Class A [Member]
Balance at Dec. 27, 2009	$ 171,075	$ 0	$ 258,413	$ (34,487)	$ 55,239	$ 0	$ (108,715)	$ 33	$ 174	$ 418
Net earnings	5,303				5,303
Change in pension and postretirement	441			441
Change in pension and postretirement	441			441
Change in pension and postretirement	441			441
Class C dividends declared ($0.142 per share)	464				464
Class C dividends declared ($0.142 per share)	(464)				(464)
Conversion of class B to class A	0								(4)	4
Stock grants	32		30						2
Employee stock purchase plan	163		162						1
Shares withheld from employees for tax withholding	(268)		(267)						(1)
Stock-based compensation	294		294
Consolidation of variable interest entity	1,164					1,164
Income tax benefits from vesting of non-vested restricted stock	95		95
Balance at Mar. 28, 2010	177,835	0	258,727	(34,046)	60,078	1,164	(108,715)	33	172	422
Net earnings	8,100				8,100
Change in pension and postretirement	442			442
Change in pension and postretirement	442			442
Change in pension and postretirement	442			442
Class C dividends declared ($0.142 per share)	(464)				(464)
Class C dividends declared ($0.142 per share)	464				464
Conversion of class B to class A	0								(7)	7
Stock grants	494		493						1
Stock-based compensation	302		302
Balance at Jun. 27, 2010	186,709	0	259,522	(33,604)	67,714	1,164	(108,715)	33	166	429
Balance at Dec. 26, 2010	208,927	0	260,376	(32,295)	87,767	1,164	(108,715)	33	165	432
Net earnings	3,375				3,375
Change in pension and postretirement	197			197
Change in pension and postretirement	197			197
Change in pension and postretirement	197			197
Class C dividends declared ($0.142 per share)	464				464
Class C dividends declared ($0.142 per share)	(464)				(464)
Conversion of class B to class A	0								(11)	11
Stock grants	20		17						3
Employee stock purchase plan	181		181						0
Shares withheld from employees for tax withholding	(506)		(505)						(1)
Stock-based compensation	262		261		1
Income tax benefits from vesting of non-vested restricted stock	368		368
Balance at Mar. 27, 2011	212,360	0	260,698	(32,098)	90,679	1,164	(108,715)	33	156	443
Net earnings	6,141				6,141
Change in pension and postretirement	197			197
Change in pension and postretirement	197			197
Change in pension and postretirement	197			197
Class C dividends declared ($0.142 per share)	464				464
Class C dividends declared ($0.142 per share)	(464)				(464)
Conversion of class B to class A	0								(4)	4
Stock grants	433		432						1
Shares withheld from employees for tax withholding	(13)		(13)
Stock-based compensation	285		285
Balance at Jun. 26, 2011	$ 218,939	$ 0	$ 261,402	$ (31,901)	$ 96,356	$ 1,164	$ (108,715)	$ 33	$ 153	$ 447

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 26, 2011

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

16  STOCK-BASED COMPENSATION

2007 Journal Communications, Inc. Omnibus Incentive Plan

The purpose of the 2007 Journal Communications, Inc. Omnibus Incentive Plan (2007 Plan) is to promote our success by linking personal interests of our employees, officers and non-employee directors to those of our shareholders, and by providing participants with an incentive for outstanding performance.  The 2007 Plan is also intended to enhance our ability to attract, motivate and retain the services of employees, officers, and directors upon whose judgment, interest, and special effort the successful conduct of our operation is largely dependent.

Subject to adjustment as provided in the 2007 Plan, the aggregate number of shares of class A common stock or class B common stock reserved and available for issuance pursuant to awards granted under the 2007 Plan is 4,800,000 shares which may be awarded in the form of nonstatutory or incentive stock options, stock appreciation rights, restricted stock, restricted or deferred stock units, performance awards, dividend equivalents or other stock-based awards.  The 2007 Plan also provides for the issuance of cash-based awards.  The 2007 Plan replaced the 2003 Equity Incentive Plan (2003 Plan) and, as of May 3, 2007, all equity grants are made from the 2007 Plan.  We will not grant any additional awards under the 2003 Plan.  As of June 26, 2011 there are 2,680,219 shares available for issuance under the 2007 Plan.

During the second quarter and two quarters ended June 26, 2011 we recognized $727 and $1,019, respectively, in stock-based compensation expense.  Total income tax benefit recognized related to stock-based compensation for the second quarter and two quarters ended June 26, 2011 was $305 and $417 respectively.  During the second quarter ended June 27, 2010, we recognized $806 and $1,141, respectively, in stock-based compensation expense, including $13 and $41, respectively, recorded in earnings from discontinued operations.  Total income tax benefit recognized related to stock-based compensation for the second quarter and two quarters ended June 27, 2010 was $324 and $458, respectively.  We recognize stock-based compensation expense on a straight-line basis over the service period based upon the fair value of the award on the grant date.  As of June 26, 2011, total unrecognized compensation cost related to stock-based compensation awards (consisting of non-vested restricted stock) was $2,131 net of estimated forfeitures, which we expect to recognize over a weighted average period of 1.2 years.  Stock-based compensation expense is reported in selling and administrative expenses and earnings from discontinued operations in our consolidated condensed statements of operations.

Stock grants

The compensation committee of our board of directors has granted class B common stock to employees and non-employee directors under our 2003 Plan and our 2007 Plan.  Each stock grant may have been accompanied by restrictions, or may have been made without any restrictions, as the compensation committee of our board of directors determined.  Such restrictions could have included requirements that the participant remain in our continuous employment for a specified period of time, or that we or the participant meet designated performance goals.  We value non-vested restricted stock grants at the closing market prices of our class A common stock on the grant date.

A summary of stock grant activity during the two quarters of 2011 is:

	Shares			Weighted Average Fair Value
Non-vested at December 26, 2010		777,872		$	2.69
Granted		331,570			4.36
Vested		(395,948	)		3.19
Forfeited		(6,150	)		5.28
Non-vested at June 26, 2011		707,344			3.81

Our non-vested restricted stock grants vest from one to four years from the grant date.  The total fair value of shares vesting during the two quarters of 2011 was $1,264.  There was an aggregate of 344,853 unrestricted and non-vested restricted stock grants issued to our non-employee directors (93,853 unrestricted shares) and employees (251,000 restricted shares) in the two quarters of 2010 at a weighted average fair value of $4.24 per share, of which 75,591 of the non-vested restricted shares have since vested.

Employee stock purchase plan

The 2003 Employee Stock Purchase Plan permits eligible employees to purchase our class B common stock at 90% of the fair market value measured as of the closing market price of our class A common stock on the day of purchase.  We recognize compensation expense equal to the 10% discount of the fair market value.  Subject to certain adjustments, 3,000,000 shares of our class B common stock are authorized for sale under this plan.  There were 35,683 class B common shares sold to employees under this plan in the two quarters of 2011 at a weighted average fair value of $4.55.  As of June 26, 2011, there are 2,292,164 shares available for sale under the plan.

Stock appreciation rights

A stock appreciation right, or SAR, represents the right to receive an amount equal to the excess of the fair value of a share of our class B common stock on the exercise date over the base value of the SAR, which shall not be less than the fair value of a share of our class B common stock on the grant date.  Each SAR is settled only in shares of our class B common stock.  The term during which any SAR may be exercised is 10 years from the grant date, or such shorter period as determined by the compensation committee of our board of directors.

Our SARs vest over a three year graded vesting schedule and it is our policy to recognize compensation cost for awards with graded vesting on a straight-line basis over the vesting period for the entire award.  We ensure the compensation cost recognized at any date is at least equal to the portion of the grant-date value of the award that is vested at that date.  The fixed price SARs have a fixed base value equal to the closing price of our class A common stock on the date of grant.  The escalating price SARs have an escalating base value that starts with the closing price of our class A common stock on the date of grant and increases by six percent per year for each year that the SARs remain outstanding, starting on the first anniversary of the grant date.

A summary of SAR activity during the two quarters of 2011 is:

	SARs		Weighted Average Exercise Price		Weighted Average Contractual Term Remaining (years)
Outstanding at December 26, 2010		1,083,207	$	10.71		6.6
Exercisable at December 26, 2010		909,527		11.21		6.5
Outstanding and exercisable at June 26, 2011		1,083,207		10.71		6.1

173,680 SARs vested during the two quarters of 2011.  The aggregate intrinsic value of the SARs outstanding and exercisable at the end of the second quarter of 2011 is zero because the fair market value of our class B common stock on June 26, 2011 was lower than the weighted average exercise price of the SARs.

Nonstatutory stock options

The compensation committee of our board of directors has granted nonstatutory stock options to employees and non-employee directors at a purchase price equal to at least the fair market value of our class B common stock on the grant date for an exercise term determined by the committee, not to exceed 10 years from the grant date.  It is our policy to issue new class B common stock upon the exercise of nonstatutory stock options.

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

A summary of stock option activity during the two quarters of 2011 is:

	Options			Weighted Average  Exercise Price		Weighted Average Contractual Term Remaining (years)
Outstanding and exercisable at December 26, 2010		26,500		$	18.06		0.3
Expired		(26,500	)		18.06		--
Outstanding and exercisable at June 26, 2011		--			--		--

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SEGMENT REPORTING

6 Months Ended

Jun. 26, 2011

SEGMENT REPORTING [Abstract]

SEGMENT REPORTING

18  SEGMENT REPORTING

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; and (iii) corporate.  Our publishing segment consists of the Milwaukee Journal Sentinel, which serves as the only major daily newspaper for the Milwaukee metropolitan area, and several community newspapers and shoppers in Wisconsin and Florida.  Our broadcasting segment, operating in 12 states, consists of 33 radio stations and 13 television stations and the operation of a television station under a local marketing agreement.  Our corporate segment consists of unallocated corporate expenses and revenue eliminations.

The following tables summarize revenue, operating earnings (loss), depreciation and amortization and capital expenditures for the second quarter and two quarters ended June 26, 2011 and June 27, 2010 and identifiable total assets as of June 26, 2011 and December 26, 2010:

	Second Quarter Ended						Two Quarters Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Revenue
Publishing	$	44,119		$	47,386		$	85,919		$	91,938
Broadcasting		46,083			47,012			88,192			89,617
Corporate eliminations		(100	)		(79	)		(148	)		(299	)
	$	90,102		$	94,319		$	173,963		$	181,256
Operating earnings (loss)
Publishing	$	5,347		$	6,623		$	7,172		$	10,012
Broadcasting		8,343			9,675			14,318			17,394
Corporate		(2,199	)		(2,523	)		(3,991	)		(4,271	)
	$	11,491		$	13,775		$	17,499		$	23,135
Depreciation and amortization
Publishing	$	2,624		$	2,902		$	5,256		$	5,800
Broadcasting		3,049			3,200			6,015			6,404
Corporate		155			122			301			244
	$	5,828		$	6,224		$	11,572		$	12,448
Capital expenditures
Publishing	$	212		$	202		$	578		$	614
Broadcasting		2,430			3,172			4,570			4,543
Corporate		107			--			257			7
	$	2,749		$	3,374		$	5,405		$	5,164

	June 26, 2011		December 26, 2010
Identifiable total assets
Publishing	$	117,771	$	125,870
Broadcasting		266,378		275,985
Corporate & discontinued operations		28,705		29,915
	$	412,854	$	431,770

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BASIS OF PRESENTATION

6 Months Ended

Jun. 26, 2011

BASIS OF PRESENTATION [Abstract]

BASIS OF PRESENTATION

1  BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements include the accounts of Journal Communications, Inc., its wholly owned subsidiaries and a variable interest entity (VIE) for which we are the primary beneficiary in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the Securities and Exchange Commission and reflect normal and recurring adjustments, which we believe to be necessary for a fair presentation.  As permitted by these regulations, these statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for annual financial statements.  However, we believe that the disclosures are adequate to make the information presented not misleading.  The gain on the sale of NorthStar Print Group Inc.'s (NorthStar) real estate holdings the operations of PrimeNet Marketing Services (PrimeNet), our former direct marketing services business, and IPC Print Services, Inc. (IPC), our former printing services business, have been reflected as discontinued operations in our consolidated condensed statement of operations.   The balance sheet as of December 26, 2010 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  The operating results for the second quarter and two quarters ended June 26, 2011 are not necessarily indicative of the operating results that may be expected for the fiscal year ending December 25, 2011.  You should read these unaudited consolidated condensed financial statements in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 26, 2010.

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GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 26, 2011

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

10  GOODWILL AND OTHER INTANGIBLE ASSETS

Definite-lived Intangibles

Our definite-lived intangible assets consist primarily of network affiliation agreements, customer lists, non-compete agreements and trade names.  We amortize the network affiliation agreements over a period of 25 years based on our good relationships with the networks, our long history of renewing these agreements and because 25 years is deemed to be the length of time before a material modification of the underlying contract would occur.  We amortize the customer lists over a period of five to 15 years, the non-compete agreements and franchise agreement fees over the terms of the contracts and the tradenames over a period of 25 years.  Management determined there were no significant adverse changes in the value of these assets as of June 26, 2011.

Amortization expense was $392 and $784 for the second quarter and two quarters ended June 26, 2011, respectively, and $487 and $979 for the second quarter and two qurarters ended June 27, 2010.  Estimated amortization expense for our next five fiscal years is $1,569 for 2011, $1,494 for 2012, $1,375 for 2013, $1,276 for 2014 and $1,263 for 2015.

The gross carrying amount, accumulated amortization and net carrying amount of the major classes of definite-lived intangible assets as of June 26, 2011 and December 26, 2010 are as follows:

	Gross CarryingAmount		AccumulatedAmortization			Net CarryingAmount
June 26, 2011
Network affiliation agreements	$	26,930	$	(7,596	)	$	19,334
Customer lists		6,794		(5,518	)		1,276
Non-compete agreements		10,410		(10,376	)		34
Other		3,896		(2,336	)		1,560
Total	$	48,030	$	(25,826	)	$	22,204
December 26, 2010
Network affiliation agreements	$	26,930	$	(7,062	)	$	19,868
Customer lists		6,794		(5,353	)		1,441
Non-compete agreements		10,435		(10,392	)		43
Other		3,896		(2,260	)		1,636
Total	$	48,055	$	(25,067	)	$	22,988

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.  The net carrying amount of our broadcast licenses was $82,426 as of June 26, 2011 and December 26, 2010.

The costs incurred to renew or extend the term of our broadcast licenses and certain customer relationships are expensed as incurred.

Goodwill

Goodwill recorded at our community newspapers and shoppers and broadcasting reporting units was $4,285 and $4,813, respectively, as of December 26, 2010. In June 2011, our community newspapers and shoppers reporting unit sold the Pelican Press and PelicanPress Marketplace businesses, and we disposed of $182 of goodwill allocated to those businesses. Goodwill recorded at our community newspapers and shoppers and broadcasting reporting units was $4,103 and $4,813, respectively, as of June 26, 2011.  We do not believe either of these reporting units is at risk for failing the step one impairment test in accordance with the FASB's guidance for accounting for goodwill and intangible assets.

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EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 26, 2011

EMPLOYEE BENEFIT PLANS [Abstract]

EMPLOYEE BENEFIT PLANS

14  EMPLOYEE BENEFIT PLANS

The components of our net periodic benefit costs for our defined benefit and non-qualified pension plans and our postretirement health benefit plan are as follows:

	Pension Benefits
	Second Quarter Ended						Two Quarters Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Service cost	$	--		$	--		$	--		$	--
Interest cost		1,962			2,085			3,925			4,170
Expected return on plan assets		(2,398	)		(2,571	)		(4,797	)		(5,142	)
Amortization of:
Unrecognized prior service cost		(2	)		(41	)		(5	)		(82	)
Unrecognized net loss		245			680			490			1,360
Net periodic benefit (income) cost included in total operating costs and expenses and selling and administrative expenses	$	(193	)	$	153		$	(387	)	$	306

We fund our defined benefit pension plan at the minimum amount required by the Pension Protection Act of 2006.   We do not expect to contribute to the qualified pension plan in 2011.  Based on current projections, we expect to contribute $3,300 to our qualified defined benefit pension plan in 2012.  We expect to contribute $469 and $517 to our unfunded non-qualified pension plan in 2011 and 2012, respectively.

	Other Postretirement Benefits
	Second Quarter Ended						Two Quarters Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Service cost	$	14		$	21		$	27		$	42
Interest cost		206			238			413			476
Amortization of:
Unrecognized prior service cost		(55	)		(55	)		(110	)		(110	)
Unrecognized net transition obligation		138			137			275			274
Net periodic benefit cost included in total operating costs and expenses and selling and administrative expenses	$	303		$	341		$	605		$	682

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Unaudited Consolidated Condensed Balance Sheets (USD $) In Thousands	Jun. 26, 2011	Dec. 26, 2010
Current assets:
Cash and cash equivalents	$ 2,395	$ 2,056
Investments of variable interest entity	500	500
Receivables, net	50,697	55,309
Inventories, net	1,417	1,035
Prepaid expenses and other current assets	5,278	3,961
Syndicated programs	3,764	7,361
Deferred income taxes	4,046	4,809
Total Current Assets	68,097	75,031
Property and equipment, at cost, less accumulated depreciation of $231,742 and $228,820	174,014	179,725
Syndicated programs	3,407	3,083
Goodwill	8,916	9,098
Broadcast licenses	82,426	82,426
Other intangible assets, net	22,204	22,988
Deferred income taxes	48,945	54,077
Other assets	4,845	5,342
Total Assets	412,854	431,770
Current liabilities:
Accounts payable	20,360	22,895
Accrued compensation	10,403	13,703
Accrued employee benefits	5,575	5,087
Deferred revenue	14,732	13,899
Syndicated programs	4,544	8,685
Accrued income taxes	651	7,332
Other current liabilities	7,207	6,493
Current portion of long-term liabilities	530	561
Total Current Liabilities	64,002	78,655
Accrued employee benefits	56,923	58,534
Syndicated programs	5,078	5,114
Long-term notes payable to banks	60,965	74,570
Other long-term liabilities	6,947	5,970
Equity:
Preferred stock, $0.01 par - authorized 10,000,000 shares; no shares outstanding at June 26, 2011 and December 26, 2010	0	0
Additional paid-in capital	261,402	260,376
Accumulated other comprehensive loss	(31,901)	(32,295)
Retained earnings	96,356	87,767
Total Journal Communications, Inc. shareholders' equity	217,775	207,763
Noncontrolling interest	1,164	1,164
Total Equity	218,939	208,927
Total Liabilities And Equity	412,854	431,770
Common Stock [Member] | Class C [Member]
Equity:
Common stock value (in dollars)	33	33
Common Stock [Member] | Class B [Member]
Equity:
Common stock value (in dollars)	153	165
Common Stock [Member] | Class A [Member]
Equity:
Common stock value (in dollars)	447	432
Class C [Member]
Equity:
Total Equity	33	33
Class B [Member]
Equity:
Treasury stock, at cost (8,676,705 class B shares)	(108,715)	(108,715)
Total Equity	153	165
Class A [Member]
Equity:
Total Equity	$ 447	$ 432